Founder conversations: Triplemint reinvents real estate by not disrupting for disruption’s sake
New York City is not only the nation’s most valuable residential real estate market — reaching nearly $1 trillion last year — but it’s also the most complex for consumers to navigate, whether they’re buyers, sellers, or renters. It’s even tougher for start-ups trying to crack the code with technology. Only a few remain standing and even fewer can claim success.
Among them are Triplemint, which former Yale classmates David Walker and Philip Lang launched in 2011 after running into the apartment-hunting buzzsaw themselves. “We started the company because we wanted to give people a better consumer real estate experience,” Lang said, “focusing on search, service and insights.”
That goal stayed intact during Triplemint’s journey to a team of nearly 200, continued double-digit revenue growth, and $20+ million in outside capital raised. But many other things changed, such as renaming the company from Suitey and shifting focus from rentals to sales. Lang reflected back on some lessons learned.
Blowing up an industry may not be best approach
The real estate industry’s 6% commission structure featured prominently in many start-ups’ early pitch decks — Triplemint among them — as huge target for reduction and redistribution, but it’s been mostly resistant to attacks.
“When startups are launching, the founders often think, ‘I have to change everything about the industry,’ and we were no different,” Lang said. “We learned early on that it’s very hard to change the economic model of real estate, and the experience is much more important than the price.”
Two factors were working against disruption. While traditional real estate agents are contractors who work on straight commission and pay most of their agency’s expenses, Suitey started with — but later abandoned — an employee-broker model. Agents were salaried with bonuses tied to customer satisfaction to encourage a “one team” mentality and less mercenary behavior.
While the employee model decreased the income risk for brokers, it also reduced the upside. “When you have people on salary, they’re always going to compare results to people who are commission-based in terms of total compensation,” Lang said. And since Triplemint wanted to create the best possible experience for consumers, he added, “it was very important to hire experienced agents, compensated competitively, who could utilize our technology to create a better experience for our clients.”
The other case against blowing up commissions was that consumers really weren’t pushing back against commissions per se; they were questioning the value they got for their 6%.
“People often attack real estate for ‘It’s so expensive, and the agents were so terrible,’ ” Lang said. “If you break it down, it’s right that many agents are terrible, but expense wasn’t an issue if a good agent was able to increase the seller’s profit.”
“Sometimes what people say they want is different from what they’ll actually buy,” he added. “You have to analyze and understand why they’re saying it.”
So Triplemint’s leaders focused on what they could control and drove incremental innovation.
While reembracing the industry practice of having brokers as contractors on a standard commission structure, they also created a culture of customer service and accountability, supported by the 25+ employees serving in functions such as marketing and technology.
“We realized that we could use data to predict the people most likely to buy and sell, helping buyers tap into off-market properties and working with sellers to maximize the value of their investment,” Lang said. This new product became a centerpiece of their strategy and value proposition.
Postcards from the gig economy, sort of
Triplemint came of age just as the gig economy started gaining steam, but this was nothing new for real estate, which has a long history of using independent contractors. The federal tax code even carves out agents as “statutory nonemployees,” which avoids the legal hassles now happening in California and elsewhere.
Compared the Ubers and TaskRabbits of the world, “we have a thorough interview and vetting process because of the high expectations that we set with our clients,” Lang said. Also driving tighter scrutiny are real estate’s far higher transaction value, need to manage individual books of business, and the significant cost of a negative customer experience. This all converges into Triplemint valuing agents with an owner mentality.
“When we interview, we talk a lot about ‘take blame’ versus ‘place blame,’ ” Lang said, “because a person who takes blame is going to accept responsibility instead of saying, ‘Oh, it’s just this way’ or ‘Management wants this.’ Perseverance is also huge for us.”
Also unlike gig economy players, Triplemint grants its agents equity to “give them the rare ability in real estate to share in the success of the company,” he added. “Another big piece of this is communication: making sure that everybody’s keyed into what the company’s doing and that they don’t feel like there are barriers,” which also includes a more intensive onboarding and training process.
Every advantage is needed, as an arms race over top brokers has broken out with other venture-backed real estate start-ups such as Compass and Redfin as well as legacy agencies. Commissions are getting richer, and other financial incentives to join are starting to pop up — “deals that financially don’t make much sense for traditional firms,” Lang said. “It’s wild.”
Series C tastes on a Series A budget
In successfully navigating Triplemint through nearly a decade of growth, Walker and Lang also ardently guarded against a peril that has claimed many startups: applying big company trappings to smaller company life that results in runaway expenses.
In today’s hyper-competitive world, employees from larger firms may be accustomed to certain things — administrative assistants, layers of junior help, or a healthy T&E budget — that are definite luxuries in a startup. “Some people interview with expectations of resources that are only available at the biggest companies,’ ” Lang added, “and people who want to be at a startup have to shift their mindset and enjoy being scrappy.”
Founders are wired to always think about cash in the bank and how spending impacts burn. “When you start, it’s just a few people, and you’re doing everything,” he said. “As the company grows and you add more resources, things that once were nice-to-haves soon become necessities, and it may become very difficult to control costs.”
Even at nearly $300 billion in revenue, frugality still remains of one of Amazon’s 14 leadership principles: “There are no extra points for growing headcount, budget size, or fixed expense.”
Triplemint’s management team encourages a similar sensitivity. And it goes beyond implementing budgets — a necessary step in every company’s evolution — to giving leaders granular cost data so they can analyze the economics of scale, resulting in more accountability.
“Do you really need X, or can you restructure your working environment to manage more with the resources that you have right now,” Lang said. “Sometimes a process or technology change can be just as effective as adding headcount.”
Through selective parsimony, “we think about investing in areas where it will have the highest impact,” he added. “And we try to instill that in our managers as well.”
The Entrepreneurs Roundtable Accelerator (ERA) has guided more than 200 US companies through their early stages with its impressive mentor and investor network. ERA also has international programs that where the most promising overseas startups come to NYC for intensive guidance on how to grow their business both at home and in the US.
ERA’s four-month program, which includes $100K in funding, is now accepting applications. More information is available here.
