I think I’ve told this story before, but I attended a Proptech CEO Summit a couple of years ago put on by Pete Flint and Paul Levine. One of the speakers was Glenn Kelman, CEO of Redfin. During his interview, he commented that Opendoor was the first company he thought cared about operating margins as much as Redfin.
Opendoor’s culture is one of frugality. You have to deeply care about your margins if you are in the iBuyer market because, at this stage of the game, they are razor-thin. They even have a saying at Opendoor, “We eat BIPS for breakfast”. BIPs meaning basis points (BPS), meaning 1/100th of 1%. That’s the increments Opendoor lives in. Every little expense matters.
Flash forward a couple of years and I wasn’t surprised that Redfin had partnered with Opendoor.
Last week when I read the news about the Redfin layoffs I tweeted this.
Glenn Kelman is usually ahead of the curve on these types of decisions. I would expect more companies to follow suit. Redfin is furloughing 41% of its real estate agents https://t.co/rSsg46ST0p— Greg Robertson (@gregrobertson) April 7, 2020
A few people on Twitter thought I was referring to other brokerages or franchisors. But, knowing how similar Redfin and Opendoor operate my first thought was Opendoor. Cuts are coming, and they are going to be deep.
Haters are gonna hate. Just as many people were crowing that Redfin’s model of employee agents doesn’t work, many are already calling the death of iBuying. Pay no attention to the haters, they are wrong. What is happening now is unprecedented.
Mr. Kelman and Mr. Wu are fighting for the survival of their companies and sometimes that means you have to make tough decisions, you have to focus, and give it everything you got.
That’s what happens when you are in the arena.