The Exchanges

Q So after her, your mom's relationship with, with Jean ended, um, she met your dad. How, what, what's the story about how they met?

A So they met at a bar, and my father, African-American, good-looking guy, jazz player and construction worker, I'm sure he was in great shape, he sits next to her, and they start talking, and then he says, hey, what's your birthday? And she says, uh, you know, July, you know, 26th, uh, and he said, hey, my birthday is July 26th. And she says, you know, her year, he says, oh, my birthday is the same year. And of course, she doesn't believe him at all. And she says, let me see your license. And they ended up having the exact same birthday. So in a way, that was destined. You know, they went, they dated on and off for a few years, and I was not born on purpose. I was not intentional, but we had me, and yeah.

AI assessment note: “So they met at a bar, and my father, African-American, good-looking guy”

Q You write about this in your book a little bit. Um, I guess your mom told her parents that she was pregnant, right, with their grandchild. Um, how did, how did they respond?

A The day I was born, my mom calls her parents and says, I just had a kid. And they just asked one question. What is he? And she said, he is Jewish and black. And they hung up the phone. A week later, they sent a letter in the mail that said, That she was disowned. You know, to this day, I, I never met my grandparents. I never spoke to them. She never spoke to her dad again. He ended up being very successful. I think he and his family owned real estate in Israel, and, you know, when he died, you know, he gave twenty-six million dollars to her sister, who is, I guess, more obedient to the way that And he wanted her to be. And gave a hundred dollars to her just to say, I, I hate you.

AI assessment note: “they hung up the phone. A week later, they sent a letter in the mail”

Q a very self-consciously progressive part of America, right? Oakland, Berkeley, because of who you are and what you looked like and, you know, your different identities, black, Jewish, you know, single parent, I mean, all these things. Did you feel like it was a good environment all the time? Or did you feel like, did you feel like an outsider, um, you know, at school or just in the community?

A I felt that I just didn't have a real community. Synagogue, I was the only black person. Around my black friends, I was also, you know, Jewish and, and half white. You know, the private school where I got a scholarship, hey, I was a scholarship kid, and I was commuting, you know, two hours to school and two hours back, and from the East Bay, and I went to high school in San Francisco. And I was also a C student in a really good private school, so that didn't make me feel like I belonged. But it did give me a skill of feeling comfortable being uncomfortable. I think I was forced to feel that way so much when I was younger that when I was older and started working, that it didn't drain me. I just, it was just part of, of life, of how I felt, and so I just moved on, and I was, I wasn't able, it didn't suck that energy out of me.

AI assessment note: “I felt that I just didn't have a real community.”

Q So once you started to come to that realization, how did you, I mean, did other people in the team agree? I mean, you had hired all these people, and you had a management team, and did they agree with you?

A I tell everyone that, you know, this isn't working, and they, you know, they didn't agree with me. They were saying things like, hey, you know, don't give up on the vision. You know, we could transform the industry, and I was never motivated just to transform the industry. I wanted to make things better. I didn't want to innovate and disrupt just for disruption's sake, and they were very unhappy with me. One morning, Ori Was invited to a breakfast by one of the senior members of the team. He goes to breakfast, and everyone is there on the senior team except me. And they basically tell him that they want to fire me. And Ori, you know, later on, he, he takes me on a walk, and he tells me what happens. And he said, hey, let's think about this throughout the day. Let's have dinner tonight. I go home to my wife. I tell her, I think it's all over. They don't want me at the company anymore. And, you know, we talked for about an hour, and at the end of it, she just tells me, like, bounce back. Tell Ori why you have conviction in this new strategy. And the new strategy was building for regular agents that are experienced and know what they're doing. And so we have dinner that night, and I make the case. He says, we're always going to be able to hire really talented people from outside the industry. Great business people, great engineers, and we were able to raise, raise a good amount of…

AI assessment note: “I tell everyone that, you know, this isn't working, and they, you know, they didn't agree”

Q What did you want to, I mean, you had already had experience running a business. It's a DJ business, and, and so when you, when you got to college, and you were clearly in a rush and hurry to get out, what did you envision you would do? Did you think, uh, I'm gonna go start a business, or I'll go to Wall Street? What did you think?

A My, my journey to New York is really just the idea of New York. I felt like New York was a city that would accept anybody, where everyone could belong, and then, uh, I started, uh, You know, seeing, you know, what, what do people do after they graduate college? What are the opportunities? And of course, when you're in New York City, it's all about, you know, Wall Street at that time. And so in the fall, before I graduated, it was November, and I had interviewed a number of investment banks, anyone that would let me interview, and none of them gave me a job. And so I was getting terrified. I was, I accrued all this student debt, And I was about, I graduate a month later, you know, with a C average, by the way, and no job, and so I got really, really nervous, and I had collected hundreds of business cards. I actually had a, a binder of business cards where you, you would slot them into, like, baseball cards in, like, a collection. I go through, and I start emailing, uh, people And calling people that I had met and asking them if they would interview me.

AI assessment note: “I had interviewed a number of investment banks, anyone that would let me interview”

Q I guess in, um, twenty-eighteen you were, you had this idea to, I guess, to license your, your software, um, the CRM and things to other agents who were not working for Compass, and it kind of imploded. What, what happened?

A Yeah. Yeah, I had this idea of let's license our technology to a competing brokerage. We, we announced it in less than a month, and there was a complete backlash of our agents, and they didn't want us to give any competing company, uh, the technology because they didn't want an agent at another company to say, hey, work with me. I have the same technology as that agent from Compass. Right. And so we shut it down. And, you know, there was a lot of, you know, press at the time saying, you know, how we failed, and it was a failed launch. I never understood that, because to me, we just tried. You know, we tried something that didn't work, and you try something else. And the next month, we tried something called Compass Concierge. We launched it really quickly in less than a month, and it turned out to be one of the best things that we've ever done, where we front load the cost of home improvement services, like staging and deep cleaning and painting. To prepare homes and make them move in ready. And, you know, that's been a big success, but you can't be the company that can do that without being the company that also has, uh, that launches something that isn't successful.

AI assessment note: “there was a complete backlash of our agents... And so we shut it down.”

Q the only black person working on a team, often one of the only black people working on an entire floor of a building. There were the small comments that stung. The times people confused me with other black people, the times people assumed I worked in the mailroom, the awkward jokes about the racial comedy skits of Dave Chappelle's show. How are you kind of absorbing all of those things?

A I think I grew up with low expectations, and I said, this is the way the world is, and I just gotta work twice as hard and, and do the best in the, the way the world is. And so, yeah, it didn't feel good being the only black person in almost every meeting, but I felt fortunate. I felt lucky. Like, how lucky am I to be here? I need to work twice as hard, not just for myself, but to pave the way for others that come after. If I do well, that's the way to honor the people like the late Vernon Jordan who paved the way for me. Because if it wasn't for them, I wouldn't have had that. I mean, it was very clear to me if I was born a couple of decades earlier, none of those, first of all, I was born 50 years earlier, I wouldn't have been able to even get a scholarship to any of these schools. But the most important thing that happened to me in my career, not just professionally, but psychologically, was Vernon Jordan.

AI assessment note: “I said, this is the way the world is, and I just gotta work twice as hard”

Q know, I mean, some skeptics have said, all these guys do, all Compass does is, they'll go in, they've got their, they've raised over a billion and a half dollars from investors and banks, and they can just buy out the best agents, and it's kind of, um, you know, it's, it's using money to buy market share. Is that a fair critique in, in your view, or fair assessment?

A One of the best things that Compass has is the cynicism of our competition. When our competition says, oh, Compass, they're only successful because of A, B, C, D, whatever, whatever that thing is, it makes them feel okay about not doing anything, about not asking their agents, you know, what can we do to make it so you don't want to go to Compass. The concept that agents just move for money is really offensive to the agent. It doesn't make any sense. They're not going to move their entire business to a company they don't believe in for some economic incentive that's a small percentage of their annual income. Yeah, when I moved from my Blackberry to my iPhone, yes, I got, like, 300 dollars off the first phone, but that's not why I moved. But the, you know, you are, you are right there. The competitors say a lot of really bad things to try to scare people from wanting to move, but they, they had their chance. This has been a model for over a hundred years where brokerage firms had taken the profits from the agents, split it between the manager, the manager's manager, and the owner, and on balance that owner put in their pocket and then they went on vacation. But what they didn't do is what Apple did. What Microsoft did, what Google did, they didn't invest it back in research and development to create a better company for their customer. The agent. And that's what we're doing.

AI assessment note: “The concept that agents just move for money is really offensive to the agent.”

Q real estate industry, and it started out that way. You know, shut down, you couldn't see homes. It turned out that twenty-twenty transformed the industry. It all of a sudden completely opened up virtual tours, and people were looking at homes across the country virtually and buying them, and there was a real estate craze. Home prices just skyrocketed. Was that unexpected? Were you surprised by what happened in twenty-twenty?

A Yeah, when COVID hit in early, we had closed our offices in early March, and over the following weeks, I really thought, hey, this could all be over. I told my wife, you know, we are legally not allowed to show property in almost every market we're in, and there's no end in sight, and so we couldn't make any money, and And business is a business. You can't make any money. You can go out of business because we still had those costs. You know, we had, you know, to go through the really hard work of, you know, just trying to survive. Like the goal was we just need to survive. And you're, we're talking just two months later, activity started picking up and market by market by market, not in New York city because you, they would not let you show property in the buildings, but But in the suburbs, people started buying at a faster and faster and faster rate. And then over the summer, it became the busiest summer in the history of real estate.

AI assessment note: “Yeah, when COVID hit in early, we had closed our offices in early March”

Q that rather than a real estate firm, but also like WeWork, there doesn't really seem to be any revolutionary tech involved. They just seem to be throwing tons of money at acquiring market share. Um, did you hear that and say that's just flat out wrong? There's no validity to that? Or, or is there anything in there where you think, okay, you know, I can I can see that.

A Look, I think that 20 years from now, if you're not a technology company, it's unlikely you're going to exist. These agents are gonna be here, right? Just to be very clear, people use agents more now today than they did 10 years ago. Who's gonna be the company that helps agents use technology to realize their entrepreneurial potential? Over the last 30 years, every profession has been able to use technology to get better, and that's actually what has made it so difficult for brokerage firms. 30 years ago, all of the workflow of the agent went through the brokerage firm. The MLS book was on the desk, the client would meet in the office, they would look at the off-market listings on the wall, but over the last 30 years, the workflow of the agent has come outside of the brokerage firm. So now it's, like, half outside and half inside. We're building the modern platform. It's not either or. It's not just, you know, is Amazon a bookstore or a technology company? Is Uber a tax limousine commission or a technology company? I think these are false dichotomies. Over the next 10 and 20 years, you have to be both. And you have to use software to make everything better. We have an overall, uh, 850 person technology team. And so we're, we're investing more in technology than the traditional brokerage firm.

AI assessment note: “I think these are false dichotomies. Over the next 10 and 20 years, you”

Q Do you think a part of you was motivated by a desire to prove all the people who kind of let your mom down, let you down, to kind of prove them wrong in a sense, or to kind of, I don't know, despite that, despite all the people who let her down, let you down, that you were, you were going to make it?

A I've always been motivated by a mixture of positivity, like big, big dreams, and anger. So, you know, you talk about the competitors at Compass. When they say things that are, are less positive, you know, about, you know, me, uh, or the company, it gives me energy. You know, there, there was a woman that came to Compass, one of their early top agents, and, you She told me, hey, Robert, I can't come. The head of my former brokerage firm that she came from, she told me that you were anti-Semitic, anti-gay, and anti-woman, right? And I'm like, what? What are you talking about? I tell her, first of all, I'm Jewish. I had a par mitzvah. So, where then, second of all, this is not true. Things like that happen in a weird way. Maybe this real estate industry is so full of people that Are negative and, and mean, in a competitive sense, like the brokerage firms, that's actually given me an extraordinary amount of energy to work harder. I mean, there was a, at a big real estate conference, one of the top, you know, brokerage firms says, oh, you know, this was like in 2018, um, I think compass is going to go out of business in five years. And then the, the head of the fourth largest broker from the country says, oh, I think that's generous. It's not going to last five years. I mean, that, that's kind of what this industry has been about.

AI assessment note: “I've always been motivated by a mixture of positivity, like big, big dreams, and anger.”

Q are super agents, right, and they have a team. Would you go in and kind of, same way that you would acquire a company, like, would you go into a market and, like, make an acquisition offer for that team and say, all right, we're gonna, you know, we're gonna give you a big check to join us, and then now you're part of us? Is that something that happens?

A So in the early years, I personally launched all the markets. So I've launched dozens of markets myself. I go out to the market, I would call the top agents, and I'd say, hey, I'm Robert Refkin, I'm the CEO of Compass, and they would say, you know, Compass who? Like, Compass the bank? In no market where we launched did anyone know who we were in the early years, and so the hardest thing was just getting the meeting. And I try to talk about my background and what we're doing and the money we raise and investors and say, hey, look, if you can meet, uh, there's no downside. The worst thing that can happen is you'll, I'll share with you all the ways that we're helping agents grow their business. And if you don't, um, want to come, you can take those ideas back to your own business. And so that's how I would get the meeting. And I'd have two different conference rooms in a hotel and I'd be back to back meetings from one to another. And I'd have Someone else on my team being in the meeting when I wasn't there. So you'd be, you know, back to back from early in the morning to late at night and explain to them, we're going to have the marketing, the technology, the culture, and the support to help them grow their business.

AI assessment note: “explain to them, we're going to have the marketing, the technology, the culture”