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Bootstrapping a Billion Dollar Unicorn in Online Real Estate: CEO Jeff Frieden (Part 6)

Posted on Monday, Jun 22nd 2015

Sramana Mitra: Are the real estate agents part of this marketplace or are you working with buyers and sellers, and the brokers are out of the picture?

Jeff Frieden: The brokers are in the picture.

Sramana Mitra: The people who are actually handling the transactions are still the brokers.

Jeff Frieden: We go directly to the owners of the real estate, and they may have a broker that they like. Or if they don’t have one, we will help them select one.

Sramana Mitra: How do you position vis-à-vis these other real estate sites?

Jeff Frieden: The analogy would be Zillow and Trulia, which are like TripAdvisor. We’re like Priceline. In the Internet space, you see content companies and you see commerce companies. We’re the commerce side of the real estate equation.

Sramana Mitra: If the brokers are still involved, you are splitting the transaction commissions with the brokers?

Jeff Frieden: We actually get paid on by the buyers. There’s a buyer’s premium that’s added. The broker gets their full commission and there’s a marketing fee. We call it a buyer’s premium. It’s very well-known in the auction business. If you pay $5 million for a building, you pay $5,250,000.

Sramana Mitra: That’s your business model. You said when you sold to private equity, you were at about $180 million in revenue run rate. Five to six years later, where are you now?

Jeff Frieden: The reason why I disclosed those numbers to you was because that was when Jeff and Rob owned the business. Today, Google is an investor.

Sramana Mitra: Can you tell me more about what has happened from a financing point of view since the private equity transaction in 2009?

Jeff Frieden: There’s $150 million of debt on The history of the company is private equity investors got involved in the company. As we went to build an online business, we shifted from a debt model to an equity model. Following the equity model, we closed a round with Google Capital in early 2014. The strategy of marrying the real estate DNA and the financial services DNA with technology DNA is something that we not only want to do at the employee level, but also at the executive and the shareholder levels.

We view Google as the best partner in the world to add DNA at the shareholder and Board level given their expertise on things that are so important to us such as SEM, SEO, mobile, and product development. I don’t know if you’re familiar with our other investor Stone Point. They’re the largest private equity firm in the financial services vertical managing $13 billion with folks like Chuck Davis and Steve Friedman who were formerly running Goldman Sachs when Barry Stearns was one of the leading figures in the commercial real estate industry.

The idea again is about marrying both parts of the business – technology as well as real estate. We shifted from being a private equity company to being a growth equity company. We raised growth equity capital about a year and a half ago.

This segment is part 6 in the series : Bootstrapping a Billion Dollar Unicorn in Online Real Estate: CEO Jeff Frieden
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