5 Questions with Robert Reffkin.
When is a start-up no longer a start-up? We’d suggest it’s when you have locations in six major metropolitan markets, $123,000,000 in seed money raised and a Street valuation of about $800M. Not bad for a real estate/tech hybrid that started in one of it’s co-founders apartments on Jane Street just three years ago. But when we talked recently to the CEO of Compass we were reminded that we’re only just getting started. More cities coming. Stronger relationships with agents. The most creative marketing to serve our clients. Better technology for all. Here are Five Questions with the one and only Robert Reffkin. Enjoy the ride!
Q. One of our favorite lines we’ve heard you quote is from the mouth of Mahatma Gandhi, “First they ignore you, then they laugh at you, then they fight you, then you win.” Where do you see Compass’s place on that spectrum on both local and national levels?
A. As the company expands across the country, each local office travels this lifecycle at its own pace. Launch date, geography, and the nuances of unique real estate markets have tremendous impact, and so we approach every region as its own entity. But encouragingly, as we progress, we’ve seen a sequential shift: rather than ‘push’ our way into new markets, we’re now heeding a distinct ‘pull’ from local leaders who actively welcome us into their communities. As markets nationwide grow ever more receptive, we edge closer toward the successes of that final stage.
On a national level, we’ve clearly encountered evidence of resistance within the industry, as competing brokerages take legal action against us. What buoys us is that of these suits, we have yet to be found guilty of wrongdoing. Anytime a company disrupts norms with new ideas or products, they can expect to meet resistance — in fact, I view these cases as a sign that we’re doing something right. We’re certainly in good company, too: Google, Apple, Uber, and countless others have all fielded — and dispelled — similar accusations since their inceptions.
Q. Why do you think the technology behind Compass inspires such curiosity (and in some areas, contempt) from the larger real estate community? Are there any predominant misconceptions you’ve noticed?
A. Rather than the technology, it’s why we’re creating it that’s so revolutionary. What we’re doing is collaborating with the agent community and seeking to improve their operational experience in an entirely new way. In reality, it is because our company is founded by entrepreneurs, not managed by custodians, that we’re able to relate to our agents as the business leaders they are.
The more common misconceptions, on the other hand, question our company identity: Are we first and foremost a technology company? Will we sell quickly? How can we call ourselves a luxury brand? The answers all return to a singular point, that our two core pillars — real estate and technology — are integrally intertwined. We are indeed both a tech startup and a real estate brokerage, and our success in both arenas is reliant on this unique and opportune positioning. So no, we will not be selling, nor will we shift the focus of our platform. And while no national luxury real estate brand currently exists, the fact that the GCI among Compass agents is 20x the NRT national average primes us well to become the first.
Q. We’ve often heard you say “There are no great companies without great culture,” and Compass has one of the greatest corporate cultures out there. As CEO, how do you create a culture? Is it a set of ideals you establish at the outset? Is it something that evolves organically over time? And lastly, is the company culture you created the one you set out to build?
A. Our People & Culture team have done a tremendous job creating an authentic culture. Rather than focus on public perception, I’ve always believed that investing in our agents, staff, and consumers would result in a true culture of excellence. Developing a company identity is always an evolving process, but where Compass is today certainly exceeds anything I could have expected three years ago. The truest evidence of this? After accepting our offer, an agent recently told me that his former brokerage called him to ask why he had decided to join. The agent responded, ‘because Compass has one thing that you don’t. Passion.’
Q. Real estate agents are independent contractors. Traditionally, this type of employment encourages more of a mercenary mentality. Agents at Compass are also independent contractors, but the environment is unquestionably collaborative and supportive. What’s the secret to fostering an atmosphere where competition is a way of life but where all the kids play so nicely together in the sandbox?
A. It starts with our agent outreach and the strength of the resulting community. By recruiting from the top 10 percent of each market we enter and extending offers to only 17 percent of those who apply, we create a sense of confidence and security among our agents. With every agent being valued and heard, there exists no need to compete internally for resources. It’s from this individualized attention and culture of achievement that we’ve fostered collaboration and mutual support; after all, the best want to work alongside the best. Today, I am very proud to say that Compass has a 98 percent agent retention rate, a rarity among independent contractors.
Q. Whenever anything monumental is built, there are challenges. Put another way, some days are a whole lot harder than others! Other than your own steely conviction, how did you power through some of the dark times early on when you were building this business?
A. We’re still building! It’s been with a tremendous amount of work that we’ve expanded across the country, but when the opportunity is there, you have to take advantage of it. I discovered long ago that negativity wastes a great deal of much-needed energy. What keeps me going — in work and in life — is envisioning the successes on the other side.
Some people go to startups only to quit when the excitement and novelty dwindles, but it’s longevity in the market that is the measure of success. Plenty of companies launch only to quickly fail; remaining relevant, iterating, and striving for excellence beyond that inception stage is how you become the one that makes it. That’s what I like to remind myself when the days feel long.
