Archive for the ‘Uncategorized’ Category
July 3, 2008
Lots of prominent venture capitalists, including Fred Wilson and now Bill Gurley, are writing this week about the dearth of IPOs first reported by Matt Richtel in the New York Times. This quarter was the first since 1978 that a venture-financed company didn’t go public.
But the real headline isn’t the dearth itself, but the fact that some of the smartest people in VC are fine with it. It’s like the PGA moved the Masters to a pitch-and-putt, and Tiger Woods applauded the decision.
The argument goes that a public company just isn’t a worthwhile aspiration anymore for Internet or software companies, in large part because of a lions-tigers-and-bears litany of regulations that the National Association of Venture Capitalists is asking everyone to complain about. Bill cites 15 (holy cow!) companies in Benchmark’s portfolio with more than $50 million in revenues, all still private.
“I don’t think we have a demand problem, we have a supply problem,” Bill writes. “No one wants to manage a public company.”
This is a pleasant conceit, that all of us could manage a public company if only we wanted to. But the real supply problem is how many companies can — not how many want to — grow into large, profitable, stand-alone businesses.
In this respect, Bill chose the wrong threshold for companies that could go public. At $50 million in revenues, you would be spending 2 - 4% of revenues (roughly $1 - 2 million per year) on the costs of being public. That doesn’t sound good.
But how many Web 2.0 companies today have a chance of reaching $100 million in revenues, then $500 million? Maybe we have the next Google, eBay, or Amazon among our ranks now. If so, I doubt the new regulations are enough to deter them from growing into public companies.
Characterizing folks who cash out as just smarter or more realistic than those who want to build a stand-alone business seems just as misguided as the 90’s macho insistence on an IPO for its own sake. There are some businesses where M&A makes more sense, and others that can prosper on their own (forget the companies so disruptive or weird that few companies will want to buy them).
M&A today is just a different game of the musical chairs we played in 1999. Who is going to be left to buy technology companies if technology companies stop going public? It can’t just be Google and Microsoft, Yahoo, AOL and IAC forever.
That means we have to keep building business to be businesses, not just to get bought. There are plenty of entrepreneurs who, if they could grow a business to $100 million and beyond, would prefer to keep building it rather than get acquired. The hard part for us isn’t the regulations, it’s getting past $100 million, which takes patience, big thinking, and a huge appetite for risk.
When brilliant folks like Bill Gurley and Fred Wilson start giving up on that project, it’s time for high-tech to get its mojo back.
June 21, 2008
There was a fire in the Seattle-based data center that Redfin uses to host our web servers, causing a loss of service between approximately 5 a.m. and 10 a.m. Pacific Time. The entire data center was shut down by the fire department, including universal power supplies. Thanks to Redfin’s Chris Neitzert and his team, the site is now up and running. Throughout the interruption, our agents have of course stayed at their posts working with clients. But as the data center installs new equipment, it is possible that we will experience much-briefer interruptions in our website service around midnight tonight. We will continue to be available by telephone at 877-973-3346 or through the direct number our clients have for their agents.
For now, we apologize for the interruption in our service.
June 19, 2008
There’s a juicy conversation about short sales on Redfin’s Bay Area Forums, from the rare bird who successfully completed a short sale (which is when you buy a home for less than what is owed on the mortgage, requiring bank approval) in Pittsburg, California. He explains what it takes to win:
- Be promiscuous: I think most importantly, don’t come in expecting to get your first choice. Or your second. Or even your third. We made offers on four houses and were preparing to make an offer on a fifth when the third one finally came though. It’s kinda hit or miss with the banks, which are inundated with foreclosures and short sales…
- Don’t expect the pick of the litter: I had to change my mindset away from finding “the perfect house” to finding “a house we could live in” and then making offers on several houses before we finally got one.
- You don’t have a deal ’til the bank gets an appraisal: We made an offer (at the asking price), the bank then had the property “appraised” and counter offered, then we increased our offer $10k, and that was accepted after a few weeks.
- How long it takes depends a lot on the lender: I believe that different lenders are getting slammed with these short sales at different rates, and some banks are better equipped to deal with short sales than others.
Not earth-shattering rocket science, and we would suggest you could save yourself some time on all those offers by checking out how many banks have to approve the deal and how long they have to do it before the foreclosure auction — but for all the talk about short sales, someone who has actually closed on one is sometimes hard to find.
May 22, 2008
The inevitable blog post about a blogger’s feelings on blogging doesn’t do much for me. The confessional tone is often only a more devious ploy for attention, and the solipsism of the post is an uncomfortable reminder of the solipsism of the form, with everyone talking to ourselves, while hardly anyone listens.
So why, when I felt so busy this morning, couldn’t I stop reading the New York Times Magazine’s ten-page essay from a former Gawker blogger about blogging, written by Emily Gould? At first it was the picture of the author sleeping beside her laptop. Then it was this one beautiful sentence: she wrote after a breakup that she felt like “the last living speaker of some dying language.”
And finally it was that she seemed like the most unlikely person in the world to explain what every blogger sooner or later learns: that communication without the possibility of privacy is hardly communication at all (whenever someone I’ve met for a hot chocolate asks “How are you? I mean, really?” I first try to remember if he has a blog), that your voice really does sound that way on the answering machine, that the accumulation of hastily written (and sometimes not-so-hastily-written), calculating, heartfelt, boring, argumentative, funny posts might be who you really are, less likable than you’d hoped, irrevocably given away to strangers.
Reading the essay’s description of people blogging morning, noon and night, it was hard not to think of Adam Gopnik’s description of Shakespeare characters as “compulsion machines, capable of charm.”
The comments are also good: “Turn off the computer, drive to Coney Island and jump in the ocean. Cleanse yourself and start all over again. You won’t be missing a thing.” And: “Will the cure for cancer get this many pages [in the paper]?” And: “At first, I thought I was reading the sophomore page of the student newspaper at Harding High in Yokelville, Ohio. Then I realized that it was the New York Times. Just awful.” Reading a perfect snark like that, I still bounce up and down with excitement, which is exactly what Emily was arguing against.
Sometimes I feel like God first created people, and then the Internet, so that after we’re gone, there will still be an elaborate record — perhaps even a blueprint for our re-creation, like a self-replicating piece of DNA — of our contradictions, our multitudes.
May 16, 2008
A few months back, we released a new version of the site that let our customers download listing stats and past sales data to a spreadsheet. Then last Tuesday night, we began to require registration on Redfin’s site before allowing customers to download results from the map. People typically use this data when they’re doing a Comparative Market Analysis or CMA.
We made the change because a few of the MLSs to which we belong have requested that don’t allow indiscriminate access to listing data. As one MLS has already pointed out, this will help protect home-sellers from being snail-mail spammed by movers. It’s a way to balance buyers’ hunger for information with sellers’ privacy.
And no, we’re not complaining about the MLS. As we observed this week in the New York Times, MLSs are getting more and more Internet-friendly all the time. We know how hard it is for them to set up rules that all the brokers can abide by when sharing their data, and we like belonging to the MLS. Being able to show all the homes for sale is much better for us than trying to build our own partial database, which is what the non-brokers have to do.
Here’s an example of the data you can download once you’re logged in:
Several Redfin users have noticed the change. One asked us the question:
I can’t seem to see/find the download button when pulling data for homes that have sold, to build comparisons.
What am I missing?
Thanks,
ZK
ZK, you’re not missing anything, but now you need to register and log in to see the data. If you register, we won’t spam you, sell or rent your email address, or otherwise do nefarious things. And of course you get to use all kinds of cool site features like email updates on your search, RSS feeds, and the ability to tell the difference between homes for which you’ve viewed details (lighter colors) and those for which you haven’t (darker).
We think registration for download is a good thing: serious buyers still get the data that helps them make a sound offer, as well as other benefits. And sellers don’t get spammed.
May 5, 2008
While in general we believe that more information is better, we recently learned how the information on our website can be used for indecorous purposes. The winner of DC Metrocentric’s most recent PriceChecker competition used Redfin to look up the price of a DC condo, rather than make a guess. DC Metrocentric is a blog about housing and development in and around Washington, DC. We’re fans of their PriceChecker series in which they profile a property and ask readers to guess the price. After a few days, they reveal the listing price and a winner based on the closest guess. The property profiles are great, especially if the property has an animal skin rug.
The winner of the latest PriceChecker found the list price on Redfin. In the comments, Roy, the winner, admits he used Redfin to get the price. Fransie wants Roy’s “PriceChecker Crown revoked.” Clearly the commenters are having fun with this. While we’re glad that Roy uses Redfin and was able to find the property, we hope this doesn’t lead to the downfall of the PriceChecker series. What do you think? Cheating or smart research?
Photo credit: laffy4k on Flickr.
May 5, 2008
Everyone is dancing on Yahoo’s grave this morning, after Wall Street punished the company for rejecting Microsoft’s merger offer. But perhaps because I came of age when Yahoo! celebrated everything fun and weird about the Internet, or because it’s good to see a nerdy founder replace a bigshot media executive, or because Yahoo is an underdog, I smiled when I read the news. Already people have forgotten how perilous getting bought by Microsoft would have been for Yahoo. Yahoo has hemorrhaged talent, been rightly strung up for its cooperation with repressive governments — not that Yahoo was the only one — and its executives can’t stop selling out the company to the press, but the Silicon Valley I know should be celebrating Yahoo’s pluck. It isn’t easy competing against Google, and it’s unclear that Microsoft would have made it any easier.
April 25, 2008
On Monday, we looked at what makes a property hot in Boston, so we’re closing the week with a look at a market on the other coast: Los Angeles. The big question: will we see the same trends coast to coast?
We found there really are (hot) pockets of sunshine in the Los Angeles housing market, and this is not according to my trusty Magic 8-ball. We analyzed 2,364 real estate records for single-family listings in Los Angeles County, Calif. that entered the market between Oct. 1, 2007 and March 31, 2008, and sold.
We looked at the Los Angeles real estate market next because, well, you asked.
Here’s a rundown of the neighborhoods with the most listings that sold within seven days on the market; the numbers in parentheses calculate the hot properties as a percentage of the total houses that sold in those areas:
- Beverly Center, Miracle Mile: 12 (26%)
- Brentwood: 12 (27%)
- Los Angeles, Southwest: 10 (12%)
- Sunset Strip, Hollywood Hills West: 10 (11%)
- Westchester: 9 (17%)
For the areas where there were a significant number of hot properties, we compared the listings that sold in seven days or less with everything else that sold in those areas. Our goal was to develop a clear portrait of the hot property, so our buyers would know when they really had to hop to it. And here’s what we found:
- Beds and baths were the same for both types: there was no pattern in terms of bedrooms and bathrooms. Hot and “not” (not properties took more than eight days to sell) properties both had three bedrooms and two bathrooms. The coasts agree!
- Hot properties are bigger, slightly: The median square footage for hot properties was only slightly larger (.2%) than not properties, but the median lot size was 3% larger. Clearly, the LA sprawl doesn’t mean buyers get more space. Boston homebuyers got 13% larger lots with pretty similar sized homes – 1,669 square feet in Boston vs. 1,735 square feet in LA.
- Hot properties are newer: the median year built (1948) for hot properties was four years earlier than for the nots. Bostonians bought slightly older homes, but maybe that’s because most east coast homes are older?
Hot properties are expensive: it turns out that hot properties weren’t exactly priced to move. In fact, the median list price of hot properties ($1.1 million) was 16% higher. And the high price isn’t just because the houses are bigger: the median dollars per square foot was nearly 16% higher for hot properties ($633) as compared to the nots ($548). The median list price of Boston’s hot properties was $459,000 … you can get two for the price of one in Boston.
There wasn’t a huge difference in the days on market for the hot areas (43) and the entire Los Angeles market (45), but, on average, the hot properties sold in almost five days (Boston hot properties sold in about 4.5 days).
The bottom line is that hot properties are slightly bigger, newer and more expensive. There are distinct areas and house types where properties still sell fast, which continues to support our reason for doing this study in the first place — the real estate market isn’t really clinically depressed; it’s more of a split personality, with the good stuff selling fast, and the rest languishing.
Did you just buy a home in one of these neighborhoods? What was your experience?
Bonus link: The Wall Street Journal reports on the heartwarming side of the housing bust. [Warning: shameless Redfin plug] Read about a couple who escaped their 100-mile, LA-freeway commute.
April 24, 2008
Redfin reported on the Redfin Advantage last month, analyzing 65,242 records from the Multiple Listing Services that brokers use to share listing data in the Bay Area and Seattle. Our goal was to understand whether Redfin customers fared as well as customers of traditional brokers in their negotiations, so we compared the price our customers paid to the list price, and then compared what customers of other brokers paid too.
And we found that our customers fared better than the average, though we were careful this time to acknowledge that this may have been because our customers were more engaged in the negotiations, or because they were focused on properties more likely to sell at a discount to the list price. We reported that in San Francisco County, our customers’ negotiating advantage compared to the average was 1.635%; in Santa Clara County it was 1.079%; in Seattle it was .498%. The average difference was 1.07%.
But most of our deals came in Seattle where the difference was smaller. In table 3 of the white paper report, we calculated the weighted average of the negotiating advantage. We measured our buyers’ average final price as a percentage of list price, weighting the average according to the number of deals we had completed. We also measured the average final price as a percentage of the list price paid by other brokers’ customers, weighting the average according to the number of deals completed by those brokers. As the table in the report makes plain, we then subtracted one number from the other for a weighted average.
On a call earlier this week, a Windermere broker asked if we should calculate the weighted average differently. He was right to ask. The accurate way to calculate the weighted average is to calculate the difference between Redfin and other brokers, and weight it based on the number of deals Redfin completed in each market. We have adopted this approach, and are re-publishing the report, and changing our site. The new weighted average is lower than it was: .603%. The average for each market was always correct and remains the same.
Our goal was not to overstate the Redfin Advantage; we published the data for others to perform their own calculations, and we are issuing this correction though the broker had already said his question would remain private. We just notified every blogger we briefed or emailed about the Redfin Advantage, explaining the error.
Those of us who are computer scientists, statisticians and brokers deal in numbers every day, and we should know better. We checked and re-checked all the numbers for each market, but our statistics team did not validate the weighted average. The marketing team that prepared the report calculated and re-calculated the weighted average, but just did so by calculating two numbers — one for Redfin, one for the rest of the market — and then subtracting the two.
The Redfin Advantage is still an advantage, and it’s the same advantage that we reported for each market, but the weighted average was miscalculated. We are sorry for our mistake.
I know it has been a ragged week at Redfin. We hold ourselves to a higher standard than this, and apologize to everyone to whom we gave the wrong weighted average. Thanks to the Windermere broker for bringing this to our attention.
April 22, 2008
For no real reason, a San Diego Sweet Digs blogger attacked real estate broker Kris Berg today. The contract blogger, a usually kind person who deeply regrets the post, no longer works for Redfin because she violated the first rule of our culture, which is that everyone is respected. The charter of Sweet Digs is to write about local real estate, and to leave the shooting-yourself-in-the-foot-stuff to me.
The post makes me physically ill, not only because it seemed mean-spirited but because we know Kris Berg to be a wonderful person, a total pro and a darn good blogger. Worst of all, it deepens a brainless, destructive division between Redfin and our peers that has caused me great — this is the right word — anguish. We have already commented directly on the post, and Kris has already been gracious enough to accept our apology. So the rest of this post is an apology to everyone else in real estate, many of whom have reacted to more than just what we said about Kris last night. And because this is so hard to write, it’s also a list of small but important things we can’t apologize for too.
We all know that Redfin’s business model is different than yours: we try to get customers via our search site, we pay our agents salaries and customer-satisfaction bonuses, we want to put the escrow process online to avoid talking so much to our customers, and we refund part of our commission. This makes us freaks perhaps, or even fools if you like, but not an enemy.
Just because our model is different doesn’t mean that we think it’s universally better than the commission-based model. You have no idea how many times a day, every day, all night, we worry that we can’t make it work, usually right before we’re filled with euphoria at our prospects. We long ago imagined the party you’ll throw on our grave if we fail. But the reason we can’t give up on Redfin is that it’s what we would want for ourselves. Clearly, most consumers still prefer the traditional model. But some consumers have chosen our model too.
So that’s what we can’t apologize for: for who we are, for tinkering to make our model better (especially around tours, where it has been broken), for believing we can make it work. But we are sorry for our tone — I am sorry for my tone. What is most important to us is that Redfin’s (often ineffective) calls for reform stop ticking you off. Like you — and unlike the Zillows and Trulias whom you love (and whom we sometimes find ourselves admiring too) — we are real estate agents. We have a vested interest in making real estate better. We share our data via the MLS. We play by its rules. And we work together buying and selling homes.
The change we want is change everybody wants: that consumers can choose the services they pay for without fearing retribution, that they can access property information on their own. That’s it.
I don’t know how we’ve screwed things up so badly that our complaints about vandalized yard-signs or blocked offers have ticked you off. We should all denounce the one-in-a-zillion nut jobs who pull these stunts, because they make us all look bad, and it only takes one or two to terrify an entire market (#1 reason Redfin.com visitors don’t buy through us, 2 years straight: “fear of discrimination”).
It took us a while to realize how stupid it is for us to talk to the press about these incidents — nobody is ever punished, in even the slightest way, even when caught red-handed, and nobody else in real estate is outraged — but we’ll try harder to work out future incidents in private.
And, today’s blog post aside, there is reason to believe we can patch things up with everyone else. Last week, I finally told Greg Swann — he was so nice and gracious — that I was sorry for picking fights with him. Last month, an MLS decided to liberalize its data-sharing rules. Yesterday, a broker phoned to point out — privately, kindly — a possible error in one of our marketing claims (which we will correct if it’s wrong). And Kris Berg took my call today when 9 out of 10 people would have hung up in my face. Every week or so, I get a thank-you note from an agent about a deal we worked on together. How wonderful, how unnecessary and necessary, is that?
So maybe there’s hope that we can work things out. This isn’t a promise to be boring. But at least we can be civil. We weren’t today. We are sorry for the post about Kris Berg. We wanted to say to everyone else in real estate talking about this post that we hope there can be peace between us.
