EDR will soon be starting a phased roll-out of a national building permit database that will include a property specific building permit report.  This new service was made possible by a recent investment EDR made in BuildFax (located in Asheville, NC and Austin, TX).  At the moment, the BuildFax database includes:

·     14.4 million unique addresses

·     48 million building permits

·     3,300 cities, towns and villages across the U.S.

There are multiple reasons for EDR's investment in BuildFax, not the least of which is that Building Department Records are a Standard Historical Source cited in ASTM E-1527.  Adding this information to our suite of historical research products means that EDR will now be able to provide 6 of the 8 Standard Historical Sources to environmental professionals who chose to outsource a portion of their historical research.

The service will work similar to how the Sanborn service has worked over the years.  Environmental professionals can voluntarily elect to search the database for a particular address.  If no permits are identified, EDR will deliver a "no permit" letter documenting that a search was conducted.  When building permit records are found, EDR will deliver the permit history to the EP electronically.

Our long term intentions are to continue aggressively investing in BuildFax so that the database grows to include more properties, more permits and more geographies. 

I hope that over the coming weeks and months environmental professionals will check out the BuildFax database and evaluate the usefullness of the building permit report.  As with all of our products and services, we're eager to hear what you think so please, please, please let us know!

I find the Netflix story completely compelling and I'm not even a customer.  After all, here's a business that, on the day it was started, knew it would die quickly if it didn't immediately begin to change.

In case you're not familiar, Netflix makes money by mailing DVDs to subscribers at their request.  After the subscriber watches the DVD (movies, games, etc.) they mail it back and receive a new one.  The company was founded on the premise that Blockbuster's business model was flawed; specifically related to their system of charging high fees for movies returned late.  From the start, Netflix was a commercial success and the company has experienced strong growth.

But Netflix's founder and CEO, Reed Hastings, knew from the start that a business that mailed content, in this case DVDs, would have a relatively short lifespan.  It would only be a matter of time until Netflix's customers would be able to experience the exact same content on demand, instantly and probably at a lower cost.  In other words, Netflix's "real" competition isn't Blockbuster or another DVD mailing service, it would eventually be the satellite, telco, cable or ISP.  More than likely it would be some combination thereof.

So even though the company generates over $1.3 billion in revenues, it is currently in the process of tearing itself down so that it can rebuild.  Imagine how painful that must be for the average Netflix employee.  There are no sacred cows here.  Instead, Netflix has accepted the reality that the skills that produced the first $1.3 billion would not be the same skills that produce the next $1.3 billion.  

What's unique about Neflix isn't their business situation, it's their acceptance of it.  All business models eventually die and are replaced by more efficient business models.  Sometimes this transition takes decades (steel, automobiles) while other times it seemingly happens overnight (fax machines, travel agencies).

After all, when is the last time you faxed your vacation plans to your travel agent?     

Happy Father's Day to all the dads out there and a huge "thanks" to all the moms, teachers and kids for being the ones who "really make it happen".  Being a father of two (3 and 6) I was struck yesterday by all the thought that goes into preparing for this holiday and quietly remorseful that I haven't put equal effort into Mother's Day, various birthdays and at least one anniversary.

Clearly, teachers had been thinking about this for weeks and had concocted all sorts of art projects designed to make grown men weep (I love daddy because...).  Then, during lunch or dinner, family after family walk into restaurants or arrive at homes to share a meal, laugh and just spend time together due to plans made and reservations booked by moms.   

I don't mean to insult anyone but I think, in general, mom's do Father's Day better than dad's do Mother's Day.      

Every year I say I'm going to attend the Consumer Electronics Show (CES) in Las Vegas and every year I fail to do so.  This year was no different.  I said I would go but, instead, I am in the office reading articles and blogs from others who attended and reported back on what's happening there.

Some might wonder why, as the CEO of a business-to-business information company, I would be interested in CES.  This is especially true because I am not an early adopter of new technologies or a huge device geek.  Instead, I tend to let others try the new stuff out first and then decide whether or not to embrace something.

My reason is this:  I believe a significant shift in how innovation spreads has occurred.  In the "old days" technological innovation primarily occurred in B-to-B spaces and, as costs gradually came down, the innovation eventually found its way to the consumer. 

But today, much of this has flipped.  Many of the most innovative ideas are now developing first in the business-to-consumer realm and them migrating to the enterprise.  I think the reason for this is rather straight forward.  Even though a company sells a service to another company, the actual users of the service are consumers.  They are the same people who, in their personal lives, buy mobile devices, bank online, consume digital content and connect with friends electronically.  So as people become acquainted with certain services in their personal lives they soon come to expect them in their professional lives as well.  This phenomenon forces once separate value propositions to converge.

Apparently, this has been a theme at CES this year as many new devices are being introduced that are always connected to the internet.  Rather than primarily differentiating themselves via their core features, these devices are differentiating themselves based upon the applications they can support.  For example, new televisions are competing less on traditional TV features and more on their connectedness.  According to an article in the New York Times, the TV manufactures know that increasingly "what will differentiate one TV from another is the software it runs and the Internet services it connects to."  The same article goes on to include the following quote from the CEO of Nokia; "Hardware is not enough.  We (Nokia) need to have a wider array of services and content."

I'm interested in this because I see a similar thing occurring in information publishing as in consumer electronics.  For companies like EDR, delivering valuable data is no longer enough.  Sure, customers still need to see that our content is high quality and accurate.  But you can't sell on those benefits alone anymore.  Instead, you have to deliver value around the way people work.  For any data and content company, this means that future success lies in creating more value in how customers order, receive, experience, work with, analyze, archive, retrieve and integrate information.

Everything that once was special or unique eventually becomes ordinary and expected.  The challenge for business today is to find the "new" special or unique and start bringing it to customers before your competition does. 

If anyone cares for a good read, especially something relevent in turbulent economic times, I'd recommend The Snowball:  Warren Buffett and the Business of Life (Alice Schroeder).  As the name implies, the book is less about Buffett's deal making and more about an approach to life; a quality that sets this book apart from most other books about Buffett.  For me, there are two key themes that resonate through each chapter.

The first is the ever present concept of fiduciary duty.  Whenever someone handed their hard earned money over to Buffett to invest, he felt an enormous, almost sacred, responsibility to them.  As a result, he began a habit that would last for years.  Each year, he would write an amazingly detailed letter to investors that outlined his thoughts, opinions, and investment strategies.  He did this voluntarily and long before corporate disclosure became what it is today.  He did this not to cover his tail but because he felt it was the right thing to do for people who placed their trust in him.  On multiple occasions he told investors that their money "may" yield a higher return elsewhere even if it caused them to withdraw their funds and take them elsewhere.  Talk about leadership!  As I was reading this, I couldn't help but think about how Wall Street executives, automobile executives and politicians are behaving today.

Second, and on the negative side, Buffett and his family certainly paid a price for his complete focus on investing.  Examples abound throughout the book illustrating a man who was rather detached from his family, distant to his kids and largely uninvolved in major aspects of family life.  Some of this was probably due to generational expectations and Buffett's own quirky personality.  But I couldn't help feeling somewhat sorry for him and his family.  Sure he was building a fortune in his 20's, 30's and 40's but he was also missing out on some of the best things life has to offer.

Finally, and of particular interest to me, was something that I didn't know before.  In the 1960's, Buffett owned the Sanborn Map Company.  For years, Sanborn had been making detailed maps used by the insurance industry and the board of directors was composed mainly of insurance industry executives.  But by the 1950's, this business was in serious decline and profits were rapidly eroding.  But hidden behind the scenes at Sanborn was something beyond a map making operation.  Sanborn had also accumulated an investment portfolio of $2.5 million and this was growing.  However, the company was only being valued based on the map making business.  With Sanborn's stock trading at $45 per share, Buffett calculated the value of the investment portfolio to be $65 per share.  So buyers of Sanborn at $45 were essentially acquiring an investment portfolio for $.70 on the dollar and getting a mapping operation for free.  Buffett's response was to place 35% of his entire partnership assets in Sanborn.  In the end, the investment portfolio and map making operations were separated and Buffett closed out his investment.     

The eve of a presidential election, like the start of a new year, is as good a time as any to make some predictions about what the future of our industry may look like.  Things will certainly be changing but not necessarily because there will be a new administration in the White House.  Instead, things will be changing because that's what "things" do; they continuously change and evolve.  So here are my predictions for what we can all expect in the coming year or two:

1. Whoever wins the White House will have less direct impact on our markets than many people think.  It's already clear that either McCain or Obama will inheret highly depressed credit and real estate markets.  Additionally, there's a strong chance the U.S. economy will also be in a recession.  But the next President will also be inhereting plans to turn things around and it's highly unlikely he will drop these plans and implement new ones.  Come January, TARP will be well into its implementation and the team of Paulson and Bernarke will be allowed to continue on their course.  As we've witnessed in virtually every presidential election during modern times, a lot is said during the campaign to appeal to voters on the left and right of the political spectrum.  But once in office, Presidents almost always move to the center in order to govern.  That will happen again.
2. Phase I volumes will return to "normal" in 2010.   If this sounds too optimistic, hold on.  "Normal" does not equal the volume of transactions we witnessed in 2007.  While at the time we may have thought 250,000 Phase I transactions per year was normal, we now know that it wasn't.  There were probably 40,000 to 50,000 transactions in 2007 that were the direct result of a securitization market that just kept on giving.  The CMBS market will gradually return but there will be a much improved balance between the demand for credit and its supply.  This will lead to a market for Phase I services that will be around 200,000 per year and will grow from there at a 2-3% per annum rate for the next several years.
3. The real growth in the environmental due diligence field will be in the demand for "other" types of environmental investigations;  services like desktop reviews and opinion letters.  This will be a very good thing for those firms who recognize this opportunity and adapt accordingly.  The most important thing for our industry is not how many Phase Is take place each year but, rather, how many properties receive some type of environmental investigation prior to transacting.  As underwriting standards increase and overall risk management policies become more conservative, the total pie is expanding and that will benefit many environmental consultants.  Gone are the days when some properties receive absolutely no environmental due diligence whatsoever. 
4. The industry will continue its move towards specialization and consolidation.   Firms are realizing they can't be all things to all people so intelligently choosing your customers will be critically important.  Some firms will seek our corporate clients with global interests while others will focus primarily on a geographic region and a particular client sector (small banks, attorneys, etc.).  One path isn't necessarily better than another but what does matter is that firms evaluate their capabilities and then focus most of their efforts on a limited number of market segments where they can be the most successful (and profitable!).  Focus and clarity of purpose will separate the winners from the losers.

Additionally, other areas of change may emerge as hugely significant.  The residential real estate market  is showing movement that environmental professionals may wish to pay attention to as more consumers are evaluating environmental risk prior to purchasing a home.  Firms are also looking to get their arms around their employee skill sets and implement enterprise wide training, skill development and knowledge management programs.  This will be of particular importance in light of major demographic shifts underway in the workforce and younger employees expectations of their employers.  Retaining and developing high performers should be the top priority for all management teams.

Has anyone noticed that, with all the blame being thrown around, nobody in the media is talking about the role the average person has played in this mess?  Surely, it's quite clear that the investment banks, traditional banks, rating agencies, politicians and government regulators each played a role in causing or contributing to the current financial difficulties we're facing.  But what about the average consumer?  Isn't the consumer's behavior a major part of the problem also?

Now I don't expect either presidential candidate to make this point if he expects to win the election.  Talking about executive pay and Wall Street greed will go much further in gaining votes in November.  But you'd think someone, somewhere would mention how imprudent people have become over the past few decades. 

Consumerism is the American way and, the more consumers spend, the more robust the economy.  But when consumption becomes excessive and occurs at the expense of savings, eventually there will be a problem.  As I write this, I'm thinking about several personal friends of mine who have been living way beyond their means for a long time.  These a great people, good parents and hard workers.  But they've been seduced into acquiring things they either don't need or can't afford.  And as they've been doing so, they haven't set aside any money for retirement, let alone a job loss or other emergency. 

One friend in California got into real estate sales about six years ago when the market was booming.  After a few commission checks, he immediately sold a home that was almost paid for and moved into a huge McMansion in Orange County with an equally huge mortgage.  And if that wasn't enough, he then leased two high-end luxury cars with a combined monthly payment of over $1,500.  Today, he's in dire straits.  I could go on-and-on with similar stories about people I know.

When someone five years ago borrowed $330,000 to purchase a $300,000 house, thereby receving a check for $30,000 at closing, spent the $30,000 and hoped to be able to refinance later on, that person made a poor personal and financial decision.  Granted, the Realtor and mortgage broker involved gave him very bad advice and they too share some blame.  But ultimately, aren't we all responsible for our choices?  Over the past several years, millions of Americans purchased mortgages that they didn't understand but decided to purchase them anyway.  Whenever these people are portrayed in the media, they're always portrayed as innocent victims who were taken advantage of.  They always tell the story about how they were duped into securing a mortgage based on the promise that their home's value would only ever increase.  Each of these stories is tragic because real people, with real children, hopes and dreams are now losing their homes.  But somewhere in the middle of this entire mess, one has to think that they bear at least a tiny bit of the blame.

Something tells me that if, as a nation, we were better at living within our personal means, then we would not have become as over-extended as we have.