It’s the quiet ones you have to watch out for…
Redfin has been quietly dominating since its inception in 2004, and no one in the real estate industry seems all that concerned. We dismiss Redfin as a discount brokerage and debate what to call it – Tech company? Brokerage? Something else entirely? Whatever label you put on it, Redfin is disrupting the way real estate works. And with its S-1 filing, we can finally see just how well the company has been doing. With a sales volume of $16.2B and a 31% gross profit margin, Rob is justified in saying that Redfin has the potential to ‘eat the industry.’
Today Greg and Rob get into the impending Redfin IPO and the potential consequences of its success on traditional real estate. They cover Redfin’s phenomenal company culture and the advantages associated with having employee agents rather than independent contractors – and explain how its software has the ability to capitalize on repeat/referral business in a way that traditional brokerages do not.
Listen to understand why Rob believes that the industry should be more afraid of Redfin than Zillow, and hear Greg’s take on the relative importance of agent relationships versus company culture in shaping the consumer experience. Might there come a day when traditional brokerages would have to partner with (GASP) Zillow to compete with Redfin? As the company goes public, let’s talk about why Rob and Greg think industry leaders should start losing sleep.
What’s Discussed:
The importance of culture at Redfin
Redfin’s recent S-1 filing
– Shares in $12-14 range
– Company valued at $1B
The debate around Redfin’s identity
– Tech company
– Real estate brokerage
– Agent team hybrid
Why there is no backlash against Redfin’s IPO
Rob’s take on why the industry should be more afraid of Redfin than Zillow
How traditional brokerages throw shade at Redfin as ‘discount brokerage’
Rob’s theory that Redfin is going to ‘eat the industry’
Standout stats from the Redfin S-1
– $16.2B in sales volume, #5 in RealTrends 500
– 31% gross profit margin
How Redfin’s software capitalizes on repeat/referral business
Redfin’s focus on data
– Measures customer satisfaction via NPS
How the Redfin culture affects the consumer experience
The myth that only independent contractors can provide high-level service
Greg’s take on Redfin’s limited ‘boots on the ground’
The advantages of employee buy-in to Redfin company culture
Who might be considered Redfin’s competition
The what-if scenario around Redfin establishing a ‘sneak peek’ listing agreement
How Redfin generates traffic to its site
– SEO
– Targeted email
When the heads of large real estate companies should start losing sleep over Redfin
– Redfin offers lower commissions, agents paid based on satisfaction ratings
– Customer demand could force traditional brokerages to enact similar policies to remain competitive
How a company with a multi-brand strategy could incorporate Redfin into its business model
How traditional brokerages might need to partner with Zillow to remain competitive
How reducing costs through automation would allow brokerages to charge less for commission
The way capital acts as an accelerator in the tech world
How having employee agents allows Redfin to fully adopt its technology systems
Resources:
Redfin IPO: Tech Company, Real Estate Brokerage, or Something New?
Rob’s Redfin IPO Blog – Part 1
Sam Debord’s Guest Blog
Connect with Rob and Greg:
Awesome discussion guys. I just bought a few shares of Redfin for fun… it’s doing well on the public market so far.