Best Data Driven Businesses (CFFL 477)
Best Data Driven Businesses
Transcript:
Jack Butala: Jack Butala and Jill DeWit.
Jill DeWit: Good day.
Jack Butala: Welcome to our show today.
Jill DeWit: Thank you, Jack.
Jack Butala: In this episode, Jill and I talk about the best data-driven businesses and why they succeed. Turns out, we have one of them, and so do our members. Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill DeWit: Okay. Matt asked, “I have the option to purchase a property that happens to be to have a small duplex on it that hasn’t been used in years and is likely a tear down. Thoughts?”
Jack Butala: Buy it.
Jill DeWit: Goal. Score.
Jack Butala: Here’s why. Anything that differentiates your property from a vacant piece of land, on the Internet is going to much more likely to be an attribute versus anything else.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: We haven’t talked about it in a while, but we gauge all these properties based on the four As, right, Jill?
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: Acreage. More is better. Affordability. Cheaper is better. Access. County road’s better than a dirt road. Dirt road’s better than no access. And attributes like is it close to the Grand Canyon? Does it hae an unused old duplex on it? And on and on and on. The more attributes, the better.
This is a fantastic scenario. Any time, other than nuclear waste, if there’s something on a property, it’s almost always better.
Jill DeWit: Right. Let them decide. Let your … I would showcase that. Have some photos on there. “Look. Hey, I don’t know anything about it, but there’s a structure there. It could be something you could remodel and make your own.” You know. It’s awesome.
Jack Butala: Now’s a good time to, actually, Jill brings up a great point. You don’t have to take responsibility with what’s on your property like you do a primary residence. You can always turn it back around to the person who’s interested in the property by using this sentence, and I say it a million times. “Hey, buyer. See how cheap this property is? It’s because I don’t know anything about it. Somebody told me that there’s a structure on there, and I sent somebody out there, and here’s a picture of it, but that’s all I know. You should go check it out. Really, you might be a … You might be finding the biggest piece of gold, you know, in a garage sale piece of gold. Mona Lisa in a garage sale. I don’t know, but I know that I’m going to make a little bit of money on it.” [crosstalk 00:02:20]
Jill DeWit: Exactly, and I hope you make even more money and it’s great.
Jack Butala: And I hope you make more. Awesome.
Jill DeWit: Exactly.
Jack Butala: If you have a question or you want to be on the show, reach out to either one of us on landinvestors.com.
Today’s topic, what are the best data-driven businesses and why are they so awesome? Why do they completely remove almost all of the risk for success? This is the meat of the show. So I came up with this topic, because I was watching a news talk show in the morning a few weeks ago, and they were talking about FourSquare. Jill, tell us what FourSquare is.
Jill DeWit: Okay, so FourSquare is a technology company that, I’m reading about this …
Jack Butala: It’s a social media company-
Jill DeWit: It is.
Jack Butala: … where you check in-
Jill DeWit: It entices you to check in with your location and what you’re doing in a social sense to brag and connect socially. I mean that’s it.
Jack Butala: So like you go to a restaurant and you say, “I’m checking into the restaurant and the restaurant’s awesome,” or “The restaurant sucks,” or whatever.
Jill DeWit: And you’re often rewarded. You might be rewarded with coupons or discounts and things like that. They say, every day with real world perks and bragging rights. Hey, look where I am. Stuff that we do already. We do it all on Facebook and social media anyway. I’m standing at the top of Machu Picchu. We’re going to take a photo, seriously, and brag about that. It’s kind of like this and it’s like restaurants and businesses, is what it is.
Jack Butala: Right. You can do it … It’s my understanding, you can do it with products too. You can sit there and say, “I got a new game for the Xbox,” and, “It’s great,” or, “It’s not what I thought,” or whatever. So what ends up happening is FourSquare was in a lot of financial trouble until recently. They got a new CEO and the CEO took all that data and made sense of it, organized it, and started to make it available to companies.
So when people stop checking in at a certain restaurant after about 30 days, the restaurant can buy the data and find out why. Maybe they got a new chef, and the dish that they were famous for isn’t … You can just see the trending downward data and predict that in a couple weeks, if this continues, this restaurant might be out of business. Think about it from a MacDonald’s standpoint. That level now. Maybe some branches are doing really well, some are not.
It’s very predictable. Think of a swarm of bees, and it’s migrating and moving, and based on where their food might be or not so much even a swarm of bees, but a school of fish. Their behavior changes based on a bunch of stuff in realtime. That’s what FourSquare is. It’s a data-driven business, and you can make logical, predictable outcomes. Well, that takes all the risk out of it. I’m going to apply it to real estate here in a minute.
Jill DeWit: Well, I was going to … Can I share some of my stuff here? Here’s what FourSquare’s doing to entice the users, and I’m going to let you talk more about what they do with the results. So to entice the users, they have things like the FourSquare City Guide. So they’re helping people learn their way around maybe like a Yelp kind of ting, different restaurants with perks to go to different places and see different things. They also have a thing called FourSquare Swarm, which is kind of a game. So they have all kinds of good things in there.
Now here’s some of the numbers, which I thought was really interesting. More than 50 million people are using them each month, and they average 9 million check ins a day on FourSquare Swarm, and they are not in every city even, by the way. I mean, when you look at the list of cities and the list of countries, it’s real limited. So they are killing it with this small list. Imagine what it’s going to be really branch out. So that’s, right now they have 93 million places around the world that are on FourSquare.
Jack Butala: Amazing.
Jill DeWit: It’s really cool. So I just wanted to share that.
Jack Butala: So, I mean, you can see now why it’s so valuable to find out, for small business owners and for large business owners that have products like hairspray or something like that, I don’t know, whatever, cosmetics. They pipe in on that, and they’re motivated too to get a coupon or whatever for the next purchase. In real estate, it’s even better. In real estate, you know who owns, through RealQuest Pro or TitlePro, there’s a closed set of data, it’s 148 million plus or minus properties. Well, you know exactly who owns every single property. You know how big or small it is. You know all kinds of data on this property, and through getting completed sales and posted listings through various parts on the Internet, you know what it’s selling for within reason. Well, that makes our job ridiculously data-driven easy. You just offer less than what it’s, what like kind properties are selling for, and you let them choose whether or not they want to sell it.
You make an offer for less than it’s worth. They’re going to do one of three things. They’re going to sign the offer and send it back and give you a kiss on the lips. They’re so happy to sell it. They’re going to yell at you, because they think that it’s worth a lot more and don’t like your opinion of its value. “Ha! Ha! That’s hilarious.” We call that the Haight, like Haight-Ashbury. Or they’re going to throw it away and do nothing. And it’s very predictable. Their behavior is very, very predictable, thanks to us, because we’ve sent out millions and millions and millions of offers. We can tell you how many offers it’s going to take. It takes about one out of 200 offers that are sent out and properly priced, you’re going to buy a piece of land. About one out of 2,500 houses that you offer, if it’s priced properly, make homeowners offer, they’re going to sell it. I don’t know what else to say. Like mike drop.
Jill DeWit: I know. That’s it. There’s the answers.
Jack Butala: Why doesn’t everybody do this then?
Jill DeWit: I know.
Jack Butala: I don’t know.
Jill DeWit: Isn’t that interesting?
Jack Butala: Well, I do know.
Jill DeWit: I think it’s too good to be true. I think people say, “This can’t be real.” Yeah, it is. We’re not the only ones.
Jack Butala: People are afraid.
Jill DeWit: You just brought up another industry that uses data to do what we just talked about.
Jack Butala: Everybody doesn’t do this because they’re afraid of data, or they’re afraid of spreadsheets, or they’re afraid of themselves. That’s why. It’s all in their head.
Jill DeWit: Exactly.
Jack Butala: If you’re awful at math and can’t stand spreadsheets and really just want to make flower arrangements all day or some version of that, this is not for you, but for the rest of us who aren’t afraid of that stuff, knock yourself out. We have all the tools.
Jill DeWit: Exactly.
Jack Butala: We’re licensed providers of every single tool that you need to do this for a living.
Jill DeWit: Exactly.
Jack Butala: We have members, many, many members now-
Jill DeWit: At the … I mean this-
Jack Butala: … who make way more money than we do.
Jill DeWit: We’re the pros and this is what the pros use.
Jack Butala: Right.
Jill DeWit: This is what you get to use.
Jack Butala: So data-driven businesses take remove the risk from failure.
Jill DeWit: It’s true. I don’t have to try to guess what I think somebody wants or what I think they’re going to like. No.
Jack Butala: I love, I love being in control, for better or for worse. Some people think that’s real unhealthy. I don’t care. I want to be in control of my destiny.
Jill DeWit: I know.
Jack Butala: You know? I want our children to go to the best schools and stuff.
Jill DeWit: No, I think-
Jack Butala: That’s what this money thing’s all about.
Jill DeWit: Well, you know, I think everyone has some version of control, and they like that, because even if I worked for a job with a pension, I’m in control of that. I chose that. I’m here for a reason. So we all have some control, but yours is different.
Jack Butala: So here’s some examples of data that I think … Did you ever hear that, in college, I had a statistics professor. He opened the class by saying this, “There’s lies, damn lies and statistics.”
Jill DeWit: Wow.
Jack Butala: You can manipulate statistics to be the biggest liar [inaudible 00:10:13]
Jill DeWit: Jack, I have never heard that quote from you.
Jack Butala: No?
Jill DeWit: No. That’s a great quote. I really like it.
Jack Butala: I think it’s … It’s not original. It’s like Shakespeare or something.
Jill DeWit: I like it.
Jack Butala: So you can … Here’s some ways that I think data can really is not good and not beneficial. Let’s say there’s a funny statistic about Detroit high schools, 25% of the people that enter a Detroit public school graduate.
Jill DeWit: That’s kind of sad.
Jack Butala: So let’s say that’s real. Is that helping anybody or is it predicable? What about the 20, maybe ten-
Jill DeWit: So 75% that don’t finish.
Jack Butala: Maybe those 25%, if you just cut the statistic off right there, maybe those 25% go on to be medical doctors. We don’t know. It’s not that swarm all-inclusive data that we just talked about with FourSquare or that we talked about with these real estate assessor databases.
Jill DeWit: Right.
Jack Butala: Data can be hurtful, and you can actually become less informed and pointed in the wrong direction with a lot of data, so it’s our responsibility to pick and choose and use it wisely.
Jill DeWit: I was just … Remember last night? We were just talking about data. We were with the hockey game. I was saying-
Jack Butala: Oh, yeah, right, yeah. Perfect example.
Jill DeWit: It was recently. It was a couple games into the Stanley Cup Finals, and as we all know-
Jack Butala: Pittsburgh’s up two to zero.
Jill DeWit: … Pittsburgh, right, so we, at the time we were talking, and I’m like okay statistically what’s going to happen? Statistically, they’re probably set up to win. Probably not win in four games, maybe five or six, but I don’t know, but you just brought up a good point, because we were talking about this, and I’m like, “You don’t want … You don’t want to have the other team thinking about the stats.” The losing team, because they’re going to focus on, “Well, statistically, we’re going to lose and we’re not, our heart’s not in it.” So that ties into what you just said about it can be detrimental when you think about the negative stats.
Jack Butala: Yeah, you want the guys out on the ice trying to score.
Jill DeWit: Right.
Jack Butala: Not thinking about anything else but that.
Jill DeWit: Exactly. Not that, “We have a 95% chance of losing at this point.”
Jack Butala: Anyway, you’re listening to this show for a very, very good reason, and if you’re contemplating or you are in this business, congratulations, because you’re making a good data-driven choice with very predictable outcomes. What you put into it, you can almost guarantee you’re going to get something, you’re going to get a predictable outcome out of it.
Jill DeWit: Beautiful.
Jack Butala: It’s not like opening a restaurant and wondering if anyone’s going to walk in.
Jill DeWit: It’s true.
Jack Butala: That’s scary to me.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: Join us in another episode where Jack and Jill discuss how to use information. Man that’s appropriate for this show.
Jill DeWit: Mm-hmm (affirmative), and inspiration, that’s me.
Jack Butala: To get just about anything you want.
Jill DeWit: We use it every day to buy property for half of what it’s worth and sell it immediately.
Jack Butala: You’re not alone in your data-driven real estate ambition. All right, so I love this topic. You know that.
Jill DeWit: I know.
Jack Butala: I love-
Jill DeWit: Anything about data.
Jack Butala: Every time we go down to CoreLogic down in Irvine and we meet with those guys, they all say the same thing, “Well, I did a little research and you love data as much as we do,” and I’m like, “Yeah, man.” I’ll sit here all day-
Jill DeWit: Exactly.
Jack Butala: … and talk about the new data-driven real estate products you guys are about to release. Give me the inside track and we do.
Jill DeWit: Right.
Jack Butala: I mean, last time we did it, they had to bring lunch in. Remember that?
Jill DeWit: I know.
Jack Butala: Or actually you brought lunch and cookies and stuff.
Jill DeWit: Yeah. They’re actually-
Jack Butala: Those guys will never forget that.
Jill DeWit: You don’t remember. We’re actually meeting with them next week.
Jack Butala: I don’t remember.
Jill DeWit: It’s on the calendar.
Jack Butala: I’m excited.
Jill DeWit: Good.
Jack Butala: Oh, we get to get all the …
Jill DeWit: More inside track.
Jack Butala: The day after that, we will disclose fully, disclose on this show, and discuss the new products that are coming out.
Jill DeWit: Yup.
Jack Butala: One of them I know is access to all the MLSs in the country without being a real estate agent at all. We’re going to license ourself to provide that too. That’s exciting. Talk about completed sales comps and stuff. It’s awesome. Information and inspiration to buy undervalued property.
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