Seattle-based online real estate company Redfin filed for an initial public offering on Friday with U.S. regulators and will seek to raise up to $100 million.
It’s unclear when exactly Redfin would go public or how many shares it will offer. The company plans to trade on the NASDAQ under “RDFN.” Redfin declined to provide additional details when contacted by GeekWire.
Redfin would be the first Pacific Northwest company to go public in 2017.
The 13-year-old self-described “technology-powered real estate brokerage,” which has been a recent candidate to test the public markets, is active in more than 80 markets across the U.S. It has helped customers buy or sell more than 75,000 homes worth more than $40 billion combined.
Redfin reported a loss of $28.1 million on revenue of $59.9 million for the first three months of 2017, according to the SEC filing. That’s compared to a net loss of $24.3 million on revenue of $41.6 million in the year-ago period.
Redfin reported 20 million monthly active visitors to its site and mobile app in Q1 of this year, which was up 44 percent year-over-year.
Here’s a look at some key business metrics and financials:
Here’s a description of the company’s business as outlined in the SEC filing:
Our strategy is simple. In a commission-driven industry, we put the customer first. We do this by pairing our own agents with our own technology to create a service that is faster, better, and costs less. We meet customers through our listings-search website and mobile application, reducing the marketing costs that can keep fees high. We let homebuyers schedule home tours with a few taps of a mobile-phone button, so it’s easy to try our service. We create an immersive online experience for every Redfin-listed home and then promote that listing to more buyers than any traditional brokerage can reach through its own website. We use machine learning to recommend better listings than any customer could find on her own. And we pay Redfin lead agents based in part on customer satisfaction, not just commission, so we’re on the customer’s side.
The company, which sits atop the GeekWire 200 list, has 2,427 employees, up from 752 in 2013. Redfin has raised nearly $170 million to date from investors like Madrona Venture Group, Greylock, Draper Fisher Jurvetson, Vulcan Capital, and Tiger Global. Each firm has around a 10-to-12 percent stake in Redfin.
Here’s a breakdown of the company’s top shareholders:
- James Slavet, 12.4%
- Paul Goodrich, 11.4%
- Andrew Goldfarb, 4%
- Glenn Kelman, 3.7%
There was one surprising item among the list of otherwise-boilerplate risk factors listed in Redfin’s SEC filing: the company is running its website on a single data center based in Seattle. “We do not currently have a back-up web hosting facility in a different geographic area,” Redfin said in the filing. It’s not clear if the company is using any of the major cloud services in its back yard for its mobile app workloads or any other services, though at one point it ran its entire operation on Amazon Web Services. We’ve reached out to Redfin for more details.
The filing also revealed that Redfin is testing a new service called Redfin Now that lets the online real estate brokerage buy homes directly from customer.
Redfin’s IPO would be the first in the Northwest since Apptio raised $96 million in September 2016. Greg Beams, a partner in EY’s Seattle office, told GeekWire last week that the quiet period may be a result of the JOBS Act, which allows companies to confidentially file paperwork for public offerings. The SEC announced this week that it is expanding that rule to all companies.
Here’s a “letter from the team” included in the filing, signed by Kelman, the company’s CEO; Scott Nagel, president of real estate operations; Chris Nielsen, chief financial officer; Bridget Frey, chief technology officer; Adam Wiener, chief growth officer; and Anthony Kappus, general counsel:
This prospectus will tell you what we do: our company runs a website to show people homes for sale, and employs our own real estate agents to help people buy or sell those homes. This letter tries to explain who we are.
We think of ourselves as idealists, who got into this business to make real estate better for consumers, not just ourselves. Our ideals are important when we want to earn customers’ trust: to take our advice about walking away from an easy sale on the wrong house or about paying more in a bidding war. At a time when our customers are hauling everything they own across the country to start a new family, a new job, a new life, what they most need us to be is completely on their side.
And this is our mission, in a sales-mad, baloney-gorged world, to be the truth-teller, the fee-squeezer, the game-changer. Our idealism may not benefit stockholders over months or quarters, but we believe that over years and decades it will deliver the best results.
Of course idealists often get punched in the nose by the real world. But we’re also fighters. A long time ago, when we were competing against giants in markets where homes had lost half their value, a journalist described us as rabid squirrels.
We embraced this identity. It gave us the pluck to go after big markets with an unreasonably small number of people and resources, a mentality that is essential to creating stockholder value. This tenacity has been a good complement to the almost fevered idealism on which Redfin was founded, letting us ignore present-day pain for long-term gain. Rabid squirrels don’t give up.
We invented a map-based search website for Seattle, then let media companies launch that idea nationwide while we spent a decade figuring out how to run our own real estate brokerage market by market. Now we’re the United States’ fastest-growing major real estate site and, we believe, the best real estate service. That pairing has let us make the whole process of buying or selling a home better, not just the initial search. It has opened up the $75-billion market for residential real estate brokerages, not just their ad budgets. It has been worth the wait.
This long-term, holistic perspective has led to thousands of tweaks to our online tools so we can meet more customers, but then to months and even years of testing each tweak to see which of those customers actually buy a house. What has been beaten into us at every turn is a wary preference for durable gains in gross profit and customer value over pops in unprofitable growth.
But being a rabid squirrel is more than just frugality or patience. When we can convince more than 2,000 employees that we’re more willing to do hard things than our competitors, it is a fearsome advantage. This conviction makes us grind on details most would let go. It gives us the confidence to pursue mortgage, title and other businesses that aren’t for the faint of heart. It reminds us that the only way to make money over time is to do things others can’t or won’t.
The result has been a contrarian culture. In an age when the technology economy is increasingly divided from the rest of the world, we have hired our own real estate agents, not as a disposable labor force, but as partners in this business, with a salary, health-care benefits and the opportunity to earn stock options.
We employ people from all walks of life. We write software and analyze financial results like other technology companies; we also scoop kitty litter and squirm through crawl spaces looking for rats. Our engineers have said that when a problem with our software affects our agents, it feels like we have failed a friend. Our favorite saying at Redfin is that everyone sweeps the floors.
This humility is essential to our risk-taking culture. Everyone at Redfin knows our executives have made the lion’s share of our mistakes. None of us pretends we’re Steve Jobs. Since the cost of a mistake in business is often a hundred or a thousand times smaller than the gain from a new idea, we believe the fault lies mostly in the “not-done, the diffidence that faltered.” When we admit our mistakes as executives, it liberates everyone else here to think big and fearlessly, but also to concede their own mistakes quickly so we can limit losses, learn what went wrong, and move on to the next idea. We believe this increases our overall capacity to delight customers and create stockholder value.
So this is Redfin: rabid squirrels on a mission to make real estate better, and to treat everyone we work with along the way respectfully. Since we’re in real estate, we know there will be ups and downs. But we also know that when you work very hard for a long time to make things better for people, you usually create something meaningful, durable and good. We hope you see Redfin the same way. Thank you to our families and friends for supporting us in this effort.
