Hey everyone, I'm Mike Delprey and you are listening to Context, the podcast where I'm talking to industry leaders about what's changing. My guest today is Tamir Poleg, CEO of The Real Brokerage. Hey Tamir.
So Tamir, you're here all the way from Israel. Thanks for popping in.
It's awesome. I'm very excited to have the chat because there's things I know about you and Real and there's things I don't know. So, I'm interested to unpack that. And I am super excited to have you into class to talk to our students as well.
Excited to talk to the students.
So, we'll start with an easy one. How do you typically start your workday?
I have a somewhat of an unusual setup because I live in Israel, but I run a company that's based in North America. So, when I wake up in the morning at 6:30 in Israel, it's 11:30 p.m. in the US, Eastern time. So, I typically pick up my phone, look at all of the Slack messages, emails, all of that. I have five kids, so I have to get them ready for school. I take them to school. I come back at around 8, go ride my bicycles, probably five times a week, and then spend some time with my wife. And then my working day starts at around 3 p.m. and goes through until midnight.
Does that work out all right for you?
I mean, that's my reality. I've been doing that for more than 10 years, but yeah, there's a little bit of sacrifice, but I work from home, so I'm there.
That sounds good. Typically, people kind of start their day with coffee, but if you're starting your day at 3 p.m., is that with a glass of wine or port, or you...
I actually don't drink coffee. I only drink water. So, when I wake up in the morning, I drink a large cup of cold water with a banana that I eat every day. And then I don't have coffee throughout the day.
Okay. Wow. Amazing. Biking. Road bike. Mountain bike. Gravel.
Okay. I'm a road biker. We should have did some biking. Next time. All right. Next time.
It's a little bit too cold here for me, but I can try.
It's Boulder. There's people out in all sorts of weather.
Where do you kind of in that whole mix when you're not working outside of work? How do you find inspiration?
It's a good question. I actually think that the reason why I'm riding my bike every day is because those are the only moments where I can truly clear my head and think. I think that some of the best ideas that I had in business at Real came from bike sessions. So, that's how I clear my head. I'm a sea person as well. We live on the Mediterranean in Israel, so whenever I have time, I go and just sit by the sea or we have a small fishing boat, so I go fishing. I think that this is where I'm able to truly kind of disconnect from the daily tasks and think about big picture.
Yeah. I like to say that. I've said that before for myself. I do my best work on my bike.
Yeah. And people ask you like how many hours do you work a day? But when you're an entrepreneur or a CEO of a company, you probably work all the time. Like it's in the back of your mind. Even when you're doing things with your family, you always think about something. So I think that it's important to disconnect and to understand what are those activities that allow you to think even though it doesn't look like work for others. This is where the true work happens.
Yeah, I agree 100%. It's hard to schedule creativity. Exactly. And inspiration.
Ah 8:30 a.m. Let me just put that on my calendar. Come up with a great idea. Okay, great. So speaking of, you know, starting things and good ideas, let's talk about Real. Where were you and what were you doing when you decided to start this business?
I co-founded Real back in 2014 and before that I owned a company that was focused on multifamily investments in Texas and prior to that I worked for a couple of tech companies for a few years. So I had a combination of technology background and real estate experience as well. And I knew that I wanted to stay in real estate. I'm passionate about this industry. I love it. But I also understand the impact that technology can make on traditional businesses. So when I sold my previous company in 2013, I was looking for ways to stay in real estate and do something meaningful with technology. And I think that I always understood the benefit and the immense value that agents bring to a transaction. And I think that as I thought more and more about agents and how they live and how they operate, I just realized that they're underserved. And I wanted to create a brokerage that just creates better futures for real estate agents. That's how it started.
In what areas were they underserved?
I asked myself if I'm an agent and I'm looking at the landscape and I have to choose a brokerage because agents have to work for a brokerage. What are my options? Like if I go to option A or B or C, and for me all of them look the same. So you're getting very little value, you're paying a lot of money. Nobody's really creating a better future for you because agents are almost like a commodity for a lot of brokerages. Like, okay, if it doesn't work, we can replace you with a different agent. And I thought that there's just an opportunity to create a different kind of brokerage, one that delivers more value at a lower cost.
What do agents tell you that they want and what do agents actually want?
That's a billion dollar question actually because at the beginning we did ask agents what do you need. And you'd find out that the things that they tell you are not necessarily the things that they are going to use later on or the things that they truly need. And I think that this is because they are confined to the boundaries of what they know is possible and they're not thinking about what's not possible or what has not been introduced so far. So at the beginning it was all about we need leads, we need marketing, all sorts of things that when we actually came up with them, they didn't use them. At the beginning we built an amazing system that knew how to buy leads from Zillow directly and send that lead to the most relevant agent for that specific customer. And we spent a lot of money on building the system and buying leads from Zillow. We delivered them free of charge to our agents and then we saw that they just didn't do anything with those leads. So why are you telling us that you want leads? And I think that at that point in time, we realized that, okay, we should be doing the job of figuring out what they actually need for our agents. Obviously, there needs to be a lot of conversations with them back and forth, and we need to filter out all of those things that they're telling us, but at the end of the day, it's on us to decide.
And what have you decided? What's actually moving the needle?
Many things, but I think that we started at the beginning with efficiency. How can we save agents time and how can we streamline processes that they're doing and how can we make sure that they're getting paid fast. At the end of the day, this is what most agents care about because you're living closing to closing and sometimes you have five transactions a year and transactions may get delayed. So, you're desperate for that paycheck. So, paying on time is crucial. So for many years we were building the efficiency side of the business and then now we're starting to do some additional things on top of the foundations that we built. But one of the most difficult things in our business is the understanding that there's no one feature that if you deliver it, you'll be winning. It has to be a set and that set has to create sufficient value for the agents for them to actually be attracted to what you're building.
It's kind of what I'm hearing is an attraction equation. You know, A plus B plus C equals value.
It keeps going all the way to Z. And it's probably a different equation for every agent. But the difficulty you have is you can't build—how many agents do you have now?
Right? You can't build 22,000 different equations.
Correct. You can build one. That's correct. And again, there are the solo agents, there are teams, there are small teams, large teams. There are the agents that are part-timers. There are those agents that close 50 or 70 transactions a year. You have to find the denominator that speaks to everybody.
So, one of them is getting paid on time, which I think is interesting. I don't know that I've ever read an article in the industry or went to a presentation where somebody's talking about getting paid on time.
It's a big one. It's also super boring. And agents care, but you're not going to raise $50 million in venture capital by promising to pay people on time.
That's true, by the way. It's super boring theoretically. I think that if you think about the tech part of it, it's actually super exciting. How can you create technology that can help them get paid instantaneously at closing? And I'll just mention something. About two years ago, we launched a feature that allows agents to actually take a picture of the check at closing from our app and we deposit the money directly into their bank accounts. So there's an exciting technology story behind that. Boring.
Yeah. No, that is interesting. Okay. So if we're thinking A plus B plus C plus D etc. and getting paid on time is one of those. Can you share another one?
Sure. There's education, there's culture, there's some degree of marketing, there's speed of communication both with their clients or accessibility towards their clients and the speed of getting responses from us. For example, you're an agent. You're sitting at a closing. You have a commission disbursement authorization form from us that allows you to actually get paid at closing. And then there's a change. There's a $20 difference. So instead of you now reaching out to your brokerage, waiting for that CDA to arrive, it may take an hour or two hours or maybe next day, we were able to come up with the ability for the agents to actually change the CDA on the closing table.
So all of those small nuances that actually make their lives easier.
Yeah. Okay. Interesting. Thanks for sharing. Let's talk about the growth of the business. So Real is, you know, one of the fastest growing brokerages that I've ever seen. And like a lot of companies that have this hockey stick type curve, you kind of need a microscope to see it on the graph, you know, way back, but then it just skyrockets. Was there an interesting turning point or pivot point where that growth really started accelerating?
Yes. When people look at companies, sometimes things look better from the outside. And people look at our growth today and they're saying, "Okay, this is an amazing growth story and this is an outlier and we're growing revenue by, I don't know, 80, 90% year-over-year when the industry is down." But it wasn't always like that. We started in 2014 until 2020. The growth at the beginning was okayish. And then probably between 2016-17 to 2020 we kind of plateaued. And I think that the moment in which things started working in our favor is the moment that we had nothing to lose. I was left with less than $50,000 in the bank. We were losing money back then. I had to raise money. We raised about I think $16 million to date. And I came back to the investors and said, "Hey, we need money." And they said, "We're not really willing to put in any money." And I told them, I think that we should take the company public. And we were tiny back then. And they said, "What's the idea behind it?" And I said, I believe that if we offer agents equity in the company they help build, this will help me attract more agents. And they said, okay, if you can pull it off, go ahead and do it. They gave me an additional $300,000 at a $2 million valuation.
So this was a steep down round. And then in the beginning of 2020, we were supposed to go public to merge with a public shell. And then COVID happened and all of the investors that were supposed to invest in the public shell told me, "We're pulling our investment because the world is ending." So I had to go back and try to raise money. And in the summer of 2020, we actually went public. At the same time, we also changed something in our marketing strategy. Before that, we were spending a lot of money on serving ads on Google and Facebook to agents who would be interested in hearing more about us. And at that point in time, we had about 800 agents. And I said, "Okay, what if we could turn those 800 agents into our affiliates, into our salespeople that not only sell real estate, but also pitch Real to their friends." So those two things, going public and changing our marketing strategy, happened in summer of 2020. At the same time, we also attracted a few people, a few agents that bought into the idea of building a different brokerage. And since then, we've been growing like crazy. In 2021, I think we grew by 635%. 2022 also something around 200, 300%.
Wow. Yeah. I mean you said 800 agents in 2020 to 22,000 four years later.
Yeah. It's been a journey.
