In the fall of 2017, Compass announced an ambitious plan to grab 20 percent market share in the country’s top 20 cities by 2020. As the deadline approaches, CEO Robert Reffkin told agents the firm still had some ways to go.
In a year-end letter to agents on Tuesday, Reffkin said Compass had exceeded 20 percent market share — or come close — in cities like San Francisco and Washington, D.C., as well as Silicon Valley submarkets. It hit 10 percent market share in “many more markets, which is major progress towards our 2020 by 2020 target.”
He added: “Let’s get there together by the end of 2020.”
Reffkin’s letter, which offers a snapshot of Compass’ accomplishments and challenges, has become an annual tradition. Last year, he acknowledged certain missteps — including launching tech before it was ready and rolling out a tech licensing initiative that was later scrapped.
Before Tuesday’s email, Compass had already said it was pumping the brakes on entering new markets in 2019. And since announcing the 2020 plan, executives have slightly tweaked the goal to mean, “by the end of 2020.”
“We focused on depth over breadth,” confirmed Reffkin in the year-end letter, noting that the strategy applied to both geography and tech development. Instead of new markets, for example, Compass invested in existing markets like New York, where it acquired Stribling & Associates, and San Francisco, where it bought Alain Pinel Realtors.
Compass ended 2019 with 15,000 agents who sold $88 billion worth of real estate, up from $33 billion a year prior, according to the letter. One reason for the massive jump is Compass’ recent acquisition spree; its picked up large independent firms in key markets.
In 2019, it added 87 offices for a total of 325 across 135 cities. Over the past 12 months, the company expanded its tech team to more than 440, from 171 in 2018. And overall, Compass said it hired 850 employees, out of 144,000 applicants, boasting that its 0.6 percent acceptance rate was “more selective than Harvard.”
As the company grows, Reffkin also acknowledged the skepticism that startups face in today’s market. The brokerage has tried to distance itself from WeWork, another SoftBank-backed firm, which fell into a spiral after an icy reception to its now-cancelled public offering.
“Fast-growing startups no longer get the benefit of the doubt,” Reffkin wrote in the letter. “Going forward, we’re going to invest more in communications so we can do a better job of proactively telling our story.”
Reffkin also acknowledged some missteps: Although in 2019 it rolled out Compass Concierge, which fronts sellers money for renovations, he said the firm didn’t anticipate the high level of interest from Day 1. (By year’s end, Compass said 17.5 percent of sellers, representing $8.5 billion in listings, opted to use Concierge.)
“We didn’t put some obvious support in place pre-launch like a hotline to answer your questions,” he said, “or people to do the paperwork for you.”
He also touched on the list of tools that Compass is investing in, including transaction and financial management, prospecting and artificial intelligence-driven marketing and communications.
“In the 2020s, we’re going to prove that any technology being used to disrupt agents can be better used to empower them,” he wrote.
He signaled that in 2020, Compass would be focused on helping agents leverage their relationships to multiply their business. He said he’d offer more detail in January.
“I believe the only way to create value for Compass is to create value for agents,” he said.
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