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Q&A with Redfin's Glenn Kelman Add to ...

As chief executive officer of Redfin.com, Glenn Kelman is on the forefront of a changing real estate industry in the United States, agitating for a change toward a more customer-centric model. The site - whose founders include David Eraker, Michael Dougherty and David Selinger - offers consumers the chance to work with customer-service agents rather than sales agents. Here is a transcript of reporter Steve Ladurantaye's interview with him last week.

Q: How does Redfin work?

A: Our basic model is that most of it can be done online, but the truth is it is a combination of personal and digital service. The original premise was all digital, and since it has kind of grown into a more customer-service role. What's really different is that there is no sales component - we don't have a sales force - we generate leads through the website [and]when people want to work with us they step forward and ask for service. Our agents aren't paid to make it rain, they are paid to serve the customers who want to be served, and the Web can do 90 per cent of the customer finding.

Q: What kind of access do you have to MLS information?

A: The simple way to interpret the rules is the guiding principle that if we can share it with you face to face, sitting across from you, then we can publish it on the Web. We have to hire brokers in each local market. Our original idea was to catalogue listings and pair with tax records and do all of these analytics and build a community. We're just trying to bring real estate into the 21st century.

It's the same thing you do when you buy a book at Amazon. It's very natural to want to socialize and have the experience be informative - from a nerd's perspective, real estate is a lot of fun because it is totally inefficient. Almost everything is recorded somewhere with significant statistics. Agents don't really need to have their finger in the air, which is sometimes seen as the standard of service. But at the book store, I want to know what someone thinks and I want the stats - I want both, which is what we had to acknowledge building Redfin. We thought we could be a cold and austere website, a factory where the lights go off and the robots work all night. But that hasn't worked - everything we wanted to do wasn't right and the industry wasn't all wrong. We had something valuable - a better site. And every decision we make is informed by the idea that we're not going to screw the customer.

The real problem is people don't trust agents, they think they are only after a commission on the most important purchase of their life and pressuring them to make the wrong decision. The whole model hasn't put the customer first. People used to hate us and they still do - just not as much because I'm not as cocky as I used to be. The opening move was to give the industry the finger - I said real estate was the most screwed-up industry in America, that it only exists to charge a commission on the most important buying decision you'll ever make.

Q: What was the reaction? Have you ever felt threatened?

A: Yeah, sure… But all I was saying is that we save money by automating most of the process.

I have revelled in it, then it started worrying the bejesus out of customers who just wanted to buy a house and get some data. I don't want the whole industry out for blood. I'm trying to be a little more diplomatic. I was asked at a conference if I still think it is the most screwed up and said politely, with all due respect, yes.

We just can't be like all the other sales guys - what I'm trying to say is I used to be proud of being a software guy and now I'm proud of being a customer-service guy. Look at [online seller]Zappos - it's a software guy who realized his ass was grass unless he found the blend. And that hasn't come naturally for me, a guy who doesn't always enjoy talking to people.

Q: How's business now?

A: We are operating revenue run-rate north of $20-million right now, and saw our first profit in June and carried on with profitability in the second half of 2009. The industry is coming around to us - they respect the fact that we made more money than they thought we would - that's what floats their boat. I've also been repetitive on the topic of how to pay salespeople and how to hire them. If you just get as many warm bodies as you can and have them beat the streets there's no quality control and that breaks the trust. That's the speech I give to companies. What we're proud of is real estate agents can stop being salesmen and start being customer service. We tell agents if they want to sell, they should go look for another company.

Q: Any Canadian plans?

A: We thought about coming to Canada, but we're waiting for things to happen. We'd have to have a totally different website, the rules are different, the user experience would be different. I haven't done the analysis in the last year, but I didn't want to spend all my time arguing.





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