Magazine article The Spectator

The Wiki Man: Rory Sutherland

Magazine article The Spectator

The Wiki Man: Rory Sutherland

Article excerpt

I don't like to make business predictions, but -- barring some apocalypse -- I suspect there will be plenty of estate agents around in 2065, and occupying prominent high-street shopfronts just as they do now.

This may seem an absurd prediction: after all, almost no one now uses an estate agent to find a house: we go to property websites instead. And, since we all assume the purpose of an estate agent is to find buyers for a house, a role usurped by Rightmove and Primelocation, we think the remaining days of the estate agency are few.

However, perhaps the principal role of an estate agent is not to find us a house so much as to be a scapegoat if the house we buy proves to be terrible. When you pay Messrs Knight Frank, what you are actually buying is a form of reputational insurance to pass on to the new owner of the house in the form of reassurance. The estate agent is the local man who remains in place to be vulnerable to reputational and legal redress. He has 'skin in the game', as Nassim Taleb calls it. The plate-glass windows are no longer there to display property: they are there for me to put a brick through if my new house turns out to lie on a flood plain.

To understand this, you have to understand an idea first expressed by, I think, Jacques Attali: that fundamentally there are only two kinds of industry. There is the insurance industry, to protect us against something going horribly wrong, and there is the entertainment industry, which distracts us from the fact something will soon go horribly wrong. Everything else is just an elaborate variant of one or both of these two businesses.

It is for this reason (what I call invisible insurance) that I always buy a car from a local dealer. Most of the time, I get a slightly worse car for the money than if I bought from a chap called Dave with a suspiciously fluid pay-as-you-go mobile phone number. …

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