Automation works VERY well under a controlled environment. Every other place is yoyo. Yes, you can automate a car assembly line because you can control nearly all the variables. But building an autonomous vehicle with infinite ways weather can perform or other drivers can behave, you have a real challenge at hand. Then add events like valuing houses which theoretically have unbounded variables to consider! I mean, a small bill in Washington can change the prices of homes.
A small sneeze from the US Federal Reserve can have huge impacts on interest rates. Then local politics and many elements including gangs on streets, construction rate growth, etc.
Zillow, a leading real estate company with technology DNA has learned hard lessons: algorithms have limits. The company’s AI for buying homes messed up and it has shut it down with 2,000 people losing their jobs: “a painful move that will result in 2,000 employees losing their jobs, a $304 million third quarter write-down, a spiraling stock price (shares are down more than 18%…)” in hours”.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Yet, the destination is that more things will become more automated including buying homes, over time. It may not be right now but over time, humans will get there. The rule remains: do not be too early and do not be too late as patterns emerge.
But optimizing that timing separates the legends from the commoners. Humans continue to WIN – and we need to respect them in companies.
Just because a business process can be automated, doesn’t necessarily mean it should be automated. And maybe — just maybe — there are components of business that are not better served with AI algorithms doing the job.
That’s a key takeaway after Zillow Group made the unexpected decision on Tuesday to shutter its home buying business — a painful move that will result in 2,000 employees losing their jobs, a $304 million third quarter write-down, a spiraling stock price (shares are down more than 18% today), and egg on the face of co-founder and CEO Rich Barton.
Zillow’s move also represents a big loss for the algorithms that powered its nascent iBuying business, and it is a warning sign to other businesses — both in real estate and other industries — that rely heavily on the almighty algorithm.
---
Register for Tekedia Mini-MBA (Feb 10 - May 3, 2025), and join Prof Ndubuisi Ekekwe and our global faculty; click here.
Humans are indispensable, any process that undermines that is doomed. Your best bet is to work with humans, you cannot completely automate them out of the loop, else they create new problems for you…
The human touch and feel for any business and the market, should not be eliminated from any business process. This, Zillow has learned the hard way.
and market*