Leaning into Structural Advantages to Deliver Outsized Real Estate Growth with Robert Reffkin

How important is this to be on both sides of the trade? The real opportunity here is being the company that's focused on creating homeowner value. I think in this space, you have companies that are focused on selling leaves, but not focused on selling homes. Days on market is the killer value. Price drop history is the killer value. Did any homeowner in the country say, I want days on market on my listing? Why is it there? It's all been manipulated. If you go to REA, which of course is like the biggest thing that exists in Australia, there are no negative insights on the listing of any kind. No days on market, no price drop history, no crime weather estimates or of any kind AVMs. I think this world has moved so far to creating buyer insights to negotiate against homeowners that for Compass, we're focused on preserving and maximizing homeowner value. Prominent CEOs, leading economists, iconic investors. Insights from the experts. The Walker Webcast with Willie Walker. See who's next. Welcome everyone, both to the Zellman Housing Conference, as well as those dialing in on the Walker Webcast. Robert, it's great to have you here. Glad to be here. Thanks for joining us. I want to dive right in to your marathoning of random places to start this conversation. In 2007, you decided to go run 50 marathons in every state in the country to raise over a million dollars for charities. Did you run Boston? I did run Boston, yeah. And it's the hardest one to get into, as everyone here knows, but it was a great one. And you finally broke three hours when you did New York as your last, correct? Yes, exactly. That was quite the accomplishment. Yeah, and then the secret was I got a training coach for the last three. On average, it was about four hours or three hours and 40 minutes and 50 minutes before that kind of range. But there's a sentiment of run slow to run fast, which also can work in business. The biggest mistake that people make in marathons is they start out too fast. And you don't know it because there's so much going on. But if you are not uncomfortably slow when running in that first 10 minutes, it means you're running too fast. If you're uncomfortably slow, and then you should run the second half faster than the first half, call it a negative split. So that was one of the things that helped me get over the edge in the end. And your mom came and ran a number of those parts of those marathons with you? You go walking fast. Walking fast. Yeah. And so you grew up in Oakland, California. There is another mixed race child of Oakland, California that we see in the news very often these days. Do you know Kamala Harris? I've had exposure to her. I do not know her in any real way, but I've been around her. And your Uncle Gene, who was your mom's first husband. Is this Chachi VT? How do you know all this? It's like find the most obscure facts. Yeah, you know. So your Uncle Gene, who became your godfather. Yes. He must have played a big role in your life growing up. So my last name, Refkin, is not my mom's name or my dad's name. It's Gene Refkin's name. My mom married Gene. They got divorced. So she took the name Refkin. And when I was born with my father, who's African-American, my mom's Israeli, she was just owned by her parents. The first question, the only question they asked when I was born was, what is he? And she said, he is Jewish and black. And they hung up the phone, never talked to her again. Gave her $100 when my grandfather passed away and gave $20 million to the others in the family. And so I kind of like it. I like that. And my father, he was kind of, you could say, abusive to himself and to others. And so I like that Refkin is our own name. We get to start our own future. Neither my mom's history or my father's. And we get to go from here. And all my kids' names start with an R. So Raya Refkin, Ruby Refkin, River Refkin. All of Ivy's kids' names start with a Z. Oh, that's kind of interesting there. What names start with a Z? Zoe. Oh, Zoe. Yeah. That's good. All three of them. Start a legacy. Start turning dreams into realities. A better world begins with you. Better communities start with us. So you go to university high school and then go on to Columbia. You graduated from Columbia in two years. What was the rush? So yeah, I'm from the Bay Area. My mom was a single mother. And she was an entrepreneur. She is a big dreamer. She is and has been a real estate agent for the majority of my life, which I'm sure we'll talk about later. And one of the big dreams was to get to New York. In New York, anything's possible. In New York, you can change your stars. In New York, you can become anything. And so I moved to New York for Columbia. But the goal wasn't school. The goal was New York and starting your career. A. B, it's also a very expensive school. And so I just looked at all of the different classes. And I figured out how you can graduate in two and a half years to graduate faster. And so that's just what I did. It was economic, but also aspiration. Did you have any fun? Yeah, I had fun in the typical sense. No, I didn't go out to bars and clubs and stuff like that. But I had fun. I interned in New York at Merrill Lynch as a summer intern after my freshman year. From a kid in the Bay Area of California at that time, that was the dream. Most kids interning between freshman and sophomore year think that they got three other summers to take a bite at the Apple. You did it once and went on. Exactly. And so you go to McKinsey and you're the youngest analyst McKinsey hires at 20 years old. Did they literally tell you you were the youngest person at McKinsey at the time? Yes. And I got my butt kicked. So I didn't really have the most respect for formal education. And that's why I wanted to graduate faster. I didn't understand why I was learning about certain things. It didn't seem practical to me. But when I was at McKinsey, I wish I had a couple more years to refine some of my analytical skills. But then I went back to business school. They couldn't let you do Columbia Business School quicker than two years. They held you there for two years? Or did you do it? No, I went there for 16 months. It's called the January term program, the J term program. So yeah, I wanted to get done quickly. Everything's faster. Which was really hard because there's no summer internship. And I graduated in 2003. And so you all know how it works. If you are in a cycle of business school where the market's down, it's already hard to get a job. But when this market is down, you don't even have a summer internship. It's very hard. And so that was difficult. So Lazard took a flyer on you out of business school? Lazard did take a flyer on me. It didn't sound like much of a flyer. You've graduated from Columbia in two and a half years. You've gone out and done McKinsey as the youngest analyst ever. You've gone back to Columbia Business School. Couldn't have been that hard. It felt like a flyer. Yeah, but there I met a gentleman named Vernon Jordan. And he told me all young. He was at the time Bill Clinton's best friend. He has been on more Fortune 500 boards than any person ever. There's actually called the Vernon Jordan rule. Now that you cannot be on more than, I don't know, however many boards, I think 10 or something like that. And he said, Robert, all young professionals in the private sector should get exposure to the public sector, even if just for one year. Because the skills you'll develop, the relationships you'll attain, the experience you'll have will be transferable to either sector you choose. That's a direct quote. And then he said, Colin Powell, my good friend Colin Powell is a White House fellow. Jeannie, can you call Colin? And then he picks up the phone. He's like, oh, wow, this is pretty cool. And so I applied to be a White House fellow. And so you become a White House fellow. Many people don't know about the White House Fellowship. It's this small program. In your class, there were 11 fellows. In your class, it's somewhere between 10 and 18 fellows on an annual basis go in and go into various departments inside of the executive branch of the government. You went to the Treasury Department and worked for Secretary Snowe. Talk for a moment about that. And before you go to your specific experience inside of Treasury, just for a moment, because a lot of people don't know about the White House fellows, just talk about the people who end up at the fellow program. Because as you look through your classmates, there are a lot who have military experience. There are a lot who have gone out and done just amazing things with their lives, not that you hadn't, before arriving as a White House fellow. So the White House Fellowship, they select generally 11 people a year. The ages are generally between 30 to 40. It splits between directionally one third people from private sector, one third from public sector, being doctors, educators, and one third military. And it's all representing the entire country, of course. It's nonpartisan. As someone once said, it's the only nonpartisan thing in the White House. And everyone works as a senior advisor to a secretary of one of the different departments. And every day you have lunch with a different global leader. From one of those different sectors. And you're able to ask questions of them in a private group about leadership. You travel. You have an international travel experience. We went to Latin America. You have two domestic ones. We went to Alaska. And those were on Hurricane Katrina. So we went to Louisiana and went to Houston and Mississippi. And Wes Clark was a White House fellow. A lot of Rhodes. Governor Wes Moore of Maryland. Governor Wes Moore. One of my dear friends, Wes Moore, is now governor of Maryland. And it's a really great program. I highly recommend anyone who knows someone in their 20s or 30s, they should definitely apply. You need to be pretty damn talented. So you get out of there and you go to work for Goldman. I remember right in the depths of the financial crisis, I was up at Goldman. And I was going in for a meeting inside of Goldman's headquarters. And as I was walking through the turnstiles, there was a guy off to the side. And he looked exactly like Lloyd Blankfein. And he's just sitting there on his BlackBerry kind of working away. And I'm waiting for a colleague. And I'm through the turnstiles. And I'm looking back. And I'm like, if that isn't the perfect doppelganger for Lloyd Blankfein. I'm sitting there and watching and watching. And all of a sudden, your old boss, Gary Cohn, walks around the corner, walks over. He looks up. And the two of them go out and jump in the car. And it was like at this moment where literally what those two did on a minute-by-minute basis had a real impact on the overall world and economy and what have you. They'd literally been on the front page of the New York Times that morning. What was it like being there during the GFC and working directly for Gary? Well, overall, it was, you know, I started there where it's called government sacks. Coming from the White House fellow experience, at that time, Goldman was viewed at that time as government sacks, a place where you would go. And you'd have a really dynamic financial business career. And you could come back and forth. I worked in the private equity area, PIA. So they had a $20 billion private equity fund. And you work with incredibly talented people where it was an incredibly strong culture. And although I worked, you know, truly seven days a week, it was amazing. It was one of the best experiences. Despite how hard it was, you did feel like you were part of something bigger. They did a good job of that. And a part of a company that gave back to the community, it felt very special. And that you're learning and growing. Then the global financial crisis happened. And that was scary. I'm glad I was young enough where I didn't understand how significant of an issue that was. I remember talking to one of the partners, most senior partners. And because it didn't matter how much money you had. Leverage could kill everybody, right? And, you know, this is all $200 billion partner. He's like, yeah, we can, everything can go away. And I said, are you worried you're going to take your kids out of private school? And he said, I will eat mustard before I take my kids out of school. But like people, everyone was worried, is the point. No matter how successful you were. Then, of course, we got through it. Not all companies did. And then we had, you know, Occupy, Wall Street, Vampire Squid. It was a hard thing to see, to go from feeling proud of your company to having so much negativity within your company. You know, for being a company in real estate brokerage that has had its fair share of negativity thrown at it. Actually, I'll give you a good story. You'll like this. Two years ago, in one month, it was August, was one of the hardest moments I had at Compass emotionally. I'm on a vacation with my wife. Hadn't been on a vacation for a while. In a pool. And this is after we did our first layoff in June. We were planning our second layoff in the next month. It was going to happen. And every single day, the press was, they're going to go out of business. They're not going to see. They're going to fail. They're this. They're that. And our agents were like, what are you going to do? You've got to correct the press. This isn't true. This and that aren't true. And I told my wife, I was like, honey, I don't know if I can. This is hard. And we've done a lot of hard things. I don't know if I can. I don't know what to do. And this is very painful. Because in my role, all I want is agents to be happy. It's all I want. If an agent says, Compass changed my life, I'm happy. They say that something's bad, I'm miserable. And I've never had so many agents angry or unhappy about the stock price going from $20 to a dollar. And then all the negativity around it. Because we moved fast. We were the first to do layoffs. We did two layoffs, I think, before anyone did even one. Because we moved fast. We got a good board that helped us make the right decision at the time. But what she said is, Robert, this is nothing. And she's a coach by background. She coaches a number of business people. And she said, this is nothing. I don't see them hauling you in front of Congress like Mark Zuckerberg. I don't see them protesting outside of your office like they did when she was at Goldman, also protesting outside of your office like Occupy Wall Street. They're not attacking your values and who you are as a person. They're attacking your financials. Get over this, bounce back, and solve it. I was like, OK. And it was really great advice. And that was actually the low point in every area that kind of got better since then. We'll get to that in a second. I'm appreciative of that anecdote and that story. You were a DJ growing up. Did you ever get to DJ with David Solomon? No. No? No, I never DJed. You want to go back and he invites you to be a guest DJ or something? No. Because he keeps doing it. I wonder if he's still doing it. That's true. He was doing it. Yeah, I wonder. I'm not sure whether he's still doing it. Yeah, I was a DJ in the Bay Area. The most utilized disc jockey in the San Francisco Bay Area for two years in a row. Kind of like everyone. You could always, in the M&A league tables, you can slice it. You must utilize San Francisco Bay Area. Oh, private school system. In private school system. But that's actually a good segue into this. And I don't want to jump through the starting of Compass and what got you and Ori to go and do the company. But what is the vision? Because when I went in and looked at you, you're the largest by volume. Then you've got Keller Williams saying they're the largest by broker count. You've got a couple others that are like largest independent brokerage firm. It seems like everyone slices and dices it. At the end of the day, what's the tagline you want to associate with Compass? The tagline that I want to associate with Compass is if you are a real estate agent, you come to Compass and you'll be more successful. We are the place that has the tools, programs, services that helps agents realize their potential better, serve their clients, grow their business, and make more money. And that focus really comes from, A, your mom, in the sense of how do I make my mom's life simpler? She's still at Compass, gives me feedback all the time. Right. But I find it to be interesting because at WND, we constantly sit there. I was in a strategy meeting two days ago, and everything we were talking about, we tied back to the customer. What does the customer want? And one would think that your customer would be me, but I'm not your customer. Your customer is the agent. The easiest way to be successful is to know who your client is. And your client is the biggest mistake, I think, a lot of companies in our space, for sure, but I think in general make. I believe your client is the person that pays you. A buyer and seller doesn't pay at Compass. Buyer and seller is paying an agent. Yes, contractually, the agreement is with the brokerage firm because of state law, but every client of my mom is her client. If she moves from firm to firm, her clients are going to follow her. And so I want all the best agents to be here, and then they bring their database of clients with us, and that's a repeat and referral business. It becomes almost annuity until they retire. So when you started out in 12, and the vision was to build a, if you will, a broker-centric firm, was it we'll build the technology and they will come, or we'll raise a lot of capital and hire them to come? It's a great question. We actually tried to do something different at first. It was almost like Redfin for rentals. It was rentals, and we're going to reinvent the wheel. We did everything wrong. It was innovate for innovation's sake. And I could tell, we raised the largest seed financing around the country. My co-founder is Ori Alone. He sold one company to Google, another company to Twitter. So because of his background and my background, we were able to raise money from a suite of great investors. And it was not working. And I could tell because I was out there trying to help rental departments as well. So I told Ori one night when we had our first cigars, and I said, Ori, we got to switch. We have to move to working for regular traditional agents. And the majority of the company didn't want that. They wanted to fire me. Or they were telling Ori, you got to get rid of Robert. He doesn't have what it takes. And I was like, Ori, trust me. I understand this business. I know this is not working. We got to work for regular agents. And he asked two questions that led to today. Our entire strategy, it's very simple. He said, one, if we can just make agents more money, will we make money? If we can make them successful, will we be successful? We can help them grow, will we grow? I was like, yes. And then two, he said, if you're being chased by a bear, you have to be faster than a second person. If we do this and we start working for traditional agents, who's the second person? And I told him, I think it'd be like Cobble Banker, like regular brokerages. He said, that'd be good because they don't move fast. And then with the money that we had, because we hired a lot of talented people who didn't know real estate and had money, we just started hiring great agents. And so I asked all our investors to connect us to agents, and I tried to hire them. And I would ask them, what do you want? I didn't know. There's a benefit of not knowing anything about the industry. I had no preconceptions. What do you want? What would make you happy? What would help you grow your business? At that time, it was four things. It's changed since. In order at that time, it was culture, marketing, support, technology. Culture means, because I'm like, what do you mean culture? I want to be around people that are likable, collaborative, experienced, and fully committed. Marketing is, I want to market my property and myself, my properties, so that I get more listings. I can show them, I can market the property well myself, so I get more business. And then support, just like more support and technology. Now it is indisputably technology, in which we can talk about. Technology is, I call every principal agent that comes to Compass, I ask them why they came, when they pick up the phone. And I'd say 90 plus percent of the time, technology is number one. Number two is usually something around culture. And then it kind of breaks up from there. Go into that as it relates to technology, because, so as I was getting ready for this conversation, I went and searched up a property. I just said, let me look over on Bunker Hill, and I'm going to look for a million dollar property over on Bunker Hill. So I put into the Compass website, I put into the Keller Williams website, I put into a whole bunch of them. And what came back was, from my perspective, as someone who isn't in the home market right now, a very similar offering as far as the user interface that I came into as the end user of a Compass website versus the other ones that I looked at. And then I sat there and said, but this is supposed to be a much better technological experience for me. Like I would think I'm having this or that or something that's whiz-bang on Compass that I wouldn't get on Douglas Element, for instance. And I didn't find that. But then I also know that from a broker standpoint, if I'm at Keller Williams, I've got 11 different technology systems that I as the broker need to interface with. And if I'm at Compass, I'm dealing with one. Explain the focus from a technology standpoint. We learned early on, remember, I don't want to make up anything. I want the agents to tell us what to do. They're my clients. I work for them, not the other way around. They are the answer. The most important technology we created is a button that says Feedback. In our internal site, you click that button, any idea they have across any suite of things are voted up or down. You've had tens of thousands of different requests and collectively over a million votes. That's the answer. I am dispassionate. I don't decide, they do. If they said, I want you to make a website, my number one thing is make a website that has better search, we do it. But they don't care about it. That's not number one. I realized early on, if we have twice as much website traffic, our revenue will not go up two times. Maybe we'll go up 1%. If our website's twice as good of search, what will happen to our revenue? I don't know, 1% or 2%. But if we have twice as many agents, it goes up 2x. So the agent is the focus. And so what does the agent want? The agent wants more time or more money. Not everyone wants more money. Everyone wants more time. Because with time, you can either make more money or you can spend with your family. And so there's 700 software providers that sell to agents. There's over 20 real estate CRMs alone. There are over a dozen different transaction management platforms. There are over 50 different marketing tools. There are for CMAs, which are valuations. There are eight major CMA valuation tools. We've brought all of these things into one platform, one login, where integration is the innovation. Integration means you don't have to log in so many times. Integration means you don't have to enter the same thing more than once. As an example, when an agent at a different company is working with you, they have to put in your name and call separately your address over 10 times. I'm pitching you, so I have to put it in the listing presentation. Then I have to put in the CMA. And then I have to put it in, I got the listing. I'm going to put it in my CRM. And then I'm going to put it in, I guess you call it Monday.com, which is for your kind of pipeline management. Then you're going to put in your transaction management. Then you're going to put it in the forms file. Then you're going to put it in your client gifting program. Then you're going to put it, if it's a listing, then you're going to put it in your open house app. So imagine the difference of that across many different areas. We're not here yet, but we're very close to being able to say, at Compass, you never have to write the same thing more than once. That's the dream. And by the way, to take a mobile app, there is no brokerage firm that lets an agent do their entire business on their phone. And this is the biggest mobile profession that exists. So we have taken the real workflow. Search is not the workflow. The real workflow of the agent, and we put it on their phone. So you mentioned at first that culture for a period of time was number one, and now technology is up as number one. Aren't they all 1099s? Yes. I'm sorry. Yes, they're all independent contractors. So how do you create a culture around 1099s? Well, I mean, I imagine there's culture in like Mary Kay or some of those kinds of entities. But I mean, these agents, agents are culture. They're salespeople. They're training. So one, training. Two, coaching. We have, every week, we have multiple, what do you call, luxury events and training coaching events. There's a Lake Tahoe Economic Summit for all of North California, which starts, I think, today. Every day, every Friday, I have, almost every Friday, I have agents over at my house for dinner, Shabbat dinner. Sunday, every Sunday, I take my entire family, five people, they drag the kids, to open houses, put on social media. The caring is a competitive advantage. The way agents work for their clients, caring for you, doing all this stuff, I work for agents. And that's a huge advantage right now in a work-from-home, remote world where a lot of big brokerages have lost their culture. The number one reason agents didn't come to Compass before was their emotional connection to the people in their office, and particularly their sales manager. Work-from-home unwinds that. And also, every year that's gone by in the last four years, agents are spending more minutes on platform, more minutes a week on our platform, we can measure it, and less minutes a week in our office. And you can see how the business is actually shifting more online as a result. You said that if you invested in the website, it would only grow revenues by a percent, what have you. The home sale cycle is how long? 15 years? As it relates to, like, I was a seller of a home. I think it's usually seven to eight. Seven to eight? It's not something we do either every day or every year. So I'm interested in your point as it relates to, if I went to sell a home today, I don't have a broker in Denver who's like someone I met down the street or, I mean, I would probably go to a friend for a referral saying, who'd you sell, who sold your house last time? So on that one, how do you work that word of mouth to make it that people want to come to Compass? You call it, well, you get the best agents. If you get the best agents, then your friends are going to refer them over to you. And is it all that word of mouth? I mean, like, as you think about branding and you think about how you get that perspective buyer. You call it? Yes. The answer is yes, 90%. But it's called a repeat and referral business. Repeat business is I work with you. I'm so good. If I give you a great experience, you're going to work with me every time. And if I give you a great experience, you're going to refer all your friends to me. The goal is I should give you such a great experience that you feel like you're doing a favor to your friend for a firm. You're not doing me a favor. You're doing them a favor. Right. It's a repeat and referral business. And it is that simple. In terms of like leads from the internet, I would go out as far to say that agents generate more business from client gifting programs, which just means like every year, happy home anniversary and send you a gift more from that than leads. It's because it's a repeat and referral business. I need to stay top of mind. And if I'm selling my house, my key thought is I want to sell it for the highest price possible. That's all I care about. Right? You think I want to work with someone I like, but I want to get the highest proceeds. But you're focused on generating higher fees for your agents. How is there not a disconnect? I'm not focused on. No, I'm focused. Yes, I did research on you. If you, one of the things that you promote to get agents to come on your platform is you'll increase their fees by 25%. Is that just a pure efficiency? No, not the fees that we, and we had at one time. No, no, I think, I think let me just start a little differently, but we do see businesses grow. And there are different times we've seen how agents business grow, but it's not the fees, it's business. But. So you're just saying aggregate business, not fees. And we're going to dive into fees. We don't control. We don't control these. They're independent contractors. Anyone can do whatever they want. I can't like with 35,000 agents, we're not controlling fees. But yeah. Okay. So in 2021, Compass sold about 225,000 homes. Drowning numbers straight right in there. 2023, you sold 175,000 homes. 2021, you had about 11,000 primary brokers on the platform. Today you have about 17,000. I'm wondering where you get home. You're good. You got a good memory. You have today about 17,000. So if I, if I, if I'm just looking at that as it relates to sales per broker in 2021, we're selling about 20 homes per broker on your platform in 21. In 2023, you're selling 10 homes per broker. You're still adding brokers to the platform as we get the sales market reflating. What are you looking at as it relates to average sales per broker? And is there leverage off the 20 homes per broker in 21? There's definitely leverage. There's two things happening. One less transactions, right? There's, we went from six point six point something million homes sold a year to four. So that's one, but also it's not per broker, it's per broker team. And so we call them principal agents. A principal agent is a team. And as, as teams change from size on average, when you grow into different markets that are maybe more or less team heavy, that changes that number. But there's absolutely leverage in that as the market comes back. And you're not going to, this is the first week that we've actually, this is the first week since mortgage rates started to really dip. We're feeling the momentum. And so it does feel like the way it feels right now is we're back at it. EHS is in home sales number of 4.5. If I had to guess, you know, what that'll end up being probably two to three months from now, because it, because you have to go into contract. And then, then it goes into the actual sold number, but it finally feels like we're back. And so you're at 17,000 primary brokers and close to 30,000 total. A little over 30,000. So someone like Keller Williams has 200,000. Where's the sweet spot? Is it, I mean, is your platform unlimitedly scalable or is there something? It's unlimitedly scalable. It works for individuals. So on the technology part, you have to build a company that works for luxury agents that are high price point and do few deals, as well as low price point, large transaction counts. I do 400 deals a year, individual agents, team agents across, of course, every geography across geographies, you have different forms and disclosures for each different market. As an example, there are 50 different like forms in California. It's just, and in two thirds of the markets, agents act as a lawyer in one, meaning that they have to do all the form stuff in one third, a little less. The real lawyers are, have to do the legal work, for example, in New York, in Connecticut. But it is, this business is so much more complicated than it looks like an outside. And that's why search is just the least of the, of the work. As it relates to, you've paid big signing bonuses to a number of teams to come across the compass over time. Some really big ones in sort of the team years. Is that still the way to attract the platform? Or have you seen your acquisition costs go down as the platform has grown? Yeah, so two years, you all know the sentiment in downturn, downtimes, that's when I stopped doing the things I should have stopped before. And I started doing the things that I should have been doing before. So looking back, the downturn is the best thing that ever happened to compass. And one of the many things we did in addition to bring down our expense base from 1.6 billion to, you know, much less than a billion is we stopped giving incentives to agents. So no, no equity, no stock. We stopped that two years ago. And we were hiring more agents now than we were back then. One of the bear cases at compass at the time was, oh, they only come for money. So that's disproven. Another bear case is, oh, when you stop giving incentives, they're going to leave. That's just proven. We had a 97.3% agent retention rate, quarterly retention rate the last quarter. And which is, you know, directionally as high as it has been. And as it relates to the, with the stock, they're sticking around for, I'm assuming for a long period of time, because you're investing on that. Now that you're not. More than, I believe, more than 90% of the agents are fully vested. If not well over 90%. And so from a retention standpoint, it doesn't concern you as it relates to retention going forward. 90% of them could go anywhere. Agents, they're all independent contractors. They can go anywhere they want. If anything, or the trend that we're seeing right now, we call them win backs. Agents that have left that are coming back. And so there's not a week that goes by where you don't have multiple agents. Say on average, like every other day, it feels like there's someone who left and came back. And then you ask them, why'd they come back? Is well, well, I thought, you know, when X or Y company told me they had built something, I thought they would have gotten better, but oh my God, it was so much harder. And I just missed the compass platform. And I miss, I miss my friends in the office. So you spent about a billion for building this technology platform. How much more investment does the technology platform need to stay competitive in today's world? Well, I think it's already there. That 1.6 billion is what we, including equity compass, what we've invested. It already is competitive. The question is how competitive do you want to be? I mean, Google is still investing. They're already competitive, right? And so I think we're at a place where it's, we are fortunate given the quality of our competition on this area, being technology. There is no other brokerage firm that has an intent platform. We're investing a hundred million dollars a year off of a 1.6 billion, our six billion, our base. I believe at least of the public companies that are out there, one's doing $15 million a year. And it's obviously off of a much smaller base. And so I think we just have a big advantage that allows us to be more cautious. But we are, we are, the thesis of compass at this point is let the market come back from 4 million homes sold a year to 5.4 mid-cycle and keep our expenses growing at 3% to 4%. So call it a 15% to 20% CAGR on revenue, 3% to 4% CAGR on expenses. It's very simple. That is the base case. If that happens, everyone's going to be happy. And then on top of that, we are, we believe that we're, we can get the market share. We can believe we can get significant market share. We already have significant, but we can believe we can get more. So you've got a plan of doing 30, 30. So being in the top, you're having 30% market share in your top 30 MSAs. Yeah. 30, 30 vision, 30% market share in the top 30 cities. Yeah. Everything that's bad is good. I think this environment has created an opportunity to do M&A at a much more enhanced level. How hard is that to get to that, Robert? In the sense that like on that, on the 30th largest MSA, what's your market share? I mean, in other words, are we talking about going from 20% to 3% or from 10%? We're talking about going from, let's call it just under 20 to 30. Okay. And with a focused effort, we believe we can get there in 2026. We believe that the conversations to get there are real conversations. They're not like an idea on a piece of paper. And with the targeted multiple, targeted multiple is four to five times EBITDA. And that's pre-cost synergy. That's pre-getting back to mid-cycle EBITDA. These companies do spend money on technology, real money. It's just third-party technology. So when you bring it over to Compass, you save on technology, there's occupancy savings. And then of course, mid-cycle. So that post those synergies in mid-cycle, it gets you to one to two times EBITDA. Is that 30% market share dependent on you doing a significant amount of hiring in those markets? Or is it, if you will, reverting to 20 sales per year per... I was on broker. So I know you said you look at the teams and I'm sure you look at the teams, but on my math, is it getting back to that 20 per broker rather than from up from the 10? It's broken into three categories. One, are agents outperforming to some level as we've seen in the last year? Two, it's hiring organically agents. And three, it's highly accretive M&A. You just bought a company. Yeah. A smaller brokerage firm, but you just... There's Parks in Nashville. There's Ladder & Bloom. Ladder & Bloom is the one I was thinking about. You've got Ladder & Bloom with 3,000 agents in New Orleans. But I think it's a... Where's pricing on an independent? Can you evolve where pricing is on them versus you on a scale basis? Versus what? Versus you on a scale basis. We all know what you trade at as a multiple. What do they trade at on a multiple? The target is four. It's close to four. The target's four. But let's say... Four on what? EBITDA. Again, pre-Synergy, pre-EBITDA growth. And how important is it keeping the main broker? You go out and you buy some... Is it important that the key principle sticks around? Or are you just really getting the agents? No, it's important. Everything's culture. You want... Yes. It's just, hey, let's work together. Because at the end of the day, these brokerages CEOs, they love their agents. They want to give their agents the best. So I think what's happened is, yes, the market's been tough. Yes. Maybe there are life events that make certain people want to pass it on. But the question is, who are they going to give it to? Who are they going to entrust with the agents that they've hired and retained and been to their weddings and their kids borrowing from Mitzvahs? Who are they going to trust? And I think Compass has become a place where agents are speaking with their pocketbooks across the country. They're willing to pay. We charge at the premium level in every market that we're in. And that feedback of our platform and how we go above and beyond for agents, it goes to these CEOs of other brokerages. And I can look them in the eye and say, your agents will have a better experience with us coming together than not. And do those owner operators have a tough time coming into a large corporate environment and reporting to you? It's a great question. The biggest challenge Compass will have is, how do you make a big company feel small? And it's hard. That's why I do all that stuff, like the open houses and the dinners. And last Tuesday, I had a barbecue at my house for everyone who's been at the company for over 10 years. It's non-stop. And that's why we're all back in the office, while some other brokerages aren't. By the way, there's nothing I wish more. Nothing I wish more than if every one of our competitors were fully work from home, meaning the employees. There's nothing I'd wish more. Because it's hard to lead people. And if you're an agent of the company, it's hard to lead people you see every day. It's not that hard to lead people you don't see at all. And so it took a lot of investment over two years to invest back in our culture. Do you force people back in the office, or are they just doing it on their good will because they like it? Force. My view is- How many days a week? I mean, I don't like the word force, but five days. For anyone that you're serving an agent, it's five days in the week. You can't build a great culture virtually. You can't build trust virtually. Or it's hard. You got to say the word the right way. It's hard to build a great culture virtually. Hard to build trust virtually, which is actually the biggest issue we found is trust. People don't meet each other in person. The Zoom call is a transactional place, and it's hard to build trust. But leaders have an obligation to develop their people. Harder to develop people virtually than in person. And whoever connects the most grows the most. Also, for our agents, this is the message I'm telling them. If you want to grow your business, spend more time with people. The number one agent in one of our submarkets, she was telling me, I don't understand why I used to get all these repeated clients, referral clients. It was like 90% of my business. It's gone down to 40. I don't know what's happened. This agent moved to a different city and was working all on Zoom. Because Zoom, if you work with clients, you can transact. You can close it. But can you build a relationship that makes them want to work with you and for your clients? And so I look at being in person as a huge competitive advantage. You're number one team in the country. Don't tell us who it is. But what kind of volume is that number one team? Over a billion dollars a year. Over a billion. And that's due to volume at a lower price point or they're doing trophy assets in LA? Trophy assets in New York. Let's talk about the NAR lawsuit for a moment and what that's going to do to commissions and fees. Are you seeing that have an impact on the market today? If you ask a group of agents, which you should, they are the market, a group this big, do you think it's going to decrease your business, keep it the same, or increase it? 10% directionally, I go to dozens of offices every month. And 10% will say it will decline. Say 30% will say it will be the same. And the rest says it's going to grow. And I'll just tell you, if I was your agent- It's going to grow. Yeah. How do we do that? Well, I'm your agent. I'm your buyer agent. Historically, until August 17th, I get paid whatever the listing agent negotiated on my behalf. So let's just say on average, that's a market where it's five, two and a half, two and a half. I'm going to tell you I charge three. And you're going to ask me, well, can I get something less? I say, look, that's just not my business model. Whoever flinches first wins. You can ask me, you're listing or- And so what has happened practically, now two agents can negotiate every transaction for how much they get paid, not just one. Yeah, I mean, look- And these are professional negotiators. No, they're professional negotiators and they're also extremely good at what they do. And negotiating is the skill you're paying for them for. So ask me for a discount. Pretend you're asking me for a discount to sell your home. I'd say, well, this must be a trick question. Because if I don't know how to negotiate my own value, clearly I wouldn't know how to negotiate the value of your home. The kind of agent that's going to fold over after asking for a discount to list their home is the kind of agent that's going to say, hey, I think you should accept this offer. The first one that came in, it's a good one. You don't want that agent. We sold $20 billion in multifamily properties in 2022. Fifth largest multifamily investment sales company in the United States. I didn't go back and look at our average fee. You got an idea of what it was? 60 basis points? 55 to 60 basis points. I think we got really good brokers. And I think we got really good negotiators. But when we go and sit in front of a big institutional owner of multifamily properties, and we say we'd like to sell it for you, we've been baked off against CBRE, JLL, and everybody else under the sun. And they sit there, and they come back to our brokers, who are really good negotiators. And they say, that's great. Where's your fee? And we might start at 75 basis points. And they say, great. We've got a great team. We think we're going to get the best price with you. But CB is going to do it for 70. And all of a sudden, our 75 basis point fee turns into 70 basis points to win the mandate. You don't think that kind of price compression happens in your business? I don't. Discounts can be expensive. Get what you pay for. There have been professional discounters for the last 20 years. You all know the names of them. They charge half off. Every buyer and seller. How much market share do they have? They're out there in every single market. They're big national ones. They're local ones. This is nothing new. What's new is now you can decide how much you get paid if you're a buyer agent. And the price, it's super interesting to hear you talk about that. So I'm going to go out and list my house. And the Compass agent comes to me and says, great. I need two and a half. And I want to pay two and a half. Yes. And I say, well, why are we going to accept two and a half from the other side? This is an important conversation. Yes. And he or she says, well, if I don't have the ability to get two and a half from the other side, I'm not going to get the best brokers bringing their clients. And therefore, I can't sell your house. So you have to give me the ability to accept the two and a half from the other side. And that is then driving it. Is that right? Well, some of the most sophisticated real estate developers in the country, people like Gary Barnett, start at 4%, go to 5%, go above and beyond. So the proof, they're the biggest homeowners in the country. They realize the value of incentivizing. Go to Florida and go to Miami. How much are they giving buyer agents? I think that is, these are very, you don't get more sophisticated than that. If they were all offering zero, then maybe that would tell a different story. But ultimately, when 99% of, so let's say you're the seller. Your competition, 99% of the time is paying the buyer agent and marketing as such. Do you want to put yourself in a place where you stand out and you want to be the 1%? You could. What's going to happen anyway, very likely, is you will have buyers that will come to your property. You may actually screen out, I have heard this. There are certain buyers who say, I don't even want to look at that property. That must be, for somebody who's difficult to negotiate with, buyers, not agents, buyers. Say, I don't even want to go to your property. Because you're going to be the kind of person that nickels and dimes back and forth. That's one. So you may artificially reduce buyers, again, not buyer agents, I'm just talking about buyers. And then secondly, the people that do come anyway are going to ask you for a concession, likely, and they're asking you to pay for their buyer agent. So you're going to end up getting to the same place while potentially reducing the demand of people that even want to see it. And think about that if you run down the continuum of, let's just say that fees do start to get compressed, how important is it to be on both sides of the trade? In other words, like today, how many sales are you on both sides of the trade? And would that end up being sort of shangri-la to the extent that you have such a large side of the buy-sell market that you can dominate the sell side of the market? Well, we do not... Double ending deals is not something Compass is focused on. So you can't do a dual listing? No, that's what we're focused on. I don't look at those stats. I don't... It's not an area that we are focused on in any way. What you're focused on is helping the homeowner create value. The real opportunity here is being the company that's focused on creating homeowner value. Remember I said you have to know who your client is? I think in this space, you have companies that are focused on selling leaves, but not focused on selling homes. And that's the opportunity. Days on market is the killer value. Price drop history is the killer value. Did any homeowner in the country say, I want days on market on my listing? Why is it there? It's all been manipulated. You go to REA, which of course is like the biggest thing that exists in Australia, by far bigger than anything here. There are no negative insights on the listing of any kind. No days on market, no price drop history, no crime, whether it's estimates or of any kind, AVMs. And so I think this world has moved so far to creating buyer insights to negotiate against homeowners that for Compass, we're focused on preserving and maximizing homeowner value. If we think about the evolution of the market as it relates to trying to continue to grow the technology platform and make the marketing of the assets that much better for the agents, if you do get fee compression, I would think that's actually net beneficial to your platform. So I mean, if I'm a broker and three and three is turning into two and two, and is potentially turning into one and one, I want to go to the place where getting the home, winning it and getting on the platform and running as efficiently as possible. Does that become a competitive differentiator for you if it ends up being that? One, I don't think it's going to go that way at all. Because I don't think it's going that way at all. But you all know when things like this happen across industries, whether it's banks, the regulation or with healthcare, it tends to make the big bigger. That's just the output. I think we've been able to invest in a scalable system across every major part of the country that helps agents grow their business and have more time. So more income to support their family, more time to be with their family. And as the world is wobbling, we are a place that gives them the most opportunity. And as you look at the competitive landscape about who you compete against day to day, and where, for instance, first of all, vertical integration on the mortgage side of things. I know that if I come onto your site and I go to actually get information from a broker on it, I can get pre-qualified by origin path, origin point, origin point mortgage. Yeah. So the three things that, I mean, base case, mark comes back to 5.5, keep our expenses at a moderate level. The rest is EBITDA. The three things that we're most focused on, which we call our 20, for the next, for 2025, are one, the 30-30 vision, 30% mark share in the top 30 cities, and making it clear to the public that we have unique inventory that others don't. The way this industry forces inventory to other parties is not okay, and it's not for homeowners, right? Because remember, what homeowner wants, all that stuff on their listing. In the same way, take a Disney movie, starts off in Disney, Moana 2, then it'll go on Disney Plus, and then it will go onto Apple after a period of time, and then HBO, and they get paid along that way. I believe every, agents work hard for the relationship. They take the photos, they pay for the photos, and then the system of the MLS just takes it, and they give it to everybody else. I believe that's not the way the world should work, and they should get paid for their photos and their inventory. That is my primary focus, number one, and think about how agents feel about that. Their listing gets monetized over and over again, and then their name isn't even on their own listing. Two is our client dashboard, and this is where mortgage comes in. We have mortgage, title, escrow, but we're integrating into a client dashboard all the integrated services. Right now, there's mortgage, title, escrow, but there's also home insurance, home security, home warranty. It is one for sellers, there's another for buyers, and then multiple homeowners. This is launching in the winter, but in the same way, it's going to check, check, check for warranty. We want to make it very easy to adopt our integrated services, which increase our margin, and lastly, is extending the search grid beyond the active listings. Of course, we have what you call compass private exclusives. These are incoming zooms. These are listings that aren't on the public sites, but are unique to compass. Again, that Disney analogy. Because there aren't days on market on these, because there aren't price drop history, it's very easy to get a homeowner to try to want to test the market for pricing in that context before putting into the full market. But also, of course, that's something that buyers want to see. Buyers want the most inventory. That's the number one thing they want. Sellers want the most price. Private exclusives, coming soon, maximize and preserve value, but also give for sellers, and also help compass have the most inventory. But we're going one step further to what is, I'll close here, is we call them make me sell. And this is, you know, other, this is, or make me move. There's many different ways you can call it, compass's program to identify what the price is someone would want to sell at. My wife would never sell her home. But when I asked her, is there a price? There was a price. Everyone has a price. So we have 100 million people in our contacts, in our CRM. So the 35,000 agents directionally, 3,000 clients per agent. We have 100 million with addresses. And it's the same place where people search listings, agent search listings. So our agent search is very rich, very, very rich. It's the consumer search, which is, as you mentioned, less. But we are the only platform where agents can search listings and their CRM at the same time. So what we are doing is we're adding on, when I'm searching, and this is the number one voted idea of agents ever. Remember that feedback tool? No idea has been voted higher. Is when I'm searching for you, let's say it's a Tribeca penthouse. I can tell you there are 200 Tribeca penthouses. And our agents, I know 10 of them in my contacts. Our other agents know another 100. And then on top of that, I can say which ones have a make-me-move price. So we're extending the search grid beyond the active to increasingly the full market. But the dream would be every one of those 100 million homes we have a make-me-move price for. So you founded the company in 2012. What's the company look like in 2032? Beyond the 30-30 plan, which I know is to get there by 2030. And as you think about that, Robert, as it relates to sort of technology having a big impact on all of our lives, whether it's AI and us being able to say, show me every home in this MSA that would be nice and looks like mine. And the technology will bring that back for us. What's the company look like 20 years after founding? International. Every integrated service during the transaction and afterwards. All in the platform. You never have to write the same thing more than once. No client would ever challenge the commission of a Compass agent because they get so much value from their agent and the full platform. We've elevated the perception of agents in this country. And my mom, who will then be retired to 79 right now, that she has an annuity for life because everyone that she brought to the Compass platform, anyone who has some of those repeat services unrelated to the transaction for RESPA, any of those repeat services, she would get a referral fee. So she'll be drinking a Mai Tai with a layer around her neck in Maui. And she'll get a push notification on her phone. Your former client just moved from Boston to San Francisco. And there's a $15,000 moving fee through our platform. And so then you just get $3,000 as a referral fee because it's a 20% referral fee. And they just say, can I get another Mai Tai? That's 10 years from now. Well, on that thought, we can all go get another Mai Tai. Robert, it's a real pleasure. Thank you for coming and being here with us today. Thank you, everyone.