Here’s the short answer: Because while Uber successfully cracked the model of bringing value to both consumers and service providers, Redfin stopped one step short from going all the way.
Although the industry is hailing Redfin as a game-changer, it obviously hasn’t had nearly the impact that Uber has on its particular niche. The U.S. residential yearly commission market is seven times larger than the limousine and taxi market, raising the expectation that real estate industry would grow a giant company that would match Uber in its impact on the market. And Redfin is the first name coming to mind when trying to find Uber’s real estate peer, but clearly, at 4-and-a-half years old, Uber has made a far greater impact on its industry than 10-year-old Redfin.
Setting aside the basic differences between Uber and Redfin, between the taxi/limo/ridesharing/transportation market and the real estate market, and not even comparing the Uber app to the online tools provided by Redfin, both companies are on a mission to engage technology in order to change the way a market operates and provide value along the way.
Both, at the end of the day, benefit from a transaction occurring between a service provider (a driver, a real estate agent) and a consumer; both disrupt a traditional model (drivers working with stations, real estate agents working with traditional brokers); and both consider themselves software companies.
But Redfin is not Uber. Capital markets acknowledge the difference. Uber, younger and operating in a smaller market, gained a blasting $19 billion valuation in its last round of financing. Redfin was valuated at $500 million in its last round.
Huge value is created by ensuring lifestyle enhancement that can be enjoyed by all. A closed platform, only accessible by a limited number of service providers or agents (and consequently, a limited number of consumers that can be served) may, at best, enhance the lifestyles of a limited number of individuals.
That is Redfin.
Uber is successful because it benefits the drivers as well as the consumers. Uber lets drivers set their own hours; it allows drivers to work part-time — in short, it makes drivers’ lives easier. Uber does require basic standards and quality, but allows drivers to be their own bosses.
And above all, Uber is an open platform. It does not employ drivers; it welcomes them to join the Uber platform. The more the better. Redfin doesn’t.
One other difference is growth. Uber’s model allows it to rapidly expand to additional cities, duplicating the model in cities where regulations are similar. It supports fast enrollment and quick operation, which helps pursue profitability. There’s no need for physical infrastructure. The local presence is the drivers, and the engine is their marketing and technology platform.
Uber is becoming a giant by thinking completely different. By aspiring. By believing it can transform an entire industry and completely change patterns and behaviors, far beyond what anyone did before.
You cannot blame Redfin for not wanting to become a giant or not trying to do things a bit differently. It just tries to make a difference among and between the boundaries of an industry, but those boundaries are far wider than they imagine. And this is where they miss.
Attempting to create a real estate brokerage that will match the success of Uber will be difficult, but it’s not impossible. It will happen — it might even already be in the making — but the question is, who will be the one to come up with the right vision, sheer determination and a perfect model, offering value to all?
Tamir Poleg is the founder and CEO of Real, an innovative technology powered brokerage. Prior to founding Real, Poleg served as the CEO of Optimum RE investments, owning a large portfolio of residential properties as well as a property management company and a construction company. Poleg holds a bachelor’s degree in economics and several real estate related accreditations.