Revolutions: Redfin Case Study
Disclaimer: the views below are of my own and not necessarily of Redfin and its employees.
Redfin has many, many critics. Many of these critics are real estate evangelists and, being critics, are certain that Redfin will fail. They usually make claims like, "When Redfin fails ..." instead of "If Redfin fails ..." Redfin also has very prestigious investors such as Vulcan and Madrona who have invested millions of dollars in Redfin because they believe Redfin will succeed.
This tug-of-war really got me thinking. Redfin is trying to start a real estate revolution, and I'm wondering whose opinion matters the most - critics caught up in current times or investors thinking about the future? I have some opinions.
Critic: "It's impossible!"
In Redfin's case, most of their critics bash Redfin for their business model. They don't think that what Redfin is trying to do will scale. Redfin is redefining the role of a real estate agent, and many of their critics believe that the Redfin-proposed role of a real estate agent just simply won't work.
Investor: “I think it could work!”
Investors have invested in Redfin because they believe that it can succeed. Redfin's investors definitely did some research in the real estate industry prior to investing in Redfin, but Redfin's investors probably aren't as evangelical as their critics.
I believe that if a business will revolutionize a market to better the consumer, then all that matters is their ability to execute and how lucky they are. If the leader of a revolution has the vision and the ability to execute, then I believe that the critic doesn’t matter. Too often are critics' opinions and beliefs plagued with animosity and disgust; they lose credibility because of this. Their emotions outweigh their rational, and their ignorance blinds them from the possibilities of a revolution. Similarly, VCs don't expect all of their ventures to succeed, and very probably their greed clouds their evaluation of the current times.
I suppose what I'm trying to get at is that I believe that Redfin will succeed, and I believe that companies in similar situations to Redfin will succeed. I have a fundamental belief that all companies trying to do a good thing, with an awesome team, at the right time will succeed. Hopefully Redfin's time is now, but I suppose we will see. I believe that as Amazon demolished the e-commerce market and Apple is (maybe?) demolishing the PC market, Redfin will demolish the real estate market and provide a better service to the consumer. Then again, I'm just a punk kid that hasn't been on the block for very long, so maybe I'm either totally wrong or stating the obvious. What do you think? There's a related post here as well.
PS - I think Bloodhound and I have the same WP theme.
Photo story: this photo was taken at my Google APM scavenger hunt; it's of two gay Google employees making out in front of the scare-tactic Christians. Awesome.
April 16th, 2008 - 09:33
Yea!!! Disclaimers are cool. Keep gettin’ racy dogger…Updates cometh.
April 18th, 2008 - 09:29
> I think Bloodhound and I have the same WP theme.
Same basis, anyway. Ours started with 3D spheres in the banner image. I changed the orange to Bloodhound Red and added a lot of custom PHP. I use variations on that theme on five of our weblogs. Looks great here, too.
April 18th, 2008 - 10:51
Sorry, I didn’t mean to seem not to address the post, just got distracted by the PS. I won’t speak for any other critics of Redfin. My own objection was to the company taking the full co-broke while defaulting on the buyer’s agent’s obligations. This practice is going away, and with it my own animosity.
The next level of the argument is that, even with the economies of organizing a real estate brokerage with the task-specialization of a normal business, Redfin will not be profitable, at least not working with buyers. Some transactions cost quite a bit more than they pay, which is a reason why real estate commission are what they are. The inherent socialism of taxing nine easy transactions to subsidize the monster tenth is not just, but this is not something Redfin (or anyone) is addressing.
FWIW, as a matter of general practice, I am in favor of change in the real estate industry. Even if I don’t love particular aspects of the innovation, anything that shakes things up will have salutary consequences in the long run.
Good post. Good ideas spark good ideas. We’ll either fire up the engine of progress or burn down the mission, a net improvement either way.
April 18th, 2008 - 12:48
Thanks for the note, Greg. It’s interesting to me to learn more about your views of Redfin and the real estate market. I admit that I am a selective reader of the BloodHoundBlog, but after reading your note I’ve decided that I should be more in tune with your views, especially if I’m going to write about them. Thanks again.