I have been house hunting lately and my agent works for Compass. The website experience kind of sucks. Horrible mobile experience, lots of UX glitches, it’s just annoying to use. In fact, half the time we are using StreetEasy to look at listings (they are a local competitor). Other than that, your buying experience is completely based on the quality of your agent and how well he can navigate your market. Not sure how Compass gets an edge there, but I will say my agent is great!
emilsedgh 1135 days ago [-]
They got VC money by pretending to be a tech company.
Then they set up very good branding.
Then they used the VC money to acquire best agents.
So their edge is not tech, but branding + good offers to agents.
doitLP 1135 days ago [-]
Yep, this is what they did.
They swept through all the big markets a couple years ago and got all the top-selling agents by offering amazing packages. My brother was a top agent in Austin and he got stock, excellent brokerage rates, a lucrative bonus program and a huge stipend for marketing, branding and even 40k toward hiring an assistant. It was an offer no other brokerage could match and he and basically everyone he knew went to Compass.
tamade 1135 days ago [-]
Some of these top brokers have already started to bail. They've also cut back on their Compass Concierge service, which is just an interest-free loan for sellers to dress up their homes. Guess all that Softbank cash is starting to run out...
kin 1134 days ago [-]
Actually, I can tell you that their original strategy was to have exclusive listings. Last year because Compass had so many agents, they were able to "preview" listings on their site days before MLS. Their hope was that this edge would attract users into using Compass to search for listings over RedFin/Zillow/etc. Fortunately, this practice was banned and they no longer have that card to play.
melomal 1135 days ago [-]
The unicorn playbook. There's going to be VCs on LinkedIn trying to explain why this is such a good long term play...
piokoch 1135 days ago [-]
What if someone jumps in with a even better offer for agents (fed also by VC money) to "disrupt" Compass? Wouldn't this sink Compass?
1135 days ago [-]
Justsignedup 1135 days ago [-]
we got a sales pitch from them
basically "we have a culture that the big agents can't and that attracts the best agents to us" so basically culture + back-end not horrible tech = massive success.
sloreti 1135 days ago [-]
StreetEasy is far and away my favorite real estate platform and it’s a shame they only serve NYC.
username2021 1134 days ago [-]
StreetEasy is owned by Zillow
Axsuul 1135 days ago [-]
Compass is a real estate technology company that provides an online platform for buying, renting, and selling real estate assets.
There's no technology, it's WeWork 2.0 (heck, it's even funded by SoftBank).
benhoyt 1135 days ago [-]
Compass is partially funded by SoftBank, but the rest is not true -- there's a whole lot of tech behind it (source: I used to work there as a software engineer). It's mostly tools for agents, and some tools for consumers. They pull in dozens of real estate feeds, normalize and index them and make them searchable; they have a decent app for agents to keep track of listings and contacts; they have a marketing tool that allows agents to produce nice brochures of their listings; they have some newer tools to allow creating videos from photos with one click; and lots more.
tamade 1134 days ago [-]
I've been a Compass client for several yrs and have generated ~$100m of the "Gross Transaction Value" they crow about in their S-1 (bs metric to focus on, since Compass only earns commissions of 3~5% of that). Most of the tech they promised in their initial pitch either doesn't exist or is outsourced to third-parties. Even basic services such as marketing/SEO in our market is handled by 3Ps. From a client POV, nothing differentiates them from other major brokerages. At the end of the day, RE is a people biz; I've stuck with them because I like the agents we work with. If these agents were to jump ship, I'd leave as well.
username2021 1134 days ago [-]
It’s a tech enabled brokerage but not a tech company. It’s a services company. The technology ingesting a bunch of IDX feeds and making them searchable is decades old functionality that literally every large brokerage in the country has. Redfin is far ahead in the agent technology space and operates far more effectively. If they classify as a technology company then so does every competing brokerage in the space (Keller Williams, Coldwell Banker, etc)
santa_boy 1134 days ago [-]
I am working on a real estate product for agents. Wondering if you can critique / provide inputs on a SaaS model for agents. Could I email you? Thx!
benhoyt 1134 days ago [-]
Not sure if you were replying to me, but sure, go ahead -- my email is on my website (which is in my profile).
username2021 1134 days ago [-]
Keller Williams was the Compass of the 2000s, has more robust technology, more market power, and 10x more agents. They are closing 100s of billions in gross sales each year. Compass can’t touch them or their model.
DevKoala 1135 days ago [-]
It looks a lot like Zillow. Do they also advertise mortgage rates? I couldn’t find that. That is one of my favorite Zillow features.
dillondoyle 1135 days ago [-]
That's my guess at where real disruptive $ could be; actually vertically integrate and originate loans + sleeker/lower fee real estate transaction. If they corner enough inventory they could probably eliminate many human agents too
adeelk93 1134 days ago [-]
I said this elsewhere in this thread, and I’ll say it again here: what you’re describing is Redfin. They’ve been originating loans for a couple years now, and creating that efficient vertical integration.
username2021 1134 days ago [-]
Zillow does this at greater scale than Redfin. Coldwell Banker also has an affiliated loan arm of their business (Princeton Capital). The difference is that Redfin is a broker whereas Zillow is not. Zillow has 20x the traffic and reach of Redfin plus the originate mortgages and provide instant offers. Because Redfin and Compass are brokers, they have more legal restrictions on how they offer these services to others that limits their reach
dillondoyle 1134 days ago [-]
sounds like a good business model!
though redfin doesnt seem to have online listings anymore though (maybe they never did but i thought they used too).
carvana's experience is pretty great. a house is not the same as a car, but still seems like there could be a lot of improvement still
twostorytower 1135 days ago [-]
$270M loss on $3.7B in revenue. If they can get opex down, there's some serious money to be made and a lot of growth left here. In my neighborhood I'm seeing more and more houses go up for sale with Compass signs.
nknealk 1135 days ago [-]
Their single biggest expense is “commission and other transaction related expenses” which clocks in at just over 3B. I don’t know how much control they really have over commissions.
choppaface 1135 days ago [-]
True but maybe the “industry standard” agent cut is open for “disruption.” (Personally I can’t fathom what the agents do today that adds $10k-$100k of value). They’ll find some data to support that they make agents more efficient and then reduce their cut. And when the agents complain, there aren’t going to be many people crying for them, especially the ones on Bravo.
adeelk93 1135 days ago [-]
Redfin is that disruption you’re describing, not Compass. Having worked with both, Compass tries to come off as more “premium” than “economical.”
rossdavidh 1135 days ago [-]
If you're making a purchase/sale of several hundred thousand dollars, having someone with you who has done this many times before is easily worth 5% or so. Is every agent good? Well certainly not. But it's a high-stakes transaction that most people have never done before, or have done only once before, so having a veteran of many such transactions walk you through it is easily worth a few percent of the total cost.
webdood90 1135 days ago [-]
> easily worth 5%
Easily worth a couple grand, maybe. A percentage like that? No chance in hell.
bostonsre 1135 days ago [-]
Why haven't commission percentages gone down over time? It seems like a massive margin that should be trimmed down by competition. I would think there would be more than enough room to under cut the standard rates, cover costs and still make a healthy profit. Is there a low supply of realtors that causes them to be in high demand and helps them keep up their commissions or something like that?
nrmitchi 1135 days ago [-]
The National Association of Realtors controls a huge percentage of real estate transactions, and works to make sure it doesn't drop, to the point where there are multiple open anti-trust lawsuits. For example: https://www.justice.gov/opa/pr/justice-department-files-anti...
Basically, if you don't play the Realtor game and agree to pay those commissions, it's difficult to participate in the market at large.
wombat-man 1135 days ago [-]
Yeah I mean you're kinda paying to make everything go smoother and ideally their experience in the market will help prevent you from making an expensive mistake. As long as you have a good one, of course.
bostonsre 1134 days ago [-]
Ah, thanks.. that makes a lot more sense then. Hopefully the justice department stops that BS rent seeking crap.
exclusiv 1135 days ago [-]
Can you negotiate 5%+ more salary if you know what you're doing? Yes. Yes you can. That's easy.
Half goes to buy side though normally. Although some firms try to "double pop" it and represent both sides. That should definitely be illegal everywhere.
There are a lot of terrible agents though that aren't worth it. It's a low barrier to entry with a very high upside. Not many career opportunities like it.
Buy side can be a ton of work though for the same payday as sell side. Agents and owners offer commission to the agents to make it worth their while.
If there weren't any buy side commissions, you'd get less interest, because no buyers agent would ever refer you to a house they can't make money on. Unless they had a conscious AND they hadn't already spent a bunch of time on you.
But at some point if you want a house that had no buy side commission and you locate it (Zillow or a sold by owner site), you're going to buy it without your buyer's agent.
So it could easily head the way of the hotel industry where the buy side is virtually non-existent.
jankassens 1135 days ago [-]
I'd love to see the typical breakdown of where those 5% go in a hot market like San Francisco. At a median price of $1.5mil, that's $75k in commission. I never bought a home, but that seems like it should buy a lot of services.
choppaface 1135 days ago [-]
In a market like SF, or on Million Dollar Listing, I think the argument towards the commission is that the agent will either save you that much through negotiation (or earn you more through inflation) and/or they will get you something that you couldn't get otherwise (e.g. an unlisted property or a celebrity buyer). That said, I imagine the agents' return-on-arbitrage is actually even higher at the top price points, and even harder to quantify because deal details can be obfuscated (e.g. through LLCs etc).
lawnchair_larry 1135 days ago [-]
Agents don’t negotiate on your behalf. They present all offers.
tamade 1134 days ago [-]
The typical 5% is split 50/50 between the buyer and seller brokers and paid by the seller. If the agent represents both sides, there's usually a discount, e.g. 4% total. Additional broker incentives, e.g. extra 0.5% to the buyer broker, may increase the commission
lawnchair_larry 1135 days ago [-]
No, it really isn’t. The price only exists because of the MLS cartel, which is finally starting to crack.
dmode 1135 days ago [-]
Isn’t the revenue number kind of misleading ? Essentially it seems like it is the total value of the transaction and their revenue should essentially be the take rate from the transaction.
username2021 1134 days ago [-]
The broker controls commission splits so they have all the control. The problem is that if they don’t offer fantastic commission splits to agents then the agents will go work for another brokerage. At some point, it’s advantageous to work for a different broker because they’ll offer a better commission split and enable them to standout apart from the crowd.
onethought 1135 days ago [-]
Running realestate commissions through your books to pump your "revenue" seems a bit crappy... So really they have 700mil revenue.
twostorytower 1133 days ago [-]
I think it's actually correct in accounting terms, but their COGS will be high.
1135 days ago [-]
honopu 1135 days ago [-]
If they drive leads, they can capture a percentage of leads they generate for in house agents. This is why Zillow went commission split on transactions, it’s much more lucrative once you have a lead pipeline.
vineyardmike 1135 days ago [-]
> On the date of this prospectus, Robert Reffkin, our founder, Chairman and Chief Executive Officer, will hold all of the shares of our Class C common stock
> Each share of Class A common stock is entitled to one vote per share. Each share of Class C common stock is entitled to 20 votes per share
I'm surprised no one has proposed laws trying too crack down on founders have super-control of their company through stock voting power shenanigans. For example, I hear a lot of critique of facebook due to absolute control from Zuck' and his voting control - the remaining shareholders are unable to vote him out or otherwise exert control
Edit: not explicitly saying its bad for business or anything like that, just surprised it hasn't been regulated away.
superfrank 1135 days ago [-]
If you want to see some messed up voting rights, look at Palantir.
It's super complicated and I'm glazing over a lot of the details, but my understanding is that the founders have "founder's shares" and no matter how many of these they have, whether it be one or one million, these shares control 49.9999% of the votes. They are allowed to designate which of their shares are and are not "founder's shares" and alter this pretty much on a whim.
Because it's so complicated, and because the amount of common shares changes depending on how many shares are designated as "founder's shares", they also don't ever have to tell people how much voting power common shares have, even as a vote is happening.
It's actually funny reading all the legalese that just boils down to, "we're can do whatever we want".
And yet Zucc has increased the value of the company sevenfold since IPO. I don't love Zucc either but there is definitely something to be said for allowing the CEO to execute on their vision without being beholden to the tale of the hour and the spectacle of quarterly earnings.
dcolkitt 1135 days ago [-]
And I agree that Zucc's been an incredible CEO. But for every Facebook, there's about 50 companies that were run into the ground and pilfered by management on the way down because of inadequate corporate governance.
InvertedRhodium 1135 days ago [-]
Not only that - but there is nothing to say that it wouldn't have performed just as well, if not better, with a different CEO.
detaro 1135 days ago [-]
There's probably been proposals, but I guess the fundamental argument remains that as long as it is clearly documented, investors know what they are getting into, and it hasn't gone wrong loudly enough yet (I think most high-profile examples are doing quite well, financially) to sway opinions otherwise.
(EDIT: And the main group being "forced" to invest and can't just skip such companies are index funds, who generally don't take an active position anyways?)
ericd 1135 days ago [-]
Yeah, honestly I prefer to invest in companies whose founders are firmly in control so that they can take a longer, strategic view.
bradleyjg 1135 days ago [-]
Some of the biggest indexes, including S&P500, now exclude new entrants with multiple equity classes.
bostonsre 1135 days ago [-]
It seems like behavior that the SEC should be pushing back on. They're charged with protecting investors and it seems like investors having no say in company management would be in conflict with that charge.
vineyardmike 1133 days ago [-]
Well said! This is the reasoning that I had when posturing the question.
boh 1135 days ago [-]
There's no case to be made that "super control" inherently leads to unethical behavior. It may, however, negatively impact the stock price, since less investors will likely want to invest in a company with limited controls on governance. Most companies aren't Facebook and don't have Facebook growth, so ignoring them is an option.
bostonsre 1135 days ago [-]
Why is there no case to be made? It would be interesting for someone to investigate if it hasn't been already. I'm curious if that "absolute power corrupts absolutely" saying is just a saying or if it has a basis in reality. I can't recall many benevolent dictators for life from my history classes.
boh 1135 days ago [-]
This comment is in reference to the voting rights attached to common shares. This would have likely not been covered in your history classes.
bostonsre 1134 days ago [-]
> There's no case to be made that "super control" inherently leads to unethical behavior.
You are saying it like it's been proven. What are companies where is gone well? I can't think of many examples whether inside or outside of the market where absolute control has gone well.
boh 1134 days ago [-]
Voting rights don't give you "absolute control".
bostonsre 1133 days ago [-]
Seems like you are splitting hairs and arguing about semantics. If you don't want to call it absolute control then it's whatever is currently in place at Facebook where Zuckerberg has majority voting rights and has stacked the board with yes men. He controls policy, he controls the direction of the company. If that's not controlling something absolutely, then what is it?
boh 1132 days ago [-]
Semantics denote meaning, so splitting hairs on the meaning of a statement is an adequate subject for argument. You're making broad assumptions about the nature of voting rights in general by referencing an individual narrative regarding one company. You're also oversimplifying the narrative. The aggregate activities of a company cannot be denoted through some parable about an evil man with "absolute power". Rest assured, whatever has happened with Facebook was a team effort involving many different stakeholders.
bostonsre 1132 days ago [-]
> The aggregate activities of a company cannot be denoted through some parable about an evil man with "absolute power".
Where was evil mentioned at all? Why is comparing countries with dictatorships to companies where majority ownership is held by one person not allowed? Are you really saying there are no commonalities between the two at all and any similarities are to be outright ignored because they're not the same? Of course they are not the same, but they are both massive bureaucratic organizations where a few individuals have an iron grip on control.
> Rest assured, whatever has happened with Facebook was a team effort involving many different stakeholders.
I'm not sure the past of facebook matters, what is its state right now? To me, it looks like zuckerberg has stacked the board with yes men and there is not a single thing that anyone can do from within the organization to go against him. Call it whatever you want, but he seems to be controlling it pretty absolutely at the moment. He _literally_ idolizes and models himself after Agustus Caesar. He sees the use in studying historical tyrannical governments, so it seems possible to me that there could be something useful in the comparison and that it shouldn't be dismissed outright because it's not exactly the same.
djrogers 1135 days ago [-]
> I'm surprised no one has proposed laws trying too crack down on founders have super-control of their company
I think your proposal explains the problem here - it’s their company. If we remove this option for control, we’d likely see companies like this stay private or private-ish in order to retain that control.
InvertedRhodium 1135 days ago [-]
I actually came here to ask why this is setup in this manner and I already find a partial answer! To extend a bit further - what possible motivation could there be to prompt someone to exchange more valuable Class C shares for Class A shares at a 1:1 basis?
bradleyjg 1135 days ago [-]
Only A shares are tradable. So if he wants to turn some of that paper wealth into money he needs to convert the shares first.
xyzelement 1135 days ago [-]
There's a bit of confusion in the comments a about the company. I had researched it a bit while interviewing there so I want to clarify although what I say will not be complete.
First compass is a real estate agency. They have agents (realtors) all over the country and the way they make money is through real estate commission.
To the extent that they have a public facing real estate search site akin to zillow, I believe the point is that it connects people with compass agents to represent them (whereas I think on zillow/trulia is just connects you to randos who paid for leads)
However the primary angle is that compass builds great tools for their agents. So the idea is that the tech makes the agents better at their jobs which in turn helps them service buyers and sellers better which in turn drives business.
I can see this angle make sense.
We are currently house shopping (not via a compass agent) and the agency's it system is clearly not that great for either us or the agent (eg when they send us listings it's not that smooth). Presumably would have been way better tech wise if we went w compass.
So that's the angle I think. Their tech and product people are solid, from my conversation. Lots of ex FAANG folks.
And finally there are comments below that don't understand why a realtor can charge the commission they do - it's because they are enabling you to navigate a high stakes, non commodity transaction and their local knowledge/network/etc matters. You could certainly try to do it yourself but unless you are going to dedicate full time to it you will just never buy anything except in a truly buyer's markets which we are not in.
abeppu 1135 days ago [-]
I see Compass signs all over the place. What makes them interesting here? Are they doing something that every other large real estate company isn't also doing?
pyrophane 1135 days ago [-]
Yeah, they've raised a whole hell of a lot of VC money and are using it to buy up market share by luring top agents away from other companies.
They also have also have a nicer tech platform and recommender system, from what I understand.
xenihn 1135 days ago [-]
I don't know the details of the platform, but I heard from friends who work for them as realtors that (supposedly) no one on the realtor side actually uses any of it. Compass pays the most, though, at least in the bay.
1290cc 1135 days ago [-]
This is a company that helps realtors more than home buyers/sellers. The realtor business is a patchwork of messy solutions and mom/pop shops. Compass has brought many realtors into the modern age with managed business processes and a way to leverage all the tech behind managing home sales.
My realtor switched from his own excel sheets to their way of doing things and loves it.
Don’t miss the part where they do a huge, splashy, expensive electronic redesign of the classic realtor For Sale sign only to trash the whole concept.
Dowwie 1134 days ago [-]
I was a solo, technical founder on a true tech venture for real estate and property. There are many reasons why the 20th Century business model for real estate services persists today. Technology innovation cannot alone solve the challenges that entrepreneurs face in this domain. If you are currently working on solving these problems or have a strong interest in dedicating yourself to them, I'd like to connect. I've been building for several years and bring real tech assets to the table (secure, high performance systems written in Rust).
oh_hello 1135 days ago [-]
Does anyone have any familiarity with Compass platform? At first it seemed like the plan was to cut out a huge amount of busy work from agents' load and ultimately reduce the need to keep so many employed. Shaving away the cut paid out to agents would make a lot of sense. However, the story for the last year or so has been that they are simply spending a fortune buying up smaller companies and paying out higher-than-standard commissions.
Was the notion that their technology is their secret sauce abandoned? Did the platform just not meet the stated goals? The promise of their software seems gone and they look like a plain old real estate company trying to buy their way to market share with investment money.
trevor-e 1135 days ago [-]
I used a Compass agent when buying my condo but had no idea they were masquerading as a "tech" company. Their online presence was a lot better than other agencies in the area which is probably what sealed the deal for me, and FWIW the agent ended up being great.
The real estate industry is interesting since it's such an old practice and basically none of the old players (Keller Williams, Re Max, etc) capitalized on the tech boom from what I can see. Instead, companies like Zillow, Redfin, Trulia, and now Compass, all swooped in and established a presence. The MLS database is the last hurdle and it's inevitable that will solved in the next ten years IMO.
Dowwie 1135 days ago [-]
Nothing is inevitable in a multi-billion dollar industry heavily protected by regulators. The industry persists for non-technical reasons.
didip 1135 days ago [-]
Our business has experienced rapid growth. In 2019 and 2020, our revenue was $2.4 billion and $3.7 billion, respectively, representing a year-over-year increase of 56%. Our net losses were $388.0 million and $270.2 million in 2019 and 2020, respectively.
For a company that sells expensive inventories, this falls below my expectation. Compared to Coinbase, given my limited amount of money, I'd rather invest in Coinbase.
sib 1135 days ago [-]
I'm pretty sure that they don't count the value of the homes themselves as revenue when they complete a transaction.
I think they can only count the commissions on one or both sides (depending on whether they represent the seller, the buyer, or both.)
conductr 1135 days ago [-]
Gross Revenue is deceptive in an industry where you pay such a high percentage as commission to your agents. It’s basically a pass through function, they get to brag about a big revenue number even though it comes with a large liability. No measure of profitability will ever be impressive on this business is my guess. Unless there’s something else to it. But based on the comments here, sounds like they just bought a bunch of good agents who will walk as soon as they start trying to reduce their commissions.
matthewfcarlson 1135 days ago [-]
I’ve been looking at houses lately and I don’t understand why I can’t get a predicted score on a house. They know what I want by the filters. Why can’t I filter by houses within a 10 minute drive of a grocery store and a public library (two things that are important to me).
I guess it’s a case of why not built it yourself.
conductr 1135 days ago [-]
Many of the apps allow you to draw polygons on the map. The polygon thing is how they handle the long tail of searches, by giving you DIY functionality.
I just wish having a basic 2D floor plan was a listing requirement/standard. I’ve wasted so much time going to view properties I could have instantly ruled out if I saw the floorplan. Also. This is how I searched for apartments online 20 years ago. Matterport is the new shiny thing and borderline overkill. Nice if you have genuine interest. But during the browsing phase, I prefer the simple 2D format because I can quickly tell if it’s something I’m interested in.
jackemcpherson 1135 days ago [-]
Any company that claims to provide in depth analytics and AI assistance as a value add but spends less than 10% of revenue on Research and Development is a concern.
Their spend decreasing from 6.4% in 2018, to 3.9% in 2020 seems anemic for any firm trying to put out high quality software.
1135 days ago [-]
boh 1135 days ago [-]
Its a little silly how easily a company can categorize itself as a technology company. Many of the IPOs from the past two years suggests having a website and/or having an app doesn't just make you into a tech company (WeWork is a good example of this). Compass is no doubt eager to foster unreasonable expectations for growth that surpasses the business they're actually in (as real estate brokers) and prefer to imbued the magic pixie dust of "engineering" to somehow defy the forces of gravity with Google-like growth. Their argument that growth is a function of their "tech" vs. just old-school, everyday sales (with maybe a good dashboard/messaging app) is pretty weak.
anonu 1135 days ago [-]
Agreed. This point from the S1 stood out:
> on average, 88% of our agent teams used our proprietary technology platform at least once per week,
This doesnt sound like they built some insane tech that everyone needs to use all the time. So how exactly is the <insert buzz word here> a differentiator?
meestaahjoshee 1133 days ago [-]
"...of which approximately two-thirds used it daily"
it's not insane tech but it's not like it's not being touched either.
ampdepolymerase 1135 days ago [-]
Entrenchment through network effect?
fny 1135 days ago [-]
Is AirBnB a tech company? I'd argue their core business has nothing to do with tech, but they've managed to become the biggest broker for temporary rentals in the US. They did need a good amount of tech to scale and be successful which is why everyone thinks of them as a tech company.
In my view, Compass is in the same boat. They want to become the middleman between buyers and agents in real estate. It's a platform play just like AirBnB. Not sure if they'll succeed, but I disagree with the premise that this is just some magic pixie dust. They need tech to scale (and there already seems to be enough to rival AirBnB).
anonu 1135 days ago [-]
First thought: AirBnB didnt really innovate. There was VRBO before it. They somehow got traction through a slightly better platform and more marketing/word-of-mouth. They built a better mousetrap.
Second thought: AirBnB is a marketplace. You have sellers and buyers meeting in a tech-enabled environment with rail guards in place to protect the customer experience (reviews + payment middleman + etc..)
As a recent home purchaser, I totally agree the process needs a revamp. But how does that happen when you're still boasting 10s of 1000s of brokers on your platform. The middleman is still there.
boh 1135 days ago [-]
AirBnB is a website/app/platform, Compass is a real estate broker. AirBnB can leverage the low-cost economics of software, Compass is a real estate broker (and a pretty conventional one at that). Compass is not a middleman, they are the agents.
thunkshift1 1135 days ago [-]
Thats true.. Zillow will mop the floor with compass remains.
pmorici 1135 days ago [-]
On the surface it looks like a Redfin clone with a different color scheme.
kaibee 1135 days ago [-]
Runs a lot faster than Zillow. Presumably because they haven't had time to add all of the analytics and tracking yet? or not as much load due to still being new(er)? Though it shows basically the exact same data as Zillow or Redfin.
RobLach 1135 days ago [-]
Compass's business model is taking VC cash to pay above market rate for realtor labor in an attempt to capture market share purely through more "boots on the ground".
Whether this approach has any long-term value for shareholders seems dubious once the cash injections stop.
Rendered at 23:00:41 GMT+0000 (Coordinated Universal Time) with Vercel.
Then they set up very good branding.
Then they used the VC money to acquire best agents.
So their edge is not tech, but branding + good offers to agents.
They swept through all the big markets a couple years ago and got all the top-selling agents by offering amazing packages. My brother was a top agent in Austin and he got stock, excellent brokerage rates, a lucrative bonus program and a huge stipend for marketing, branding and even 40k toward hiring an assistant. It was an offer no other brokerage could match and he and basically everyone he knew went to Compass.
basically "we have a culture that the big agents can't and that attracts the best agents to us" so basically culture + back-end not horrible tech = massive success.
https://www.compass.com
though redfin doesnt seem to have online listings anymore though (maybe they never did but i thought they used too).
carvana's experience is pretty great. a house is not the same as a car, but still seems like there could be a lot of improvement still
Easily worth a couple grand, maybe. A percentage like that? No chance in hell.
Basically, if you don't play the Realtor game and agree to pay those commissions, it's difficult to participate in the market at large.
Half goes to buy side though normally. Although some firms try to "double pop" it and represent both sides. That should definitely be illegal everywhere.
There are a lot of terrible agents though that aren't worth it. It's a low barrier to entry with a very high upside. Not many career opportunities like it.
Buy side can be a ton of work though for the same payday as sell side. Agents and owners offer commission to the agents to make it worth their while.
If there weren't any buy side commissions, you'd get less interest, because no buyers agent would ever refer you to a house they can't make money on. Unless they had a conscious AND they hadn't already spent a bunch of time on you.
But at some point if you want a house that had no buy side commission and you locate it (Zillow or a sold by owner site), you're going to buy it without your buyer's agent.
So it could easily head the way of the hotel industry where the buy side is virtually non-existent.
> Each share of Class A common stock is entitled to one vote per share. Each share of Class C common stock is entitled to 20 votes per share
I'm surprised no one has proposed laws trying too crack down on founders have super-control of their company through stock voting power shenanigans. For example, I hear a lot of critique of facebook due to absolute control from Zuck' and his voting control - the remaining shareholders are unable to vote him out or otherwise exert control
Edit: not explicitly saying its bad for business or anything like that, just surprised it hasn't been regulated away.
It's super complicated and I'm glazing over a lot of the details, but my understanding is that the founders have "founder's shares" and no matter how many of these they have, whether it be one or one million, these shares control 49.9999% of the votes. They are allowed to designate which of their shares are and are not "founder's shares" and alter this pretty much on a whim.
Because it's so complicated, and because the amount of common shares changes depending on how many shares are designated as "founder's shares", they also don't ever have to tell people how much voting power common shares have, even as a vote is happening.
It's actually funny reading all the legalese that just boils down to, "we're can do whatever we want".
https://techcrunch.com/2020/09/21/palantir-is-not-a-democrac...
(EDIT: And the main group being "forced" to invest and can't just skip such companies are index funds, who generally don't take an active position anyways?)
You are saying it like it's been proven. What are companies where is gone well? I can't think of many examples whether inside or outside of the market where absolute control has gone well.
Where was evil mentioned at all? Why is comparing countries with dictatorships to companies where majority ownership is held by one person not allowed? Are you really saying there are no commonalities between the two at all and any similarities are to be outright ignored because they're not the same? Of course they are not the same, but they are both massive bureaucratic organizations where a few individuals have an iron grip on control.
> Rest assured, whatever has happened with Facebook was a team effort involving many different stakeholders.
I'm not sure the past of facebook matters, what is its state right now? To me, it looks like zuckerberg has stacked the board with yes men and there is not a single thing that anyone can do from within the organization to go against him. Call it whatever you want, but he seems to be controlling it pretty absolutely at the moment. He _literally_ idolizes and models himself after Agustus Caesar. He sees the use in studying historical tyrannical governments, so it seems possible to me that there could be something useful in the comparison and that it shouldn't be dismissed outright because it's not exactly the same.
I think your proposal explains the problem here - it’s their company. If we remove this option for control, we’d likely see companies like this stay private or private-ish in order to retain that control.
First compass is a real estate agency. They have agents (realtors) all over the country and the way they make money is through real estate commission.
To the extent that they have a public facing real estate search site akin to zillow, I believe the point is that it connects people with compass agents to represent them (whereas I think on zillow/trulia is just connects you to randos who paid for leads)
However the primary angle is that compass builds great tools for their agents. So the idea is that the tech makes the agents better at their jobs which in turn helps them service buyers and sellers better which in turn drives business.
I can see this angle make sense.
We are currently house shopping (not via a compass agent) and the agency's it system is clearly not that great for either us or the agent (eg when they send us listings it's not that smooth). Presumably would have been way better tech wise if we went w compass.
So that's the angle I think. Their tech and product people are solid, from my conversation. Lots of ex FAANG folks.
And finally there are comments below that don't understand why a realtor can charge the commission they do - it's because they are enabling you to navigate a high stakes, non commodity transaction and their local knowledge/network/etc matters. You could certainly try to do it yourself but unless you are going to dedicate full time to it you will just never buy anything except in a truly buyer's markets which we are not in.
They also have also have a nicer tech platform and recommender system, from what I understand.
My realtor switched from his own excel sheets to their way of doing things and loves it.
Don’t miss the part where they do a huge, splashy, expensive electronic redesign of the classic realtor For Sale sign only to trash the whole concept.
Was the notion that their technology is their secret sauce abandoned? Did the platform just not meet the stated goals? The promise of their software seems gone and they look like a plain old real estate company trying to buy their way to market share with investment money.
The real estate industry is interesting since it's such an old practice and basically none of the old players (Keller Williams, Re Max, etc) capitalized on the tech boom from what I can see. Instead, companies like Zillow, Redfin, Trulia, and now Compass, all swooped in and established a presence. The MLS database is the last hurdle and it's inevitable that will solved in the next ten years IMO.
I think they can only count the commissions on one or both sides (depending on whether they represent the seller, the buyer, or both.)
I guess it’s a case of why not built it yourself.
I just wish having a basic 2D floor plan was a listing requirement/standard. I’ve wasted so much time going to view properties I could have instantly ruled out if I saw the floorplan. Also. This is how I searched for apartments online 20 years ago. Matterport is the new shiny thing and borderline overkill. Nice if you have genuine interest. But during the browsing phase, I prefer the simple 2D format because I can quickly tell if it’s something I’m interested in.
Their spend decreasing from 6.4% in 2018, to 3.9% in 2020 seems anemic for any firm trying to put out high quality software.
> on average, 88% of our agent teams used our proprietary technology platform at least once per week,
This doesnt sound like they built some insane tech that everyone needs to use all the time. So how exactly is the <insert buzz word here> a differentiator?
it's not insane tech but it's not like it's not being touched either.
In my view, Compass is in the same boat. They want to become the middleman between buyers and agents in real estate. It's a platform play just like AirBnB. Not sure if they'll succeed, but I disagree with the premise that this is just some magic pixie dust. They need tech to scale (and there already seems to be enough to rival AirBnB).
Second thought: AirBnB is a marketplace. You have sellers and buyers meeting in a tech-enabled environment with rail guards in place to protect the customer experience (reviews + payment middleman + etc..)
As a recent home purchaser, I totally agree the process needs a revamp. But how does that happen when you're still boasting 10s of 1000s of brokers on your platform. The middleman is still there.
Whether this approach has any long-term value for shareholders seems dubious once the cash injections stop.