Eric Chesin, Chief Strategy Officer of Anywhere Real Estate
Today we talk with Eric Chesin, Chief Strategy Officer at Anywhere Real Estate (formerly known as Realogy), the Fortune 500 parent company of some of the world's leading real estate brokerage brands and service businesses. In this role, Chesin oversees the development and execution of the Company’s corporate strategy.
David Benjamin: Tell us about yourself. How did you come to residential real estate strategy?
Eric Chesin: After starting my career at McKinsey and learning a lot about many sectors and functions, I entered the startup world, focusing on disruptive innovation, and got the bug for industries that are ripe for reimagination. When I landed in my current role, I initially had no experience in residential real estate, but quickly realized that it’s an exciting space to be in, with lots of opportunity for creativity and disruption. I was attracted to the bigger purpose that exists in this space—helping individuals and families become or remain home owners, and supporting a community of real estate agents, who are essentially independent contractors operating in a true meritocracy to build businesses for themselves and grow legacies for their families.
Benjamin: What do you think is likely to happen in the housing market in the near-term and further out as a result of the pandemic and other factors?
Chesin: People ask me for predictions all the time and unfortunately there are too many inter-dependent variables for it to be possible to predict. We try to put blinders on against short-term market vibrations and focus on the longer term and the things that we can control.
The short-term impact of the pandemic was unexpected, but the work-from-home and live-anywhere dynamics that it accelerated feel real and likely to be sustained. Those dynamics will continue to be very helpful to the industry and to the idea of homeownership because they put even more emphasis on the importance of home and the benefits of owning a home, and despite near-term volatility, will drive new transactions as people continue to migrate to the places they want to live. It will also cause a shift in the types of homes that people are looking for, creating even more reasons for them to buy and sell homes. This is good for both the industry and for some of the underlying drivers of the economy.
Another big impact on the market is the very large millennial generation and their growing spending power. Their homeownership rate has been low compared to previous generations at the same age, but that’s just because millennials are buying homes later, not because they’re not buying homes. We see plenty of evidence of this, including that the oldest cohorts have already reached the same levels of homeownership as previous generations. And that suggests a real tailwind coming up: Over the next five years, the five largest age cohorts of the millennial generation will turn 35 which is about when we see them most likely to start to buy homes. That means we’re looking at major pent-up demand, which is a good thing if you're a homeowner, seller, or builder. The hope is that the demand will also unlock inventory issues, which are at truly historic lows right now.
There’s the potential for a perfect storm in the industry because of all these factors, which gives us a lot of confidence in its longer-term outlook.
Benjamin: As the CSO of a very large, at-scale industry incumbent, how do you look for signs of disruption in your market, and how do you help your company to innovate and react accordingly?
Chesin: When I chose to join the company I work for now, I was jazzed at the opportunity to lead disruption from within an established player in the industry. Since then, though, I’ve learned that the job I’ve taken on with my colleagues is less about disruption, and more about staying laser-focused on how to improve the experience of conducting business. That focus will inevitably lead to both innovation and, in the end, positive disruption for consumers and those in the industry’s value chain. The key is to continually look for better answers, look for opportunities for innovation, and bend toward progress.
That also means scanning the universe for where innovation is happening outside the four walls of your business because the best ideas can come from anywhere. Keep your eye out for those innovations that are getting traction in the market, and, if from the depth of your knowledge and experience, you see that the innovation is profitable, better for consumers, and the right answer, be all over it; If not, if it doesn't feel sustainable, or if it feels like chasing shadows, then watch out before jumping on the bandwagon. Rather than making defensive adjustments and becoming distracted from your long game, sticking to your guns (pursuing better answers and better experiences) is usually the best decision.
It can come down to an equation of having the right people around you, plus access to the right information and analysis at the right time, and a bit of luck!
Benjamin: To that point, can you share any wisdom you have about big data and how you get your hands on the right insights at the right time? Have you discovered a “secret sauce”?
Chesin: I think data is the most amazing business asset. I'm no data scientist, but I've been lucky enough to work with some really smart people who are, and that’s opened my eyes to what can seem truly magical. I’ve seen firsthand that when you have access to a sufficient scale of good, clean, well-maintained data, the things that can be predicted with accuracy are fascinating and often counterintuitive. What I’ve noticed, though, is that you can't unlock the magic of big data without smart business strategy. It’s not just about bringing in the necessary skill set and building the right tech stack and infrastructure; the true value creation comes from knowing what questions to ask, what predictions to make, and how and where they will be applied.
For example, much of my company’s success is driven by recruiting and retaining amazing real estate agents, and we have to work hard to attract the top ones with our superior value proposition. To that end, we built a model that would predict which agents were likely to grow their businesses fastest over the next three years so that we could focus our recruiting activity on them. The model had millions and millions of data inputs—some obvious and some not, some public and some proprietary—and in the end, we used it to rank-order a list of 600,000 agents, chose who to focus on based on those predictions, put that into the CRM our managers use, and set up business incentives for those agents and bonuses for our people based on their success with them. Three years later, we’ve spot-checked the group of agents predicted to grow fastest by the model, and sure enough, they grew 80% faster than the rest.
The magic of big data is that you can’t know what factors formed the basis of the predictions, just that they were very accurate. The power, though, comes from knowing the insights you need, the business application of those insights, and how to insert them in your processes to create an outcome. If we didn’t use levers like incentives and bonuses to ensure focus on the right agents, if we hadn’t communicated the strategy well with the managers and had a CRM system in place to help them apply it, without all that, this magical prediction wouldn’t have had any business impact.
Benjamin: Do you have any parting thoughts you’d like to share?
Chesin: Our company just hosted an investor day, and in preparation our CEO and I spent time talking about how to host a whole day focused on the next five years, when short-term volatility is such a hot topic and everyone wants to talk about the next five minutes instead. His approach, which he used publicly with investors and privately with our team, was: “We’re going to push past the headlines to focus on what matters”.
I find that approach to be very grounding. Keep your focus on what you can control, keep your head in the game, avoid the noise, and don't let the distractions of the moment push you off course.
This interview has been edited and condensed for clarity
