Musings on the Wisdom of Crowds
The Wisdom of Crowds has become dogma in this new era of social networking. CNN/Money picked up on the Inman Connect conference and its thematic message that the crowd will generate a torrent of relevant information and diminish the role of the Realtor as knowledge gate-keeper:
"In the past, the real estate industry always had a gate-keeper mentality 'Brokers prospered by not giving out information,' says Dottie Herman, CEO of New York based broker, Prudential Douglas Elliman. 'Clients came to them for information. This takes the industry to a whole different model."
Technology has made it very simple to start up, run and contribute to Web sites and that has let loose a flood of information that's increasingly well organized."
And now to sports:Today, our Golden State Warriors (to whom I remain faithful because they are now FUN to watch) traded four Warriors, including two overpaid underperforming players, for four athletic Indiana Pacers. Blockbuster trades are no longer analyzed in a vacuum by sportswriters the next day ... social networking is at work and the Golden State blog and the Indiana Pacers blog were swarming with minute by minute commentary. Here's the interesting point - the wisdom of both these crowds in different states overwhelming concluded that Golden State got rid of two "Charmin' soft players" with bloated contracts and Indiana got shafted.
Which invites the question - if the crowd (i.e., everyone) can see how bad the deal is, what the hell was all-time-great Indiana GM Larry Bird thinking?
Here's a good explanation:
Malcolm Gladwell, author of the well-read Tipping Point and Blink, posits in his revealing blog post Degree of Difficulty that the crowd sometimes cannot see the whole story. He states this example:
"I remember watching Phil Mickelson at the PGA (or was it the U.S Open?). He was in the rough, just off the green, and chipped within a few feet of the hole. Ho-hum, I thought. He bogeyed the hole. But the color man was incredulous. Mickelson, he pointed out, had taken a FULL swing at a ball in an impossible lie and sent it 20 feet, to within an easy putt of the hole. I've never played golf, so I had no idea how hard that was, or why that was anything special. The announcer, though, had a completely different perspective."
Mr. Gladwell also cites in his post that NBA players themselves believe Vince Carter (remember him?) - not Kobe Bryant, not Lebron James - is the most formidable one-on-one basketball player. The public can't see this.
So, sports is fraught with intangibles that the crowd just does not see, but Larry Bird does (I'm assuming this, frankly I also believe he's a retard for making the trade...). Similarly, real estate transactions are so complicated with lots of intangibles, that the crowd will also never get it right in the final estimation... because real estate is local... and local is intangible ~ how much is an ocean view worth?
Technorati Tags: wisdom of crowds, disintermediation, inman connect, cnn money, basketball, golden state warriors, indiana pacers
Hi Pat! Interesting post. Emotions play a huge part of every deal, it's not all dollars or common sense in the market place! Emotions cloud our judgements, besides people make mistakes and do and say stupid things everyday. Can I get a witness?
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Here, here! And I still think Larry Bird is a retard!
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Pat-
Great post - I definitely agree that the crowd does not ALWAYS know best. But maybe that's just because I'm very opinionated and think I know better than others in some instances or on some topics
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Hey Drew, I think your views are shared by all of us! We'll just call it the Wisdom of the Opinionated Crowd... (btw, I know what you mean... we sit on the same side of the fence on this...)
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Pat,
Excellent points indeed. The intangibles in any deal are often only known or valued by the participants in a deal. In your example, you "glossed" Larry Bird as a "retard" for making the trade. But in Bird's mind intangibles make up the difference in talent. The intangibles that both Dunleavy and Murphy will likely improve in a new system with a new coach, may share the ball more than the players given away in the trade, and the fact that both players are younger most likely were the less valued (by the crowd) reasons Bird completed the "transaction."
The crowd only sees the talent levels and derives their opinion from this idea only. Like dear old Dad likes to say "One man's trash is another man's treasure."
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Knew you'd be here basketball brother... nice judicious comment, but I can hear you trashing on Larry Bird under your breath now...
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Thanks for the props my basketball brother. The real intangibles involved in this seemingly one sided trade? Harrington wanted out of Indy. He was dissatisfied with their offensive philosophy as well as playing second option to O'Neil. And Jackson has had a history of on and off court trouble--
The only trashing I am doing under my breath is on the front office brainiacs that drafted Dunleavy & Murphy. . .
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