First is a machine learning-based platform that helps agents know when to reach out to consumers in their existing network.
RE/MAX has acquired real estate tech startup First, a company that offers a machine learning-powered platform that helps inform agents of the best time to reach out to existing clients in their sphere.
The terms of the acquisition, which was announced Wednesday, will be disclosed at a later date, but the acquisition was funded with cash on hand, according to RE/MAX CFO Karri Callahan.
RE/MAX has spent the better part of the past two years committed to enhancing its technology offerings for agents and brokers affiliated with the franchise network, in the wake of the acquisition of booj. The company is focused on building technology and tools that focus on enhancing the production of agents or the consumer experience, according to Callahan.
“As we build the booj platform we’re always looking at things we can add on and amplify in those two areas,” Callahan told Inman. “We really felt that this opportunity would help us do both.”
“It’s a technology that can both help our per-agent productivity as well as deliver a better consumer experience because we’re putting them in a position to connect with consumers when consumers are ready to engage in the transaction,” Callahan said.
First was founded in 2016 by Mike Schneider, its current CEO, in Durham, North Carolina. Schneider explained the impetus behind founding the company, which has since raised $11 million in venture capital funding, was an industry lack of focus on building technology that helps agents capture more business from within their existing network.
“Eighty percent of deals for agents are coming from existing networks, but almost all of the technology focus [in 2015] was focused on the lead side of the business,” Schneider told Inman. “It became very clear to me that there’s a reason, from a consumer standpoint, that so many deals come through relationships.”
Within three minutes of signing up from First and syncing your contacts, Schneider said the platform can identify where your contacts live and what property they own. After mapping out an agent’s network and looking through multiple listing service data, Schneider said his company can see that agents are only winning 20 percent of the business within their own existing network.
“The problem becomes, ‘I have 2,000 people in my email and in my phone, where do I spend my time?’” Schneider said.
Schneider explained the crux of the platform is about connecting with the right people at the time, in an effort to strengthen relationships within an existing network. The app lets agents know when to reach out and also organizes and consolidates an agent’s database while providing reporting on how much business is won and lost from within an agent’s network.
First wasn’t necessarily for sale, Schneider explained. He had been speaking with some of the bigger brokerages and brands in the country because they were discussing integrations. Then several offered to outright buy First, according to Schneider.
“We ran a process, we ended up getting interest from almost all the big players and it was very interesting getting close to the technology organizations and the leadership at all the big players,” Schneider said.
Schneider, who also penned an open letter about the decision, was very impressed with a few things on the RE/MAX side: the company’s leadership and culture, as well as its commitment to using technology as a differentiator and taking a thoughtful, long view on building a great technology organization.
The acquisition is the second major technology startup acquisition in as many years for RE/MAX. When asked why the company opted to buy First, rather than develop similar technology in house, Nick Bailey, the chief customer officer at RE/MAX, explained that RE/MAX found a proven organization with talent and a great product. By acquiring First, he believes they shaved years off the timeline of building that technology for RE/MAX agents.
“Companies that want to make everything propriety and have an attitude of 100 percent build, I think they’re always going to be playing catchup,” Bailey said.
Bailey was mum on how exactly the newly acquired technology will fit into the booj-powered platform the company launched over the summer – he said an announcement will come at RE/MAX’s R4 event in February – but, broadly, RE/MAX was looking to address some of the same challenges laid out by Schneider.
“When we stepped and looked back at what truly are agents’ challenges and how we can help as a brand and franchisor leader to their business, there is one fundamental piece that’s missing – agents on average lose 70 percent of listing opportunities in their own sphere,” Bailey said.
One could easily imagine that First’s platform could fit seamlessly into booj’s lead-capture system with a lead and sphere scoring component.
The lead score tracks user engagement with an agent site, such as visits, property views, saving properties or narrowing their search down, to estimate which page visitors are most likely to convert to actual clients.
The sphere score isn’t tracking the client, but tracking the agent. It outlines 30 key touchpoints throughout the year that agents should be hitting, to see how often and successfully they are engaging with consumers.
Bailey said he could also envision the use of machine learning and artificial intelligence technology enhancing RE/MAX’s forthcoming consumer-facing experience, which is expected in the first quarter of 2020.
RE/MAX agents in the U.S. will gain exclusive access to the platform at a discount in early 2020. Bailey didn’t elaborate on the full roadmap of offering both free and premium add-on services to booj, but the company has hinted that may be the case on multiple earnings calls.
Current clients of First will continue to have access to the platform through 2020 or until the end of their current contract.
Integration discussions are currently ongoing and RE/MAX declined to disclose if there will be any layoffs or if First’s entire 20-employee team would be coming over in the deal. Callahan did clarify, however, that a big reason RE/MAX was excited by the acquisition was First’s talent.