DON’T BE A BLOCKBUSTER

Friends, you all remember Blockbuster, the video rental behemoth of the 90’s and 2000’s. The place where we would go on a Friday or Saturday night and walk around the outer perimeter of the movie wall because that's where all the new releases were. You’d let the kids go search the kids movies and video game room while you searched for what would become your weekend viewing plans. A bucket of microwave popcorn, maybe some red vines or twizzlers and the weekend plans were complete. 

Of course, nobody has forgotten about those atrocious fees for late rental returns or the penalty for not fully rewinding the VHS tape. Thank goodness for the advent of DVDs! For me, those are some good memories of a time when things seemed much simpler. But, like any reminiscence of days long passed, what was not obvious to most of us at the time, was how the world was changing and the earth shifting right beneath our feet. 

Fast forward to 2014 when Blockbuster finally called it quits and the vast majority of us said, ‘good riddance’. Because, for the 10 years leading up to their final days, we were streaming movies and video games from Netflix, and ordering our Twizzlers from Amazon.

Blockbuster didn't die because of Netflix, which is an often assumed conclusion. Blockbuster died because of arrogance, hubris, and an unwillingness to adapt. Netflix didn't kill Blockbuster. Blockbuster committed suicide by refusing to pivot when they had the chance. 

In this episode, we’re going to talk about some of the lessons from the fall of Blockbuster and how it parallels what, not just appraisers, but many professions and industries are facing today. We’ll talk about what Blockbuster got wrong and how to not make the same mistakes they made. 

Let’s jump right into the first comparison between Blockbuster and what many are experiencing right now, which is something called the ‘Shirky Principle’. A little known observation by a man named Clay Shirky whereby institutions will do their best to maintain the problem to which they alone are the solution. This means that companies, when faced with changes in the market and new technologies, might adapt the new technologies to fit their existing business model and practices instead of fundamentally changing their structure to better utilize the technology. 

In essence, what the Shirky principle says, and what many companies do (as well as people within those companies), is they are incentivized to maintain the problem they are supposed to be solving, even if something better exists, because their very existence depends on that problem, not the new solution to the problem. 

What Blockbuster did was double down on the late fees and the brick and mortar stores even though everyone and everything was pointing to an online model. At one point, in an attempt to be a little nicer to their customers, they ditched the late fees only to realize that it was not helping them beat their competitors (too little, too late) and they were losing around $200,000,000 dollars in revenue by doing so. Instead of rethinking their business model in the face of increasing technology, better models like Netflix’s DVDs by mail model, and a shrinking customer base, they simply went back to the old model of kicking their customers in the groin with late fees. 

Blockbuster Lesson 1: Stop clinging to the old model just because it's all you know and it just happens to still be paying…for now. 

It’s time to stop pretending that the gravy train that has been lender appraisals for the past 40-50 years will continue into the future. AMCs are here to stay and are eating the lunch of the typical normie appraiser every single day. What do appraisers do? They complain on social media about declining fees, ridiculous turn times, egregious revision requests, and anything else they can think of instead of doing the one thing that would actually make a difference: change their business model!

I’m not suggesting you fire all of your lender and AMC clients today and venture off into the world of non-lender appraisals, although you're crazy if you aren't at least starting to diversify into the non-lender world asap. What I am suggesting, however, is that you read the writing on the wall and recognize that the world is changing around you at a very rapid pace. Complain all you wish, it will not change a thing for you. 

Some of you will take it a step further and try to get petitions signed and new regulations created against AMCs and what you consider to be unfair practices and unreasonable fees. Cool, keep doing that if that feeds your soul. At the end of the day, you’re still standing on the tracks waiting for the train to hit you. The problem with all of the crusaders fighting to get things changed at a legislative level is that, should you succeed in getting the fee structure changed to something that is more palatable to your personal situation, you're still begging for a few more dollars from the same people and companies that see you as mere cogs in a big machine. 

Why would you beg for your own subjugation and imprisonment by thugs, thieves, and morally bankrupt individuals? Oh, I know why, because, if you win your fight, they’ll have to pay you an extra $25 or $50. Great, and you’re still in bed with your so-called enemy. 

Stop making your values and ideals conditional and based on how much the companies you hate working for will pay you and, instead, read the writing on the wall. The only thing you have control over is your business model and who you choose to do business with. If you don't want to be the next Blockbuster, It's time to think about just how much your livelihood and future is based on what others control over you. The market is begging for a new model and it can be seen in the form changes, the fees changing, regulation changes, technology changes, and a shrinking profession. Like it or not, you will either change with the times or be written about as a relic at some point in the future. Don't be a Blockbuster. 

This leads us to the next comparison between Blockbuster and what's happening in the world today, which is that they had all of the same tools, technology, and talent available to them as Netflix did and they laughed it out of the room. And, while I won't say that technology isn't a threat to our very way of life in some respects, I must say that, as far as your business and career future is concerned, technology isn’t the big threat, complacency about technology most definitely is. 

The tech is here to stay, friends. The only way we go backwards is after some kind of nuclear holocaust or grid down scenario where everything goes down and we’re all completely cut off from everyone but our immediate neighbors. While those are definitely potential scenarios, we can’t hide in our bunkers waiting for it to happen if we want to run our businesses.  

In the Blockbuster scenario, Netflix made an offer to them fairly early on to be purchased for $50MM and run a mail order segment of Blockbuster’s business model. They were literally laughed out of the room. Blockbuster thought Netflix was a joke and completely ignored what the market was telling them they wanted. The market wanted convenience and choice, not inconvenience and a degrading customerexperience. 

Blockbuster Lesson 2: Embrace technology and use it to leverage your strengths and shore up your weaknesses. 

If I was talking to you a year ago, we would've been talking about your SEO and content strategy to get better ranking for your website on Google; ramping up your online presence as an authority in your market; becoming more visible, valuable, and vocal in your market; and ensuring your growth and survival by productizing your offerings and diversifying your clientele. 

Today, almost all of that is still on the table, except that now Google hates you. Because of the advancement of AI and AI search capabilities, you’re lucky if your basic SEO and limited content gets you any further than the AI response at the top of the search page because that’s where 80% of people are stopping now when they Google something. Who’s winning today? Those of you who have doggedly and consistently been creating content that has you showing up on a variety of platforms with a variety of formats like video, audio, and written content.  

Those of you who waited on making content because you wanted to get a few more letters after your name, good for you for wanting to be better at what you do, but sorry, you’re that much further behind in a very rapidly advancing world of technology. Technology isn't the enemy, complacency is, and if ever there was an industry that sprinkles complacency on its Cheerios each morning, it's the appraisal industry. 

It's time to stop thinking like a technician and time to start thinking like a CEO. If you believe you’re one of the good ones out there, then by not making yourself known more widely in your market you’re being selfish. Why shouldn't everyone have the option of doing business with you just because you want to stay small and unknown? It’s time to embrace the technology we all have available to us and expand your little empire. 

Technology has democratized what was once only available to large institutions and organizations. You now have more power in your back pocket than many companies and even 10 years ago. You have an extremely powerful media machine in your purse and you’re not using it beyond the appraisal site visit. You have the power of Chat GPT, Claude, and Gemini at your fingertips for ideation and content creation and you’re still carrying around a clipboard and measuring wheel. Don’t be a Blockbuster!

The next apt comparison between Blockbuster and potentially you is that several of it's competitors, namely Netflix, were investing in their brand and the customer experience, Blockbuster wasn’t. Blockbuster was doing what so many appraisers and other industries do today, they rested on their laurels and on the false belief that the world needed them more than they needed you. It was as if Blockbuster wasn’t reading the headlines or asking their customers what they wanted. 

Netflix was asking questions, listening to what their customers wanted and needed while Blockbuster was yelling at its customers for not rewinding the VHS tape. You know who else yells at their customers? Appraisers. Maybe not right in their face, but proverbially in how they think about their customer and how they treat them. 

Instead of thanking their customers and clients for every single order they send, appraisers complain about having to give progress updates, maybe make a few changes to reports every now and then, and how they have to pay a few dollars in upload fees. 

Do I like portal and tech fees? No! But I understand business and I know enough to simply raise my fee to cover the cost of doing business and, more importantly, I know the futility of complaining about it to people who have no ability to change it for me. If you don’t like something, either try to get it changed in your favor or shut up about it and move on. You always have some control over how you respond to what’s going on around you.  

Blockbuster Lesson 3: Be the person and company of influence, not the commodity in the market.

Start showing your face and build a personal brand. People gravitate toward those they come to know, like, and trust. If you’re not known, liked, and trusted by people in your market, the default is always back to price and turn time, which is a race to the bottom in every industry. Don’t be a Blockbuster. 

Friends, I talk about this next one all the time and it’s that you have to focus on equity, not just income. The way I typically say it is that income follows assets and equity only comes from ownership of assets. Assets come in all shapes and sizes and quite often look unlike what you’re used to when you think of the word ‘asset’. 

So what do Blockbuster and Netflix have to do with equity and assets? After all, Blockbuster owned a heck of a lot of real estate, which isn’t exactly nothing. When I talk about income following assets, I’m referring primarily to all the other assets in your business that you likely don’t think of as assets at all. 

The most common asset that I refer to are what we could call intellectual property or intellectual capital. It’s the documented systems and processes that have allowed you to make the income you make and run the successful business you run. It’s the special thing or things you do that make your company stand out in the marketplace. It’s the unique branding and marketing you do that sets you apart from everyone else. 

All of these things might seem common or strange to refer to as intellectual property or capital, but they are all assets in your business that lead in some way to income. 

Another often overlooked asset in an appraisal business is its mailing list and its customer list. If you can market to some form of list and that activity increases your revenue in some way, even if it's just in the form of building trust and adding value to the list over time, it's an asset. 

Your website is an asset. Your blog is an asset. Your podcast and YouTube channel are assets. Your partnerships and referral channels are assets. Your private Facebook groups for agents and lenders are assets. I’ve talked about some of our private groups and communities on this show and how several of them are 6-figure assets for us. 

Blockbuster Lesson 4: It’s about the equity, not just the income!

The point is that Blockbuster had no long term equity play, and the only asset play they had was their real estate holdings. Again, not nothing, but their real estate holdings weren’t worth the $560 Billion Netflix is worth today. Why? Netflix turned data, original content, and their distribution model into a massive ATM machine. 

Netflix had assets in the form of intellectual property and capital, Blockbuster had brick and mortar stores with depreciating VHS tapes and DVDs. 

Take a look around your business with your asset glasses on and see if you can’t find some assets in your business that are either being way under utilized, or not utilized at all. Think creatively and start to build assets that also build equity, not just income for this month. 

Friends, Blockbuster had lots of time, opportunities, and resources to pivot as things were changing. Remember, they had an opportunity to buy Netflix for $50MM and they laughed. They didn’t make the shift because they were afraid to cannibalize their cash-cow, which was their late fee business. And appraisers are, in many ways, doing the same thing. 

Appraisers can see the shifts in the market and in the profession, but so many of you are doing almost nothing meaningful about it. It’s time to reinvent yourself or somebody else will do it for you. The evolution we’re witnessing today is not optional, it’s mandatory. You will be required to evolve or perish. 

Embrace the technology that is all around us and rapidly advancing. technology, AI, and machine learning don’t have to be competitors, they can be partners that enhance and superpower our skill sets. Remember, I said at the beginning that Netflix didn’t kill Blockbuster; Blockbuster committed suicide. Appraisers aren’t being killed by AI and technology, they’re simply fading because they refuse to become visible, valuable, and vocal. 

If you’re ready to become visible, valuable, and vocal and want to learn the exact steps to do that, just head over to www.CoachBlaine.com/freemonth and join the Appraiser Increase Academy where we teach you very specific ways to be the Netflix in the appraisal profession instead of becoming the Blockbuster.