Entrepreneurs, Study Redfin Carefully

Who should we look up to?

As HubSpot grows, that question keeps coming up. Sure, we look up to Google and Facebook, but what are smaller, earlier-stage companies doing equally amazing things?

This summer I discovered a new answer to that question: Redfin.

I recently finished buying my first home, and I did it through Redfin. It was a fantastic experience. I left Redfin a happy customer, and a deep admirer of their business.

There are five main reasons:

(1) Their product and service are easy to love. Every bit of my experience with Redfin was a pleasure: searching the site to find listings, visiting properties with my field agent Mark Sanders, wandering around neighborhoods checking out properties with their iPhone app, using data on the site to do my own market analysis, and finalizing the purchase with my agent, Hannah Driscoll.

(2) They empower users with data.
Most companies bottle up data like some kind of secret sauce. Redfin understands that everybody wins when data is shared. They publish all the MLS listings on their site and make them easily searchable.  That means buyers can find properties they like on their own. That saves time for the buyer and the agent since the properties they visit are ones the buyer is most interested in. No more visiting dozens of places just so the agent can understand what the buyer wants.

(3) They align incentives correctly. Traditional real estate agents are paid on a commission of the sale. That means their incentive is to get a deal done, even if it's not a property that makes sense for the buyer. Redfin flips this crappy model on its head. Redfin agents are paid on a salary and get a bonus based on feedback from the buyer. That means Redfin agents have an incentive to make sure the buyer is completely satisfied with the sale.

(4) They’re blowing up an inefficient market. Real estate brokers exist largely because of imperfect information — but now that information is digital, there is no reason it should be imperfect for consumers. If it’s possible to know all the real estate listings and recent sales in a neighborhood, no business should be able to keep that information behind a gate and charge for access.

(5) Their employees are happy. — The Redfin employees I met — Mark and Hannah — were both genuinely passionate about the company. As a customer, there’s no better signal you can get about a company.

I do have one nit to pick with Redfin: They don’t have a good marketplace for service providers. Instead, they recommend specific lawyers, mortgage brokers and inspectors.  As a consumer you have to wonder about service providers — particularly lawyers — recommended by your broker. Is a lawyer recommended by Redfin regularly going to represent your interests or Redfin's? Probably Redfin's. Redfin could remove this conflict of interest by replacing the recommendations with simple listings and customer reviews.

Finally, the thing that makes me happiest about Redfin: Companies like Redfin will eventually pull us out of this recession we're in — companies that are creating thick new value, simplifying life for consumers and freeing us up to do more of the things we love and are good at.

2 thoughts on “Entrepreneurs, Study Redfin Carefully

  1. Thanks for the post. I had heard of red fin before but never from someone who had actually used the service. I appreciate the points above and feel they are critical. I was watching a video with Jason Fried earlier today and he said not to watch the Googles and the Facebooks, but to watch other companies of your size, because they are going through the sames things you are. I think that its a great point. You hit the nail on the head.


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