What happens when a disrupter encounters disruption of its own? Real estate brokerage Redfin stormed the gates of an entrenched industry in 2006 through a lower-fee, internet-fueled model, refunding a portion of agent commissions to homeowners. Like the company’s founders, CEO Glenn Kelman was steeped in software development, and he saw inefficiencies to slash. The market crash in 2008 later put Kelman and his team through their paces, as they struggled to keep the brash new company afloat. Having to get tough during those times forged Redfin’s identity, Kelman notes. Good times bring solid revenues, but when foreclosures swell, he says, “That’s when you find out who you are.” It’s an experience none of his team will forget, he adds, “And if we ever do, please slap me.” Redfin’s birth in dark times has encouraged Kelman to proceed cautiously. The company’s agents are employees, not contractors, another industry-bucking choice Kelman ascribes to his being “a Berkeley ex-hippie.” As this model provides agents greater stability, it also helps Redfin build brand identity through uniform service. That reputation has helped Redfin close more than $31 billion in home sales and saved customers more than $335 million in fees. Today, Redfin serves 83 markets nationwide. Kelman believes Redfin could grow faster and hire more aggressively, but he chooses restraint. He remains excited about Redfin’s prospects for changing the industry, such as using smartphones to make real estate more of an on-demand service, helping buyers evaluate homes from other cities or countries, and streamlining escrow through a completely digital process. “There are so many ways service could be better,” Kelman says, “so many houses to sell.”
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