When they were young

110799

When Redfin was young: the early years

Redfin, originally called Appliance Computing, refunded $1M in commissions in less than a year

Innovation series by Steven Loeb
August 3, 2018
Short URL: http://vator.tv/n/4be0

As our readers know, Vator has started a series called When they were young.

It's a look back at the modest days of startups, what traction they had in their first few years, and how they evolved. In the end, we hope to provide a glimpse into what great startups looked like in their first few years.

Stories like these are always well received because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent, and committed. If we can follow their footsteps, maybe we too can have similar success.

This segment is on Redfin.

— Redfin's First Year —

Founders: David Eraker, Michael Dougherty, David Selinger

Founded: The company is initially incorporated as Appliance Computing Inc. in Washington in October 2002.

Initial company description: The initial idea comes from Eraker's experience trying to buy and sell his house in Seattle, where he discovered that, "The real-estate market seemed from the viewpoint of consumers one of the most underdeveloped technologically," he says in 2004.

"When I joined David Eraker and Michael Dougherty in co-founding Redfin I’m pretty sure we had no idea what Redfin would become. We may have been a bit starry-eyed and more than a little naive, but from day one, every member of the team knew one thing: the current real estate market was all about serving the profit needs of the agent, not about the customer; and changing that would mean changing the most important financial decision for families. Forever," Selinger writes in 2017.

"We believed that democratizing data and technology would level the playing field, and by serving the consumer we could upend an industry held in stasis by the powerful conservative forces that dominate the realtor universe. And we knew that by consistently proving to the consumer that 'we are on your side' we could build an amazing long-term business that profits in partnership with the customers."

 

— Redfin's Second Year —

Patent, at one year and eight months from founding: In June 2004, Eraker and Dougherty file a patent for an "Online markerplace for real estate transactions"

"Under an embodiment of the invention, a web site system maintains a real estate web page. The web page has an aerial image map of a geographic region that can be navigated by a user. The web site system facilitates online collaboration for real estate transactions. When the user registers, the system creates a user account for real estate information. Real estate agents and/or other real estate service providers selected by the user are granted shared access to the user's account by the web site system," the patent says.
 
Appliance Computing also files a patent for a "Web-based real estate mapping system."
 
"An innovative web-based tool displays visual information about real estate. In one embodiment, an aerial image is overlaid with various data layers to visually present real estate data. Data associated with various embodiments of the tool can include tax parcel information, historical sales information, Multiple Listing Service information, school information, neighborhood information, and park information."
Press mention, at one year and 11 months from founding: In September 2004, the Seattle Post, referring to the company as Redfin, writes about its mapping capabilities.
 
"Pioneered by a new Seattle firm, redfin.com is the nation's first real-estate Web site and brokerage to marry satellite-view photos with a host of other technology to give the public a near tree-top view of whole neighborhoods down to mere city blocks. Viewers can even use it to select a real-estate agent, from any of a number of firms, who specializes in their target neighborhood or type of property," it says in the article. 

 

— Redfin's Third Year —

Reincorporation, at two years and five months from founding: On March 31, 2005, the company reincorporates as Redfin in Delaware.

First funding, at two years and 11 months from founding: In September 2005, Redfin raises $770,000 from Madrona Venture Group.

 

— Redfin's Fourth Year —

Second funding, three years and three months from founding: In January 2006, Redfin raises $1.25 million from Madrona Venture Group. Paul Goodrich, Madrona's managing partner, joins Redfin's board as chairman.

Personell, three years and three months from founding: In January 2006, Glenn Kelman is named CEO of Redfin, replacing Eraker.

"It is the final frontier. Everything else that you could sell over the Web -- from human organs to tennis shoes -- you can now buy. But real estate, that's a $61 billion market that has never been put on the Web. There have been a zillion people that have died trying, and I sort of said: 'Wow, that is really big. That is really crazy.' And that seemed fun. ... You wanna work on something big, so that if you win, everybody wins, and you really have an impact on the world. And that can get you out of bed," Kelman says in an interview with the Seattle Post-Intelligencer.

Launch, at three years and four months from founding: In February 2006, Redfin launches Redfin Direct, which it calls "a home-buying program for saving consumers thousands off the price of a home."

Name change, at three years and seven months from founding, three months from launch: In May of 2006, the company officially changes its name from Alliance Computing to Redfin Corporation.

The name Redfin is an anagram of the words ""finder" and "friend"

Third funding, at three years and seven months from founding, three months from launch: In May of 2006, Redfin raises $8 million in a Series B round led by Paul Allen's Vulcan Capital. Other investors include BEV Capital, The Hillman Company and Redfin's original venture investor, The Madrona Venture Group.

Vulcan Capital's Peter Cochran and BEV Capital's Marc Singer join Redfin's Board of Directors.

Expansion, at three years and seven months from founding, three months from launch: In May of 2006, Redfin launches its online brokerage service in the Bay Area, and opens new offices in San Jose, San Francisco and the East Bay. 

Traction, at three years and seven months from founding, three months from launch: Redfin has managed over 40 pending or closed Seattle-area home sales, worth in aggregate over $15 million. 

Accolades, at three years and nine months from founding, five months from launch: In July 2006, Redfin wins the 2006 Innovator Award for the Most Innovative Business Model from Inman News. 

"For a company that prizes innovation and customer service as its defining characteristics, Redfin is proud to have been recognized for having the industry's most innovative business model," Kelman says in a statement. "The award is especially meaningful coming from Inman News, which has long been the voice of the real estate industry. We believe our winning reflects a new openness to Internet service within the industry that was, for us, the most noteworthy aspect of this year's conference."

Personell, at three years and 10 months from founding, six months from launch: In August 2006, Eraker leaves Redfin.

“It’s a rare entrepreneur who has the vision and energy to re-imagine one of the largest, most traditional industries in America,” says Kelman. “We all owe a great debt to David, and wish him well.”

Product, at three years and 11 months from founding, seven months from launch: In September 2006, Redfin launches its home-selling service, called Redfin Direct for Sellers. 

 

— Redfin's Fifth Year —

Traction, at four years from founding, eight months from launch: In October of 2006, Redfin reveals it has refunded $1 million in commissions to home buyers. That includes an average refund of $9,825 to 103 home buyers in California and Washington. In addition, 28 home sellers have used Redfin to sell their home saving $289,173 in commissions, for an average of $10,328.

Product, at four years from founding, eight months from launch: In October 2006, Redfin launches "Red Carpet Services" to offer home buyers free home tours and pre-inspections.

Product, at four years and two months from founding, 10 months from launch: In December of 2006, Redfin launches Sweet Digs, "the first online real estate magazine to publish reviews of properties for sale across the greater Seattle area."

Product, at four years and seven months from founding, one year and three months from launch: In May of 2007, Redfin is fined $50,000 by the Northwest Multiple Listing Service over its Sweet Digs blog. The blog, which has about 3,000 e-mail and online subscribers, is shut down

Accolades, at four years and eight months from founding, one year and four months from launch: In June of 2007, Redfin wins the Alliance of Angels' 2007 Company of the Year award. 

Product, at four years and eight months from founding, one year and four months from launch: In June of 2007, Redfin relaunches Sweet Digs "with a new analytical format designed to give consumers insights on prices, inventory levels, bargains and open houses in San Francisco Bay Area and Greater Seattle neighborhoods."

Fourth funding, at four years and eight months from founding, one year and four months from launch: In July of 2007 Redfin raises a $12 million Series C round of funding led by Draper Fisher Jurvetson. Madrona Venture Group, Vulcan Capital, BEV Capital and The Hillman Company also participate.

Traction, at four years and eight months from founding, one year and four months from launch: By July of 2007, the company has completed more than $350 million in real estate transactions, saved its home-buying customers nearly $6 million in commissions and increased revenues by more than 2,000 percent.

Redfin Today

Redfin went public in July 2017 at a $15 IPO price. It is currently trading at $24.02 a share.

The company saw revenue of $370 million in 2017, of which $10.5 million came from Redfin Now, a service, introduced in 2017, where the company buys homes directly from home sellers through a wholly owned subsidiary and resell them to homebuyers. The company saw its revenue grow 38 percent year-to-year.

(Image source: redfin.com)


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