Consumer First, Technology Second, Short term profit last: Redfin Principles from Founding to IPO
When I joined David Eraker and Michael Dougherty in co-founding Redfin I’m pretty sure we had no idea what Redfin would become. We may have been a bit starry-eyed and more than a little naive, but from day one, every member of the team knew one thing: the current real estate market was all about serving the profit needs of the agent, not about the customer; and changing that would mean changing the most important financial decision for families. Forever.
We believed that democratizing data and technology would level the playing field, and by serving the consumer we could upend an industry held in stasis by the powerful conservative forces that dominate the realtor universe. And we knew that by consistently proving to the consumer that “we are on your side” we could build an amazing long-term business that profits in partnership with the customers.
It was pretty emotional listening to Glenn Kelman sharing how Redfin has stayed the course this past decade in the pursuit of a better consumer experience and building a great business around this. And he wasn’t exaggerating about the continuity of this vision and passion in the least bit. In fact, it’s pretty amazing how true this is. In our very first investment pitches, we were pushed by VC’s to go down the path of ads, and we certainly contemplated it. But it wasn’t the finances that drove us — it was consumers and technology.
Consumer First: Great UX is invaluable and it is still hard.
It is unconditionally true that with AWS, the emerging UI stacks, distributed workforces, building a website or mobile app is easier than ever. But building a great user experience is still an asset, and a major differentiator for Redfin throughout its history and today. I clearly remember investors rolling their eyes when they saw this slide, and immediately dismissing the importance of consumer experience:
I can’t tell you the number of people who tell me every week “Oh I *love* Redfin! It’s the absolute best tool for real estate.” What Redfin’s consumer technology does at its core is pretty simple, but somehow with hundreds (thousands?) of competitors nipping at their heels, Redfin consistently owns the golden standard: they uniquely create the experience that consumers love; and by doing this, they are able to grow their consumer reach unlike any other real estate brokerage. What seems easy and commoditized, they have ingrained into their culture in a way that for 10 years running, Redfin has been the best real estate consumer experience in every one of their markets.
Having worked with numerous non-Redfin agents and purchased homes using Redfin as a consumer (and shadowing friends doing the same), I can conclusively say that this consumer-first attitude is pervasive throughout not just the technology but the entire Redfin team. A clear example:
Redfin experience: The counter-party listing agent told us to up our bid $20k. Our Redfin agent told her we would pull our offer in 15 minutes if she didn’t accept. He said it was the most fun he’s ever had — because he knew it was the right thing for us. She accepted 10 minutes later. This is the home my family and I live in today. (Oh and I got a huge check after the purchase too! WOO HOO!)
A non-Redfin experience — My best friend’s agent: The counter-party listing agent told us to up our bid $20k. My best friend’s own agent spent 2 hours on the phone trying to convince him to spend the extra money even though it was the wrong thing for his family. No rebate check.
An “agent” is someone who acts on your behalf and as far as I can tell, Redfin is the only company building a culture of true customer advocacy in the entire industry. Heck, turn on your TV and watch “Million Dollar Listing” and then try to convince yourself that those “agents” care about their customers. Not even close — It’s all about the dollar-dollar bills y’all.
Redfin is a true technology company. Do you think Google built the first internet-based interactive maps? Think again. That’s right — it was Redfin.
In 2004, in our first product-planning meeting, Michael Dougherty told me that we needed to build maps that were real-time interactive for consumers. This is pre-Web 2.0, pre-Google Maps, pre-Gmail. Yahoo Maps and MapQuest were the dominant players, and their maps were small squares (~1/4 of the screen) that had arrows so you could scroll a set amount to the left or right, zoom in a set amount. With every click a new web page would load with your new map generated. It took 10–15 seconds per click. It worked but it was ridiculously slow. Michael (Dough, as we call him) insisted that we make the entire interaction seamless — zero-second scrolling.
In the frank tone engineers use to educate people who “just don’t get it,” I told Dough it was impossible. Being a constructive co-founder, I told him we should do something else — find a different differentiator. I’m just calling it like it is.
He persisted, and thank goodness. He persisted not because he understood the limitations and knew we could overcome them, but because he knew it was the right thing to do. It took months and months of late nights to build the maps — we had to handle taking static maps, and parsing out an “image pyramid” (various images at various scales), and then figure out a way to present these to the user in a real-time interactive manner. We had to put a marker notating the location of each home — we actually used to show detailed lot outlines on the main map — which was AMAZINGLY difficult. The technology was so new and complex that you could show me any browser, and I could use our maps to crash it. We had to be very careful and engineer each and every feature dozens of times to prevent these crashes.
The end result was absolutely stunning. But without the pressure to do the amazing despite its impossibility Redfin would never have become what it is today. That ability, to do the technically impossible simply because it’s the right thing for the user — that defines an amazing technology company. And it’s clear that this capability exists today.
Redfin’s continued technical innovations are evidence of this. They have transparent reviews of their own agents on their site. Redfin is integrating mortgage and title into real estate search to make it easier, faster and cheaper. They compensate the team based on user reviews, not commission. They broadcast data to consumers faster than has ever been contemplated in the real estate. They are the first brokerage to support and enforce 3d-imagery for all of their listings.
They do each of these things despite being told that they’re impossible. They do them because they’re the right thing for the consumer. I’ll bet you they’ll be the first to embrace VR at scale. I’ll even give you 10:1 odds.
So, as Redfin embarks on the next stage of their journey, I want to wish the whole team good luck. I pray that they keep true to these key principles: Consumer First, Technology Second — and everything else will follow.
Mostly, I want to say “Thank you” to Glenn and the team at Redfin that every day pushes the limits of what’s possible in pursuit of that absolutely perfect real estate experience for each consumer.
(Legal Qualification Note because they are in their IPO prep period: I am a shareholder at Redfin, but I am not a representative or employee; I do not have any information about their plans. Everything herein is my opinion and my opinion only. Anything that might be construed as a prediction is just that — and is not investment guidance, confidential information or a forward-looking statement.)