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Hello World: What Happens When High-Tech Companies Employ People from All Walks of Life

Glenn Kelman, LinkedIn
Glenn Kelman, chief executive officer of Redfin Corp
David Paul Morris | Bloomberg | Getty Images

This post from Redfin CEO Glenn Kelman appeared originally on LinkedIn.

The New York Times's Nick Wingfield just published a story on Redfin, about how a software company decided to hire a thousand real estate agents. The article doesn't make the case that Redfin will conquer the world. In fact it acknowledges how small our share of the $60-billion market really is, and highlights how employing agents through real estate's crazy ups and downs led in the early days to layoffs and low valuations.

But it does explain what makes us different: that as employees, our agents get salaries, health-care benefits and the opportunities to earn stock options, which in turn lets us focus on getting the right sale for the customer, not just the commission. There are still questions of fairness between agents and engineers that come up every month, but even in this entitled age, those questions hopefully begin with the understanding that everyone at Redfin is paid by the sweat of a real estate agent's brow.

The larger question is how the high-technology industry got to this point, where employing the people who do most of the work is a newsworthy approach? I came to Silicon Valley thinking I had found a kinder, gentler capitalism, where startup secretaries became millionaires, and ex-hippies ran Apple and then Google. This was before angry mobs slashed the tires of private tech shuttles, or employees in customer service published open letters about low wages.

Thomas Barwick | Getty Images

Now, how we engage the rest of the world has become an urgent issue for technology companies because we've started to work in that world, packing boxes, manufacturing cars, cooking meals, running taxis, diagnosing diseases, and filming movies. The good news is that more companies, like Honor and Managed by Q, are bringing Silicon Valley's openness, energy and hopefully some of its wealth to new groups of employees, beyond software engineers or even real estate agents, to health-care workers and janitors.

The companies we can learn from go beyond the ones typically featured in Wired. When I came back to Seattle from San Francisco in 2005, one of the first business people I spoke to was Richard Galanti, Costco's chief financial officer. Walmart was ascendant, its ruthlessness toward employees and suppliers celebrated as the only way to survive as a retailer. I wondered if all businesses eventually had to be that way, and asked Richard about it.

He said that Costco had no intention of imitating its competitors. He told me that the reason you feel good when you walk into a Costco is because Costco treats its employees with respect. He pointed out the pins store employees wear showing the year they joined the company. Bigshots don't get the prime parking spots he said; employees who've been there the longest do.

At a time when everyone thought Costco would lose, Richard told me that Costco over the next decade would win, in the matter-of-fact way most of us say "It's raining." Since that time, Costco's stock has risen at triple the rate of Walmart's. And its founder, Jim Sinegal, only owns 1% of the company. At an age when I was finally realizing that everyone can be a maker of the world rather than just a bystander or a pundit, what Richard said gave me and the other folks at Redfin the confidence to stand up for what we believed in.

In that same span, another Seattle company, Starbucks, shrugged off cheap coffee from McDonald's and Dunkin' Donuts, all while paying for baristas' health insurance and education. A shoe-store founded here in 1901, Nordstrom, pays more than any other department store but somehow makes more money too. As California's digital economy spreads to the rest of the U.S., the middle-class values of this old town, and of places like it across the country, can combine with tech to create a new business culture, half Silicon Valley, half something else.

Investors will have to be patient, as building these companies takes time, in our case ten years to hire and train a thousand agents to cover a thousand U.S. neighborhoods. But the result is better for our customers and our employees, and ultimately for shareholders too.

The traditional brokerage enjoys the flexibility of exclusively independent contractors who can do as they please, but we can set prices and service levels, and roll out technology and training to every employee agent, which we believe is the only way to make buying and selling a home fundamentally better. And making an industry fundamentally better is the only durable way to make money. According to independent surveys of thousands of customers, our customer satisfaction is nearly double that of our traditional counterparts.

It took a long time to get to the size where we could cover even one market well. Many nights in 2009 and 2010, I'd become convinced that Redfin would fail. After my kids went to sleep, I'd retreat to the darkness of our bedroom. My wife would listen at the doorway as I'd say something in a strangled voice about the people who were counting on the company, about our losses.

One night she finally acknowledged that Redfin, like any business, might fail. But then she said that, even if Redfin never became a money-making thing, it would always be a good thing, because of what it did for our employees and our customers.

"Can you live with that?" she asked. And then: "Could you live with it if it were the other way around, a money-making thing but not a good thing?"

It has to be both. I turned on the lights again, and got back to work.

is the CEO of Redfin, a technology-powered real estate broker.

Glenn Kelman, chief executive officer of Redfin Corp
David Paul Morris | Bloomberg | Getty Images
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