Wow, just saw this and just HAD to comment. It’s rare that we see brokers go at each other so publicly about their competitive claims, but I have to say this letter is pretty interesting.
The real estate industry is rife with hyperbole and marketing claims. Our industry’s preference of opinion over fact is one of the main reasons I started a research practice within WAV Group. The birth of business intelligence is allowing brokerages new ways to substantiate or refute claims like the article from Moxiworks shown below. Moxiworks is using MLS data married with BI tools to refute claims that in the past would have been difficult to prove or disprove.
It’s great to see a well-established brand push back against new players that love to throw the long-standing brands in real estate under the bus because it plays well in their recruiting pitches. I totally agree with York that brokers have LONG had technologists and agents in the same company. My partner, David Gumpper is a great example of that. He served as CTO of Michael Saunders and Company and managed an in-house development team for nearly 20 years. In fact, if you look at the Top 500 Brokers on the Real Trends list, at least 250 of them have their own CTO’s that manage development efforts from my calculations.
Don’t get me wrong – I love an exciting news angle as much as the next guy, as long as they are based in fact and not marketing fiction. It’s time that every broker only make claims that can be proven, where the data is readily accessible for others to substantiate.
I hope York Baur’s article will act as a wake-up call to any brokerage, technology company and consulting firm that claims to be the best, biggest or brightest without any data to back up their claim of greatness. We have competitors that do the same thing in the consulting space – they claim to do more research than anyone else or claim to be the most well-respected. I would love to see the data that backs up those claims too.
To be fair, I have to ask York Baur to tell us his sources of the data he uses to negate the claims made by Compass. We need to know how you calculate the 245 day retention number for example and how you calculate Compass’ market share at .7% and not 5%. Fair is fair here – every data point needs to be substantiated to make an article relevant in my view.
I think Moxiworks may have just started the real estate industry’s version of a #metoo movement. We may start to see tons of articles refuting the myriads of “#1” statements we see in our industry. If you’re going to make a claim, tell us how you came up with that stat or simply stop talking!
Here’s the original letter referenced above:
An Open Letter to Compass From a CEO
Dear Compass,
I have to call you out on your boastful approach to an industry that we all know and love. While we agree that there’s a great opportunity to employ technology in ways to make both the consumer and agent experience better, we don’t think you need to resort to the trash-talking and grandstanding that we’ve heard from you – you’re better than that, and frankly we don’t want you to tarnish an industry that has funded the creation of the very technologies you now claim credit for.
You claim to have started the tech talk in real estate. In your recent LinkedIn post titled Before Compass, Technology Was Barely Mentioned in Real Estate you said: “As it relates to technology, Compass truly revolutionized an industry that had become complacent and had fallen behind terribly.” In just a few words, you risk losing your credibility. The first wave of brokerage tech took place in the 1990’s. For instance, Windermere Real Estate, just one example of many, launched Windermere.com in 1995, creating the first known brokerage website, and added a complete suite of agent tools by 2000.
Since then, Windermere, Long & Foster and Howard Hanna have funded MoxiWorks, whose platform and tools now help make 60 brokerages and 110,000 agents better at what they do. Other obvious examples of innovative technology use in real estate include Zillow (founded in 2006), Redfin (2004), and the long list of startups that have been hard at work for decades, funded by hundreds of millions in capital that was invested prior to your founding.
And stated by your head of product Eytan Seidman in his recent Built In Chicago interview, Compass claims to be “the first and only company to bring engineers together with agents under one roof.” Yet Windermere, Long & Foster, Howard Hanna and countless other leading brokerages have had software engineers and agents working side-by-side in their brokerages to evolve real estate technology since the mid-1990s, developing the technologies, data exchange mechanisms, and standards you now rely on.
You claim to create all your own technology. And speaking of untruths, your CEO Robert Reffkin has publicly stated, “We build everything in house, and all the tools and support is in house.” But anyone can look at the websites you run and see that they’re licensed from MoPro, that you’ve licensed MailChimp as your email marketing tool, and that you licensed Honey for your internal social network. These are all fine choices, but you don’t “build everything in house,” so why the distortion?
Your CEO Robert Reffkin recently claimed in a live interview on CNBC that Compass “just launched Seattle five weeks ago and we already have 5% market share.” We took it upon ourselves to do a deep dive into the data – the Moxi Cloud Open Platform now contains the data for 90% of the home sale footprint of the United States, so like everyone out there with access to MLS data, we can calculate your actual market share in any of your markets. For example, that data shows that for the Seattle metro area, the best you could claim is 0.7% of transactions where Compass was either the listing or selling agent. That’s a far cry from the 5% you claimed. Your CEO Reffkin also said Compass “is the only company empowering agents.” That’s not credible, so why say it other than to antagonize the industry you’re clearly a part of, and in business with on the other side of many of your transactions?
You say that your goal is to “improve the lives of agents.” You pay six figure signing bonuses “to less than 10% of your agents” and claim 98% retention, yet notable agents flee to their former brokerage as soon as the contract is up. We did a deep dive into that data too. For agents that joined Compass any time after January 1, 2016 and have left Compass since, the average tenure was only 245 days.
Bottom line. The tech stack you tout is something every other brokerage can quite literally replicate on the open market – many already have. Compass may not be a brokerage that is great at building technology (that has yet to be seen), but you are a brokerage that is great at integrating the technology you buy, and you happen to build some of your own tools too. That sounds like Windermere, Long & Foster and others before they recognized that choosing the best mix of tools from the vendors that use the $1B of capital invested annually into real estate technology was a better strategy.
Side note to all the brokerages out there: You are investing in tech. Keep your independence. If you haven’t already, choose a platform, whether that’s from MoxiWorks or from any one of our worthy competitors and mix the unique set of agent tools that match your brokerage value proposition and business style. That’s all that Compass has done, only their platform isn’t open, which means they don’t have the flexibility you’ll have.
Compass’ strength of integration is one MoxiWorks has already built and established – nothing new here. The Moxi Cloud has been available to our customers for exactly this purpose for three years and has over 40 partner companies whose products work with it, sharing and contributing to the broker and agent data in the platform for the benefit of all. And we’re not the only ones – many of our competitors have similar abilities, and brokerages are mixing their unique blend of technology to support their value propositions just like you are.
We set out to better the industry, not terrify it or antagonize it. Consider this open letter an invitation. Consider it an opportunity for you to set the record straight.
Candidly,
York Baur, CEO of MoxiWorks
Checkout more of the data at moxiworks.com/compass.
Way to tell it like it is! Good for WAV and Great for MoxiWorks to have the chops to take a position against the big bad Compass.
Investing in an open technology platform to empower agents rather than investing in buying agents by promising a closed technology platform. Two very different approaches to the business. One exists as a gateway to promote meaningful change and the freedom of choice, and the the other has created a means to entrap agents by hyping the use and potential pitfalls of a singular choice. Technologies come and they go in this business. Despite that certain reality, tech is a necessary part of the future of the any successful business. It is clear that MoxiWorks clearly understands these dynamics as an industry leader in the provision of integrated technologies. Onward!
Clear Communication is a center of excellence for Compass. It is strong, consistent, clear messaging. The fact that they do not get in the weeds on the differences between custom development and a string of code libraries, applications, application plugins, frameworks, etc. is understandable. You lose your audience. I would say that Windermere is a custom shop even though you do the same stuff they do. Compass just took a more liberal communication approach to it. Keller Williams does the same. Heck – all brilliant communicators do that stuff. I think that they are somewhat guilty of not being super specific, but would give them a pass unless I am a competitor. In that case, Windermere (and Moxi) did the right thing here too. They are picking a fight. That is a brilliant communication strategy too.
Compass does a lot a code writing – but sure – not everything. Heck, even when creating custom code – you work on a code base that has code libraries – so it is hard to say that anything is custom any more – other than the way you create your collage of code, applications and integrations. Point well taken.
As for the market stats, I can guess where Compass is coming up with their marketshare numbers. They are likely forecasting the future volume and market share based upon historic production of the agents and companies they recruit. This is also frequently used in communication strategies. Technology companies report the full value of a contract even though it is only in month 1 of a 36 month contract. When brokers buy other brokerages they often state the predicted or past revenue of the combined companies. Again – What Compass is doing here is brilliant communications. They are construing the numbers to fulfill the story that they want to tell. They are brand new in Seattle, so they probably have only recorded a few months of sales – but report on what they think that the full 12 month annualized transaction estimate is related to the agents they have recruited. IE. If they hire an agent that has done $50 Million a year for 10 years, they are reporting $50 Million in their estimate for that agent even though their production for a partial year may only be $10 Million.
What I love about real estate is that we have competition. It drives companies to be better about building and maintaining their story in the market. But, as you say – many many brokerages are equally as effective. Everyone also quotes the Top 500 lists, but some huge companies like Weichert do not submit their data. Other brokers report the franchise numbers combined with the company owned stores. It’s all positioning.
My father impressed upon me that “Reporting is an art as much as a science, factual numbers lead to the truth you want if you know how to add them up right.” Show me a business leader that does not know how to be creative with reporting, and I will show you a business leader who is untrained in the art of corporate communication.
If I’m not mistaken, the market share of 5%, per Mr. Rifkin’s interview on CNBC, included agents and or teams that Compass had acquired in that market. So, they counted those listings and sales in addition to the actual Compass listings and sales since entering the market. I believe Mr. Baur is quoting the ‘pure’ Compass listings and sales if you will.
Right or Wrong?
That is my assumption exactly
Not sure Gregg – that’s my point exactly. How can we believe any statistic that we see without transparency about where it came from or what it truly represents. Time for my truth in advertising.
This has been very interesting to follow on this site and across social media. Is it me or does the lack of any news of this on Inman speak to the fact that they don’t want to risk the giant paycheck they get from Compass? Where is the so called journalistic integrity? Brad = Epic fail…
Not sure I would take that leap of faith Mary! I would ask Inman directly about that.
To anyone still wondering about where and how we got our data, you can find it at our page: https://moxiworks.com/compass, which is actually linked at the bottom of the original open letter on our site (has been there since this went live). It explains at the bottom of the infographic how we calculated our data (all via MLS) and should be quite easy to digest. I also invite anyone and everyone to contact me personally so I can set up time for our Data Scientist to walk you through the exact calculations.
Thanks for sharing the details of your statements Tiana!