Glenn Kelman, CEO of Redfin, is one of several entrepreneurs speaking at our first-ever Starter Day. If you haven’t already signed up for Starter Day, now’s the time. Seating is limited for this half-day, $50 event (only $10 if you’re a Starter license customer) that features some of the hottest startups talking about how they made it big… or plan to! In the run up to Starter Day, we spoke with Glenn to get a feel for the company and his talk.
Why did you start Redfin?
David Eraker founded Redfin, not me. I joined when it was still just a few guys in an apartment, and the reason I did was because we had the first map-driven real estate application, built even before Google had released a map platform, and also because our business model was designed to change the real estate game in consumer’s favor, which gives all of us at Redfin a sense of mission.
What were some of the challenges of bringing your business to market?
The business is very capital intensive. It costs a lot of money to go market by market, getting listing data from local real estate boards, but this allows us to build the world’s best real estate search site. And it’s expensive hiring real estate agents who can provide local service in every neighborhood we serve, particularly when we pay our senior agents a base salary with a bonus for good customer service. Sales commissions significantly reduce capital risk but paying agents to do the right thing has been the only way we have been able to deliver world-class customer service. Because we have these costs, we have to build a website that generates its own traffic. Fundamentally we’re shifting the huge sums of money the real estate industry invest in sales & marketing to technology and customer service.
How have consumers’ attitudes changed in the real estate market — are they ready for Redfin?
The business is doubling year over year, driven mostly by word of mouth, so we must be doing something right. Our demographic broadens a smidge every quarter, and our customers are insanely happy, so I think that trend will continue. Attitudes change slowly because real estate deals are so big and scary, and because everyone has an uncle or a friend who’s a real estate agent. But with $50 billion in commissions every year, we don’t need 50% market-share overnight. We know this will be a long haul.
How have your competitors — which I assume to be the traditional real estate business — responded to the threat of Redfin?
Some have stuck their head in the sand and some have really invested in the two areas where we seek to stand apart: customer service and web technology. The structural problem the industry faces in competing with Redfin is that most brokerages are franchise-based businesses, which limits their ability to invest in technology at scale. Most rely exclusively on contractors, which makes it difficult to control the quality of the customer experience. Because we record every tour and every transaction in a central database – and because we survey every customer on the quality of our service — we can minutely monitor the quality of our service, and we can also identify
Tell me a little about the talk you’re going to give at Starter Day?
It’s about where ideas come from and how they are perfected. I think too much attention is paid to the Eureka moment, to this model of creativity in which Athena is formed perfect and whole directly from Zeus’s head. My experience has been that what’s most important in building a business is finding a worthwhile problem to solve, then working out the solution. Usually this is a painstaking process in which you have to tinker and tinker rather than an insistence that your original idea is beyond reproach. It used to be hard for me to admit that I was wrong, but now that admission seems integral to the creative process, not a flaw in it. I think this is especially true in a retail business in which the consumer decision-making process is complex and emotional.
Register now for Starter Day, June 9, San Francisco. Hear six of the hottest startups as they talk about how they made it! Seating is limited.