Archive for the ‘Glenn Kelman’ Category
March 23, 2008
Michael Arrington complains again today that people are overwhelmed with email. Michael cites a venture capitalist who encourages people awaiting his email reply to befriend him on Facebook, but then admits he is even less responsive there.
“Someone,” Michael says, “needs to create a new technology that allows us to enjoy our life but not miss important messages.”
But if Michael wanted fewer messages, he could just switch to a private address without telling me what it is. Every time we write an email rather than call, or add another distant “friend” to Facebook, we choose a network over true friendship, communication without commitment. And usually, we’re choosing what we want.
This is a process that starts early: the New Yorker’s Adam Gopnik recently wrote about the imaginary friend his toddler talks to on her toy-cellphone, usually only to say that she’s too busy to talk to him.
And it began a long time ago. The critic Hugh Kenner speculated that the disembodied voices of modern poetry grew out of the invention of the telephone. What I grew up seeing as a way to reach out and touch someone, a previous generation saw as a paltry substitute.
And now that’s how I now see Facebook, as a paltry — but not quite dispensable — substitute. Facebook comforts us with the thought that we have lots of friends. And yet the prestige that this network offers is the opposite of security, that 8th-grade sense we got from knowing exactly who our friends were.
The “social utility” of friends on Facebook is different than other forms of friendship. Most of my friends’ Facebook updates have the quality of overheard cell phone calls: mundane, impossible not to listen for, really only half of a conversation, but also comforting. Someone stuck in Singapore for a year once told me that what he missed most was the English chatter of overheard conversations.
This is why I’ve stopped checking Facebook throughout the day, but then suddenly find myself, alone in the wee hours of the night, glad to see everyone there. The feeling it gives me was best described in Augie March: “Wherever it was dark there was this sound, continental and hemispheric, again and again, like surf, and continuous and dense as stars.”
Saul Bellow was writing about falling asleep to the chirping of insects, but now that sound is the buzz of our friends. Maybe the one-line updates of Facebook have just reduced communication to what we really need to hear, over and over again: “Are you there?” “Yes, I am (everything’s fine).”
(photo credit: Moriza on Flickr)
February 21, 2008
Slate’s Daniel Gross complained last Friday that recent proposals to declare a temporary moratorium on foreclosures will only slow the process of price discovery, which is how the market figures out what an asset is worth.
Whether we like it or not, Gross argues, housing prices still need to come down. A foreclosure is the market’s only way to force the issue.
And as anyone who has seen “Trading Places” can tell you, in most markets, price discovery can take a few minutes. In real estate, it takes years. Sellers, Gross says, get stuck on a price. Builders hold the line so that other residents in their development don’t feel like suckers. Commissions and moving costs, he notes, decrease liquidity. 
Gross has argued elsewhere that bubbles are good for the American economy; without such irrational exuberance we wouldn’t have the telegraph, the Internet, or railroads. But in the bubble’s aftermath, he says, it’s just as important to murder as to create.
And when nobody faces the music, you get a Japanese-style recession, with prices stagnant for years. This is why Gross says that a foreclosure moratorium would perhaps be good for social harmony but bad for our economy.
One symptom of incomplete price discovery is wide disagreement between home buyers and sellers on price. Sellers are remembering what they could have gotten six months before, and buyers are forecasting what they could still save six months later.
This surfaces in our business as low close rates, which have dropped 50% since late fall. To generate the same amount of revenue, we have to do a lot more work. We spend most of our day trying to explain to buyers and sellers what we see happening in the market.
Predictably, we think the solution to the price discovery problem is more information. Informed consumers are one of the basic prerequisites for an efficient market. In the bubble, consumers bought houses without realizing the properties had sold for half the price two years before, using adjustable-rate mortgages they didn’t understand. Now in the bust, they are even more anxious.
And I’m sure Adam Smith would say it’s their own fault. Consumers should read the fine print. But the real estate and mortgage industries haven’t always made it easy for consumers to do that.
Today, many of the MLS cooperatives for sharing listings regulate brokers’ ability to publish price history, valuation estimates and tax records. And at least one California MLS has pressured Redfin not to support the “bubble bloggers,” who — working anonymously, occasionally at their own peril — often challenge conventional wisdom on market conditions. Extremely intelligent people struggle to compare the cost of different mortgages. Most disclosures are made at the discretion of the real estate broker or the mortgage broker, which is one reason why there’s still nothing like Yahoo! Finance for real estate.
And home-buyers need information more than stock-pickers. Buying a home isn’t like playing the stock market, which is still the sport of America’s other half; buying a home is supposed to be what all Amercians strive to do, regardless of whether they have personal finance expertise.
So while we have come to embrace the idea that cooperation among brokers is necessary to ensure the information we share is high quality, we still think the industry needs to get over itself about sharing all of that information with consumers. The most forward-looking MLSs — including the one here in Seattle — have already begun this process, and many others will follow their lead. If we as brokers aren’t the source of information about price discovery, someone else will be.
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Bonus link, from a Friend of Redfin, on Florida prison system’s drunken orgies. Also check a review of online real estate sites which puts Redfin at the top of the charts. And a free Redfin t-shirt to anyone who can guess where the title for today’s post came from…
February 12, 2008
The New York Times reports Friday that alone among all the cities hoping to be the next Silicon Valley, Seattle “is actually doing it.”
But the Times didn’t talk to iLike President Hadi Partovi, or Zillow.com CEO Rich Barton, both entrepreneurs who, like many of the folks at Redfin, shuttle between Seattle and Silicon Valley. None of us thinks Seattle is ever going to be much like Silicon Valley. We believe instead that what other cities can learn from Seattle is how to be different than the Valley, not the same.
In reality, most places don’t even want to try to be like the Valley. Seattle has become unrecognizably wealthier in the past decade, yet is oddly unhappy about it. Many Seattleites wish we were still a modest boreal town rather than a Microsoft-Amazon megapolis. The question I am most often asked here is where I went to high school — twenty years ago — not what I’m doing next.
The Valley by contrast is a heartless amnesiac. In my 16 years there I can’t recall anyone’s ever expressing nostalgia for how it
used to be. This is probably because almost no one in Silicon Valley has any idea how it used to be. Internet guru Michael Arrington often opens conferences by asking audience-members from Silicon Valley to raise their hands and then, if they were born in the Valley, to keep their hands raised. Hands go up and down like The Wave.
And this is what Michael loves about the Valley: that it calls out at dog-whistle frequencies to nerds across America, Russia, India and China. The single-mindedness of their migration belongs in National Geographic. My first roommate spent four years building a company in San Francisco without ever buying furniture. When his startup went bust, he packed for the trip home to Toronto the same day.
Seattle is different. People live in Seattle because they love Seattle. When I was still looking for a reason to be here myself, I often asked Redfin recruits what brought them to town. The answer I always hoped for was “CONQUEST.” But what everyone talked about was something I still barely understand: the lifestyle and schools, the mountains and lakes. “Do you have any idea,” I finally told one candidate, “how bizarre it is to swim in a lake at the center of a city?”
Failure to appreciate a lake is viewed by many Seattleites as a sign of mental illness. But the Valley’s monomania is really just a kind of pubescence. What else could account for the Valley’s self-righteousness, its congregations of frustrated dudes, its all-nighters, idealism, delusions of grandeur, mood-swings, longings, dramas, hero-worship and pranks? Anywhere else by contrast seems all grown-up.
No one in the Valley can afford to grow up. Just as stressful environments delay the onset of sexual maturity in marsupials, a high cost of living – a two-bedroom house in Palo Alto typically costs more than $1.5 million — prevents people from buying homes and having children. In Silicon Valley, Seattle’s 28 year-old family man is still working his tail off for a hit.
The Hogwarts of Silicon Valley
The other source of Silicon Valley’s youthfulness is, in fact, places like Seattle. Seattle has some of America’s best high schools, but sends many of its best computer science students to California.
The founders of Apple, Google, Intel, Sun and Yahoo! all graduated from Berkeley or Stanford; an enormous graduating class seeks to follow in their footsteps every year. The whole state of Washington produces about 150 computer science graduates a year.
Stanford in particular is not just the source of Silicon Valley’s manpower but its magic. Guy Kawasaki says it is “the single biggest reason for Silicon Valley’s existence.” And as Hadi notes, “very few colleges spit out 21-year-olds who think they can be the next Jerry Yang or Larry Page.” It’s painful for those of us never admitted to Stanford to marvel at its sunny rejection of failure, its Hadron-sized Internet connections, its courses on venture capital and Facebook, its magnificent sense of entitlement.
Yet we all know that without Stanford the Valley would grow old and die. Native Seattleites hardly notice Seattle’s Stanfordlessness; Valley expats never get over it.
Rotarians and Pirates
This is not to say that Seattle is all bad for entrepreneurs, only that the ways in which it is good only show how different it is compared to Silicon Valley. Start with Seattle’s Rotary Club, the largest in the world. High-tech entrepreneurs are expected to be pillars of the business community here, not, as Silicon Valley’s establishment likes to think of itself, pirates of the Caribbean.
At one of the first conferences I attended in Seattle, I was shocked to hear a speaker talk about how to improve K-12 math education, not how to hack a Tivo. It took a while to realize that “K” stood for kindergarten, not kilobytes. But this mindset connects us to a set of civic virtues bigger than any one company. It’s why I’m optimistic about Seattle over the long haul.
And it has nurtured a rookie CEO like me. A Seattle journalist e-mailed me while I was still loading the tiny U-Haul that brought me here. A VC who should have eaten my gizzard for breakfast invited me to his lake house for dinner. A startup CEO who offered money-raising advice over lunch diverted us from Quiznos to Carmines. Redfin is better because of their help.
Far from the Madding Crowd
Few people would have had the time to help in Silicon Valley. The chaos of newcomers and the desperation of those who want to stay make the Valley seem like a capital about to fall in a coup. Dingbat ideas are scattered like pennies on a sidewalk. Overlooking last night’s website launch is like showing up at a party with last year’s purse.
The cult of the new may seem like madness but here’s the method to it: what’s often most difficult about developing a new idea is figuring out if it’s already an old idea. A business just like the one you’ve been dreaming of may already be forming within Google, or preparing to launch on its own.
When you and everyone you know spend 18 hours a day downloading, hacking, breaking, sharing, gossiping, criticizing and arguing about the Web, it’s easier to tell when an idea is truly new. And if you don’t, it’s almost impossible to catch up.
This is why Hadi says so many Seattle entrepreneurs develop ideas late. We aren’t slow; just out of the loop. Even Seattle’s greatest two start-ups, Amazon and Microsoft, were first conceived somewhere else.
But being apart from Silicon Valley can give entrepreneurs the latitude to think about what works, not what’s fashionable. It was, at first, hard for me to break out of the Valley mindset. My initial question in setting Redfin’s course wasn’t “Is there a business here?” but “Is it cool?”
Because Redfin’s business — real estate — isn’t cool. And taking on the messy business of serving customers directly definitely isn’t cool. But some of the best – and most meaningful — new ventures may be the ones that combine old and new business models, experience and youthful recklessness, perseverance and opportunism. And it is these ventures that really seem to belong in Seattle.
Loyal to a Fault
Because if it turns out that Zillow, iLike or Redfin are on to something good, it may be easier to build a long-term business in Seattle. Ten years on at Microsoft, engineers deep in Redmond’s rain forests are still writing the next version of Office. Meanwhile the engineers at Google are, as Zillow’s Rich Barton points out, plotting their next startup on the company dime.
I’m not sure which engineers one would rather have, but it is true that there is a blue-collar dedication in Seattle that you don’t find in the ADD-addled Valley. “You work hard here because it’s gray,” Rich writes. “Then you go hiking or fishing or skiing.”
I really like that advice. Unfazed by any heavy weather ahead, Rich keeps chugging along and having fun. And Seattle does, too.
Thanks to Rich Barton, CEO of real estate portal Zillow.com, and to Hadi Partovi, president of music discovery startup iLike, for their help.
February 3, 2008
Reacting to Thursday’s announcement about the new “Freakish Depth” release of Redfin.com, Austin asset manager Lani Anglin-Rosales wrote an analysis of Redfin’s brand for national real estate magazine Agent Genius:
Redfin is actually designed to appeal to GenY by using hip vernacular like “Redfin’s goal is to delight our audience of hard-core real estate fanatics by offering Freakish Depth on major real estate markets.”
On the same day that Lani talks about our appeal to people born between 1980 and 1995, San Diego real estate blogger Kris Berg writes “you dudes, like, speak my language,” and Greg Swann wonders about the “gnomes who find Redfin appealing.” But it was Lani’s analysis that generated so many comments she had to close the post, concluding with:
As an insider, I can tell you that GenY falls for wants jazzy words and being made to feel special, so all you really have to do to cater to GenY is tell them they’re special, that you’re stupid and they’re not, and give them shiny buttons on your website and offer them $100 at closing as a rebate.
Notwithstanding that our average refund is $10,000 at closing, Lani is correct that our brand appeals to younger people: 90% of our customers are under 45.
But this talk of “delight” was not a calculated attempt to appeal to GenY. The concept actually came to us years ago from P&G employee Dan Gerbus, when many Redfin employees worked for a startup that made software for companies like P&G. It was strange to hear a now-retired IT manager in Cincinnati talk so freely and passionately about the vaguely sensuous idea at the center of P&G’s strategy: “the first and second moments of consumer delight.” 
And it had never occurred to us back then that the proper role of a new product is not simply to fill a need, but to delight its customers. Pre-Redfin, we had always focused on such dry selling points as return on investment and network security.
Dan explained that the first moment of delight is when the consumer first spies it on the grocery shelf. The second moment is when the consumer actually uses the product. We liked the idea that using the product is the real moment of truth precisely because, contrary to Lani’s point, this respects rather than dupes the consumer.
Coming to Redfin with no consumer products experience, we remembered what we learned from the best consumer-products company in the world about delight. Our first moment is our map-based real estate search, but the second is what really counts: when we deliver results as real estate brokers. If traditional agents teleported into a random Redfin meeting, I really think they would be surprised just how much we talk about this. And then they would be brainwashed, hogtied or sacrificed in a bizarre, sadistic ritual.*
But what about “Freakish Depth”?
Before Redfin, we had been used to pouring our guts out on software that half-interested people barely paid attention to. But a real estate application is one of the few web applications in the world where you can safely assume that people want all the information you can possibly give them. Few people browse Amazon, Orbitz or E-Trade until their eyeballs fall out, but that’s how they use real estate sites.
So in focus group after focus group, we tried to convince our customers that they didn’t actually want to see all the information about a property for sale, or that brief data quality burps didn’t matter. And we always failed.
Redfin’s happiest thought came at the end of one of these focus groups when someone said, “These people are as freaky as we are.” It’s a nerd’s dream: taking one of the most rich, public and structured data sets in the world, and getting free reign to shovel as much of that data as you can out onto the Web.
So after poking at inventory for a while, we’ve decided to go nuclear on data quantity and quality, because we found that consumers really freak out about differences that we had worried seemed arcane or even invisible. Freakish Depth is also probably the only strategy that Redfin, limited now to seven markets while others build national sites, can be good at: taking consumers the long hard way from previewing homes online, to touring, pricing and buying, owning.
So we use terms like “Freakish Depth” not to appeal to GenY but because that’s how we really think of our strategy, and saying what we really think is probably the only way we can be heard in this fake-weary, media-saturated world. But to our critics, sincerity just seems like the most cunning trick of all.
(Bonus to anyone who can identify the art work pictured above as an example of delight, and how it works. Credit to Business Week for Dan’s photo. Many thanks to Dan for all he taught the Plumtree-alum at Redfin and everywhere else.)
*The human-sacrifice comment was just a joke, about how traditional agents seem to think of us and what we do all day. We try to delight you, too. If we held an open house for traditional agents to meet Redfin agents and executives would you come?
December 17, 2007
Thanks to everyone for their kind words about Redfin’s appearance on “Today,” which broadcast on Friday our data-driven guidance on how to sell a home more quickly, for a higher price. We showed up in the local papers and the blogs. Another food-fight broke out with the real estate bloggers. But mostly people have asked what it was like to be on the show. Here is our starstruck eyewitness account…
The segment was scheduled to run at 7:40, and the producer asked me to arrive by 6:50. Outside the Today studio it was festive: there was a gigantic Christmas tree, and traces of snow still on the ground, and a crowd of tourists, and a security guard manning a velvet rope. It was windy and cold. Inside there was another security guard, and — what a thrill! — another velvet rope.
The green room was just around the corner. The carpets were comfortable and worn. I was alone with two production assistants who were surfing the web on an ancient computer and watching the show; the food was plentiful: doughnut holes, egg sandwiches, cookies, bagels, granola bars, a plastic bowl of cut fruit. The place was crammed full of newspapers and televisions, all tuned to NBC. “Mind if we see what else is on?” I asked. They shook their heads.
A contingent of cooks showed up with a truck-sized slab of beef that they were going to prepare on the air. Since it was so early, I asked the PAs if they ate the food from the cooking segments and they said, “Oh yeah.”
The mood was unruffled. Brian Boitano was in the building, and somebody said, “It’s Brian Boitano.” Julia Roberts appeared just after Redfin, but her segment was taped the day before. Unlike “60 Minutes,” which was as highly charged and carefully wrought behind the scenes as it was on camera, “Today” is sunny, relaxed and fast-paced. It is after all on for four hours a day, almost every day. All the make-up people and production assistants are very encouraging, almost like amusement park attendants.
Heading up the stairs to the make-up room, I walked through a door and literally ran into Matt Lauer. “Hi guys!” he said. “Do I really need make-up?” I asked and the make-up people nodded with religious conviction. I asked them about their favorite stars to work on and they told me “the stars bring their own make-up people.”
The producer called to say I would do great. I think I sounded nervous, which made him sound very nervous. We ended up reassuring one another. I wanted to ask if I could use the word “kick-ass” on the air, for reasons I can no longer remember, but then told him “forget it,” and he said “what?” and I said, “no, forget it,” and then he said “Just don’t get nervous.”
At that very moment I was thinking of a Post headline I saw on my last visit here, when the Mets choked in a pennant-race (”PAGING DR. HEIMLICH”), and the one from the day before, when Mike Huckabee had to apologize to Mitt Romney (”I HUCKED UP.”) A PA escorted me onto the set five minutes before the segment started. I shook hands briefly with Meredith Viera, and with 90 seconds to go, I was wired for sound.
While I sat in the bar-stool, Meredith Vieira’s executive producer kept making jokes in her earpiece that caused her to say “You’re terrible.” And “stop.” She turned to me and said “He’s just being mean,” though of course I had no idea what the executive producer was saying. She sized me up and then said, “Can I preview the out?”– the segue to the next segment which the anchors memorize in case at any moment they have to end the current segment.
I tried to remember the advice I got the day before from a friend of a friend, waiting on the outdoor platform for a train in an ice-storm, clutching a cell phone with a frozen, agonized claw (”How much time do you have?” he asked. “12 hours.” “Oh my God. And what’s all that noise in the background?” “It’s me, freezing to death.” “Ok, the first thing to remember is to sound happy — you don’t sound too happy right now, ha ha!”). Here was the advice we got from him, and an Omaha pediatrician with TV experience, both of whom were enormously helpful:
- Enthusiasm, passion, conviction: The most important qualities
- Always answer three questions: So what? Who cares? What’s in it for me (that is, the viewer)?
- Assume the viewer is channel surfing and didn’t hear the question.
- Look at the interviewer; let the camera-people worry about the angle in which to shoot your face.
- It isn’t uncommon for the questions to change the night before the show.
- Don’t lean back in the chair; scoot forward, as this naturally tends to improve your posture.
- Tuck arms close to sides, as this also tends to improve posture, but don’t have your arms too close to your sides.
- Talk with your hands if that’s how you’re comfortable.
- Avoid correcting the anchor; validate the questions.
- If you want to circle back to an answer, you can say, “Like we were talking about earlier…”
- The interviewer usually chooses you because he or she is most interested in your area; assume she is interested in what you have to say.
- It’s probably best to avoid wearing white or patterns of a finer weave than a centimeter. Wearing a blazer gives depth (”I left my blazer at home.” “OK then, wearing a blazer makes you look stuck up. Ha ha!”)
On the set, Vieira was very relaxed and amazingly good at scrolling ahead through the teleprompter script just before the segment started and then never really looking at it again. She was also friendly, which calmed me down. Then she kicked off the segment by saying that I was here to explain how everything a Realtor tells you may be wrong. I knew that somewhere at that very moment, a blood-thirsty mob of real estate agents was forming.
The rest of the interview, I was w
orried about what they would think. But then before I knew it we were done. The producer showed up and said we did great, not entirely convincingly. Swinging by the control room — eerily dark but for the light of forty television monitors — I saw on one monitor that Vieira was already doing aerobics with her next guest.
I met a children’s book author from Palm Beach when I went to pick up my laptop from the green room, and someone in the crowd outside cheered when I came outside. I checked my phone and saw nine text messages from Redfin’s well-wishers. And I felt very grateful to Today’s producers, and lucky to have such a wonderful team, and to work at such a great company.
My mom called to say I was “very informative. But why can’t you sit up straight?”
December 13, 2007
Redfin is launching tonight The Real Estate Scientist, an initiative to use empirical techniques to improve the way our agents and clients buy and sell homes. We’re releasing our first report, which provides seven recommendations for home-sellers, and training our agents on the findings, which should allow us to have more informed conversations with our clients.
We developed this research because the housing downturn has made it harder to sell our clients’ homes. This in turn has made us more introspective about how we can use our special powers – our computer science background and our consumer commitment – to be the best brokerage, not just the best real estate website.
This has been a contentious process. At lunch we argue over the practical questions we have to address for our clients, like the best day to debut a listing or whether it’s really worthwhile to post an MLS property on craigslist. But why argue when you can experiment?
There are plenty of excellent academic studies of local real estate markets. And Redfin has data that most academics don’t: access to 17 MLSs with more than 250,000 listings, and a website used by hundreds of thousands of buyers every month.
We’ve tried to put this information to good use. We know that listings that debuted on Friday rather than Thursday drew 7.7% more visitors; that a vacant home increased the odds of a price reduction by 9.5%; that, because of how real estate websites filter on price, a listing priced at $351,001 got as much as 7.1% less traffic than one priced a dollar lower. A team of agents, engineers, statisticians and writers worked together to produce the report. Some of their findings are surprising, while others confirm conventional wisdom, which has value too.
We only worry that the name we’ve given this initiative, “The Real Estate Scientist,” will open us to being mocked. And too, we hesitated to give consumers simple answers due to the complexity of the underlying data. But in the end we chose the name because it was the one we had used all along, it was fun, and it was the simplest way to explain how our approach was different. We strove for conclusive answers because we have houses to sell every week, and customers who need straightforward guidance.
Consumers who have read early drafts of the report overwhelmingly found our recommendations useful and effective. The industry reaction will likely be different. Some will argue that the report substantiates already well-understood tactics, while others will take the exact opposite position, refuting our points one by one.
But the truth is that a discussion of how real estate brokerages can deliver better results, based on data rather than just opinion, is in everyone’s best interests. And the findings aren’t simply a prescription for how we’ll serve our customers, but the starting point for an informed conversation about pricing and marketing our listings. Hopefully you can contribute to this conversation too, suggesting future avenues for research.
And now we are going to be talking about the findings on “Today,” probably around 7:40 Friday morning. What fun! To get ready for the interview I got my first $50-haircut, by a young Albanian in midtown Manhattan who compared my current style to 1989 Depeche Mode, and suggested I try a different color. “Like blonde?” I said, intrigued. “Just not so gray,” she mumbled. Because I had 30 minutes before running for a train, she cut quickly, putting off a very stylish socialite who was demanding that her hair be wrapped for the ice storm.
And then it was exhilarating to run – really run – through the streets as the year’s first flakes fell and pedestrians looked up gratefully into the sky. On the sidewalks at nearly every corner, there was one guy pushing a salt spreader and, this being New York, another to stand there and tell him what to do.
I had a meeting in the coffee shop of a remote, pretty Connecticut town, covered in silence and snow. Now on the train back, a teenager next to me is reading an article entitled “Sex Snafus That Can Send You to the ER”; a culinary school student who cried after being short on the fare has asked if we could stay together through the connection; and a bald salesman has been eavesdropping on my cell phone conversations.
“You can’t live in fear,” he says, repeating what I just said when I hung up on my last call. Then he adds: “Guys like us, we’re not afraid.” I nod, thinking about the next day’s show. If only that were true!
November 19, 2007
Changes at Redfin have made all sorts of headlines this year, but the only change our customers really want from us is more home tours. Historically, the first four-hour home tour has been free, and the rest cost $250 up front.
One isn’t enough. We’ve never had a focus group where customers didn’t bay for more tours, while the interns heedlessly wolfed the catered sushi.
So in yet another mutation from the dainty little web company we originally imagined ourselves to be, we’ve now got a new proposal to run by you: quadrupling the number of home tours customers can get from us before paying any money.
Of course there’s a catch. In fact there’re three:
- You have to be pre-approved to buy the places we’re touring: it’s ok to look, but let’s at least make sure we’re in the right ballpark.
- The home tours last two hours, not four: most people want to see three or four homes in one go, not eight or ten.
- For home tours #3 and #4, we take $250 per tour out of your refund: for someone who took all four tours, this would reduce the average refund from around $10,000 to $9,500, and only if you end up buying through Redfin.
After tour #4, you could still pay $250 up-front for additional tours.
We’re hoping this won’t screw up our per-transaction costs, mostly because the tours will be shorter, and asking for pre-approval letters from a lender will make sure customers getting a free tour meet us halfway.
We were thinking of giving this policy a try at least for the rest of the year, starting after Thanksgiving, but since the topic has been so controversial with customers, we thought we’d see if anyone had any refinements to propose first. Thoughts?
November 14, 2007
Michael Arrington just posted onTechCrunch a Redfin essay arguing that venture capitalists put too much stock in an entrepreneur’s experience. Brimming with emotion, we saw that within seconds of publication, someone had already left a comment! What a thrill! We breathlessly opened the page to see what our first reader had to say:
“Stop with the guest posts. We only come here to hear from Mike and Duncan.”
Somewhere in Seattle, a small office became very quiet. Moments later, Michael put the hammer down with his special green font: “do you guys practice at being assholes or does it come naturally?”
Later, Guy Kawasaki posted his own version of the essay, prompting my second-favorite comment: “after 20 years of unfocused attention to my various start ups, I am now relatively broke. I mean the house is paid for, the kids are in private school, but we now fly commercial and sit in the back unless there’s a cheap upgrade.” It was written at 3 a.m.
(The National: Fake Empire.)
November 14, 2007
Draper Fisher Jurvetson hosted a CEO Conference Monday in Half Moon Bay. Just about all the CEOs in the DFJ portfolio were there, mostly to talk among ourselves about how best to stave off the usual fate, which is to lose a lot of money and then get fired.
And yet we all went into it with the unfounded optimism peculiar to California: as if we might find a new best friend, or start a religion, or get swept up in an apocalypse (fires, earthquakes, Internet bubbles) that no one could previously have been convinced to take seriously.
I went curious to see what CEOs as a group would be like, as if to see what I might become: I imagined a convocation of X-Men, each with her own freakish flaws and special powers, or of business-casual, bloodlessly suave Agent Smiths.
And there were plenty of both, more than can be described here in any organized way. An Israeli entrepreneur working on a top-secret project with Eastern European X-Box hackers complained that investors in his first business wouldn’t let him use the service he built to run porn. “But this time,” he promised, “lots of porn.”
In his keynote speech, Tim Draper made a plausible case for colonizing Mars, showed a photo that may have been of himself standing astride a slaughtered elephant, and asked the crowd to sing along to a song that he composed and performed. (When I later asked a DFJ partner about the song, he said, “Oh, I’m the drummer in Tim’s band.”) It made me wonder if every titan of venture capital is really just a camp counselor on steroids, nudging his little charges along on their projects.
I felt bad for the follow-up acts. A Chinese entrepreneur took the stage to boast that his countrymen were “the Jews of Asia.” A banker dusted off “Internet growth” charts from 1999. But then a CEO in a pastel tie and matching pocket square explained how he evaluated job seekers in terms of the way they made people feel, a leap of empathy and insight that it had never occurred to me to consider.
The folks running ad-driven sites clucked that big advertisers still don’t get it. And we all agreed that the real problem was that nobody can beat Google in direct response ads, while for the zillion-dollar branding campaigns, TV and radio still pack a bigger emotional wallop.
We competed to say how little money we spent and how few people we employed, which climaxed when a San Francisco entrepreneur said he rented industrial space in Potrero Hill for $2 a square foot — ten times less than Redfin pays for its truly vile south-of-Market office. On the phone later that night, Redfin’s HR swami talked me out of cutting everyone’s pay.
Things went downhill from there. Over drinks, a games entrepreneur boasted of receiving letters from men who lost their wives because they couldn’t stop playing his game, MechWarrior. “You have to believe they might be happier alone,” he said. I misheard a young lady complain about the person who “did her nails” and told her “I’d love to have that nose.”
A guy from Los Angeles in a Thriller-style leather coat told me his creative partner was Ashton Kutcher. An Internet media mogul said he moved to LA so he could feel like part of the entertainment industry but discovered that “down there, the bassist in a third-rate bar-band has more street cred than we do.”
Everyone nodded. We knew all about being nobodies. But then we all went to bed that night in a real hotel — not on some friend’s twingey mattress – kings of ridiculously small, ragtag empires that seemed for the moment as unprecarious and boundless as the sea.
(Thanks to DFJ for hosting the conference).
October 6, 2007
With more than 70% of home-buyers looking on the Web for real estate to buy, we wondered if it made sense when pricing a house to take into account the parameters used on most real estate search sites. For example, since every site lets folks filter on price in increments of $25,000 at lower price ranges and increments of $50,000 at higher price ranges, wouldn’t a property priced at $549,999 get seen by more Web shoppers than one priced at $550,001?
The answer is maybe, just a little.
How so? Enter Mose Andre, Redfin’s ace statistician, who analyzed the logs of the Redfin site to determine how often Seattle users of our site see properties in different price ranges, between September 10, 2007 and September 24, 2007. His findings:
- About 30% of searches don’t even filter on price. But the number of searches that don’t filter on price is exaggerated on Redfin’s site because Redfin.com price filters aren’t easy for users to find.
- For most neighborhoods, the maximum percentage of Redfin searches you are likely to lose by moving from one price band to the next is 6.5% . For most Seattle neighborhoods, this band occurs for homes costing more than $550,000.
Based on these findings, we would only recommend taking into account how search sites filter on price in cases where a property is priced very near one of the popular threshold amounts. In other words, if you were going to price a house at $570,000, you shouldn’t price at $549,000 just to have it show up in 6.5% more price-filtered searches; but we would consider it if you you were going to price a house at $551,000.
You can see how this plays out on Mose’s graph of search exposure and listing count for Bridle Trails:
The red line represents the percentage of Redfin’s Bridle Trails searches filtering on price that include Bridle Trails properties at different price points; use the numbers on the left axis to measure the percentage of searches that return a result at the prices appearing along the bottom axis. As you can see, less than 20% of Redfin’s Bridle Trails searches filtering on price include properties costing more than $800,000.
The black line represents the density of listings in the area; more precisely it is a curve fitted to the shape of a histogram representing the number of listings at different prices. You can use the numbers at right to track the number of listings at different price ranges. The most common price is the one where demand becomes scarce: $800,000.
The biggest drop in buyer exposure in Bridle Trails occurs at $550,000. One reason drops tend to occur at this point is that Redfin, like many other real estate search sites, only allows price filtering at $50,000 increments for prices greater than $500,000. So the first $50,000 steps are doozies.
Let’s look at a few more graphs, this one of Capitol Hill:
Here most of the inventory is clustered at a price just below $400,000, probably because there is a glut of condominiums on the market, and most of the price-filtered searches are in that range. There is a little hump around $700,000 for houses and townhouses in the neighborhood.
One more graph, this time for stuffy, old Queen Anne…
And here is a table of the price-points where the biggest drop in search activity occurs, and how large that drop is:
| Neighborhood |
Greatest Drop in Searches Occurs at $ |
% Drop in Searches |
| Ballard |
$550,001 |
-5.0% |
| Belltown |
$550,001 |
-4.3% |
| Bridle Trails |
$550,001 |
-5.0% |
| Capitol Hill |
$550,001 |
-4.5% |
| Columbia City |
$425,001 |
-4.4% |
| Georgetown |
$425,001 |
-5.1% |
| Green Lake |
$500,001 |
-5.5% |
| Klahanie |
$2,000,001 |
-5.6% |
| Laurelhurst |
$550,001 |
-4.9% |
| Newport Hills |
$550,001 |
-4.9% |
| Phinney Ridge |
$550,001 |
-5.3% |
| Rainier Valley |
$425,001 |
-4.4% |
| Ravenna |
$550,001 |
-5.4% |
| Windermere |
$550,001 |
-4.9% |
If you want to see how demand compares to inventory for your neighborhood, download a package of all our graphs for the Seattle area. If you want these graphs for another market like San Francisco or Boston, just let us know. Thanks to Mose Andre for the stats and analysis; if there are other analyses you’d like to see us perform, just leave a comment for that too.
Update: Mose cranked out some San Francisco graphs.
