How Redfin Is Disrupting The Brokerage Industry

Author

Callum Booker
April 14, 2023

Read time: 3 minutes

GM! It's Friday, April 14th - Today, we're covering Apple's new project, "Breakout" where they compete with buy-now-pay-later companies like Affirm.

But not before we unpack Redfin's and its 'on demand' model that generated $2.28B last year.

Let's dig in!

- Callum

FEATURE

How Redfin Is Disrupting The Brokerage Industry

Pre-pandemic Redfin was valued at $6.7B.

Today they're at $995M...a crazy 85% drop.

Why? Mortgage rates are now at 7% (30 yr fixed) - for context, I bought in 2 years ago at a 3% rate...it's wild.

Alongside this, the pandemic demand for a yard and that extra office has faded.

So what are we left with?

A business that made $286M in profit last year.

So, What’s the Business?

Unlike Zillow, an online real-estate marketplace that lets any Real Estate agent list homes, Redfin is a tech-enabled real estate brokerage.

This means that they employ real estate agents in over 100 markets.

Home sellers can list or purchase a home on Redfin’s website and conduct the entire process digitally or meet with Redfin real estate agents for on-site viewings and closings.

To differentiate itself from other brokerages, Redfin discounted its commissions.

Traditional Brokerage 

  • Seller pays 6% in commissions (3% to the listing agent & 3% to the buyer’s agent)

Redfin Model

  • Seller pays 4% in commissions (1% going to Redfin's listing agent and 3% to the buyer’s agent)

Redfin’s primary revenue stream is its tiny 1% commission fee, but don’t let that fool you – the company still made $2.28B in revenue in 2022.

So How Do They Win?

Acquisitions: Redfin has continued to stay ahead of the curve by making acquisitions to provide as many real estate services as possible.

  • 2014: Acquired Walk Score to add information on listing maps that evaluate neighborhood walkability.

  • 2021: Acquired RentPath for $608M and their leading rental sites ApartmentGuide.com, Rent.com, and Rentals.com to expand into the rental market.

Continual Innovation: At first, being 'tech-enabled' was good enough. Not anymore. But they just shook the industry with Redfin Direct.

  • Redfin Direct is an opt-in program for home sellers that brings commission fees down to just 1%.

  • Homes listed through Redfin Direct can be purchased by buyers who click a button that looks shockingly akin to Amazon’s “Buy Now” prompt.

  • Redfin’s software serves as the buyer’s agent, taking users through a questionnaire that generates a contract with options such as an inspection contingency.

Soon, buying homes will be as easy as shopping on Amazon.

Redfin CEO’s Playbook For Breakout Start-Ups

Glenn Kelman believes that most startups fail because they attempt to solve a problem that the majority of consumers don’t care about.

In short, do not create demand for your product. Be good at channeling existing demand.

Playbook:

1) Identify Demand: Look at products/services people are already paying a lot of money for.

2) Improve The Offering: Figure out how you can use modern tools & systems to make the service faster, cheaper, or a better customer experience.

3) Capture Demand: Become great at articulating this value to your specific customer.

TOGETHER WITH VIRTUIX

Why Major Investors Are Backing This Breakthrough Tech

Virtuix is already shipping their breakthrough Omni One, an omni-directional treadmill that lets users walk and run in 360 degrees inside video games and other virtual worlds. And you can join them as an investor.

But why should you invest in Virtuix?

For the same reason one famous Shark is:

“I believe in the Virtuix team and product. Now is the time to bring the popular Omni gaming experience to the home.”

And he’s not alone…

Virtuix is also backed by VCs like Maveron and Scout Ventures.

The reason is simple: people are loving the experience.

“This thing is freakin' awesome. Loved it. WANT.”

It’s hard to beat a review like that in one of the leading tech review publications.

Plus…

Elon Musk has tweeted about Virtuix to his 70 million Twitter followers.

Joe Rogan has talked about Virtuix on his podcast with 11 million listeners.

Virtuix also appeared in a Smartwater commercial starring Pete Davidson.

It’s not every day you can invest in a private company turning this many heads. But they’re doing even more than that:

  • $16 million worth of products sold

  • 300,000+ players in their database

  • 19 issued patents on their technology

Their immersive tech is already a global hit with thousands of units shipped. Now they’re bringing this tech to the home with Omni One.

Omni One is already shipping. Investing before May 18th makes you eligible for a 30% discount on Omni One (worth $780) and to skip the 35,000-person waitlist.

Please support our partners ❤️

ON TREND

Apple Is Becoming A FinTech - Codenamed "Breakout"

You Should Know

Apple is doing a slow rollout of its new service, Apple Pay Later, which allows users to make online and in-app purchases through a buy now pay later model, akin to what companies like Affirm, Klarna, and Afterpay are doing.

This comes a year after the company began working to bring its financial services in-house to replace their fintech partners.

The Takeaways

  • Apple Pay Later lets users break down purchases into four equal payments over six weeks.

  • Only randomly selected U.S. users have been invited to gain early access to the payment method.

  • The program is managed under a new subsidiary, Apple Financing LLC, but uses Mastercard Installments to enable purchases.

  • Apple has made commitments to consumer financial health, but has been called hypocritical by those who view buy now pay later models as harmful to consumers– enabling debt accumulation and requiring data harvesting.