Has Reaction Web Been Forgotten?
Its been about 6 months since CoStar's acquisition of Loopnet and we're beginning to see the writing on the wall as to CoStar's plan:
CoStar Seeks to dump old Loopnet Space in San Francisco
CoStar Group is putting the former LoopNet headquarters at China Basin up for sublease, but so far is not answering any questions about where, if anywhere, it plans to move the workers housed there.
There is an interesting (but somewhat disjointed) conversation on LinkedIn about what will happen to Loopnet and how someone else can (should?) step up and fill the anticipated void. The conversation has centered largely around providing market data, but also alternative listing marketing outlets.
One company which no one has mentioned is Reaction Web. Loopnet bought Reaction Web in in 2010. While Reaction Web's niche is in neither market data nor providing a multiple listing site, it was (still is?) a powerful marketing engine in its own right.
At the time, Thomas Byrne, COO of Loopnet, said:
Adding the Reaction Web product suite to our solutions enables us to further support our clients throughout the entire commercial property marketing lifecycle. We look forward to integrating the Reaction Web services into the LoopNet solutions suite and deliver even greater value to our clients.
For those who are not familiar with Reaction Web, between 1999 and 2009, they carved out a respectable niche building and standardizing one of the first web-based transaction management systems for CRE sale transactions. In addition to custom web design, Reaction Web developed two self-service products. The first was "ListingLab" which gave brokers the ability to quickly create and manage property websites to sell commercial real estate and "BeRTBlast" which allowed brokers to create and manage their email marketing campaigns.
Reaction Web's technology even powered first version of CBRE's Private Client Group website and still powers Apartment Realty Advisor's platform to this day.
Okay, back to Loopnet and Reaction Web. Shortly after Loopnet's purchase of Reaction Web, Loopnet introduced their Pro Tools suite which appeared to be similar to Reaction Web's product offerings and included the ability to create "custom" property websites and marketing materials, and allowed brokers to send templated emails their own list of contacts.
While it did allow Reaction Web to deliver what was now basically a standardized process for marketing for sale listings to Loopnet's huddled masses, it seems the adoption rate of Pro Tools was tepid. (I could be wrong, but I haven't been flooded with eblasts from Loopnet's ProTools. Maybe I am just lucky enough to have escaped it.)
Since the introduction of Loopnet's Pro Tools, Reaction Web's website and product offerings have gone stale (eg. only one blog post in 2011; only one tweet in May, 2009). Maybe their innovation has been zapped by the corporate bureaucracy of a publicly traded company. Or, maybe they made so much money from the 2010 acquisition they spend more time skiing.
Now that Loopnet has been gobbled up by Costar, has Reaction Web been forgotten? Or will it see new life?
This niche is certainly more competitive than it was in 1999 as its tools have become much more commoditized with the plethora of content management systems and email campaign management tools which are now readily available to anyone with an internet connection and a little practice.
Also, their software is largely dependent upon now less-popular languages like Adobe Cold Fusion and Flash. But that doesn't mean their platform can't be recoded using a more popular language like Ruby, PHP or Python.
But, get this. After doing a little bit of research, I happened upon a patent awarded to CoStar in 2003.
While the patent centers around a centralized website and data repository, some of the underlying claims are eerily similar to what Reaction Web built in the early 2000s:
1. In a system that includes a system operator, a plurality of information providers, and a plurality of information customers, a method for allowing the information providers to both distribute specified information through the Internet and control dissemination of information, the method comprising the steps of:
(i) making the information provider's specified information available through a secured website on the Internet;
(ii) obtaining from the information provider a designation of a first subset of the information customers that are authorized to receive access to the specified information on the website; and
(iii) distributing to each one of the first subset of the information customers that are authorized to receive access to the specified information an ID that can be used to access the specified information.
4. The method for allowing the information providers to both distribute specified information through the Internet and control dissemination of information of claim 1, further comprising the step of requiring execution of a non-disclosure agreement by each one of the first subset of the information customers that are authorized before each one of the first subset of the information customers that are authorized can access the specified information.
#1 - Represents what ListingLab was to a (small) degree.
#4 - ListingLab also included an electronic confidentiality and broker approval process which is similar to this claim.
Who else offers a similar service? You've probably heard of Real Capital Markets (RCM1), right?
Real Capital Markets (RCM1) was founded on the idea that greater qualified exposure and appropriate transparency of commercial real estate investment opportunities results in increased sale proceeds in shorter time frames. Founded in 1999, RCM1 has become the leading commercial real estate disposition platform for property and note sales. We enable transaction professionals to market, manage and track assets throughout the entire real estate life cycle with increased speed, efficiency, transparency and security.
Real Capital Markets just ranked as one of Inc.'s fastest growing companies (again) for 2012 and reportedly had $5.3 million in revenue in 2011. With Costar's intellectual property and now Reaction Web's expertise, why wouldn't CoStar formulate a business offering to leverage this 2003 patent?...
Alas, nothing is mentioned of Reaction Web in CoStar's SEC filings. Instead, CoStar seems extremely focused on producing iPad apps like CoStarGo and a web-based app dubbed Costar Fusion:
One of our newest initiatives under development is an enhanced platform called CoStar Fusion™ that will combine and deliver multiple services, including the CoStar Suite® services: Property Professional®, COMPS® and Tenant®, analytics from PPR, and financial tools in a fully integrated service. We believe CoStar Fusion could become a revenue driver for CoStar in the future.
Meanwhile, at Real Capital Markets, they have developed a free iPhone app for the RCM Marketplace.
This maybe a case where CoStar's goal is to focus on their core business, which appears to be more about commercial real estate data, than it is delivering marketing and listing search platforms to their users.
What is crazy about this strategy is that the easiest and most cost effective way to obtain current market data is through operating an open and affordable marketing and listing search platform. Isn't that the whole reason CoStar bought Loopnet in the first place?
Updated December 18, 2012 with clearer patent drawing exhibits.