Compass is Pointing the Way

Today, the industry noise surrounding Compass now has achieved the point of being almost deafening. See the article from Inman today linked here.

Brokers are standing by and watching as top producing agents simply walk, companies are being acquired by Compass in markets across the Country. So why has this happened in our industry? I think it is because of this.

The brokers in the industry have been so myopically focused on commission revenue and splits, that they have been blinded to the potential opportunities they have in this business right now.

I have written about the loss of equity to Compass when an agent walks out, I have discussed the true potential of monetizing ALL of the transactional potential brokers control today but now I want to talk about what I commented on in this Inman article.

The “business unusual” focus Compass has had on its exit has fueled the majority of its success to date. It knows where it is going and it is simply going there.

That’s right, an exit. Everything they do as a company above the bottomline must add up to the bottomline - namely the exit. In my work with numerous start up companies, the one single thing I require them to do as their advisor is to allocate at least 30 minutes each day to mapping the company to an exit. From day one. When was the last time you spent anytime doing this? What, who, why and when will someone take what you have built, value it and allow you to realize a reward for all of your effort to build that business. So I have a question for you.

If you were asked to provide it, as in right now, what is your vision for assuring the future value of your business? And how would you define your company’s future value?

Too few businesses, especially in real estate, spend any amount of time thinking about this critical part of their business. In real estate brokerage it is usually all about recruiting and retention for the sole purpose of generating profit and keeping the doors open. But what if that were to change? As it has with the onset of Compass. Then what?

When was the last time your value proposition to your agents changed over and above some forced change in their commission splits?

At the recent Disconnect Conference, I shared with my breakout group this thought. I asked what the difference would be if we “listened and learned from what we feared most" instead of dismissing such forces and spending most of our time in denial? Moreover in this case, what could we learn from companies like Compass?

Brace yourselves, I have learned this fact. I now think Compass is doing a fantastic job of pointing the way for this industry.

Since day one, Compass and its leadership has been focused on its exit. It sold its vision to big investors and they agreed. That provided Compass with the fuel to grow and sustain a large company void of profits, by design. And now as they approach the necessary scale, they will soon go to Wall Street and realize the reward for their work.

It is that simple - and it is that difficult. Not difficult for Compass, difficult for traditional brokers today to comprehend and to execute.

Stop, look and listen to what Compass is doing and how they did it. I have and I now think there remains a distinct industry competitive advantage to do the exact same thing now. You see, I think that if offered a choice, Wall Street might even rally more around making an investment in you v. Compass.

That’s the thought I wanted to share today and in my next blogs, I will attempt to further discuss how to make this opportunity more of a reality.

Have a great day!