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Market to Buyers
ENTREPRENEURS by Jean Gruss | Editor/Lee-Collier
When real estate agent Michael Lissack couldn't find software to manage his Internet leads, he created his own.
Michael Lissack bores easily.
The Naples resident is building a company called Market2Buyers that helps Realtors manage prospects they get from the Internet. By all accounts, the software is groundbreaking stuff. In fact, technology industry trade group ITFlorida recently gave the company its Small Business of the Year award.
But Lissack has no interest in running the company beyond the next year or two. "Been there, done that, thank you very much," he says. It'll be for sale.
Say again?
Most entrepreneurs are eager to build and grow their companies. But not Lissack, who really has been there and done that.
Lissack is most famous for his role in exposing Wall Street's fleecing of the government during the mid-1990s when he was head of Smith Barney's public finance division. As a whistleblower, Lissack earned his share of the settlement with dozens of Wall Street firms. He says his share was in the low eight figures (he won't say exactly how much.)
Banished from Wall Street, he bought a house at the Mediterra community in Naples in 2000, sight unseen. Actually, he did see it - on developer Bonita Bay Group's Web site. He was on vacation in Montpelier, France, picked up the phone and asked the sales team to fax a contract. He wired the money, and voilà, he became the proud owner of a new house in Naples.
Since blowing the whistle on muni-bond investment bankers, Lissack has earned a PhD in complexity from an English university (that's another story), made and then lost a fortune on Internet startups and became a buyer's agent for residential real estate brokerage office Downing Frye. Oh, and he's also running for a seat on the Collier County Commission. (If he wins, Bankers better be on their toes when they bring deals to the comission.)
Although he won't say how much he and four unnamed investors are spending on the new Internet venture, Lissack doesn't shy from big investments. He's already spent $4 million to build a search engine called Researchbitch.com that he says beats ordinary keyword searches, for example. He says he made lots of money on a startup called Tripod that eventually was acquired by Lycos. But he lost a fortune on Webmind, a company that burned through more than $30 million before it fizzled in the tech crash.
A license at the border
Lissack bought the house in Naples in 2000, having moved to Coral Springs from New York City a few years earlier. After blowing the whistle on his Wall Street fraternity, he was persona non grata in New York. "No one would talk to me except my attorneys," he recalls.
Lissack's investment in Webmind was a disaster. "It saddled me without any money," he says. "I needed to eat."
He had done bond deals to finance projects such as the Naples airport and Alligator Alley in the 1980s and had some good memories of Naples. So he moved here and got his broker's license.
Lissack looks every bit the part of a Florida real estate agent, right down to the companion Chihuahua, a feisty little dog named Zeus. He's surprised when asked why he became a real estate agent. Doesn't everyone get a real estate license when they become a Florida resident? It's almost like they hand them out at the border, he laughs.
He's a real estate agent at Downing Frye, the largest real estate agency in Naples. But he only represents buyers. "They looked at me like I had three heads," Lissack recalls telling brokers at Downing Frye that he didn't want to list sellers' properties. Now, he's the chair of the firm's Internet committee, a job that he's particularly well suited for.
At the height of the residential boom in 2005, Lissack notched $17 million in sales. Last year, he sold $3 million worth.
Give them what they want
As transaction volume fell after 2005, Lissack needed software to track leads he was getting from the Internet. That's because it takes on average 18 months from the first time a prospect contacts an agent until they buy a house.
The long incubation period makes it difficult to track hundreds of leads, sort out the valid ones and communicate with each one for over a year. "Eighteen months is a long time," Lissack says, noting that most agents tend to drop their prospects after six weeks.
Lissack searched for software that could manage this task for him and couldn't find it. So he hired half a dozen computer programmers he knew from previous Web ventures and set them to work to create Market2Buyers.com. He won't say how much he and four other investors have spent or any financial details about sales so far. The service is available in Tampa, Orlando, Minneapolis, Phoenix and Tennessee. It's not available in Naples; "I don't want to cannibalize my business," he says.
Here's how it works:
Frequently, the first email a real estate agent receives from a buyer contains very little revealing information. Often, the request is for photos, Lissack says. So using Market2Buyers, an agent can build a list of properties in a specific price range, with photos, that is automatically sent out to a prospect. Because the software links to the local multiple-listing service, the agent's list of properties is automatically updated with fresh listings and photos.
The key here is speed. Customers want a response within minutes. Besides an email, Lissack has hired a phone service called LeadQual based in Norwalk, Conn., that will call a prospect within minutes if the price range is above $500,000. It's $10 a call well spent, Lissack says.
Once initial communication is established, the service creates a Web page for the prospective client. Every time the prospect clicks on a part of his page, the real estate agent is instantly alerted.
For example, an agent can tell how long a prospect spent browsing at a particular home. Once that happens, the service tells the agent when to contact the client, whether by regular mail or email and what to say. It even suggests scripts that tell an agent what they might say or write.
The cost to set up the software and link it to the multiple-listing service ranges from $1,500 to $7,500 depending on the complexity.
Each agent then pays $50 a month for the service and 20% of the commission earned on deals made using this system. Because transactions are reported to the multiple-listing service, Lissack can track the agent's success.
Lissack acknowledges that the price tag makes his software a tough sell sometimes. "Realtors are cheap," he says. "This is not a forward-looking industry."
That's why he says he didn't try to sell Market2Buyers until it worked for him. Real estate agents understand the commission system. "We don't succeed, we don't get paid," Lissack says. Besides, the service would probably cost $400 to $500 a month if he were to charge a flat fee instead of taking a cut of the commission.
But Lissack says his software can help real estate agents succeed by improving their odds of converting Internet leads into sales. Typically, that conversion rate is less than 1%. With the software, he says agents can boost that conversion rate to between 3% and 6%. Although that doesn't sound like much, it's a big deal in times like these when volume has fallen by half from the peak of the market.
The biggest expense is integrating Market2Buyers' software into existing multiple-listing services. That's because the multiple-listing technology varies from one area to another.
Lissack launched the Market2Buyers program a year ago and it's selling by word of mouth. "Bigger is not better," Lissack says. "You do it while it's still fun."
In a year or two, Lissack says it'll be big enough to sell. He says he likes to bring ideas to fruition, and then move on. "I'm small," he says. "This is fine."
WHAT LISSACK LEARNED
Michael Lissack lost a fortune investing in a Web venture before the tech bust called Webmind. He says the company blew through more than $30 million before crashing.
What lessons did he learn that might benefit others who are investing or managing tech companies? Here are Lissack's tips:
• Never trust the tech guys.
• Don't assume from someone's past that they can follow through.
• Always ask what's wrong multiple times.
• Prescience can be very expensive. Is the technology too far ahead of its time?
REVIEW SUMMARY
Company: Market2Buyers
Industry: Residential real estate brokerage
Key: Build a product that works and fix all the bugs before you try to sell it.
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