high barrier to entry

Missing the Next Bill Gates…

(AKA, the cost of having the highest barrier to entry in the entire real estate industry.)

I have purposely avoided writing this post for the better part of a year.

But the issue just keeps coming up, and, after having this exchange for the fifth or sixth time with various colleagues on Twitter, I felt it was probably time to document the “missing out on Bill Gates” debate in a blog post. This is that blog post.

The Debate

The quick back story:

  • Professional One has what we believe is the most stringent barrier to entry in the entire real estate industry.
  • One of our requirements is that agents have five years of documented full-time selling experience OR a college degree (we’ve observed that many people read that and only retain the “college degree” part).
  • Many inside the industry feel that this “have a college degree” idea is wrongheaded, and the argument most commonly made is that we will potentially miss out on “the next Bill Gates” (the logic for this is, of course, that Bill Gates did not graduate from college). Many people seem to have this idea that there are a number of other people out there who (1) are brilliant like Gates, (2) in real estate, (3) lacking a college degree AND a record of demonstrated sales success and (4) want to join our company.

The Response

Here is our response to this argument:

  • Without repeating all the reasoning behind the creation of our barrier to entry (which you can read here), our overall branding message of having the most professional company in the industry will have zero credibility unless we back that up with something tangible to support that assertion. It would not be reasonable for us to say, “We have the best agents, because we have an amazing ability to attract and judge talent! No really, we do! You can take our word for it!”
  • I spent nearly a decade working in an industry where 100% of the people had college degrees (Public Accounting). I’ve spent nearly twice that time working in an industry where a much smaller percentage of the people have college degrees (real estate). The overall difference in the level of professionalism and competency is enormous. I’m sorry, I don’t mean to offend. But it’s absolutely the reality. This is the primary reason we started Professional One: to create real estate’s first true “professional services firm,” like a top tier law or accounting firm (all of which, by the way, have incredibly high barriers to entry which not only require college degrees, but usually additional requirements above and beyond that).
  • Gates dropped out of Harvard to start Microsoft. Ergo, he was AT HARVARD. That’s a college you may have heard of (sorry…had to). So, it would appear that he saw the value of higher education, but because of his one-in-a-billion intellect, he dropped out to do something even better: become one of the world’s three or four wealthiest people.

Cost/Benefit of the High Barrier

Getting at the REAL point people are making when they tell us they don’t like our barrier to entry – which is that we will lose out on quality people from time to time who are very good at selling real estate – we absolutely agree with that perspective.

We WILL lose out on some quality people.

We probably already have.

But even if that is the case – and it is, because we know many extraordinary people who don’t have college degrees – what we GAIN by having that barrier to entry is of far greater value than what we lose, to wit:

  • A legitimate point of differentiation that separates us from our competition. Absent our barrier to entry, we’re just another shade of the gray that dominates the real estate industry today. With our barrier to entry, we stand out. Love us or hate us, we ARE doing something original.
  • A consistently higher caliber of agent, because we will dramatically increase the odds of screening out the marginal (or worse) practitioners that dominate the industry today. When only 27% of the people in the industry earn the majority of their income from real estate sales, and when the Harris Polls continue to tell us year after year what they’ve been telling us for 30ish years, SOMETHING must be done to avoid becoming like everybody else.
  • An ability to grow and maintain consistency with some level of systematized uniformity. I might have an extraordinary ability to attract and judge talent (which is the only alternative to having a specific barrier to entry), but that doesn’t mean that everybody else in my organization does or will. Again, this is why we have our barrier to entry: to create a benchmark that can and will be used to grow our business in a uniform and consistent fashion.

“Education is the Only Way… It is THE Thing…”

Shifting gears slightly, and since we’re already here and talking about (1) education, and (2) Bill Gates, and because I frequently find myself engaged in conversations with people in the real estate space about the overall value of education and where it fits into the entire “Raise the Bar” debate, let’s remove my opinion from this entirely, shall we?

Let’s just look at what Gates HIMSELF (and his incredibly smart wife Melinda) has to say about the value of a college education (this is excerpted from the “60 Minutes” episode that aired originally on October 3, 2010; click here for the full summary of what was said, and click here to watch the video):

I wonder what you think is the most alarming thing about American education?” Pelley asked. “I think it’s most alarming that we’re only preparing a third of the kids to go on to college. That’s a frightening thing for our democracy to say a third of kids are prepared to go,” she replied. If only a third of high school seniors are academically prepared to go to college, the Gates believe that a revolution in teaching can go a long way toward pushing that up to 80 percent.

And a few second later in the video, Bill said this:

The country is built on ingenuity. It’s built on having lots of very well-educated people. And if you were from a poor family, how are you going to be break out of that? Well, education is the only way. Education is the thing that 20 years from now, will determine if this country is as strong and as just as it wants to be.”

Summarizing, I think it’s *fairly clear* that Bill thinks education is VERY important.

Profession…or “Sales Job?”

Finally, allow me to conclude with this: If you think our having a tall barrier to entry – whether it be via educational or experience requirements – is wrong, then you are inherently saying that real estate is NOT a profession.

We believe that real estate SHOULD BE a profession, because what we do is truly important and involves serious financial consequences for our clients.

Very often, the difference between professional and amateurish representation in real estate involves tens and even hundreds of thousands of dollars.

And if you agree that real estate should be a legit profession, then we need to defend that profession with appropriate barriers to entry.

And that’s all we are doing: treating real estate like the profession we believe it deserves to be…

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