Through December Inman will be digging into the real estate industry’s most prominent brokerages, iBuyers and paradigm-shifters to suss out the biggest challenges each face in 2022. Check back regularly as we publish new reports on eXp Realty and CoStar in the days ahead.
Despite being a leader in the real estate space for more than 30 years, Keller Williams isn’t resting on its laurels. Since 2018, the company has been working to deliver on founder and KWx CEO Gary Keller’s vision of Keller Williams as a technology company that does real estate, rather than a real estate company that has solid tech.
The pivot hasn’t been without its challenges, as leadership shakeups, software bugs and a wily real estate market have pushed Keller Williams to make difficult and strategic choices about what it wants to be and how to get there.
“Onward,” Gary Keller said during the first set of c-suite shifts in February. “It’s not just a phrase – it embodies the forward-looking perspective of our organization.”
Newly minted Keller Williams President Marc King has been tasked with leading Keller’s “onward” vision, which includes continuing to build out the brokerage’s end-to-end tech stack, considering growth options including the slim possibility of an IPO, bolstering its agent support and education services, and building the leadership and agent base needed to make the company’s first 38 years look like child’s play.
“I look at Keller Williams as the Disneyland for the real estate entrepreneur where you can create anything,” King said of the possibilities that lie ahead. “We have a lot of great worthy rivals in our real estate sales space, but we are pushing forward to be the leader, to create our tools, systems, models, technologies that will keep positioning the agent as the fiduciary of the transaction.”
Waiting on an IPO? Don’t hold your breath
Rumors of an impending initial public offering have been swirling around for more than a year, stoked by several leadership shakeups and the creation of parent company, KWx. If they tested their luck on the stock market, KW would be one of the world’s largest publicly-traded real estate companies, with an estimated valuation north of $2 billion.
“It’s not a question of if Keller Williams will go public but when. Founder Gary Keller may have no other choice,” Inman publisher Brad Inman said in October 2020. “Two classes of real estate companies are emerging. One is those that are raising eye-popping mounds of cash to grow, grab market share and innovate. The others are working off operating income to grow and expand.”
Even with millions up for grabs from bullish investors, KW’s leadership has consistently pushed the idea of an IPO to the background.
“I can’t wait to tell you when we know,” KW President Marc King told Inman in August. “We understand there’s growing speculation out there on all of our moves. The statement is that we’re just going to continue to prepare for optionality and focus on delivering world-class customer experiences.”
As the brokerage closes 2021 off with several more c-suite appointments, a slew of tech rollouts and subsidiary launches such as the Keller Williams real estate school, King said an IPO remains just one option on a smorgasbord of opportunities for the Austin-based real estate giant.
“It’s so rare for a company — that is the largest company in any space — to be privately held. There’s a lot of benefits for that, and there are also challenges that it causes,” he said. “When you hire a Fortune 10 [Chief Executive Officer], and you hire a Fortune 500 [Chief Financial Officer] and [Chief Legal Officer], and this entire executive suite, most people just assume that means IPO.”
“The reality is we have dozens of companies that we’re rolling under one company [KWx], and that structure requires a higher level, more integrated executive team, and that’s what you’ve seen us do,” he added. “Where that leads us is still open. There are a lot of options to get us where we want to be, that doesn’t necessarily require you to be a publicly-traded company.”
Getting the right leadership in place
Keller Williams started 2021 with a major leadership shakeup, as Gary Keller replaced Josh Team with Marc King, a 20-year KW veteran who worked his way up from being an agent to one of the brokerage’s most successful team leaders ever.
Shortly after replacing Team with King, the brokerage bolstered its KWx leadership team with Chief People Officer Mark Foley, Chief Financial Officer Stacie Shirley, and Head of Business Development and Relationships Travis Peace. Since then, the company has consistently added new leaders to the fold, with the latest round of appointments happening at KW Commercial, KW Luxury and several other KW segments.
King said Keller Williams’s hiring rush has been influenced by the flood of talented professionals relocating to Austin during the “Great Resignation” to take advantage of the city’s robust labor market.
“The labor market around Austin, our remote work strategy, and other external factors have played a role in our hiring this year,” he said. “All of that has created a ton of excitement, a ton of opportunity and plays into our strategy moving forward.”
The brokerage’s hiring push isn’t over, as they continue to invest in launching additional niche segments, bolstering their sprawling technology platform, and adding ancillary services all in the goal of creating the industry’s best end-to-end consumer experience.
“We’re continuing to make sure we can build the homeownership experience company, and have it be completely integrated,” he said while highlighting the brokerage’s financial services and growing list of segments, such as KW Commercial, KW Luxury, and KW Sports and Entertainment.
“[Our segments] cover different types of real estate in a very strategic way because we understand luxury consumers have different needs than a commercial buyer or seller. We want to provide niche services to our consumers.”
Although the brokerage will continue to pull in the best and brightest talent from Fortune-rated companies, King said Keller Williams has and will continue to place a premium on hiring former real estate salespeople to serve in leadership positions.
“There have never been more Realtors in leadership roles at KW,” he said. “There are prop-tech companies out there pouring billions of dollars into strategies and technologies for the homeownership experience, and they don’t necessarily include what we think is the single fiduciary of the transaction: the agent.”
“Keeping them at the center of the transaction is our cause,” he added. “What makes us unique in everything that we do [is that] we build for the agents. We want to have the most amazing consumer experience for our consumers through the agents, not around them, and that requires a certain level of knowledge of people who, like myself, have been salespeople.”
King said having leaders with real estate sales experience enables the company to create technology, launch ancillary services, create growth strategies and make improvements that are based on real, boots-on-the-ground experiences, rather than from a pure business strategy position.
“I think I’ve failed at every position in this industry before figuring it out,” King said. “Understanding what it’s like to sit at a kitchen table with a nervous couple who is arguably transacting their most complex asset, and the transfer of ownership of that asset is a very unique thing.”
“There are a lot of people who have their opinions and their technology experience or corporate experience, which is important,” he added. “But if you haven’t made your living in a 1099 [independent contractor] way, where you build your own business inside of someone else’s brand, [you can’t truly understand] this very unique business model.”
“It’s really important that you constantly bring the agents into the conversation, and you build through them, not around them.”
Furthering their investment in real estate technology
Beyond building out a dream team of real estate leaders, King said having former real estate agents in leadership positions is helping the company deliver on the technology pivot Gary Keller announced in 2018.
“We are pushing forward to be the leader to create our tools, systems, models, technologies, through the agents to keep positioning that agent as the fiduciary of the transaction,” he said.
Much like their competitors, Keller Williams has responded to the transaction innovation wave by investing in proprietary technology and tools that remove agents’ and consumers’ need for third-party vendors or companies for any of their real estate needs.
Over the past three years, the brokerage released the Command customer relationship management platform and Kelle artificial intelligence-powered assistant, retooled its website, launched a consumer-facing home search and transaction tracking app, and purchased the now-defunct Smarter Agent app.
Although Keller Williams has partially embraced the benefits of an open ecosystem, King said the brokerage will continue to place the majority of its time, talent and resources toward improving its proprietary technology.
“Everything that we do around technology — whether we buy technology, partner technology or build technology — is all centered around this idea that we help the agent protect their business, their data and their consumer information,” he said. “[We’re] not going to partner with a technology company that won’t let the agents maintain their data. It’s against everything that we believe in here.”
Although Keller Williams has experienced much success with its tech pivot — the Command app has 107,000 active monthly users as of Q3 2021 — it has also experienced its fair share of problems, such as stabilization issues that plagued Command up until the beginning of 2021.
“We went on this journey a couple of years ago, way before anybody else,” Keller said in March. “That speed of lightning worked for us the first year that we brought out Command because we didn’t have enough users that we couldn’t find the bug and fix the bug. It didn’t do as much so it was easy to find all that.”
But then around September 2020, Keller Williams found it was “losing that war, meaning that the bugs showed up more, that whirling spilling death screen, or blank screen or whatever else,” he added. “I just want to make a promise to you that we hear you and we are horribly sorry that innovation has put us in this spot but we have now accepted our own 66-day challenge of locking down stabilization.”
Several experts told Inman in August that Keller Williams tech woes are partially due to the company trying to make Command into a Swiss army knife, instead of enabling the app to be a sharp tool that facilitates a few, crucial tasks.
“I think what their attempts have shown is that while companies like Keller can throw a large amount of money at this challenge,” industry expert and Collabra CEO Russ Cofano told Inman in a previous interview, “it is extremely difficult to be successful at it.”
“The challenge with Keller and any brokerage company is, who is their customer? Is it the agent? If it’s the agent which agent?” he added. “There’s a big difference between an agent that does two deals a year and a team leader. Is it the local broker franchisee? Those segments have different use cases, and what you end up having is potential for a diluted value proposition.”
King acknowledged the missteps in making Command a well-oiled machine; however, he said the company has moved far beyond the issues with software bugs, performance and stability.
“Rumors linger or missteps linger. I don’t know how long it will take before people stop remembering Zillow’s iBuyer situation. My guess is they’ve already solved for it, and they’re already moving forward, and yet, these things linger,” he said. “We’ve spent a lot of time stabilizing Command — it is an enormous feat to build technology that services every different type of agent in our ecosystem.”
“If you think about what is being built, you’re right, there are tons of different technologies out there, and they only focus on one thing and they do that thing really well,” he added. “They’ve got 500 engineers just working on that one thing [and] we’re attempting to do hundreds of things. Our path to truly create the best homeownership experience for agents and consumers is to have Command be exactly what it says — the command center.”
King said Keller Williams is bullish about Command’s future, especially as they pluck the best and brightest from the flood of young professionals hoping to build legendary careers in Austin’s growing tech scene.
“Austin is quickly becoming the technology capital of the world, and the race for talent around technology is enormous,” he said. “Just because Austin is super competitive around technology doesn’t mean that we can’t go get the best and brightest, and we’re actually attracting more top tech talent today because they’re starting to see the vision of what [Keller Williams tech] can be.”
Investing in agents with agent communities, training
In addition to providing world-class technology, King said Keller Williams is doubling down on agent support through the launch of a real estate school and several agent communities, the latter of which enables agents to connect with colleagues with similar backgrounds and leverage those experiences to build better businesses.
“If you look at what we’re doing in terms of inclusivity, creating partnership platforms, and creating opportunities for our agents to monetize their products and services through the size of our ecosystem and our marketplace, we’re the most sharing company I’ve ever been around,” he said. “We’re creating lots of opportunities, and our singular focus is to help our agents make the most amount of money they can possibly make in this industry while providing the best service.”
King highlighted the launch of the brokerage’s first agent community, KW Military, that enables agents who are on active duty, veterans or those who have spouses in the armed forces to network and take advantage of tailor-made training, coaching, events and referral opportunities.
In addition to a KW Military MAPS Coaching course, the brokerage is working on several other initiatives through Keller Williams University and the brokerage’s ancillary services, Keller Mortgage, Keller Offers, Keller Manage and Keller Covered.
The brokerage is looking to launch five more communities in the coming year, King said, with more details coming at the brokerage’s annual Family Reunion in February 2022.
“I’ll use [KW Military] as an example of something that we’re working on that’s really exciting,” he said. “We have a lot of military families in our ecosystem, and we’re creating an opportunity for military spouses to get their real estate license, even though they might be moved every two years.”
“The size, our ecosystem allows those people to move and still have opportunities, still be able to build a great career,” he added. “Our real estate schools are a really important piece for helping out all of our communities and kind of giving a hand up, not a handout if you will.”
King said Keller Williams’ agent communities initiative is in tandem with the launch of the KW School of Real Estate (KSCORE), an all-digital real estate education platform with Kaplan. The school is already accepting applications and will provide state-specific education, training and coaching opportunities for aspiring agents.
These two latest moves, King said, are partially in response to the “Great Resignation,” the term used to describe thousands of professionals’ decision to leave their jobs and start careers at new companies or in new industries, such as real estate.
“We’ve seen with the ‘Great Resignation’ of 2021, a lot of the skill sets of the people getting into the industry today are arguably higher than I’ve ever seen it,” he said. “We have people leaving the medical profession, in the pharmaceutical sales profession, etc., to get into real estate sales, and that allows us to attract talented people to our company at every level, from our local offices to our large teams, to our expansion teams, to our financial services and businesses to help us further our vision.”
King said having a mixture of long-time real estate sales professionals and highly skilled professionals from other industries is an important part of Keller Williams’ trajectory, as both groups can help each other build their real estate sales and business skills.
“I have been able to build a lot of businesses inside of Keller Williams, and I’ve learned that being a real estate agent and being a business person are two different things. While I was a talented sales agent, I hadn’t yet built the business acumen that would help me grow large businesses.”
“I’ve watched Gary lead exercises to demonstrate the difference between being a top business person versus being a top salesperson, and they’re molded skill sets,” he added. “The market recognizes that the consumer recognizes professionalism, and we’re constantly working to raise the bar of the industry with our training and who we bring onto our team.”
Helping agents heal from the past while prepping them for the future
Although Keller Williams is bullish about 2022, King said there are some headwinds the brokerage must face, including inflation, rising mortgage rates, inventory shortages, labor market woes and of course, what the emergence of the Omicron variant means for real estate and the country as a whole.
“There’s always kind of the cyclical nature of this industry,” King said in reference to the return of seasonality in Q3. “[At] Keller Williams we’ve lived through several ups and downs in the industry, and we know the market’s going to be different down the road. We don’t know when, we don’t know how, but it’s going to be different than it is today.”
“Inflation is a real challenge for homeowner affordability right now, and interest rates can only go up,” he added. “You’ve got all these external forces that are weighing into, and now Omicron is raising a lot more fears.”
With that in mind, King said Keller Williams’ greatest responsibility in the upcoming year is making sure their staff and agents and their families are physically and mentally healthy and secure enough to execute the goals they have for 2022.
“There are a lot of people that are just worn out from [the past two years]. So helping people heal, getting people on the right track and leading through difficult times is our priority,” he said. “I don’t know if I’ve ever been in an environment that was tougher in terms of just helping people.”
“We wake up every day and ask the question: How do we help our people through whatever we’re going through? How do we help them be better business people? All of those things are really important to us,” he added. “So what’s next is figuring out what the new abnormal is going to look like.”
“We’re all living through it, experiencing it, and nobody really knows what the next 10 years hold, but what we do know is people do and will need a professional to wade through all the noise.”