Housevalues lost $1.3 million in the 2nd quarter of 2008, the company reported in a press release last week. John Cook also reported that they lost over 400 customers in the same period.

But don’t shed a tear for HV – they’re still sitting on $62.7 million in cash. And that’s a bucket of cash that they’ve been willing to swing around a bit recently.

The press release highlighted RealtyGenerator, a company HouseValues acquired in November of last year. RealtyGenerator is a pretty slick product that functions as a lead generation and CRM tool for brokers and agents.

Personally, I was more curious in seeing what HouseValues had to say about its other investment – the $2.75 million they plunked down in January into ActiveRain.

Took a while for me to find any mention, but I did manage to dig this out of their Letter to Shareholders from the 2007 Annual Report (PDF link).

While the acquisition of Realty Generator will go a long way toward enhancing our products, we believe our investment in ActiveRain will help us broaden our sales reach. ActiveRain is a leading community and social networking platform for real estate professionals. The company has attained a high level of user engagement and has rapidly grown to more than 80,000 members. While ActiveRain will continue to operate as a completely independent business, our strategic relationship creates the potential for a new and rapidly growing channel.

Clearly Housevalues is excited about their new properties. I’m not sure investors were similarly moved however, as the stock price (SOLD) has remained relatively static.

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ActiveRain has always had its eye on video. It has dabbled a little bit with its RainTV segments, shot at last summer’s Real Estate Connect conference, and more recently by holding a video contest.

Now, it seems, they are making a bigger play for a piece of the real estate video pie. Through a partnership with Mixpo.com they have just announced a new platform that will more deeply integrate video into ‘Rainers blogs. The plan, which was supposed to be on the d-l, was leaked by some over-enthusiastic Beta participants, prompting this blog post.

You will be able to host and edit your videos directly from video.activerain.com, and then take the videos in your library and embed them directly to your blog posts with the click of one button. You will also be able to embed them wherever on the internet you would like outside of ActiveRain. One of the cool features that fits nicely with everyone’s blogging efforts is the ability to add links directly into your videos. So if you are giving a tour of a listing, to potential buyers, you can include links to the listing on your site, or to surrounding attractions you have written about in your blog.

ActiveRain seems to be making small strides recently to move beyond their early social networking roots towards becoming more of a repository of all of a real estate professionals digital content. Not as a sexy of a business plan, but probably a more sustainable business model.

The platform will cost Realtors $29/month.

This move is also surely a shot across the bow aimed at online provider WellcomeMat, which has been a popular choice for video hosting by Realtors to date. WellcomeMat, which, conversely, just added social networking to it’s video platform (see WellcomeMat Goes Social), has yet to announce publicly its pricing plan.

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Paul Kedrosky on why HouseValues’ investment in ActiveRain is the Worst Timed Investment Ever:

Worst: Real estate is in the tank and likely to stay there for some time. Venture capitalists are atrocious market timers, and this is, if anything, a sign things are going to get worse. Further, building a social network for real estate agents is like building one for residents of a rapidly southward-drifting ice flow.

Agree or disagree?

[poll=7]

Further, if $2.75 million buys a minority stake in ActiveRain, any guesses to the total valuation of the company?

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ActiveRain, the popular social network/blogging platform for real estate professionals, announced today it has received $2.75 million in funding (see the official post on their site).

In a move that may raise some eyebrows, the money came from fellow Seattle venture HouseValues.com in exchange for a minority stake in the company.

I had a chance to talk to ActiveRain’s founders Jon Washburn and Matt Heaton earlier however, and both are pretty excited about the cash infusion. As they put it, they’ve been “bootstrapping” ActiveRain for the last couple of years and the new dollars mean they can finally begin to focus on building their team to really ramp up development on the site. They plan on using the bulk of the money to hire new engineers.

First priority for them is to launch the outside blogging platform (see ActiveRain Launches Outside Blogs) and finish an overhaul on Localism, their consumer facing local market commentary site.

More importantly, Washburn and Heaton see this money as being a critical hedge against the other VC-backed players that are starting to edge onto ActiveRain’s turf. Zillow and Trulia (with its new Agent2Agent product) have all recently started to try and corner real estate agents’ conversations online.

In any case, news of the funding announcement certainly begins to clear up many of the nagging questions around ActiveRain’s long-term viability. Though it had started to monetize the community a little, mainly through advertising, profitability remained a long way’s off – and is still at least 12 months away, according to Heaton and Washburn. This funding gives them the breathing room they need.

Neither of the founders would comment on how the investment affects ActiveRain’s ongoing lawsuit against Move.com (see Move.com Tried to Buy ActiveRain).

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ActiveRain, the popular real estate social networking platform, has launched what it’s calling “Outside Blogs” – a new feature that lets AR members take their content outside of the walled-garden of the ActiveRain ecosystem.

From their blog post announcing the sneak preview:

A few of the highlights of our outside blog platform:
* You will be able to host your blog on your own domain. For example, you can have your posts feed to bobisgreat.com if you own that domain.
* You will be able to customize the look and feel of your blog.
* It’s easy to set up your outside blog. You can be up and running in less than 15 minutes.
* You will be able to build your posts in ActiveRain. You won’t have to learn a new platform.
* You will be able to decide where you want your posts to publish. Do you just want your outside blog to be about local content pertinent to your local market? You will be able to decide which posts go where. Send your local market reports to your outside blog. Send your real estate industry related posts to ActiveRain. The choice is yours.
* You will be able to benefit from the SEO knowledge and power of ActiveRain.
* You will be able to brand your own blog while at the same time staying connected with the ActiveRain community. Your comments will be syndicated between your ActiveRain blog and your outside blog.

This makes a lot of sense, as it lets bloggers move beyond the sandbox that ActiveRain currently provides. Until now, many budding real estate bloggers cut their chops on ActiveRain before seeking other alternatives (Wordpress, Typepad etc.) that allow them to move their blogging onto their own domain. Outside Blogs (needs a new name) allows them set out on their own yet retain their pre-existing content and still leverage the feel-good aspects of the ActiveRain community.

ActiveRain has slowly been rolling out features that begin to answer the lingering question of how they intend to monetize their flourishing community. ActiveRain Ads were the first step; Outside Blogs are, presumably, the next step.

Costs for this new feature, as yet, are un-announced.

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ActiveRain scored a major coup this month by moving in to the top 10 on Marcelo Calbucci’s Seattle Startup Index for December. Zillow still sits in the top 3 while Redfin drops out of the top 20.

The index averages and ranks the Alexa Rank and Compete Rank usage scores for all the web sites in the index. This is not necessarily the most accurate gauge of a site’s overall popularity, as both rely on toolbar installations to track visits (Compete does combine its figures with ISP and web traffic), and once again speaks to the need for a more complete and fair way to judge a site or blog’s popularity (make sure you’ve voted in this week’s poll question).

(h/t Drew Meyers)

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by Curlylocks

Parks Associates research confirm what many of us already know intuitively; few people would pay to use social networking sites.

This online survey of Internet users found 72% of social networking users would stop using a site if required to pay a $2 monthly fee.

Duh.

Monetizing their communities is the big problem facing real estate social networks like ActiveRain and especially Zolve — who, unlike ActiveRain, tried to launch with a (flawed) business model in place and may scared off any prospective members in doing so (see Zolve Tries to Kick ActiveRain While its Down).

There’s no doubt that social networks offer some attractive benefits to their members; mentoring, friendship, referrals, etc. But what exactly do these growing communities offer their hosts, besides tech support worries and greater bandwidth and hosting costs?

by Fort Photo

Social networks are very challenging to monetize, largely as the experience is easily duplicated elsewhere. Virtual communities are, by their nature, just like a flock of birds – flighty. Just ask the guys behind Friendster.

Paid services only work when the utility of the network to the users is crystal clear, like LinkedIn (I’m looking for a job or I’m looking for a new employee) and users are willing (desperate) to have access to each other.

Ultimately however, the only really viable business option for a meat and potatoes social network site (even in a niche like real estate) is to leverage the user base as a desirable demographic to advertisers. And to their credit – ActiveRain has begun to doing this, though right now it’s targeting only at a very superficial level (by region, specific pages and to groups).

by NymphoBrainiac

Being able to take the user base — users who have already self-identified themselves to their peers, and therefore reduced the amount of bogus identities — in aggregate and then slicing and dicing them into precise groups and offering them individually to select advertisers is the great promise behind social networking.

And this is the real genius behind Facebook’s new interest-based targeting platform (see Marketing Yourself with Facebook Flyers, also more from WSJ.com).

A real estate social network that’s first able to sustain its community’s critical mass through a compelling feature set, while being able to cleanly and effectively serve its individual users to prospective advertisers will truly become a valuable enterprise.

The only question is who’s going to get there first.

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The news that Realogy Corporation is going to license Better Homes and Gardens magazine’s brand to launch a new brokerage got me thinking again once again about what the real estate brands of the future are going to look like. (More on the launch from The Real Estate Bloggers).

There’s little doubt we live in an era where the big brands dominate. Drive through most towns these days and you’re going to see the same handful of big box stores that results in a startling uniform and homogenized consumer landscape. Welcome to the United States of Generica.

As these brands reach saturation point however, it’s natural for them to want to begin extending themselves into related markets. To leverage their name recognition and consumer awareness into new business verticals. Starbucks’ push into music sales is a perfect example of the powerful crossover nature of new brands, as is the push into white-labeled banking and finance services by retail outlets.

Real estate is no different – and Realogy gets that. There’s a trust factor that comes with an established consumer brand and a pre-existing identity to build upon. Plus, licensing an existing story is far easier than writing a new one (see Why Do All Real Estate Logos Suck So Bad?).

So it got me thinking, just for fun, what could be some interesting crossover brands for the real estate brokerages of the future?

• Martha Stewart real estate. A pretty obvious one – they’ve already licensed the brand to KB Homes to build a new community of homes in North Carolina.
• Ikea real estate. They’re selling prefab “Boklok” homes in Scandanavia and the UK – a trendy condo sales arm, for example, could be fun.
• Virgin real estate. Up to now, Richard Branson has had a fairly rough time penetrating the US market as extensively as he has done overseas, but the launch of Virgin America may start to turn that around. Might appeal to the 30-something crowd.

(Personally, I’d love to see Steve Jobs at the helm of Apple Real Estate – but that’s just geeky wishful thinking.)

What about the online players then?

• Zillow. OK, OK. I know I’m beating a pretty tired drum… We all know Zillow is a media company… But I still think it makes a lot of sense for them to take the brand to the streets. A true online and offline hybrid brand – Zillow’s the only one with deep enough pockets to do this. I’d be all for it.

• ActiveRain. We all know that right now ActiveRain is a big unprofitable echo-chamber. If it turned itself into a brokerage there could be a renewed sense of purpose to the brand, as well as a way to drive the much-desired consumer traffic to the site through traditional offline methods – yard signs etc. Further, you could connect individual franchisers through the social network for support and training. Ultimately you’d leverage the power of a distributed agent community working for and with each other.

Any other ideas of crossover brands?

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by Kevin Steele

Watch out! Catfight breaking out!

Earlier this year, ActiveRain, the popular social networking site for Realtors, was about to be acquired by Move.com, the owners of Realtor.com. Right at the eleventh hour however, Move.com pulled out of the deal.

All of this has come out in a lawsuit that is detailed in today’s Inman News.

Terms of the original deal are unclear, but ActiveRain is now seeking $33 million in damages and alleges Move.com stole “confidential information” that it is using it to create and maintain the new Realtor.com blog network.

This is a big deal for Move if they lose. They will probably come out of it with a little egg on their face and the damages are likely more than they would have had to pay for ActiveRain in the first place.

ActiveRain is not without some risk with this news getting out either. The ActiveRain community may not be so happy to hear the owners were that close to selling out. I wonder how the community would have reacted when it woke up and found out it had just been acquired by Move.

Ultimately, this lawsuit raises an important question you should be asking yourself. Just who owns your content online?

Thousands of real estate professionals have moved their conversations online over the last year as blogging has become more and more popular and has become an important part of a Realtor’s marketing arsenal.

Don’t be fooled, your content is very valuable. Platforms like ActiveRain, Trulia Voices, Zillow Q&A all seek to tap this knowledge base and build massive databases which they hope to monetize. ActiveRain’s near-acquisition shows just how much your words can be worth.

On the flip side, and mostly because of the communities that have developed around these sites, people start to feel very personally attached to their blogs, their profiles, whatever. They start to feel like it’s their own little corner of the Web.

But remember – at the end of the day – on any of those sites, your words aren’t yours.

What you gain in terms of Google Juice and traffic, you lose in control. The bottom line is your content rests in someone else’s hands.

Now I’m not suggesting you don’t participate in these sites. In fact, quite the opposite. The trade off could very well be worth it. I’m simply suggesting you think about the long term implications.

A site may have all the best intentions in the world and spell out truly honorable Terms & Conditions. But what happens when they fold, merge or are acquired by a third party? You may not like where those words end up. This holds true no matter what kind of information you’re putting online.

All of this reminds me of wise words I once heard from a buddy in college – Don’t go to bed with someone you don’t really know, you may not like who you wake up with.

Update: Active Rain has posted copies of the original filing and Move’s response on their web site. It looks like Move offered AR $30 million cash and extended employment offers to 3 of AR’s executives, which they, in principle, accepted. Move apparently killed the deal once it had gotten its hands on the ActiveRain member list and contact information. Ugh – this is nasty all around. Also I’m not sure I like that my information (I have an AR account) was shared without my consent – where is AR’s privacy policy?

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So Redfin was on 60 Minutes last night – What’s your take?

Mine? Hardly hard-hitting journalism. A PR puff piece if I ever saw one. Redfin just got handed a trophy before the race is even finished.

That said, I’m a big Redfin fan and I think the 60 Minutes story is just what they needed to kick off their next round of investment – here’s hoping they find it, the industry won’t be half as fun without them.

For me, the Redfin brouhaha overshadowed a much more interesting announcement though. The news that Facebook is going to offer free Classifieds. Now you can sell your junk on to your network of buddies. (More from Drew Meyers – who even tests it out).

The big brokers shouldn’t worry about Redfin – what they should be worried about is Facebook.

No, I don’t literally mean the site best known as a way for college kids to organize the next kegger and ‘Friend’ each other – I do mean social networks and their growing popularity and use in many aspects of business however.

The MLS was the original social network. It designed to allow brokers to share listings with each other. What social networking software like Facebook or Ning accomplish is takes that power to disseminate information and hand it directly to the individuals, to the agents themselves.

I wouldn’t be surprised if we see a fully functional social network designed exclusively for agents to share listings with each other by year’s end.

With infrastructure like that coupled with the ability to create their own networks, an agent’s dependence on having access to the MLS through their broker becomes less and less relevant.

Agents could develop their own networks to be as exclusive or inclusive as they want. They could be hyper local or broadly based. One can imagine many scenarios where these networks could be very effective ways to market properties, especially on the high end; for Beverly Hills luxury homes or New York Brownstoners, homes in the Hamptons or land in Montana, for example.

So who’s in the position to develop this kind of site? Well, certainly Zillow – I have an inkling that their Agent Profiles are just the first step in this direction… they already claim to have 30,000 agents active on their site already, and all they have to do is give them the means to connect with each other. ActiveRain already does this, so does the Point2NLS but both sites are kind of clumsy in their implementation of truly social features. Move.com would be wise to ‘move’ in this direction but would probably struggle with agent buy-in, at least initially.

A stumbling block may be the lack of desire for agents to work together, but I think the spirit of “coopertition” can thrive here. Marketing properties to consumers is just the first step (see Marketing Real Estate on Facebook), marketing listings to each other could be the next.

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