Greylock Leads a $10 Million Investment in Redfin

Big news! We just announced a $10-million round of financing led by Greylock Partners’ James Slavet and his colleague David Thacker. Redfin’s group of existing investors — Madrona Venture Group, Vulcan Capital, DFJ, The Hillman Company — also pitched in on the round.

We couldn’t be happier about the team behind us. Like all the Greylock partners, James has deep operating experience, having run the gamut from founding a tiny Internet company to leading a multi-hundred-million-dollar business. And even though Greylock has every right to a bad-ass swagger, with probably more publicly traded companies under its belt than any other venture investor, the Greylock people you meet are somehow humble and funny and nerdy while still being terrifyingly impressive. Their first diligence request was a spreadsheet of in-depth Settlers of Catan statistics that we’d prepared for Greylock’s newest partner, the great Reid Hoffman.download_lowres_slavet

We’re a good fit in ways beyond our affinity for Settlers. Time and again, Greylock has invested in cult businesses built with little or no marketing spending that have gone on to become household names — Facebook, Pandora, LinkedIn and, my favorite, ZipCar. Like our other investors, Greylock has the confidence to mentor the talented up-and-comers at Redfin into bigshots, to let Redfin grow as big as it can rather than selling at the first opportunity,  to think different and to think big. And it has high expectations, not just that we can continue to be a nice little business, but that we can become a company that doubles and doubles again.

Already, we’ve got plenty of momentum. Here are some of the past year’s highlights that we included in our funding pitch:

  • Revenue exceeded a $20 million yearly run-rate and Redfin generated its first profits
  • Redfin shipped the highest-rated iPhone application for real estate
  • Site visits increased more than 200%
  • Total dollar-value of Redfin transactions since inception exceeded $2 billion
  • Redfin customer satisfaction remained at 97%
  • Now the challenge is to keep performing, taking on new risks rather than just consolidating existing gains. For a while now, we’ve been too scared to take many risks. We’ve been profitable since June, but didn’t have much money in the bank, and,as we explained this morning to John Cook, couldn’t think far beyond the month right in front us.

    We’ll keep running the business out of the cash register — we worked too hard to get to profits to abandon that discipline now — but the new capital gives us a margin for error when making a few big bets: beyond real estate search, we still have to put the whole touring, offer and escrow process online, and we’ve got to build the systems and processes that allow us to deliver the same amazing service to 10,000 or 100,000 customers every month, not just 100 or 1,000.

    For now, we just wanted to thank all the folks who helped us put the round together: Paul Goodrich,  Steve Hall, Marc Singer, Emily Melton and Josh Stein on our board, as well as our excellent attorneys at Fenwick & West, Alan Smith and Matthew Forkner, and finally the folks at Redfin who crunched the numbers and made the pitch: Adam Wiener, Chris Roske, Sasha Aickin, Matt Goyer, Scott Nagel, Michael Young, Angela Cough, Bryan Selner and many others. Thanks to everyone for all your help, and to Greylock for leading the round.

    We’re honored by your support, and we”ll work hard to make the most of the opportunity.

    Discussion