Reposted with permission from Mike DelPrete.

Check out Mike DelPrete’s State of the Industry Report here.

Compass is a disruptive force in real estate. I believe it to be the world’s most well-funded brokerage, with over $1.5 billion raised, and as a result, the world’s fastest growing brokerage with annual growth rates of 150 percent.

As the company navigates a large, complex industry and attempts to find its own place in the world, its growth strategy has evolved. Looking back several years, the company has clearly gone through three distinct eras of growth.

Era 1: Agents (2018)

Compass’ first era — 2018 — is marked by an exponentially growing agent base after raising an unprecedented amount of venture capital.

The era kicked off in November and December of 2017, when Compass announced a massive $550 million capital raise. Subsequent to that, it announced an additional $400 million raise in September 2018. All told, Compass raised nearly $1 billion in venture capital in less than 12 months.

That venture capital fueled the growth of its agent count, which quadrupled from around 2,000 agents at the beginning of 2018 to 8,000 agents by the end of 2018.

Compass also embarked on a brokerage shopping spree, acquiring 12 separate brokerages during the year. Over 40 percent of Compass’ agent count growth, or 2,563 agents, came from those brokerage acquisitions.

Era 2: Tech (2019)

In the same way Compass’ first era was all about agents, its second era was all about tech. Compass has always been a self-styled “tech-enabled” brokerage or “real estate tech company,” but it was not until 2019 that the company’s investment truly matched its rhetoric.

The era started in December 2018 with the hiring of a new CTO, Joseph Sirosh. Prior to Compass, Sirosh was the CTO of AI at Microsoft. His hiring signaled Compass’ intent to move into the technology big leagues and kickstarted an active 2019.

Compass wrote several large checks in 2019 when it acquired real estate CRM company Contactually in February and AI company Detectica in November. Both companies, with 21 and five tech employees respectively, bolstered the company’s growing tech resources.

Compass’ tech team exploded (in a good way) during 2019, growing to a team size of 451 by the end of the year — up 3.3 times from 138 at the start of the year. As a percentage of total full-time employees (FTE), tech staff increased from 10 percent to 22 percent, a significantly large portion of the company.

Compass also opened a pair of new engineering centers during its era of tech. In September it launched a new 21,000-square-foot tech center in Seattle for up to 170 staff, right across the street from Amazon’s headquarters. And in November, it opened an Indian tech hub, with intent to hire up to 200 staff.

In September, Compass also unveiled a new website, the culmination of many months of work and a critical prerequisite to its long-term ambition of building an end-to-end software platform for consumers and agents.

Era 3: Making it Work (2020)

Which leads us to Compass’ current era: Making it all work. For Compass, 2020 must surely be about delivering on past promises and successfully evolving from a brokerage into a tech-enabled brokerage.

The stakes couldn’t be higher: Compass must justify its massive $6.4 billion valuation, which only makes sense if the company can harness technology to deliver an exponentially superior consumer and agent experience — with associated productivity gains and scaling efficiencies.

To date, Compass has yet to definitively deliver on its promise of agent efficiency. The seeds were planted in 2019 — its era of tech — with a new website, the acquisition of Contactually and a massive tech hiring spree. With fuel in the tank, all eyes are on execution for 2020.

CEO Robert Reffkin’s annual company letter perfectly sums up the company’s strategic intent: “In 2020, we are going to align the whole company around the singular goal of growing your business.” Growing the agent’s business means one thing: closing more transactions.

Closing more transactions comes down to higher efficiency and productivity, which can only be manifested through technology. To deliver on this promise, Compass must deliver more leads to its agents while enabling them to close more deals with less work in a shorter period of time.

The foundations have been laid in 2018 and 2019. The key question is: Can Compass make it all come together in 2020?

Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Hear from Realogy, Pacaso, SERHANT., Spotify, Redfin, Douglas Elliman, and 100+ more leaders at ICNY.Register now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription