Sramana Mitra: The entity that you sold to private equity was still REDC?
Jeff Frieden: That’s right.
Sramana Mitra: You bought the Auction.com domain name and rebranded your original entity as Auction.com?
Jeff Frieden: Correct.
Sramana Mitra: It seems you’re doing hybrid auctions but you’ve expanded from residential distressed properties to commercial distressed properties.
Jeff Frieden: All along, we started to bring it all online. We were still doing some of those hybrid auctions but at about 2009, we were really trying to bring all the residential online. We were seeing more bidders.
Sramana Mitra: What scale are we talking at this point? How much revenue was your company doing in 2009 when you did all these private equity transactions and rebranding?
Jeff Frieden: It was just shy of $200 million.
Sramana Mitra: Until you brought in this private equity group, you had raised no money? It was all organic, right?
Jeff Frieden: Correct.
Sramana Mitra: What happens in 2010?
Jeff Frieden: Let’s jump to 2011. I meet Jake.
Sramana Mitra: How did you meet Jake?
Jeff Frieden: He’s Rob Friedman’s cousin.
Sramana Mitra: The business that you’ve built since 2011 is essentially an online real estate business in both residential and commercial?
Jeff Frieden: I’d like to think of it as an online marketplace for real estate. We’re the largest online marketplace that does auction to sell properties. If you think about the real estate industry as a whole, it’s very non-transparent. You don’t know who is making offers. There’s complete transparency on Auction.com and very wide distribution. 70% of our buyers on the commercial real estate side have never met the real estate brokers.
We’re selling properties in China, all over the United States, and the Middle East. Auction.com gives the ability to have a very wide distribution. I want to make sure that I give kudos to Jake. When Jake came in, he said, “You’re really on to something here. You should open a Silicon Valley office and hire the best and brightest.” That helped us really grow this into an online marketplace. This year, we’ll sell about 75,000 homes. We’ll sell $4 billion of commercial real estate. The sky is the limit. It’s a $1.6 trillion TAM.