Compass S-1(sec.gov) |
Compass S-1(sec.gov) |
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.
> 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.
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.
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.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?
Whether this approach has any long-term value for shareholders seems dubious once the cash injections stop.
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?)
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.
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.
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
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.
Easily worth a couple grand, maybe. A percentage like that? No chance in hell.
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.
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.
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.