Aiming to Dominate Real Estate Brokerage: Robert Reffkin, CEO of Urban Compass (Part 6)

Sramana Mitra: I think that’s only partially true because the level at which valuations are going out of control right now is way beyond the kind of rational justification that you presented.

Robert Reffkin: Uber has raised $40 billion. You can say that’s a huge valuation. If a majority of cars in the country are Uber, then it’s not. All you have to believe is one thing—that using Uber for a year for all of your transportation needs would be half the cost of owning your own car. If you believe that can happen, which is a very easy argument, then Uber will dominate transportation across the world. If they dominate transportation, there’s a lot of interrelated services that they can put on top of that.

Sramana Mitra: Let me give you a counter example. We just saw a complete implosion of Fab, which raised a lot of money and had similar kinds of grandiose rationale. Obviously, it did not play out. Investors were piling money on it until they imploded.

Robert Reffkin: I’d go back to my earliest point which is how differentiated are you. There are many Fabs. Uber and Lyft don’t have any other competitors. One of them will win. Just like Google and Yahoo—there weren’t that many; one of them had to win. Similarly in real estate, one company will win. Investors are going to back the team that has the most talent that can be that winner.

Sramana Mitra: This assumption that one company will win in real estate and one company is going to win in transportation, I find it hard to believe. Why does it have to be one company that’s going to win? At the end of the day, these are not complicated technologies.

Robert Reffkin: When I say win, they have 30% share.

Sramana Mitra: If you put it that way, I am completely in agreement with you.

Robert Reffkin: What I meant was market leader. You look at eBay, Amazon, and Google, they’re market leaders. In retail, investment banking, oil and gas, it’s much harder to become the single market leader unless you are a technology-based company. It gets back to why investors are trying to identify the team they believe can be their market leader powered by technology.

Sramana Mitra: Right. In the process, they create a bubble. I don’t dispute any of the other things you said, but I think that the market is highly overvalued. Pre-IPO private late-stage venture capital market is highly over valued.

Interesting story. Thank you very much. Good luck!

This segment is part 6 in the series : Aiming to Dominate Real Estate Brokerage: Robert Reffkin, CEO of Urban Compass
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