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ActiveRain.com v. Move.com: The Lesson of the Scorpion and the Otter

By
Real Estate Agent

After reading last weeks post, Regarding Today's Inman News Article, I was reminded of the parable of the Otter and the Scorpion.  You may have heard many versions of this, but here is how I remember it:

  •  A Scorpion was caught off-guard by the rising waters due to heavy rainfall, and scrambled onto the nearest rock. 

    Surrounded by rising waters, the Scorpion could only watch as the rains descended and the water continued to rise. 

    An Otter swam by, frolicking freely in the water. 

    "Help me, Help me!" screamed the Scorpion. 

    The Otter, ever curious, swam to the rock to see who was in trouble. 

    Scorpion said, "Otter, if you carry me to higher ground, I will be forever in your debt.  Please help me." 

    Otter replied, "Oh no.  You would sting me and I would drown." 

    Scorpion said, "I promise not to sting you.  If I did, I would sink with you and drown also." 

    Otter nodded, and said, "Of course.  That makes sense.  And I suppose having a scorpion indebted to me could be useful.  Climb on.  I will take you where you need to go." 

    Scorpion climbed on to Otter's back, and Otter swam to the banks, taking Scorpion to safety. 

    As Scorpion was climbing off, safe on higher ground, Otter felt a sharp pain in his neck.

    Scopion had stung him. 

    Otter looked up at Scorpion with a horrified expression on his face.  "Why? You promised..."

    Scorpion replied, "Because I am a Scorpion.  It's my nature."

ActiveRain has been stung by the proverbial Scorpion.  Move.com, in response to ActiveRain's lawsuit against them appears to be saying much the same as Scorpion:  "You should not have trusted us, therefore you are at fault, not us."  I say that the people in charge at Move.com should be ashamed of themselves.  Yes, business is business, but they have to learn that the Real Estate Business is a People Business, not some ledger-book- balance-sheet-accounting exercise.  What Active Rain did when they created their platform was to recognize that people buy into people long before they buy into a product or service.  Move's corporate bad behavior will do nothing to endear them to either their users, nor the consumers that they ultimately serve.

My advice to Active Rain:  Keep doing what you do best.  Frolic in the Rain.  Ignore the pleas of those that envy your ability to go where they cannot.  You will live longer, and be much happier.

Rich Schiffer
Swarthmore, PA
Referral Agent, e-PRO
Lane -- right on!  Any business relationship (and especially in this business) is based on trust.  Betrayal of that trust is sure to reach much further into your pockets than a specific transaction...as you said, business would dwindle as word of the betrayal of trust got out.
Oct 01, 2007 05:34 AM
Dave McGraw
PQ - Jacksonville, FL

This is a very interesting story of how Move.com kind of pulled a rope a dope... maybe not a 100% accurate analogy, but its what came to mind. 

With the Social Real Estate networks poping up all over the place, what do people think of some of the new comers?  http://www.PropertyQube.com ?  Move.com product?

Oct 01, 2007 06:04 AM
Jo-Anne Smith
Oakville, ON

Rich, I agree that AR should continue to be developed , however the founders do need a revenue source...what if we were all the little otters that AR gained revenue from? That would save them from having to sell out....or what is your suggestion for how they should attain some monetary value from their development of the AR platform?

Jo 

Oct 01, 2007 06:10 AM
Simon Conway
Orlando Area Real Estate Services - Orlando, FL
Excellent story which I know well, but which fits this circumstance perfectly.
Oct 01, 2007 06:20 AM
Rich Schiffer
Swarthmore, PA
Referral Agent, e-PRO

Jo-Anne:  They could charge licensing fees to competetitors that wanted to establish their own branded platform.

Simon:  thanks for stopping by...

Dave:  There are even copanies out there that will help you set up your own platform.  I think that sort of thing could be a possible revenue stream for AR.

Oct 01, 2007 08:15 AM
Fran Gatti
RE/MAX Integrity - Medford, OR
Managing Principal Broker - RE/MAX Integrity

Rich,

I am not entirely up to speed on the Move.com issue.  I will do a bit more reading.  Thanks for your take on it.

Oct 01, 2007 04:38 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Rich.....  I am like Fran... but I actually have no idea what happened... I have been away from AR for most of the last 30 days....  just burnt out. I did see that Brian Brady wrote about this... but I didn't read it because I have no idea... any quick insight?  thanks

                                                                                                               jeff belonger

 

Oct 01, 2007 04:41 PM
Rich Schiffer
Swarthmore, PA
Referral Agent, e-PRO

Fran and Jeff:  Here is the my unofficial summary of what has transpired:  Move was in negotiations with Active Rain to purchase the company.  AR supplied Move with confidential material, under a confidentiality agreement.  As soon as Move received all the data they requested, they cancelled the deal and instead launched their own blogging platform, benefitting from the proprietary knowledge they acquired from AR.  AR is suing Move for damages, to the tune of $33M.   Move denies the allegations, claiming (among other things) in their defense that AR's proprietary information was worthless, and that AR is to blame for any damages.

The link in my post above points to the official blog about it, and you can read the entire legal filings from both sides there.

Oct 02, 2007 02:30 AM
Jeff R. Geoghan
Coldwell Banker Realty - Lancaster, PA
REALTOR, Marketing Manager

What!  You don't mean that computer and internet firms will lie, cheat and steal to make a name for themselves, do you?  Come on, now...

Can you say "boycott"....no rainer should support move.com.  THAT will work far better than a lawsuit.  If you have an account, pull it.  They won't last 6 months without the 50,000 rainers who make up the core of the real estate social networking crowd in the U.S.

Oct 02, 2007 03:49 AM
Joe Brady
Joe Brady - World Wide Credit Corporation - Villanova, PA
Great analysis Rich.  I hope AR will win against these poor and dishonest business tactics.
Oct 02, 2007 04:34 AM
John Slocum
Premiere Property Group, LLC - Vancouver Washington - Vancouver, WA
Broker, SFR - Vancouver WA Real Estate

Well put, Rich.

As real estate agents, part of our calling is to be good, ethical negotiators, and strive for a win-win as the best outcome.  When we turn to the companies that provide services to us, we should be very concerned if their negotiation style is not win-win.  This altercation certainly suggests to me that Move.com is more concerned with a win for themselves, and not for the AR Founders or the AR Community.  Once a Scorpion, always a Scorpion.

John

Oct 02, 2007 04:49 AM
Jeannie Kontis
Lancaster, PA
Very good analogy!  I, too, have been away for about 5 weeks or so and feel behind on the story and need to catch up. 
Oct 02, 2007 06:28 AM
Adam Waldman
Westcott Group Real Estate Company - Hauppauge, NY
Realtor - Long Island
RICH:  Sounds like best-case-scenario is that AR wins the lawsuit for damages, but doesn't have to sell to Move.  They get their money to profit from and improve AR and they get to keep the company.  Most times when the big boys take over smaller companies, they do a poor job keeping it in tact and maintaing the original appeal that made the company worth acquiring.  Good post, Rich.
Oct 02, 2007 06:40 AM
Paul Viau
Nova Scotia Real Estate Blog - Halifax, NS
Nova Scotia Real Estate Blog + Photo Services
I need to read up some more to respond properly to this. Sounds like those guys are pretty shady.
Oct 02, 2007 06:50 AM
Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552
Rich, an excellent parable, right on the money.  It's a shame that so much valuable secret information has been compromised to a competitor.  I can't understand why AR gave away so much without a firm contract.  In any case, I'm glad it won't be Move, Inc. that ends up controlling this platform.
Oct 03, 2007 01:26 AM
Anonymous
Cyndee Haydon
Rich great story - just saw you on Digg and came over to here - still learning myself - the blogosphere tar-baby. Hope all's well in Delaware County! :-)
Oct 03, 2007 01:55 AM
#21
Rich Schiffer
Swarthmore, PA
Referral Agent, e-PRO

There is an important point here, which some people seem to be very quick to overlook:

  • If you play with Scorpions, you should protect yourself.

The people behind AR may have been naive, but that is not a crime.  In my opinion, the advice they received through the process was potentially negligent.  They should have been advised by legal counsel not to reveal the things they revealed based solely on promises made in the Non-Disclosure Agreement.  They should have had a Non-Compete Agreement, requiring Move to purchase AR by a set date, and agree to not launch any sort of multi-user blogging platform or social network for a period of 3 to 5 Years if they did not consummate the sale.  They should also have done what sellers in real estate do for every transaction:  Require an Earnest Money Deposit, which would be retained in the event the transaction falls through.  I am not an attorney, nor have I ever dealt with mergers and corporate acquisitions, but I think any REALTOR worth their salt could have advised AR to protect themselves better than they did on their own.

This is a living example of why anyone selling anything of value should not attempt to do it on their own.  They should have an expert working for them to watch out for their best interests.   It is a bit alarming to me that Jonathan and the rest would go FSBO on something as important as this.  If there is a claim to be made, it might be against their legal counsel for potentiallyt negligent representation during the negotiating process (that presumes they did actually consult with an attorney during the process, of course).

  • Don't blame the Scorpion for being a Scorpion.
Oct 03, 2007 06:50 AM
Maureen McCabe
HER Realtors - Columbus, OH
Columbus Ohio Real Estate

I found your AR post via Digg too. How odd that ActiveRan is so big now I never read this before and find your blog via your Digg profile.

I read everything outside ActiveRain that I could find about the whole Move Inc. / AR lawsuit. I know reading something I thought of this parable myself. 

I am not a fan of Move.  I wish ActiveRain success whether they find a buyer or have to make money off the site otherwise. gosh I hope they were working this through an attorney.

Oct 05, 2007 11:13 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Reminds me of Oliver Stone's Movie 'Natural Born Killers' and the Indian who told the story of the snake.  Hmmmm, I'm not personally sure of the legalities or the facts, but I AM damn sure of Active-Rain's Influence....

As far as anything else, Time is the only Teller....

 

Oct 06, 2007 02:20 PM
Adam Waldman
Westcott Group Real Estate Company - Hauppauge, NY
Realtor - Long Island
RICH:  I featured this post inside of Active Rain Addicts Presents this week.  Just wanted to let you know.
Oct 06, 2007 07:09 PM