Out of the shadows, a new competitor in residential real estate has emerged: Side, a high-tech brokerage focused on empowering real estate agent teams, has quietly earned millions in backing from venture capitalists and is today making its public debut.
The startup, previously known as “Reside,” has been quietly building a virtual brokerage from the ground-up since its unpublicized launch in 2017, poaching successful teams and small brokerages across California, and converting the latter into teams. It offers attractive commission splits, a bundle of tech tools and robust marketing support, according to CEO Guy Gal, who declined to specify exactly what the splits were.
Unlike many real estate rivals, the brokerage also claims that it wants the brands of its individual teams to far outshine its own.
“What we do is not for everyone,” Side writes on its website. “We look to partner with top producing agents who are dedicated to developing a market-leading business.”
Over 60 teams comprised of about 300 agents hang their licenses with Side across Northern California, generating average sales volume of about $40 million per team, according to Side. The entire brokerage closed over $1 billion on 1,240 transactions last year, and represents $3 billion in annual sales volume, according to Gal.
Side recently branched out to Southern California and plans to expand to 25 other markets over the next few years.
Gal said Side has raised “tens of millions” from private venture capitalists and investors, but declined to disclose the exact amount because the brokerage hasn’t yet registered its funding with the Securities and Exchange Commission (SEC). Its investors include Trinity Ventures, Matrix Partners, 8VC and MetaProp. Gal previously served as an entrepreneur in residence at Matrix Partners, and has also founded three companies in the past, he said.
In some ways, Side looks a bit like venture capital darling Compass. It talks a big game about technology, is gunning for top-producing teams and, according to Gal, has even won a few from Compass.
But Gal says what sets Side apart is that the brokerage acts as a “managed service.”
Rhetoric aside, most other brokerages, including Compass, he says, largely leave agents to fend for themselves. Another difference between the two is that Side doesn’t provide office space. In that sense, perhaps Side’s more direct competition is fellow fast-growing virtual brokerage eXp Realty. If that’s the case, Side pulled off a recent hiring coup, tapping former eXp president Vikki Bartholomae to be Side’s chief of agent success.
“[V]ikki’s hiring, there are 15,000 eXp agents who are wondering where she went,” Gal said. “I believe that is a big story … It’s the president who oversaw their national expansion leaving to join a small, fast growing company.”
One tech system to rule them all?
Key to Side’s team service model is the startup’s tech platform. The brokerage offers “one system to rule them” that mixes together top-tier business software, Gal said. A transaction management platform, contact management system, website and marketing software are all part of the package.
Patricia Nakache, general partner of Trinity Ventures, one of Side’s investors, said the platform includes “best of breed” tools from third-party vendors and proprietary transaction processing technology.
Part of the goal is to free up time for team leaders, so they can focus more on managing their business and recruiting new members, she said.
Another focus is online marketing. Side helps teams brainstorm and execute online and print marketing plans, such as buying Facebook and Zillow ads and producing and distributing fliers across neighborhoods.
“We will take their dollar,” Gal said. “We will put that to work on their behalf.”
Side’s goal is to retool the brokerage value proposition for the modern era.
Brokerages traditionally served agents primarily by providing a physical offices, a brand to stand on, leads and transaction processing, said Nakache, the general partner of Trinity Ventures.
But technology has rendered some of that value proposition obsolete. Agents can work remotely and use Zillow and other services to nab leads themselves, she noted.
“You’re not getting the walk-ins; you’re not getting the phone calls to the main brokerage main office,” adds Daniel Risman-Jones, co-leader of Ascend Real Estate, a San Francisco-based team with Side. “Buyers and sellers can go on Yelp or Zillow and connect with [agents] directly.”
The age of teams
Teams, in particular, have flourished in the tech age. That’s because digital, on-demand services have raised the expectations of consumers, Risman-Jones said. The structure and resources of teams offers the best way to meet those expectations, he said. Teams also make it easier to systemize lead generation and conversion, a must for exploiting new marketing channels.
These tight-knit units pose a big challenge for traditional brokerages, said Russ Cofano, an industry vet who hosts the real estate podcast “Gradually…Then, suddenly!”
They are often high-producing, self-sustaining businesses, making it easy for them to jump to a new brokerage if their current one won’t pay a high split or provide a desired level of service, he said.
Basically, they have the advantage over brokerages today, with their leaders vacuuming up revenue that would have gone to the brokerage in the past.
For example, he said, a team leader might negotiate a 90 percent split with her brokerage, but pay her subordinates only 50 or 60 percent of her commission haul. In the past, the brokerage might have collected much of the split that team leaders collect from their junior agents.
Team members accept the low splits from their leaders in exchange for leads and support. Meanwhile, brokerages foot the bill for Errors and Omissions insurance and the team’s office space.
Still, brokerages have no choice but to try to retain teams, and many are struggling to do so, Cofano said.
Side was built to offer a welcoming home to them.
Why a Compass vet jumped to Side
Risman-Jones, a Side team co-leader, said Side’s robust marketing support is what lured his team away from Compass.
“They came to us with a marketing plan of what we need to do every month, and they help us implement it and hold us to getting it done,” he said.
He added gleefully: “Our website is completely our own branding … I don’t even know if Side has any fingerprint on it at all.”
Gal says Side charges the same “super favorable” commission split to all agents, and teams determine their own splits among themselves. The brokerage also has commission caps. But Gal declined to disclose the exact split or details about its commission cap structure.
Side teams have grown their sales volume by 49 percent per year on average since joining the firm, according to the company.
Side will eventually be able to turn a profit while still charging low splits because it doesn’t pay for offices and leverages technology, Gal said. Of the company’s 80-plus staff, he said about 30 are devoted to engineering and product development.
Industry vets who have joined Side include Bartholomae and Bryan Smith, a former senior vice president at BoomTown, now Side’s vice president of partnerships.