Aiming to Dominate Real Estate Brokerage: Robert Reffkin, CEO of Urban Compass (Part 5)

Sramana Mitra: You said you raised a lot of money. What’s the total amount of financing you raised?

Robert Reffkin: $73 million.

Sramana Mitra: Why have you raised so much money? What have you done with that money?

Robert Reffkin: We raised $73 million because we wanted to hire the best people we possibly could.

Sramana Mitra: The large part of that $73 million is in people?

Robert Reffkin: Virtually, all of it is in people. We still have a vast majority of it.

Sramana Mitra: What’s the customer acquisition strategy?

Robert Reffkin: Our customer acquisition strategy is to hire great agents because great agents have their customers.

Sramana Mitra: You’re basically getting agents from good real estate companies who have good relationships in the community that they serve.

Robert Reffkin: In New York, we’ve hired some of the top agents.

Sramana Mitra: I think I understand the business and I understand what you’re trying to do and how you’re trying to do it. Is there anything else that you want to share something that illustrates your story? Do you want to share any metrics that are interesting?

Robert Reffkin: Our website traffic has gone up to 57% year over year, which is higher than any other New York city brokerage. We’ve had 100% retention of our agents.

Sramana Mitra: You said you’ve raised the last round of financing at a $360 million valuation. Is your revenue aligned with that level of valuation?

Robert Reffkin: I can’t speak about revenue unfortunately.

Sramana Mitra: One of the things that’s going on in the industry right now is that the late stage venture capital deals are highly overvalued. The public market is not going to tolerate that kind of valuation. This is a question that is coming up in conversations all the time in the Valley right now – how does this bubble get rationalized? Would you like to comment on that?

Robert Reffkin: Yes. Investors give high valuation to fast-growing companies. It’s a function of cash flow, growth gap cash flow, and risk for the growth. Those are the three factors that drive valuation. If you can create a company that can, over time, grow very fast and become the market leader, then those valuations are justified. I think the way investors think about it is certain technologies allow certain companies to have a competitive advantage that their peers cannot replicate. If you think about what we have—21 engineers primarily from Google, Twitter, and Facebook, it’s very difficult for peers to hire any of them. Most real estate companies outsource their technology to third-part technology providers. That’s a real advantage. Technology in certain industries can be disruptive. If it’s difficult to replicate for the incumbents, it can be a great investment.

This segment is part 5 in the series : Aiming to Dominate Real Estate Brokerage: Robert Reffkin, CEO of Urban Compass
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