Sramana Mitra: You were still focusing only on real estate?
Jeff Frieden: Only on real estate. Then the market crashed in 2007. We were able to pivot very quickly to help out institutions like large banks that had a tsunami of foreclosures coming in when the market blew up. In 2007, we held our first ballroom auction during this crisis up in LA of 350 homes for Bear Sterns. There were 6,000 people. We ran half a million to a million dollar media campaign. We had this hybrid technology that we had built ourselves. We went on to build our own technology offshore. We started to play with doing it without the physical auction. All online.
Obviously, that grew very quickly because of the tsunami of foreclosures. Since 1983, I had started investing in commercial real estate in Orange County. If I made money, some would go into the bank, some would go into the stock market, some would go into my business, and a lot of it would go into buying commercial real estate.
Sramana Mitra: Let me stop you for a moment and get a bit of specifics. All this stuff that you were doing in that timeframe especially after the financial crisis, this was all under the Auction.com entity?
Jeff Frieden: It all really was under the corporate name of REDC, which was formed in 1990.
Sramana Mitra: Now we’re talking 2007 to 2008 time frame. You’re doing really well off the real estate crisis. You’re throwing up a lot of cash and started buying commercial real estate.
Jeff Frieden: I actually started buying commercial real estate in the mid-80s. I bought my first building in 1985. When we started in the early 90’s in that downturn, we invested a lot of it in commercial real estate, which, by the way, has been one of the greatest investments that we’ve ever made – better than the stock market. The County grew up around us. The orange trees went away. Some of it was good timing. We bought a lot of that real estate in 1991. We bought a lot of it in 2001 recession. We bought quite a bit in 2009 and 2010.
Sramana Mitra: How does Auction.com fit in to this story?
Jeff Frieden: In 2008, under the brand REDC, we sold half of our REDC to a private equity firm called Stone Point Capital out of Connecticut. At the same time, we bought the URL Auction.com for $1.8 million. In 2009, we launched our commercial business under the brand of Auction.com. Now, we started to sell distressed commercial real estate, which was 100% online.