Friday Flash: The invisible brokerage

Marc and I met Guy Gal, Co-Founder of Side, about two years ago. 

We hit it off. 

He was very smart, which we expected. 

But he was also deeply informed, which kind of surprised us. 

Many entrepreneurs who come at our industry from the outside see its conspicuous weaknesses and contradictions and quickly conclude that they’ve landed in a colony of dunces. This is a costly mistake.

Guy wasn’t like this. He had gone to school on real estate — specifically, the challenges highly productive, growth-minded agents have moving from having a book of business to having an actual business; from having a personal brand to having a company brand. 

His response to their challenge was a brokerage that would forgo all the stuff that vexes many incumbents — office space, the endless tug-of-war over splits, ego-tickling bonuses, dependency on timeworn software — and focus only on what helps bad-ass agents build real companies.

The result was something you might call an “invisible” brokerage from a consumer perspective. It’s in the background. Side’s partners, the agents, team leads and boutique brokers it works with, operate as a DBA under Side’s license, but own their brand, and their companies, wholly. 

Side takes the hard parts of running a real estate business off the table for its partners — the tech, the admin, the legal and process stuff — so they can focus on what they do best. Side has hundreds of partners, but no real estate offices. They compare themselves to Shopify, which powers small businesses that sell stuff online.

Side is backstage while the small business owner, in front of the curtain, stands in the spotlight. 

For this, the company takes 10% (up to a cap) from the partner and the agents working under the partner. There’s no negotiation on this split.

The tech is largely built in-house, and it’s really good. TC, legal review, marketing services, and more are all centralized within Side HQ. 

It’s a brokerage model that combines the best of big (lots of human and financial capital, purchasing power) with the best of small (boutique brands owned by high-quality practitioners).

I write about Side now because they just announced a new funding round of $150 million that will fuel a national expansion (the company is only in California, Texas, and Florida today) and because I think they provide a compelling counterpoint to another brokerage with big news this week, Compass. 

Compass’ approach to venture-funded brokerage was to gussy-up an old and structurally unsound model with money and tech; Side built a new and, I believe, ultimately sounder, brokerage model with money and tech. 

There are big questions Side will need to answer in the coming years. The company isn’t yet profitable. Servicing partners at scale will be a challenge. It is shadowed by the specter of legal and regulatory attack like the rest of the industry.

But I like their chances. They’ve built a foundation on elite practitioners, not the middling or low-producing agents many brokers live or die by. You could say they’re something like RE/MAX without 50 years of baggage. 

Side is a new take on what a brokerage is, does, and doesn’t do that we can all learn from. 

We can go to school on them. 

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Need to know

Redfin documents statistically what we’re all feeling: prices are insane, inventory is vanishing and buyers are at their breaking point. The subhead says it all: “Early indicators of homebuyer demand reflect that more are throwing in the towel as prices climb to new heights and mortgage rates tick up.”

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The Biden administration’s proposed infrastructure bill includes over $200 billion for affordable housing. $20 billion will be in the form of tax credits to build or renovate homes for low and middle-income folks. Organized real estate seems to be generally supportive.

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Notarize raised another $160 million. It seems to be all systems go for digital closings, but part of me is going to miss having some dude in a wrinkly sport coat come to my house during dinner with a stack of paper for me to sign.

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And lastly… I’m going to be hanging out in Clubhouse with my colleague Valerie Garcia at Noon Pacific / 3:00 Eastern today. We’ll be unpacking what I’ve written about here and more. Go here to join us.

Enjoy the weekend.