If you had to choose a real estate technology solution from three different firms—one company is VC-funded, the other listed on Wall Street and the third family-owned—who would you pick?
Clearly, you would need more information…but in this case, the best choice may not be the obvious one. However, the choice is easy.
I’ve been on both sides of the fence—as a venture capital investor and owner of Delta Media since 2000. And I’ve learned that family-owned businesses have a slew of built-in competitive advantages over firms funded by VC or Wall Street.
Here are four reasons why a well-run family-owned business is your best pick:
- Business focuses on the client versus growth. Firms with outside funding must make growth their top priority. That often means growth for growth’s sake, which is often the wrong business decision for your clients.
Family-run businesses—the kind that Warren Buffett buys—place their focus on the client. Outside funded firms have two masters, which blurs client focus, but when you zero in on being a “people-first” business, growth will come naturally.
Forced growth is typical among VC- or Wall Street-funded firms. Think about companies’ decisions when growing rapidly (for example, Zillow). Family-owned businesses are legendary for providing the best customer experiences because of their focus. Just ask Mr. Buffett!
- Independent versus dependent. When’s the last time you heard a VC- or Wall Street-funded firm guarantee they will not sell—ever? Only a family-owned business can make that promise.
As we have recently seen, economic conditions can turn on a dime. Funding can disappear. Profitable, well-run, family-owned firms are the ones that survive.
- Industry management versus forced management. We’ve seen this repeated throughout the history of VC- and Wall Street-funded firms. Investors or investment decisions take over if things get tough. New leaders with no proven experience in this space take control and start calling the shots.
I’ve said it before: pressure comes with checks. The leader of a family-owned business typically has a decade or two or three of experience.
- Company loyalty versus a high churn rate. VC firms are notorious for high employee and client turnover rates. Family-owned firms are bedrocks of stability, with employees and clients who stay with a firm for years.
VCs have an exit plan—and believe me, those plans are not created based on what’s in the client’s best interest. Ever notice how VC firms tout that they’re run by “serial entrepreneurs”? But what does a perpetual short-term view cost clients?
Bottom line
A family-owned business can make decisions quickly and pivot instantly. Despite the hype, that’s not true for VC- and Wall Street-funded firms. Every independent real estate broker/owner in the U.S. can relate. It’s why family-owned businesses win.
For more information, visit https://www.deltamediagroup.com/.
Michael Minard is CEO and owner of Delta Media Group, a leading and trusted technology partner for many of real estate’s top brands, and 100% family-owned and operated.
