We chat about how to incorporate the newest of revenue mentalities (SaaS) into the oldest of industries (real estate). We explore the real estate market and its potential as a double edged sword for its respective tech, and peer into the eccentricities that make for a great sales leader just as it might a great agent. Finally we learn within both what to prioritize along the way and what should be prioritized, but is overlooked.
Adam Conner (01:03):
Hey, Matt. Thanks for joining me. How are you?
Matt Rosenberg (01:05):
Hey, Adam. I'm very well. Thanks for having me. I appreciate it.
Adam Conner (01:09):
This world has exploded at least since you joined Compass in 2018. Gosh, over the last year there are a few things that have been harder than buying a house except maybe going to the grocery store and feeling safe. How's that journey been for you over the last three or four years before we start talking about your leadership of a team or putting it together. Let's just talk about this industry because it seems to have exploded maybe partially to your contributions. I'd love to hear.
Matt Rosenberg (01:37):
Yeah. No. It's been a really fantastic four years at Compass thus far. Yeah. Obviously the Real Estate market has certainly heated up. It's been one of the busier markets that we've experienced. And so being on the front lines of it, helping to build Compass through all of the growth both in the Real Estate market as well as within Compass has been certainly an exciting journey thus far.
Adam Conner (02:01):
I have seen Compass signs all over the place, but I know that it's more than just those signs in the ground that make you all great. And actually that's where I want to go because on the show, at least so far, most of the time I'm talking to a Chief Revenue Officer who is just in your typical tech titan, but this industry specifically which I would say is maybe one of the first industries ever has not had the tech acceleration that others have had until Compass and those like it came along, applying a SaaS mentality to the industry. First question I want to ask there is, why might it take so long to do that?
Matt Rosenberg (02:43):
That's a great question. I wondered the same thing when I was looking at the opportunity. I mean, I think when you look around, it's rare to find as large a segment like Real Estate that hasn't yet adopted modern practice or digitalization to the industry. And so when I was thinking about Compass and studying Compass, it struck me that there was a hugely fragmented market marked by millions of entrepreneurs, small businesses in the form of Real Estate agents that were operating in the industry, providing a lot of value to their clients. But yet they weren't being given a lot of value from the brokerages to which they hang their license, their shingle, if you will. And so to me, it just created an incredible opportunity. And so the question you ask is why did it take so long? I think fundamentally the archaic structure of the Real Estate brokers didn't support the kind of investment that Compass was set up to support.
Matt Rosenberg (03:40):
And that in large part was due to, I think the view that brokerages had of the Real Estate agent and that was the Real Estate agent is the salesperson doing the bidding of the brokerage as opposed to the Compass perspective, which is the Real Estate agent is actually a small business owner and entrepreneur and operator. And the job of the brokerage is to build the infrastructure support and platform on which these agents and the brands that they build can run and operate their business. And with that sort of thesis, you then approach the talent you bring into the business, you then approach investment very differently. And so structurally Compass was set up much more like a company that was building a system on which operators or entrepreneurs would operate. And that required a lot more capital. It required product and engineering. It required marketing services in a very differentiated way because at the end of it, the customer that we support as the agent, and that was a very different thesis I think, then existed in the market.
Matt Rosenberg (04:39):
And so we actually turned the whole idea around and looked at it very differently from the standpoint of how do you support the people that run and operate Real Estate, which were the agents that own the inventory, the houses that are being bought and sold. And if you could essentially provide them with value, they would in turn come to Compass, they would grow their practice. And that growth would enable us to invest more thus taking on more of the platform dynamics that you see in many of the successful companies today. So that was the plan four years ago. When I joined and we've been executing it at a high level since.
Adam Conner (05:14):
Now, applying this new model to an industry that never had it, of course bringing best practices along. Was that something that was new for you too, or had you had to do that earlier in your career at any point? Because I get it from an industry point of view, always there's innovation and there's got to be a first mover somewhere. Was this a first move for you as a leader also?
Matt Rosenberg (05:35):
No, what gets me excited when I think about opportunities are the asymmetric opportunities, the industries that are marked by state old analog processes, because I think those businesses are ripe for transformation. So prior to coming to Compass, I worked at a company called Eventbrite. I was very early in Eventbrite's evolution, but Eventbrite was going after the old paper ticket industry. You think about event going and all the digitalization that has subsequently been had in that industry. And again, that was an industry marked by heavy fragmentation, very small subscale players. And so that was a market with the thesis of, if you can support the small business owner, the entrepreneur, the event creator, in developing a better route to market, you would win and Eventbrite now is the largest platform for events in terms of event number in the world.
Matt Rosenberg (06:31):
So this was not a new foray for me. And prior to that, I worked in a business where we were going after service revenue in a differentiated data driven way, helping the top technology companies drive more service renewal contracts. So never been in the same industry twice, always bring a fresh perspective in a different go to market, to the businesses that I attached to. But ultimately looking for large opportunities marked by heavy fragmentation where there's really no dominant player. And I think those create really interesting market opportunities for the business and for me, frankly.
Adam Conner (07:08):
Well then let's talk about that for you because as you joined the company and as the company made its first foray into Real Estate and any company making its first foray with this model, how did you build a team with those SaaS expectations in mind and having to grow in that way? I mean, that was what the business was despite entering a market where the people that you were selling to or let's say small businesses you were selling to, may not have seen that before in their day today.
Matt Rosenberg (07:39):
Yeah. It's a great question. I mean, I think that's kind of the fun part of solving the riddle of any new business. That's trying to do something that hasn't been done before. The advice I always give people thinking about attacking a new market is start with a customer. If you start with a customer in mind and you understand what are the problems that the customer has, how big are those problems? And can you solve those problems in a way where the customer gets a lot of value from having those problems solved. Because when you're new in doing things in a new way, customers don't oftentimes understand they have a need for it because they never seen it before. So you really have to spend time trying to get at what are the things that hold the customer back from being successful.
Matt Rosenberg (08:24):
You have to make sure that the solution there's product market fit that it actually solves the need. And then you have to essentially be able to figure out how to communicate the value of what you're doing to solve those needs back to the customer, or they'll never buy it. And when doing something for the first time, in a way that's never been done before, particularly in Real Estate where we're attracting the top Real Estate entrepreneurs and business owners and they're doing just fine without Compass. So when we call them, they don't really see a need for us because they built great businesses. It's only when really digging in and understanding what else can they be achieving if they had a solution like Compass, do you begin to unlock the opportunity for those agents, for those customers? And then when you do that, you essentially understand what do you need to do to sell to them.
Matt Rosenberg (09:13):
And that's where you start to build a sales methodology and rigor around it. That's where you start to capture data about what's working, what's not working. That's where you can start to experiment with messaging and different sales approaches. And that's where you start to build the infrastructure around it because you want to put guardrails on a process that allows you to scale. And once you figure that out, then you start to pour sales resources into the equation. That's when you start to scale out the team and you're constantly refining and tweaking based on what the data is telling you. So for us and I think for anyone tackling a new market, start with the customer, identify the problem, make sure you can solve it and then figure out a way that the customer understands the value that you're delivering and they're willing to pay for it, because if you can do all those things, you could win in the market, but they're hard things to do, but you have to do them.
Adam Conner (10:03):
And it's clear that you all have one continue to do so over these past four years. And as you solve the riddle or rather maybe as you write new riddles for growing, going forward, I'm curious for how you find those factors to prioritize for and to hammer home first. And maybe we can look back to the last four years, but maybe just in general, I'm curious, what's been your first go-to priority here as you've built that team out. And then I'd also like to know what you have found to be an important factor that has often gone, or maybe in this case has gone overlooked something that maybe is taken for granted, but then is sort of like a, oh shoot, we didn't dot dot dot moment. What would you have to say about both of those a go-to priority and then something that's maybe not focused on enough?
Matt Rosenberg (10:53):
Yeah. I think the go-to priority when building the team for us at least and I think this generally holds for any sales model is you have to find the right people, always like you. You always want to be finding the right people with the right attributes to succeed in the sales model that you're building. If you can identify those attributes and you have conviction in those attributes, then find those people and invest like hell in them. Invest in listening to them, invest in supporting them, invest in creating a safe space for them to experiment and to fail. That's when people are at their best, because when you're making a new market, where you're trying to do things that no one's ever done before. There is no right answer. I'm not a big proponent of here's the playbook. This is the play working to run.
Matt Rosenberg (11:41):
The play that gets run is the play that's dictated by the customer and the needs that they have. And so you need, for us, at least, we need to hire people that were deeply curious that were experimental, that were brave, that were willing to challenge the old way of doing things, because that's what we as a business were doing. We were challenging the old ways of doing things. And if you could do all those things and invest in the talent that can pull that out, I think you can create a winning team, but you have to be really, really careful with the hires because they're ultimately representing the business, the brand and they're essentially making the market for you. So that's the first go-to priority is the people and the investment in the people. The things that get overlooked along the way is, and this is just, I think a trap that a lot of companies fall into it.
Matt Rosenberg (12:28):
It's the data. You have to have the data, you have to see what's happening as you start to hire more and more people and people start to follow a process and a cadence. If you don't have the data to understand what's working and what's not working, it's really hard to improve. And the old adage is "If you can't see it, you can't measure it, then you can't improve it," holds true in any market. And certainly with Compass we're a very data driven business. We understand what works, we understand what doesn't work. We understand where and how to modify our business to ensure that we're delivering the most value back for our customers. And that ultimately leads to more winning. And that is how you build scale. And that is how you build velocity in a sales motion. And those are the things that we do. But I encourage everyone listening, don't to overlook, making sure you build the infrastructure to capture the data and the results. Otherwise it's hard to improve.
Adam Conner (13:20):
And I will come back to asking about those results in a second, specifically about pinpointing those people who will provide those results. But before I do that, I want to touch on something that I mentioned at the very top here, because as I had mentioned it as somebody who was and still is looking for a home for the first time, Real Estate has boomed over the last year or two. It's been a mass migration at least if you read the media, that's what you'll see from cities to suburbs and house prices have gone up and so has rent. And my God, it seems harder than ever. I mean, I have lived down in the DC area for quite some time where there was a house that had something like a hundred and something bids and got sold for something like double the listing. I'm forgetting the exact headline there, but it was eye popping.
Adam Conner (14:05):
Now that's great from an industry point of view. And if I'm a Real Estate agent, there's some data that I can't overlook, namely the number of commission checks that come into my bank account because I'm selling so much and for so high. For a Real Estate tech company, that is building the infrastructure around those small businesses around those agents, has this boom been a double edged sword at all? I mean, has that growth made people overlook the need for this operational efficiency that Compass provides? Has it made it harder to sell? And if so, how do you adapt to that? Because it's almost weird to think about a world in which wow, the industry around me is booming, but because of that, maybe I need to wait until a rep isn't doing so great to use me. Do you know what I'm saying? How do you address that?
Matt Rosenberg (14:53):
Yeah, no. It's a very good question, Adam. I think Compass is a interesting model in that it succeeds when the Real Estate market is very hot and it succeeds when the market cools. And I'll explain what I mean by that. The whole thesis of the business is we're essentially digitizing the agent workflow. We're giving a platform that unifies all the various components of the transaction for the agents. They can run and operate their business much more efficiently. Right now an average agent, not at Compass will work across nine to 12 different systems. They're pulling data into one system out of another, uploading downloading, or they're just not using any technology at all, which is kind of wild to think we're in 2022 and you have all these small businesses running without the benefit of technology, the benefit of AI, the benefit of all the power of software that we know is so important in today's world.
Matt Rosenberg (15:45):
And so a Compass agent running on our system in a very hot Real Estate market essentially is spending time on higher value activities and less time on lower value activities, more time with their client. They have better analytics, better insights into how to put winning bids together for their clients, for properties. They're getting insight into which properties are coming due or coming onto the market sooner. And they're able to better compete to win those listings and so in a very hot market, what an agent wants more than anything else is time because they have no time. It's such a competitive market. They're working on bids, they're trying to find inventory. And so the company that unlocks the most valuable asset for an agent in a hot market, time is the company. That's going to add a lot of value back for the customer, for the agent.
Matt Rosenberg (16:31):
So in a hot market, I think Compass really does help its agent, which is why we're seeing Compass agents in terms of transaction count per agent, far outperform the market. When markets cool, like we're seeing right now, we're in a very hot market from a pricing standpoint, but there's no inventory. So Adam, if you're looking for a home, you may notice they're not many homes for sale. When there are not a lot of homes for sale and inventory or a listing for an agent is their business, that's their oxygen, you better have a solution that enables an agent to unlock inventory and in a slower market where there's not a lot of inventory, a solution like Compass using AI will help an agent look through its sphere of influence all of its contacts and identify signal that says, this is a customer of yours or someone in your network that may be likely to sell this home in the next 12 months.
Matt Rosenberg (17:29):
And what's amazing is the data's coming back, that 10% of those that we recommend are about to list a home do so and sell it within 12 months and that's a stunning stat. That is the power of AI. That means in an environment like we're in now, where there's not a lot of inventory, the inventory actually exists within Compass agents network. We're just able to unlock it and allow them to see it before it comes to market so they can capture it and win that listing. So in a hot market, we enable agents to be more efficient and effective in a cooler market where there's less inventory, we're able to help them unlock that inventory. So I hope that makes sense, Adam, but in both cases, I think Compass can succeed.
Adam Conner (18:08):
Well, it does make sense how you think about it. And actually, yes, last year I saw plenty. Actually, I saw both. I saw plenty of inventory, but it was very expensive then. Yeah. Inventory count cool. But persons stayed up there. So now it's me being almost more picky. Before I had to pick up a lot, if I had the cash and now it's just like, God, I feel like I got to find the perfect thing, but it's good to know that you have a solution for both sides though. It probably should be obvious to think that you had thought that scenario out. And at the end of the day, doesn't matter what great engine you have. You need the right driver to drive the car. So here's what I want to talk about next. I want to talk about those team members that you've put in place and the things you look for that indicate that they will succeed.
Adam Conner (18:56):
I'm talking from a sales perspective now, as Compass grows. I almost liken it to Real Estate agents. Some of them are great because they know everybody, some of them are great because they're great closers. Everybody's got their eccentricities that allow them to win in certain niches and grow in certain ways. Sales reps are similar. I mean, there are some common traits, but sometimes there's that secret sauce based on what you've seen from superstars at Compass and beyond, what would you say are some eccentricities among uncommonly good sales reps and also sales leaders?
Matt Rosenberg (19:33):
Yeah, I think there are two that I'll point out. Number one, and I think this really goes beyond Compass to any really extraordinary sales professional. And it's the skill of listening. There's a big difference between hearing and listening. And in our case, if you're able to ask the right questions and just stop and listen to the customer, they will map out the path to victory for them. They will tell you what really matters to them. Now, can the person listen and hear it in a way where they're able to action on it and solution against whatever the issue is that agent in our case, the customer, is having. That separates good from great. It's really hard often for sales people to stop and really listen to the customer, but the customer will tell you everything you need to know and path out and map out the path to winning that customer if you just slow down, ask the right questions and listen. So that's number one.
Matt Rosenberg (20:37):
Number two and it goes with listening, is this curiosity, the ability to continue to probe and go deeper and deeper because sometimes customers don't express what their needs are. They can't express it in ways that they're actually intending. Sometimes asking the second or third level question to the customer who really root out exactly what the pain is they're trying to solve because sometimes customers don't know that the pain is there or they can't articulate it in a way that makes sense to you. And it's the curious seller that's able to keep probing to understand what exactly is it that's holding that customer back from success or what exactly is the big challenge? To the extent you have someone curious enough to probe deep enough and then can hear the response, they will win more often than they will lose because they will solve the challenge or pain that is so particular to that customer that can be solved in a way that allows you to add value to their business and or their life. So those are the two things I think it really comes down to, listening and the curiosity.
Adam Conner (21:42):
Yeah. I like that curiosity part, not only as an interviewer, but that's what I learned. I mean, I started my career in tech sales and even back then, I don't know if it was a mentor or maybe it was a great interviewer doing an interview that I saw where they had said something like, always look for the question or two behind the question. And if you do that, normally you'll get to that route instead of whatever proximal, sometimes excuse, sometimes explanations sometimes shrug off you get. So that's a good thing to know. And of course, yes. Listening too.
Matt Rosenberg (22:15):
Yeah. It's like if you ever hang around a three or four year old, I mean, they're the most challenging people to hang around with because they ask the very simple question why, and when you're asked why over and over again, it really pushes you to explain things and this seller that can really push and say, well, why is that? Why is that the issue? You're able to uncover a lot more than just simply asking the question.
Adam Conner (22:37):
Can I dive into that for just one moment, because I've heard that so many times and I think that's like a famous psychological exercise too, even with the simplest of things. Well, why do you do that? But why, but why, but why? And you keep going until you just can't get to a more core response. And perhaps I'll ask this selfishly, because I attempted this once or twice in my years as a tech sales rep. And I do a little bit of sales work today. I want to tow the line between asking why, why, why again and getting a response from a prospect or someone akin to a response that a child might receive. You know that because I said so. How do you thoughtfully tow the line and get there without frankly pissing off the person you're talking to who might get annoyed.
Matt Rosenberg (23:21):
Yeah. I think you get one why and then you got to figure out a different way to phrase it. So for example, why is that? And then the next question would be, that's interesting. Tell me more about it, or I'm curious when you think about it that way, you could lead into the same why question different ways while still probing deeper and deeper. I think you really, can't keep saying, "Why, why, why," that would be offensive. But I think the concept of why, the concept of really pushing the person to explain it in more detail, coming from a sense of genuine curiosity. Well, I understand that you said that, but help me understand why that's important to you. So you said it's important to you. Let me understand. Is it because of this or that? Oh, it's because of that.
Matt Rosenberg (24:02):
Why is that the case that it's so. You can keep probing in a way that keeps going deeper and further without repeating the why, but essentially getting to that place of depth where you have to get to to really understand what that customer's asking for. Because oftentimes the customer doesn't know what they're asking for. They know they have an issue. They've never thought about solving it a certain way. And it's only upon that level of depth of probing do they actually realize it. And you got to align with the customer on it because if there's no alignment, you're never going to get to the solve, but you can almost see it when the customer's finally able to articulate it. There's like that Eureka moment. That moment of relief of like, "Yes, that is my problem. Thank you for helping identify it with me. Now, if you could solve this one, we'll win together." Like that's the moment that you're ultimately striving for.
Adam Conner (24:54):
Yeah. I often found that coming from a position of wanting help rather than seeking an exact reason for something has worked for me. And again, that comes down to that curiosity as well, as long as you, of course go back to step one and listen, two, I'm going to listen once more to you here, because I want to round out by talking broadly about what you think world class teams that grow, how they'll look going forward, of course this being growth culture. Let's assume first that with Real Estate and that's going to be Compass for a little while. What other industries, maybe legacy industries, maybe industries that have lasted nearly as long as Real Estate, where do you see the SaaS model disrupting next? Because it looks like you've been able to bring asymmetrical thinking to events. Of course you've done it here with Real Estate. What else exists out there? What should the next Matt Rosenberg, what industry should they go after?
Matt Rosenberg (25:48):
Yeah, I think, we'll Adam, I wish you well in your Real Estate buying journey.
Adam Conner (25:52):
Oh, thanks. Yeah. I hope I find one too.
Matt Rosenberg (25:54):
And you will, and it'll be the right home and it'll work out in the end and all the frustration trying to find a home in this market will be rewarded. But what I will tell you is when you embark on that process, you will find that the Real Estate market is still that legacy business that needs more disruption. And what I mean by that is I think we're just scratching the surface. Like we're really becoming the platform or system on which Real Estate agents operate today. But when you get into the mortgage process, you get into the title process, you get into the escrow process, you get into the moving process, you get into the inspection process, you get into... I mean, there are so many components of this Real Estate transaction, which are so disjointed and archaic. I mean just the simple amount of paper that gets produced that needs to be notarized to close a transaction.
Matt Rosenberg (26:47):
It is absurd. And I really think the company and I think it starts with Compass building the operating system that agents operate on. But then if you could unify all those different components of the Real Estate transaction and modernize those on a platform, I think then it leads to a much, much better customer experience. And by the way, the mortgage industry is a multi-trillion dollar industry. The title, the escrow industries are massive and these are all massive, massive industries associated with Real Estate. So I'd stick here in terms of areas for disruption as the next big area for disruption. Because I do think there are plenty of opportunities within Real Estate, which is the largest asset class in the United States for disruption.
Adam Conner (27:34):
Well, I thank you for the kind words and also to your looks ahead in this world. Yeah. It's always interesting to learn where that next disruption could happen. And of course, so many components along the way. We could do a whole 'nother half hour talking about the technologies that might disrupt now, but hearing a lot about blockchain, they're actually smart contracts, that kind of thing, who knows? Don't want to peer into that just yet. That's a whole different crystal ball, but for telling me more about this world now and showing me the true worth of Compass, if you haven't heard that a hundred times, Matt, thanks so much for joining me on the show.
Matt Rosenberg (28:08):
Thank you, Adam. I appreciate you having me.