If they are a little bit more tech-savvy, they can be under the Real model and we will help them create a better life and future for them and their family. So, I think that's the bottom line here.
Hey, what's up, guys? Today, I am joined by, I mean, I would call him a friend at this point, but our leader, the CEO of Real, Tamir Poleg. Tamir, welcome. Thank you so much for—actually, when you said yes to this, I was like, 'Really? You could squeeze me into your schedule.' It's—let me say this before we jump in, Tamir. You know, I love spending time with big thinkers, like with big visionary thinkers. And you're at home right now. Like, I think you said in your son's bedroom. Like it just can't get more real than that. And you know, you've got—you have a family, you know, and you've got so much going on and I just—I'm inspired by big thinkers. I'm, you know, when I spend time with you and others, I'm fortunate to spend time with a couple of big thinkers. You know, it just—it makes me realize that there's another level to what, you know, to what I'm currently doing. Obviously, keeping the family in focus and all the things that truly matter, but I just appreciate your vision for what we're doing. We're going to talk about this Remax deal. You good with that?
Yeah, sure. Well, first of all, thanks for the kind intro and obviously, we are friends and great to be here again.
Yeah, thank you, Tamir. Thank you. All right. So, I got to tell you. I don't know why I had this reaction, but when the news broke last Monday, it was weird. Like I was shaking. I was so excited. My wife was like, 'Hey, like you're here. I need you here.' It was just—it was a special kind of, you know, it just was a special moment for me. I've been in this space for 8 years, industry for 21 years. And I was just really, really excited about the potential. I know the deal has not closed yet. You know, there's some moving parts behind the scenes, but for the potential of this acquisition—I've been calling it a partnership—but you know, there's been a lot of chatter online. Of course, we expected it. But I want to answer some of those questions and some of the chatter if we can. So, let's start here, Tamir. Is the franchise model dead?
First let me address your excitement on that Monday. Because as you were saying that, I was asking myself, why was Clayton shaking? And I think that the reason why you were shaking—and obviously I was shaking throughout the weekend prior to that. I was waiting for that for a long time to happen—but I think that the reason why you were shaking is because you felt like you're a true partner in this journey. And this is something that didn't happen to the company that you're with. This is something that happened to you as a part of that company. And I think that a lot of agents felt the same way. They felt like this is something that is happening to us as a community, as a partnership. And it's not something that you just read on the news and, you know, it doesn't make any difference in your daily day. So, I think that a lot of agents at Real just felt the same way as if, you know, this is our thing. This is something that we built. This is a happy moment for us that we worked really hard to get to and I think that's important because it tells you something about, you know, the community that we're building and the sense of partnership. Now, is the franchise model dead? No. I think it's the opposite. I think that what this transaction signals is that there's room for different kind of models in the marketplace and we've been following RE/MAX for years now. And I think that what we saw is that the franchise model is not dead, but on this particular case, there's a gap in value proposition. So, a lot of agents still choose to affiliate with franchises. I mean, most of the market is franchises if you look at franchises as a group. But I think that their market share has been declining because of a technology gap, because of value proposition that has been kind of degrading and because their franchisees are struggling a little bit with margins. And some of that struggle is due to models like ours that just give a more competitive choice or alternative to agents. And we thought that while the model is sticky and a lot of agents still need it, we need to somehow strengthen the value proposition. So, if you were able to choose the franchise model with the benefits of a tech-forward brokerage, that could be a win-win for those agents who don't wish to be completely, you know, entrepreneurial. They still want office access. They want their broker in the office. It's a type of agent that is attracted to that kind of offering. So, we said, 'How can we take the franchise model and just make it better?' So, I think that the model itself is not dead, but it needed or it needs some revisions.
Yeah. Yeah, you know, I did some research on chat actually, you know, last week and again this morning and it's interesting. It's 85% of agents are with a brick and mortar franchise brokerage. The cloud space that we are in, cloud broker space that we're in, makes up, you know, roughly 14 to 15%. It's growing very rapidly, of course. But, you know, I think about—and the reason I started with that question is because of all the comments and the Facebook posts, you know, everybody's an expert on this acquisition except for, you know, the people that are actually making the decisions.
Yeah, yeah. Sorry to interrupt. It's funny because there was some sort of a webinar yesterday by a very well-known consulting company in the field and somebody sent me the link, the recording, and I was listening to, I don't know, 25 minutes out of the 40 minutes of the conversation and they were describing why Remax and Real are so different in the sense of, you know, this is not going to work because those companies are extremely different. And I think that what they were describing is two very complementary businesses without mentioning that this is actually the reason that those two companies complement each other. They have what we don't have, we have what they don't have and the combination of those two creates just a powerhouse. And I think that people tend to focus on the differences instead of understanding that the differences is exactly the reason to explore joining forces and creating something which is more complete on both sides.
Well, and I, you know, again, I've just been thinking over the past week about a Compass, you know, as an example and their acquisition of Anywhere and the proposition there was, okay, so we've built this tech stack and we're going to plug in—and I don't know if they were offering, you know, it's optional, right? For Remax franchisees and their agents to plug into our technology. I don't know if it was optional for Compass or not. Do you know if it was optional for them or is it just—
Some of it is optional for them. I'm not familiar with the details.
But here was my thought process and I'd love to hear your opinion on this. You know, the big pitch, traditional franchise brokerage, Compass, right? With technology. And so Remax will now have the option to plug into our technology and we're going to get into the tech here in just a second. But I was thinking like, you know, the most recognizable brand in the world now with the best tech stack, the option of having the best tech stack in the world, you know, when you compare the two brick-and-mortar models, Compass versus Remax now, you know, you've got a really good option with Remax who is this amazing brand and now they're going to be powered by our technology. You know, there's going to be choice. If it's between Compass or Remax, for example, there's going to be a really strong choice over here to plug into the Remax model.
Yeah, I agree and I think that, you know, we're talking at a very high level and talking about technology in general is very broad. But at the end of the day, we should be looking at the franchisees and the agents that are associated with those local offices and try to understand what do they need and what is the difference that this merger or combination is going to create for them. And I think that this is what was in the back of our minds throughout the process of exploring this partnership with RE/MAX. We were trying to think, on one hand, how do we preserve what they currently have? How do we make sure that we don't jeopardize anything, we don't jeopardize the brand, we don't jeopardize the culture, the productivity, the immense productivity of their agents, but at the same time, how can we offer them something that some of them might feel like they're missing? And how can we do that in a way that is not intimidating. We should make it optional, we should somehow expose them to the technology and the benefits. And we should have a deep understanding of their day-to-day. And I think that what distinguishes us is that we run a brokerage. We scaled brokerage from a single agent to close to 34,000 agents today. So, we understand the back office operations and the day-to-day operations that the broker owners are actually running. And it doesn't matter if you're running an office of 16 people or you have multiple offices and you have 1,500 agents in your network. We understand your operations and we can bring that type of scale, we can bring that type of efficiency, we can bring that type of value so that you will be able to go out in the market and attract more agents to your local brokerage based on what we're offering. You can focus more of your time for that purpose just because we free up more time, but you also provide greater value. So, you can compete with other models, you can compete with other companies as well. And I think that this is something that people are missing, the understanding that Real has on the broker owners' businesses, on their operations. And this is huge. So, I don't know if I answered your question, but this is something that kind of jumped to mind.
You did. And why wouldn't, you know, just hypothetically, why wouldn't a franchisee and their agents, why wouldn't they want to plug into the technology? I think at this point—
Because people don't like change. That's the only reason to be honest. People are used to working in a certain way. Some people use Excel sheets to manage transactions. And this is what you've been doing for 25 years. So, looking at something different might seem a little bit intimidating. One of the things that we're exploring and very likely to implement is Reason, our tech stack. And Reason is this huge transaction management system combined with support, with AI. We can plug that into any office, any RE/MAX office, and just take over their entire operations and free up 80, 90% of the broker's time. But at the same time, we also understand that this is a huge change. So, we're thinking about creating a Reason Light version where on that version for agents, you will have Leo, you will have the Real Wallet, you will have the Real Academy. So, you wouldn't have to—we wouldn't have to completely take over your operations as a broker owner, as a franchisee. You can still offer the technology to your agents without changing something very massive in your day-to-day. So, it wouldn't be as intimidating as completely overhauling your business. You can kind of ease into it if you wanted to.
That's great. If we just stay on the technology for a minute, Tamir. One of the things that I've been really excited about from the beginning is our banking platform, is our financial technology product. And I would imagine that I'd love to get your take on, you know, obviously you have the agents in North America have the option of plugging into the banking platform. Do you see a global option for agents to be able to plug into our financial technology product?
I wish it was that easy. Because when you're going into banking, there's a lot of local rules, regulations, laws that you have to comply with. It's complicated enough in North America. But I think that there's chance in other countries to try and look into that. So, some of our banking partners or banking as a service partners, they do operate in other countries. But primarily, I think that the focus initially should be on North America and trying to get as many RE/MAX agents on the wallet as possible. And then look at the other countries just because of the complexity of operating a banking platform outside of the US.
Yeah, and just so our listeners understand this, we're talking about a business banking solution. So our technology, you can actually run your business through our technology, but you can also run your business banking needs through our technology. It's FDIC insured. It's a bank that has automation, you can automate the movement of your money, which is built into the banking platform. So you get paid and you can choose a percentage of your money to be automatically moved into a tax account today, which is amazing for most of us as business owners and independent contractors because we just went through tax time and it's like if the money's not there because we've been robbing Peter to pay Paul. But here with our banking platform, if you set it up and you can automatically move 30% or whatever your accountant tells you to do and it's there when it's time to pay your quarterly estimated taxes and it's there if there's a big surprise in April every year.
