Going Against the Grain
In most places, real-estate shoppers can access a multiple-listing service. Not in New York, where big brokers keep listings close to the vest. Lala Wang, a New York broker–who’s now a suspended broker–founded MLX.com to bring transparency to the market. Despite sanctions from state regulators, she has kept up the fight, challenging antiquated regulations that curb competition and appealing her case to the U.S. Supreme Court on December 9.
From Lala’s original entry:
Tell us what you do (or what your team or organization does) and the specific challenge you faced.
How can a growing company of only 15 employees both sustain its business and carry on full scale litigation against New York’s Division of Licensing pro se? In 1993, LaLa Wang, a Harvard Business School graduate and former banker, combined database technology with real estate brokerage services to provide apartment hunters with a more efficient and less costly home search. As brick and mortar real estate businesses became skittish about online competitors, the New York Department of State withdrew its support for Wang’s innovative business, and selectively enforced an antiquated Apartment Information Vendor (AIV) statute against MLX. MLX CEO Wang stood fast and declined to take a license which didn’t apply to her business, and would have forced her to break the law – possibly incurring fines of $5 million daily as MLX uploaded 1000 apartment listings to partners such as yahoo – violating the law’s ban on advertising specific apartments. An Administrative Law Judge suspended Wang’s broker’s license for operating an unlicensed Apartment Information Vendor. Never mind that MLX never had a complaint, and for eight years, 2000 brokers have depended upon MLX’s services. During the same period, MLX provided consumers the same access to information and tools as real estate professionals. While the DOS doggedly pursued MLX and Wang, it declined to enforce compliance by licensed AIVs or newspapers such as the www.villagevoice.com. Wang pulled out all stops and fired back with a Constitutional challenge to the AIV law. New York politicians refused to take up a cause putting them at odds with real estate contributions. Only Attorney General Elliot Spitzer asked the DOS to drop its case against MLX and Wang, but the DOS refused. Then, the AG in his capacity represented the DOS against Wang. The Competitive Enterprise Institute summed up, “The case of MLX.com exemplifies how some old laws simply do not fit when applied to new business models. The apartment information vendor law is an antiquated relic with a newfound purpose–protecting the entrenched, deep-pocketed industry that controls the country’s most lucrative real estate market. Ironically, in trying to enforce a consumer protection statute, New York’s state government is hurting consumers by enforcing a law that hinders innovation. ‘New economy’ is not just a trendy buzzword phrase. Today, ‘old economy’ economic regulation shields established industries from having to adapt to new and better ways of doing business.”
What was your moment of truth?
Wang and MLX’s employees faced the difficult choice of either taking a license which didn’t apply, or taking a principled stand in refusing a sham license that would force Wang to operate illegally. Wang’s commitment to litigating against deep pocketed adversaries – including the state government–is based on unwavering ethics: Wang won’t permit MLX to operate under a sham license. It is this deep commitment to ethics which attracts and motivates MLX’s loyal employees and which accounts for MLX’s high service marks – from both consumers and brokers. Many CEOs face a “moment of truth.” But Wang and MLX have a showdown on a daily basis: On many occasions, the State suggested that MLX simply take the license and not abide by it – the same way two dozen licensed companies conduct business. Instead, Wang and her employees decided to take their fight to the U. S. Supreme Court. Having run out of funds, Wang is filing pro se. Recently, MLX raised the stakes and contacted New York’s Governor’s Office of Regulatory Reform (GORR), which promises, “If you’re getting the runaround or being unnecessarily hounded by one of our state agencies, call our Office of Regulatory Reform. We’ll intervene. We’ll take care of the problem. And we’ll do it fast.” While initially helpful, the GORR representative quickly disappeared, sending a terse message, “Unfortunately, I am prohibited from further involvement based on your recent [Supreme Court appeal].” Every day is another test to stay their course or capitulate.
What were the results?
Never a political animal, Wang’s situation has forced her to become an activist for accountability. MLX ‘s petition website (petition.mlx.com) which explains how antiquated regulations are being used to limit e-commerce competition and consumer choice, has garnered more than 8000 online signatures in eight months. And Wang isn’t stopping there. A planned website, www.officialmisconduct.org, is designed to hold officials accountable. Wang’s passionate commitment to free trade and marketplace competition is drawing supporters from public policy and antitrust groups. Even the FTC and DOJ are investigating Wang’s allegations of restraint of trade by real estate special interest groups. If Wang wins her Supreme Court appeal, her next step is an antitrust suit. Wang and MLX have the potential to shake up the real estate market for the betterment of all consumers.
What’s your parting tip?
Seven years later, Wang may be occasionally tired and frustrated, but her resolve is the same: Follow your own moral compass.