The word “startup” has become an ingrained addition to our modern lexicon.
Typically, one would be inclined to associate the term with a small company that’s developed a handy mobile app.
Perhaps it uses technology to automate a service that once required more effort on the user’s part. Maybe it answers a problem that we never actually knew existed in the first place.
But then there’s Compass. Now a leading residential brokerage in New York, the company has yet to celebrate its third birthday. Yet, in 2015, it secured $125 million to invest in its future and listed $4 billion worth of real estate inventory.
“There is a group of people that invest in Compass because they see tremendous potential for a future real estate brokerage that combines principles and methods that I think are the future of the business,” president Leonard Steinberg told Brokers Weekly.
The “principles” that Steinberg is talking about is a commitment to fostering a pleasant and productive experience for clients. Obviously, this is far from unique. Not many businesses strive to not leave the clientele satisfied and eager to return.
It’s the “methods” that have allowed Compass to stand out.
“We’ve grown faster than any other brokerage because we’ve hired a great engineering team,” Robert Reffkin, CEO and co-founder of Compass told Brokers Weekly. “We’re building a fast growing brokerage that’s powered by technology.”
Reffkin, whose background includes time as a White House Fellow, said that he and fellow co-founder Ori Allen took a long hard look at the current business landscape. Determined to start their own tech-based company, the duo looked for the industry that was lacking the most in the way of technological advancement.
Not surprisingly, real estate was ready and waiting for an infusion of modern tech.
“The average agent, if you asked them, ‘What has your brokerage created that you didn’t have three years ago but have now?’ The average agent will say nothing,” said Reffkin.
“If you look at the iPhone, every year it gets better. It integrates software updates every month.”
Reffkin, whose mother was an established real estate professional, understood what an injection of technology could do for the luxury real estate market.
Both he and Steinberg said that the more time brokers can spend focusing on their clients as opposed to the minutia that comes with finding the ideal home and closing on its purchase, the stronger the company will be.
Julia Hoagland, a former Brown Harris Stevens agent who joined Compass in the Fall of 2014, said that her current employer has developed a “different way of approaching the execution of the business.”
“Reffkin and Ori Allen are two exceptional business and technological minds respectively,” continued Hoagland. “They came together to develop a way of doing business that made more sense by leveraging technology.”
Hoagland said that the suite of technology provided to her by Compass has allowed her to minimize the time spent on what the company calls “non-core tasks.”
The digital — and constantly updated — analytical applications at her disposal handle necessary preparations such as measuring median sale prices in the area, or narrowing down the pool of potential buyers when it comes time to pitch a property.
“My best use of time — and what I should be doing all the time — is interacting with clients and analyzing data, not prepaing that data for analysis,” said Hoagland.
“When I’m not focused on the non-core tasks, it gives me a chance to move into a space where I can truly exercise creative muscles and think of better ways to maximize value for our clients,” she added. “It’s a leveraging of time.”
“We are creating technology that is so simple to use that it is intuitive,” said 50-year-old Steinberg.
“All of our technology is built in-house. All the technology is interconnected, inter-related and simultaneously created,” he said. “Pretty much everyone else outsources not only the technology maintenance, but also the technology creation.”
“If you’re updating every two or three years, what happens in between?” he added.
“I think the investors have seen (what we’ve created), recognized it, and are willing to back it because they believe it has a really important role in the future of the real estate brokerage industry.”
While Reffkin is incredibly proud of the technological aspect that makes Compass unique, he and his team stressed that the brokerage is an “agent driven” operation.
“We’re building tools for brokers,” said Reffkin.
“We’ve been expanding into a number of markets and a lot of the attention that the company has been paying has been to improving the quality of experience for our agents,” Christina Allen, VP of product told Brokers Weekly.
Allen said that if the agent’s jobs are made easier, then they’ll be able to provide a better experience for the client.
“The products that we’ve launched to our agents have been incredibly well received,” Allen said.
She mentioned that many of the current Compass agents have remarked how much smoother their day-to-day has become now that a bulk of their prep work is done for them.
Reffkin told Brokers Weekly that his goal is for Compass agents to spend 44 percent of the time dedicated to a transaction with the actual client(s). Tools that inform a broker exactly what a fair sale price is at that very moment in real time save them a substantial amount of manual research.
“Our goal is to really connect people as seamlessly as possible to the homes that they want to be in,” said Allen.
“Data needs to be usable, it needs to be intuitive,” she said. “If I’m going to buy a place in Tribeca, or if I’m going to buy a place in Dover, Massachusetts, what’s happened (in the neighborhood) in the last three months?”
Moving forward into 2016, Compass will look to expand it’s outreach and entrench itself on multiple markets on both coasts. Since launching in Manhattan in 2013, the firm has opened offices in Los Angeles, Brooklyn, Washington D.C., Miami, Boston and the Hamptons. It plans to bring its scalable and proprietary technology to additional cities in the coming months.
As for New York, there are already about 200 agents in the region alone.
Compass occupies over 100,000 s/f of office space in New York City with its main offices at 90 Fifth and 390 Park. The offices embrace the modern tech advancements in more ways than one. While the brokers are perfecting their craft with the help of analytics, they’re surrounded by the open floor plan environment that startup culture has become known for. Not many real estate brokerages house a pool table and ping pong.
“Between our active and new development pipeline, we have over $4 billion of listings just in Manhattan,” said Reffkin.
“Our goal isn’t to be the biggest, it’s to be the best. The best agent as defined by, if you’re a great agent you want to be at Compass. We want to be a place where great agents want to work.”
“We look at agents as key culture carriers in the company that we’re building,” added Reffkin. “The Achilles heel of this industry is that they don’t value culture.”