Ask Robert Reffkin (NYO 00-02) what he considers impossible, and you’ll find that the answer is “nothing.”
Robert’s character is exemplified by one recent achievement – running a marathon in every U.S. state, 50 in total – raising $1 million for youth education and enrichment programs in the process. “Yeah, it was a lot,” he laughs. “I thought I could stay in shape while helping people. I wanted to do more in less time, and to be more passionate.”
Today, Robert is focusing his passion on his startup Compass, a real estate technology company that was recently valued at $4.4 billion. The company offers an end-to-end platform for real estate that supports the entire buying and selling workflow. The company’s mission is “to help everyone find their place in the world.”
Founded in 2014, Compass operates in 20 major cities across the United States and is growing at a steady clip: in 2018 alone, Compass opened 70 new offices and hired more than 600 people (out of 65,000 who applied). Its real estate agent community has also grown to more than 8,000 agents, who are often wildly enthusiastic about the company. Robert is planning for Compass to have 20% market share in the top 20 U.S. cities by 2020 – and has plans to expand internationally.
What’s the secret? Robert prides himself on listening. “You have to obsess about your customer,” Robert says. “We have a feedback button on our site. Every morning, the first thing that I do is to look at that and see what agents are saying, because that's how I know what to work on that day.”
We spoke with Robert recently, and he talked to us about why – and how – he’s bringing dignity to the real-estate profession; why failure is a gift; how AI can transform the industry; and how a song from “Hamilton” causes him to reflect.
* * *What inspired you to start Compass?
My mom has been a real estate agent my entire life, and I saw her move from firm to firm, always hoping that she would get the support and tools to realize her professional ambitions and her dream. She never got either. There's never been a truly great company for real estate agents before, but that’s what we’re building at Compass.
There are two million real estate agents in the U.S., and they are some of America’s greatest entrepreneurs. At Compass, our focus is to empower them with tools, technology, and support that makes them more efficient and profitable.
You have said that real estate is one of the last industries to be transformed by technology. How much opportunity is there yet to be realized?
Real estate agents are generating $75 billion in commissions in the U.S. each year, and they're spending around $25 billion of it on a bunch of different service providers, both online and offline. These service providers are, generally speaking, subpar: from brokerage firms, to software providers, to designers, to marketing. At Compass, we're building an integrated platform, and bringing all of that in-house. There are companies that like to make money off of inefficiencies. We’re changing that. We want to focus on adding value, not extracting value for the agent. The average agent spends 89% of their time doing non-core, administrative tasks, so we are removing those tasks to give them more time to focus on their clients and their families.
I think artificial intelligence will transform every segment of our lives, and in the context of real estate, the opportunities are wide and vast. Here’s one example: At Compass, we used to schedule all of our interviews through a three-person team. Now those people are working on other things, and all of the interviews are scheduled using artificial intelligence.
To extrapolate this, two million agents in the U.S. are servicing 100 million potential buyers and sellers and are scheduling millions of times every day. If they were all on a single platform, rather than 800 different platforms, they would be able to use AI to schedule automatically. That would save so much time and so much money.
You changed Compass's original focus on finding rental property to sales, a change that sparked a critical time at the company. How did you deal with that?
It wasn't easy. We lost about half our people, because they came to do one thing and we moved to another. But one of our values at Compass is bouncing back with passion. Every month that went by after that, we got better and better as a company, as individuals, and as a product. It took a lot of strength to bring people around to a new vision, to encourage them to trust me, and to assure them we would be successful.
Your mother is now on the Compass team. What's it like having your mom as your customer?
My mom tells me all the time about great opportunities to improve. Agents are the customers of Compass. I don't think of myself as a CEO; I think of myself as the chief customer service officer. She recently had a suggestion for me about creating a data pledge for agents, saying that we won’t use individual agents’ data. We’re now sending that out biweekly to all of our agents.
This is an example of the benefit of listening. I think great leaders must be great learners. And by definition, to be a great learner, you have to be a great listener. That's a core value for me. I'm very thankful for her feedback.
Where do you see Compass in five years?
Right now, we're on the path to 20% market share in the top twenty cities in the U.S. by 2020. In five years, I think we'll be in the top 50 markets in the world, and number one in all the U.S. cities – and top three in the international ones. But our vision is putting agents at the center of the entire real estate buying and selling process. Agents are America’s great entrepreneurs, and we will continue to seek opportunities to empower them to better serve their clients.
You have also founded social enterprises, including the nonprofit New York Needs You, which has now expanded into America Needs You. Why was that mission important to you?
When I was younger, my mom had me apply to six nonprofit youth programs to give me career development, college support and summer internships, who all told me to dream big when others told me to give up. When I moved to New York City I was only eighteen, but I made a commitment that once I had the resources, I would start a nonprofit to help young people realize their dreams.
During the economic downturn in 2008, I was working at Goldman Sachs, and I felt like there was a lot of pain in the world – and that created pain for me. I felt so thankful of where I was sitting at the time, and I wanted to give back. The motivation was to find a way for people to give their time, rather than just money.
I considered what population of people could take the most advantage of young professionals' time, and I thought of first-generation college students. Those people paved the way, but they don't have anyone else to guide them to the next step. If you're the first person in your family to go to college, probably no one's ever talked to you about a practice interview. That means when you go into your first big interview, it will likely be the first time someone asks you what your strengths and weaknesses are – and that’s not something you want to do unprepared.
The organization was supposed to be just in New York, but it's an example of what can happen when you surround yourself with a great team that's passionate; a project can go beyond its original scope. Now there are multiple classes in New York, as well as in New Jersey, California, and Illinois. There are a lot of McKinsey people who volunteer their time.
Who inspires you?
My mom. She was a single mom who was disowned by her parents for having an interracial relationship and was abandoned by my father, but she didn’t crumble – instead, she always found a way to thrive. She's always been a dreamer. My belief that the future seems limitless – I got that from her. That, and her grit.
My mom encouraged me try a million different things. And nine out of ten times, I failed. That taught me to deal very well with rejection. Now, I couldn't care less if I get rejected. I couldn't care less if I fail at something. It's a good thing, because it puts you a step closer to where you should be. People are going to tell you that you can't pursue your dreams because of one thing or another. But when there's someone saying, “Hey, you can't do that,” there’s always a “Yes, I can.” Watching her do the impossible made me feel like anything was possible.
Is there any book, play, or piece of artwork that has been on your mind lately, and why?
I hate to be cliché – but it’s “Hamilton.” I've been listening to it a lot lately. It gets to the core, the very essence, of humanity. I think about the song that George Washington sings, where he says, “I'm going to teach them how to say goodbye.” I think about Compass when I hear that; when it might be the right time for me to move on, and make sure that it will have a life beyond me. It's not about me, it's about the company, and the millions of people that we're going to serve.
When you look back at the end of your career, what do you want to see?
It has nothing to do with money. It has nothing to do with power. I would like to see our two most important customers, our agents and our employees, feel like they live better lives because of Compass.
I have been dreaming increasingly about a life where I’m just fishing on a river or looking at a sunset and being totally at peace. But in my heart, I feel like I haven't earned it yet. I would be truly content if this company could have thousands of employees in the world having a wonderful life and being happy, with more dignity in their profession. The dignity that McKinsey consultants have, I also want real estate agents to have.