Joe Fox’s strategic ideas look big — he’s disrupted both the securities and real estate industries. But he claims his best innovations are the smallest ones.
Trying — with difficulty — to shake up a staid industry? It could be that you aren’t thinking small enough. Joe Fox, who has founded two industry-changing companies with his older brother, Avi, is a big believer in “mini-innovations,” small insights that add up to a big disruption. Their first company, a pioneering online brokerage called Web Street, was acquired by E-Trade Group for about $50 million in 2001. In 2006, they launched BuySide Realty, an online discount real estate brokerage that rebates 75% of its commission to home buyers. Last year they started Iggys House Realty, a subsidiary of Iggys House Inc. that allows sellers to list their homes for free in multiple listings services and on Realtor.com. Here Fox talks with Josh Hyatt for the MIT Sloan Management Review about how he became a toppler of traditions — and where he is likely to strike next.
What do you see in an industry that convinces you that there is room for grand-scale innovation?
FOX: I really believe you can’t force innovation; it’s not something that happens in a vacuum. You have to observe the world with a fresh eye. In the 1990s my brother and I were trading stocks on our own, and there was a company that had announced it was going public at $16 a share; the night before we said, “Let’s buy X number of shares at no more than $20 a share after it opens.” So the stock opens up, and goes up to $18.50, sits there for 10 minutes, then immediately runs to $26 before it closes. We waited for five hours for our broker to tell us whether we got in below the $20 per share limit that we set. And we did — which was great because the stock moved to $32 a share the next day. After that, it plummeted. We kept thinking about that “five hours” and we thought, “There has got to be a better way” and within the next year or two we saw what was going on with the Internet. That convinced us there has to be a way to reduce the cost of the transaction, create efficiencies and have a greater level of information. If I am going to innovate, I like to start with the desired result, that base idea. You have to think about what it is you want to do.