Redfin’s in the news again this week, and the media seem to be having a love affair with this company, including the P.I’s John Cook, as he’s mentioned Redfin 51 times in his blog alone, in just the past few months. What is the fascination?
It can’t be just the venture capital raised. Madrona Venture Group invested in both Redfin and Bag, Borrow and Steal about the same time, but BB&S only got written about a measly 7 times. The President and CEO, Michael J. Smith, is a soft-spoken man, who previously served as president or CEO at four consumer Internet sites, including Land’s End, Nordstrom, LifeSketch and Classmates.com, so he’s got an even more impressive resume than Kelman. But his demeanor is less openly aggressive and seems to be a more serious type of leader. This idea of borrowing, rather than buying high-end handbags could, I suppose be as “disruptive” to handbag manufacturers as Redfin is to the real estate business. And now they’re renting high end jewelry too. That’s pretty unusual and ground-breaking. But barely a peep from the business blogs. So why this fascination with Redfin?
According to Peter Cochran, who’s with Vulcan Capital, another investor in Redfin and who also sits on the board, the reasons 1, 2 & 3 are CEO Glenn Kelman.
Why did you invest in Redfin?
I’ve got a 40-page investment memo that answers that question in dizzying detail, but since I’m not willing to post that document on the web, let me try to summarize:
Reason #1, 2, 3. Glenn Kelman and the Redfin management team. It’s a VC cliche, but for an early-stage VC deal my first three criteria are people, people and people (to borrow an investment philosophy from Jon Callaghan at True Ventures and many others). I have confidence that Glenn will always strive to do the right thing for Redfin customers, employees and shareholders. He has the intellectual aptitude, enthusiastic work ethic, humble confidence and swashbuckling-style that makes Redfin a great place to work for super smart engineers and business people.
So, like a lot of what goes on in business, and real estate in particular, it involves personal strength and a cult of personality. Kelman could be being perceived by these other writers and investors as an alpha-type male, and they are responding in kind with attention and money and are happily playing follower to his lead. The alpha male establishes a hierarchy of domination that manifests itself in aggressive, hostile and powerful domination of their enemies, other less-powerful beta males and business competitors.
Kelmans antics in the press, before the U.S. Congress and documented on his blog, have positioned him as the P.T. Barnum of the new 2.0 real estate business model.
Kelman seems to delight in escapades and the high-profile spoof, lives for the short memorable riff of “crazy addictive” male Valley talk and the quick hot-shot sizzle and spin when discussing his “disruptive” technology and “crazy awesome” website. Other people have noticed and are seemingly immune to his mischief, but there are plenty of other people out there who are hypnotized by his hustle and jive.
Let’s hope that Kelman can learn to use his considerable powers for good rather than evil, and rein in some of his “freaky” impulses and become the better man. Competition is great and is unwelcome only by those who have nothing to offer. Pitting business associates against each other, associates who have come together formally and actually created associations based entirely on the concept of cooperation, however, is bad business.
Redfin should follow the lead of the other online/real estate web 2.0 companies and do the right thing. Take their clients out to view the homes, even if it means raising the price of their services, take the Buyer Agency responsibilities, liabilities and risks seriously, and join in the real estate business with a spirit of helpful assistance and cooperation. It doesn’t have to be “we win, you lose, damn the torpedoes, full speed ahead, let the best man win”. You can play nice and still be successful, and be admired to boot.
The P.I.’s Venture Blog gives the bully pulpit to Kelman once again by publishing his entire email response to my article in this post “Redfin and the Alpha Male”.
I just want to point out that when Kelman complains of getting letters from the local MLS asking Redfin to remove certain information from their site or blog, it’s because Redfin is violating membership rules that everyone else follows. Redfin doesn’t want to follow the rules and doesn’t think the rules should apply to them. The MLS is a private organization. They are free to try to change the rules or they should resign their membership. To continue whining to the newspapers is tiresome. The bigger story is why David Eraker is gone and why the media haven’t followed up on his departure.