Redfin (RDFN 5.76%) is taking real estate by storm, and it's making both their customers and realtors happier for it. In this week's episode of Industry Focus: Energy, host Nick Sciple and Motley Fool analyst Tim Beyers take a deep dive into the business. Find out:
- How this growing company has been disrupting real estate with its technology
- How its business model profits both customers and agents
- How its new offering is really shaking up the traditional real estate market, and what that means for the future
- Some of the biggest risks for investors to watch
- Why this company is such an exciting long-term investment
- and more
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
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This video was recorded on May 23, 2019.
Nick Sciple: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. Today is Thursday, May 23rd, and we're discussing Redfin. I'm your host Nick Sciple, and today I'm joined by Motley Fool analyst Tim Beyers by Skype. How are you doing, Tim?
Tim Beyers: I'm doing well, Nick! How about you?
Sciple: I am doing great! I'm excited to talk about Redfin today. This is a company that both of us own in our own personal portfolios, I believe. Before we dive into discussing what Redfin is and the opportunities it has as an investment, how did you first come across this company, Tim? How did it come onto your radar?
Beyers: It's very interesting. I work here in the Colorado office and [with] Austin Smith, who is the founder of our, I guess you would call it a sister business, Millionacres, The Motley Fool Millionacres subsidiary. We have a product there called Mogul, in which we're looking at helping real estate investors get into interesting business and interesting commercial properties. And Redfin is one that we discussed, just out of hobbyist concerns. Austin is a really great real estate investor. He's got a track record in this area, so he introduced me to Redfin. I started digging and digging and digging. And ultimately, I got so convinced that this was an interesting company that I not only bought shares, but I presented an investing case to our board of directors at The Motley Fool. So I've been on the Redfin train for a few months now, but it all started as just a random side conversation with Austin Smith, the founder of Millionacres.
Sciple: Yeah, that sounds very similar to how I came across Redfin. One of my closest friends a couple of years ago, right around when it IPO-ed, one of his aunts was a Redfin agent, talked about how she really loved the experience so much. And then I realized, they're offering -- we'll talk about this later -- lower commissions for folks who are buying homes. In law school, I'd taken several classes about the real estate industry and seen some of the places where the incentives don't exactly line up. So you have a company where the folks that work for them on the broker side are really happy with their experience there, as well as something from a customer point of view -- the value prop just makes a ton of sense. And the company's performed really well.
Part of what I just said probably touches somewhat for our listeners on what Redfin does, but I just want to dive into that a little more in depth, so we can give a picture of what the company is. They call themselves a technology-powered real estate company. They have the No. 1 most-visited brokerage website online. They define their mission as redefining real estate in the consumer's favor. Tim, can you talk a little bit about some of the offerings that Redfin has and what they've done to change the industry to fulfill their mission?
Beyers: Right, good question! Redfin is not your typical real estate brokerage. All of the brokers are employees. They use technology in order to increase the efficiency in that cycle of buying or selling a home. They have a lot of different products. All of them are technology powered in some way. So of course, there's listings. You can list your home with Redfin and pay a small commission for that. It's either between 1% or 1.5%. Usually that's 3%. If you sell your home, traditionally it costs about 6% of the total sale price -- 3% for the seller's agent, 3% for the buyer's agent, they split that 50/50. Redfin doesn't work that way. They will work with other agents, but they lower the cost to either the buyer or the seller, whoever they represent, because they have this technology at play, and they do more things in the sales cycle. They have a title company, Title Forward; they have Redfin Mortgage. If you want to pay a slightly higher fee, they have something called Redfin Concierge, in which they will come in, clean up your home, get it all ready for showing, and you just pay a little bit extra on the sale price in order to get that. And they'll go as far as buying your home outright, take 7% off the price, and then hold that, put the home on their balance sheet, and then resell it, usually at a profit. That's something called Redfin Now, and they've been doing pretty well with that.
The way I think of it, Nick, is that Redfin is trying to add liquidity to the residential real estate market. What I mean by that is, you can sell faster, you can buy more easily, there's less headache about worrying about selling your existing home before you buy the home, and that funny period where you have to go get a condo or whatever it is. They're trying to add liquidity and shrink this time between selling your home and buying a new one, and in doing so, they're generating a lot of value. They're not the only one doing this, but they're uniquely focused on doing the entirety of the business, from brokering all the way through to writing a mortgage, getting you a title, and cleaning up your home. It's a pretty interesting business. And like you said, they've done very well with it.
Sciple: Right, you talk about, when we list out these numbers, oh, you're paying 1% or 1.5% Redfin vs. 3% to a traditional buyer's agent or seller's agent. That might not sound like that much money, but when you're talking about a home purchase transaction, this tends to be the largest transaction the average American -- or person, even, in general -- goes through in their lifetime. So that 1% or 2% really can translate to thousands or tens of thousands of dollars. It's really a significant amount of money. That 1% or 2% difference can really make a huge difference in the amount of money you take home as a seller or your effective selling price as a buyer when you have to account for that in the selling price.
As you mentioned, Redfin, according to data they put out, sells their listings quicker, sells them at a higher average price. From the buyer's point of view or the person participating in the real estate transaction's point of view, there are a lot of things that make sense from a value point of view. But there also is some appeal for agents, as well. There's two sides of this transaction. Agents have to choose to go to work for Redfin. The compensation structure for a Redfin agent, you're salaried with a bonus and benefits, you usually get stock options. You compare that to a traditional broker, where you're an independent contractor paid wholly on commission, you're paying for your own health insurance, those sorts of things. You look at some data, as well. Redfin agents earn more, on average, than the typical broker, at least with the data that I've seen. According to the Bureau of Labor Statistics, the average real estate agent makes around $46,000. Redfin reports that their median agent salary, including stock-based comp but not including benefits like healthcare -- and everybody knows how significant healthcare costs can be as part of your expenses -- makes $90,000. So you're looking at Redfin agents making twice what the average is for a traditional broker. The folks who are on a very high end of the real estate brokerage market, of course, will be making more than that. If you're selling super high-end homes in LA and making the traditional 6% commission, you're making more. But for the average broker, this really makes a lot of sense. And when you have something that makes sense both for the customer and for the person providing the service, the broker, it just really makes a ton of sense.
Anything around that broker side of the transaction, Tim, that appeals to you as an investor?
Beyers: Yeah, and there are some other things that I think are competitive advantages that I see that I really like as an investor. One of them is a traditional broker, because they're a contractor, they will either recruit or have an office where they pay people to do things like set up the yard sign, clean up the front yard, maybe hire contractors, and that's all on their book. They do that themselves. They're also doing all the scheduling themselves,unless they've hired a personal assistant to do that. This is all money that you carry on your book. When you're a Redfin agent, that support system is built into the company that you work for. You're not hiring that out. You're just getting those services and bringing them to bear. I've heard, through folks who've dealt with Redfin agents, that this is something that they really like because they focus on the sale, they focus on the customer, more of their time is focused on the customer, whether it's the buy or the sale.
Another thing I really like about this is that with the equity and salary plus bonus, they're very much aligned with the customer. There is no incentive to generate the highest possible price. Now, granted, Redfin does want to sell at a higher price. It's good for them to sell at a higher price. There are bonuses. Those bonuses are based on sale price. But overall, as an advocate, a traditional realtor is completely incentivized to get you into the highest transaction they possibly can. Their commission depends on that. And that's just not true for a Redfin agent. So I think it's easier for them to be more of an advocate for the buyer or seller.
Certainly, I really like that not only is the average pay package a little bit higher, but the incentives are aligned. Nick, we both work in the financial services industry. This is a problem that the financial services industry has, too. If you've listened to Industry Focus for a while, if you've been with us at The Motley Fool, you've probably heard us say, use a fee-based financial planner because their interests are more likely to be aligned with yours. I think of Redfin agents in the same way. They're like the fee-based planners of the real estate industry. I like that a lot!
Sciple: Right. When you have an industry -- and maybe we'll talk about this later on the show -- like real estate brokerage that really hasn't undergone a lot of change over the past several decades, you have a company like Redfin that is leveraging technology, putting an incentive structure in place that makes sense, both from the person going through, like I said, the real estate transactions point of view, and from the point of view of the broker, there's just a lot to like there. We'll talk about the industry a little bit. You put this in an industry with an addressable market -- Redfin estimates that there were $80 billion in real estate transactions in 2018. Redfin is a company around $1.5 billion today -- $487 million in revenue in 2018 going into an $80 billion addressable market. Lots of opportunities to continue to grow over time. What can you say about Redfin's market opportunity relative to where they stand today?
Beyers: Well, it's huge, and it's all relationship driven, much like the rest of the real estate industry. So if you start with Redfin and a Redfin agent, one of the great advantages -- and this is something that we don't talk about a lot. There are other national real estate brands, but those brands basically are holding companies that have local contracted agents. That agent is like a Coldwell Banker agent. They don't work for Coldwell Banker, they work for themselves. They rent, basically, the right to use the Coldwell Banker name, or Century 21, or REMAX, which just recently ended up striking a deal with Redfin and then pulling out of it. But the difference is that Redfin's network, which is going nationwide, those are all employees. If you start in LA and you say you're going to move to Seattle for a job, you could theoretically sell your home in LA, move up to Seattle, let Redfin take care of the sale in LA while you focus on settling in Seattle. All of that will be handled entirely within the Redfin family. And it could be that you sell it with Redfin Now, which is their instant buyer program, traditionally, by finding the right home using their website and then getting the broker to do the work for you of getting the title set up and getting the mortgage set up and working with those mortgage arms. Redfin can handle all of that. Because they handle so much of the transaction, the upfront fees in the transaction itself can be lower because they're just taking a greater part of the overall transaction itself.
This is another way that they're aligned with the buyer or the seller -- they make more money when the buyer and seller either save more money or make more money. That's huge! They're not making it on a giant commission, they're making it on getting you into the right mortgage, and then they're making a little extra on getting you a good title that makes sense for the property that you're buying, and so forth. So by offering you more services and shrinking the time it takes for you to move from point A to point B, and making that a smoother experience, they earn more. That's a great model because it means that the more satisfied the customer, the more that they like the moving experience, the more they're going to come back to Redfin. You don't really get that with another type of broker. It's usually, "I'm going to stay in my regional area. I'm going to have my regional broker. They're going to show me around and then I'll move to the house down the street." That's usually the way it is. Redfin's thinking much bigger than that.
Sciple: Yeah, and you're seeing some of this in the numbers. Redfin has reported that their repeat business is growing at a 35% rate relative to their online customers they're bringing in, only growing at a 20% rate. That means these customers that Redfin is bringing in, they're keeping them around, whether it's moving from state to state, like you were mentioning, Tim, or whether it's just, next time they go to buy or sell a home, Redfin is the first place they think of.
Again, another important thing to note, we talked about how little they've penetrated their addressable market. They're still less than 1% market share of total home values sold. I mentioned $80 billion in real estate commissions in 2018. That's just the real estate commissions part of the business. They're expanding their core business with the real estate brokerage, as Tim said, into mortgages, into title insurance, expanding their operation. As their business continues to grow, they can move into more and more of these verticals. They have these classic network effects, both through their online listings, as well as, like we mentioned, those relationships that the brokers have with folks in each one of those communities, the relationships they build with their existing customers. This is a company that, really, as it scales, feels like it can become a snowball rolling downhill, and just pick up more and more as things go along.
Now, let's talk a little bit about Redfin's most recent earnings numbers that we got back at the beginning of May. Tim, we've had some time to digest these since they've come out. What popped out to you most from this presentation, just from a numbers point of view? We'll dive into Redfin Direct a little bit more in a second.
Beyers: Revenue is up over 38%, which is a great number. It's a little bit skewed. It's important to point out that a lot of that outsized growth is from other services. It's from mortgage, it's from title, and most specifically, from Redfin Now. Let's just, if we can, take a quick step back. Basically, what Redfin Now is, it's house flipping. I know they hate us using that term. But the house-flipping market, where Chip and Joanna Gaines go in, they buy a house, they fix it up, and then they sell it, they make a nice profit. That has been a cottage industry for a long time. We've seen it on reality TV for years. But now you have bigger brands like Redfin using data coming in and saying, "We could make X offers on these types of homes." And they're using it from years of sales data, decades of sales data. And they're using that to make appropriate bids at the right homes, pulling that inventory onto their balance sheet, and then moving it within a year. That's roughly what they're trying to do. I think within a few months, quite frankly.
It's still ramping up. They have a limit on how much they can spend. But Redfin Now was up to $21.4 million vs. $3.1 million last year. I mean, it's up roughly 7 times. That's an incredible gain. The mortgage and title services were up 59%. The core brokerage business was up 15%. That's good. It's not amazing, but it's good. It was kind of a wobbly market last year, so to know that they were up during that period, and that it accelerated sequentially, is a pretty good sign. It shows that Redfin does have a pretty loyal base of customers that they can pull from. And that's a good thing.
But a lot of what's happening here is, this is a business that's in transition. As it transitions into these higher-growth businesses, and pulling in more of the transaction to serve customers in a bigger way, I think that's going to be very good for them over the long term, but they're still building that, Nick.
Sciple: Yeah. You talked about the brokerage revenue. It was up in spite of a real estate market that contracted somewhat in 2017. To see that continue to trend up going into the first quarter of this year is positive. Also, when it comes to that growth management talked about, they'd been a little bit hesitant to hire a large number of agents in 2018, as there was some weakness in the real estate market. As we see things solidify underneath them, you might see that growth rate tick up a little bit.
You saw their loss expand a little bit in this quarter vs. a year ago -- $67 million loss vs. $36 million in the year-ago quarter. However, that's driven in large part -- you mentioned Redfin Now, some investments they're making there. Also, in the first part of this year, they really started ramping up a national advertising campaign. They had a Super Bowl ad. The CEO was talking about, 2019 is going to be the story of what happens to Redfin when the entire country is aware of our customer value proposition. They've been really rolling out advertising to make sure as many people as possible are aware of that.
Tim, as you see them going after a broad mass audience, do you think Redfin is really starting to hit that turning point where they're hitting scale and can really start to press on these things in a large, broad way?
Beyers: Well, they're building out tools to help them do that. It's uncomfortable. They're stretching their agents a little bit, which is why you saw some shrinking -- we talked about this before the show, Nick -- some shrinking in the gross margins. That's because they've got some agents that are learning how to take on a bigger workload using their tools. So they're figuring out exactly what the right mix is. They're not there yet. I think it would be a mistake to say they're there. But they're getting there. They're getting much closer. And I do think that it's absolutely right.
One of the things that could make Redfin a massive winner from here is if it moves from its traditional domain on the coasts, both East and West Coast, into the interior. There's a fascinating stat on U-Haul. The cost of renting a U-Haul to go from California to Texas is much higher, more than double the cost of renting a U-Haul to go from Dallas to Los Angeles. I think that's fascinating! It means that there's an internal migration. Redfin is doing this at a very interesting time. As they expand into new markets and they get people aware of them, they're going to have a chance to grab some of that low-hanging fruit in the markets when they show up and say, "Hey, we're here, and you've heard of us, because we had a Super Bowl ad, we have YouTube ads, we're on social media, we're advertising in a bigger way, we're doing brand advertising." They're going to have a chance to get some of that low-hanging fruit. I think that's good.
But they are going to have to build better tools, they're going to have to do it quickly. What I mean by that is, for example, instead of having an agent schedule your appointment to see a home, you're going to go into an online calendar and do that or you'll get an email that says, choose your time. They'll automate some of that. They do need to make agents more efficient and they recognize that, but they're working on fixing that problem. And as they do, I think they will scale up very well.
Sciple: Yeah, I think when you're looking at their scale, there's always going to be some role for that touch of an agent, and the need to increase that labor pool is going to put a cap on how quickly they can just ramp up growth. There's always going to be some moderation to that growth driven by the people you have to bring in. You have to have those relationships and touch to at least a certain part of the market.
However, Redfin is, at least for some customers, experimenting with this Redfin Direct offering that they revealed with their most recent earnings conference call, earnings press release. They will offer unrepresented buyers the ability to bid for properties through Redfin's platform directly. Ten-thousand-foot overview, Tim, can you for our listeners describe what Redfin Direct is, and the value proposition for a homebuyer?
Beyers: Yeah. The idea here is that, if you're looking for a house and you find what you want -- this is only in the Boston area right now. This is in Boston, Massachusetts. It's a trial. It began in March. Really, it's just a pilot project. The Redfin website, in every market that it's in, is driven algorithmically. There's a lot of data behind it. Redfin has a very big engineering team. They have as many engineers roughly, the last I checked, as they do brokers. That's amazing. So they really do put on lot of energy into getting good data, good tools, and the right information in front of buyers who visit the website.
So if you do that in Boston, you can make a bid directly. You don't have to have an agent, you don't have to have a Redfin agent. The seller pays, it's just a total commission of 2% if the offer is accepted. And there weren't very many accepted offers. I think it was five out of 127 offers. But there were 12 offers rejected that were very competitive -- they were in the game. There is something to be said. More than 10% is pretty interesting. And it's brand new. This is straight from ground zero to say, "Look, you don't need an agent. We're going to take the model that is fairly traditional for new construction, where you represent yourself. Only this time, you're going to go look at a house. You're going to make a bid yourself through our platform. And we'll just put you into the mix." I think that's very interesting.
The biggest potential drawback here is that it really flies -- I mean, if Redfin was disrupting the brokerage industry before, now they are outright going to war with the brokerage industry with Redfin Direct if they take it national. Then you're saying, "You don't need an agent unless you're selling a home." That's the underlying message of Redfin Direct. Now, they're not saying that, but if it does gain mass acceptance, that's the practical effect.
Sciple: Yeah. CEO Kelman said they still expect the vast majority of homebuyers to use an agent, and they hope it's someone employed by Redfin. However, giving this offering to customers gives them a chance to, when you're paying less of a commission, you as a buyer could pay a lower effective price, but the seller could still end up taking home more than they would have sold to a buyer who may have been represented elsewhere, just because of the commissions. But as you say, this does put Redfin -- and this was always something that was going to happen with this company as it reached scale -- in a directly antagonistic position, in this case, to buyers agents. There are certain number of transactions that buyers agents will just not have access to because Redfin is offering this service. This ties into why REMAX withdrew from their corporate partnership with Redfin, following the Redfin Direct announcement. Redfin's management had said, "Hey, we communicated that we were going to roll out this Redfin Direct offering." Told REMAX, "We don't view this as directly threatening to you." But REMAX, with some merit, had some concern that this was going to undermine the ability for buyers agents in North America to continue practicing their trade.
For me, I'm not super concerned by this. As I said, eventually, as Redfin was disrupting this industry, sooner or later, they're going to be antagonistic. I think the management's comfortability taking this risk at this time -- they had said they'd attempted this in the past and it had not had as much success. But their ability to go back and try this again suggests to me that management is getting confident they have the scale to live on their own and be antagonistic to the rest of the industry, which to me is a sign that hey, maybe management thinks they've turned a corner. What are your thoughts on this, Tim?
Beyers: I agree with you. I also think this is emblematic of the way Redfin runs as a company. I think this is important to note for investors. Redfin is a deeply conservative company. For example, Redfin Now was rolled out over a year. There was a trial period, it was a whole year, and there was a limit on what the company could spend in terms of buying houses, and it was $25 million. Now they've upped that a little bit. But they tend to do things in stages. They experiment. They experiment, they get the data, they see what's going on. And if it's not working, they immediately pull the plug. Redfin Direct, by being in just one market, with a small trial, and then taking the data and then slowly moving forward -- don't expect this to go nationwide anytime soon. In fact, I would guess that even if it is successful, it'll be at least three years before this is available across the country. Even that may be conservative, because this is a company that is very careful about how it uses capital, what kinds of solutions it wants to put in front of customers, so that they can serve them best.
This company was founded in 2005, but Glenn Kelman came on in 2006. By 2008, they were in the middle of the worst housing crisis we've seen in... maybe ever. Certainly one of the worst housing crises. That has made an impression on this business. They're not going to just throw everything to the wind and go whole hog on something. They're going to be very deliberate, very careful, and make sure they're serving customers properly. You can expect that from Redfin Direct, I definitely think that more brokers are going to wake up and smell the threat that Redfin poses. But because they're moving deliberately and with care, it's more like the frog that jumps into the hot water, and then you turn it up to boiling just a degree at a time. I think by the time Redfin really does get scale, it may be too late for some of those brokers.
Sciple: Right. And then where do those brokers go to make a nice, comfortable salary with benefits and equity in a company that is growing and has reached scale in an industry with a huge addressable market? Well, they could go work for Redfin, and the cycle helps them once again.
I will say one other thing. From a demographic point of view, you talked about the 2008 real estate market. I think structurally, there's a nice little put at the bottom of this real estate market for someone like Redfin in this entry-level homebuyer market. If you look out over the past 20, 30 years, the long-term median age of a first-time homebuyer has been 32 years old. Millennials, the average age of a millennial right now is 30 and a half. They're reaching that part of their life where, if you want to have children and raise them in a home, it's put up or shut up time. And when you're a first-time homebuyer, you are particularly price conscious, more so than almost anyone else in the market. In a scenario like that, as I said earlier on the show, those couple of percent that amount to thousands of dollars can really be a driving force for you. As someone who is 26 years old, of that generation, I'm much more comfortable with finding things online, taking care of things myself to get that lower price, which is what Redfin offers.
I think the offering for a buyer really makes a ton of sense. The offering for a broker really makes a ton of sense. It's in an industry that appears ripe for disruption, that high commission level is an opportunity. Your margin is my opportunity; that's an opportunity for Redfin. The demographics line up for them. I see really a lot to like with this business. Obviously, I own the stock, so I'm talking my own book.
Tim, big takeaway, when you look at this company moving forward, is there anything that's going to disrupt this, break this story? It appears they've got a lot of runway ahead of them. Obviously, they're going to be antagonistic to brokers. We'll see how that happens. But the opportunity looks very large.
Beyers: It is very large. There are two big risks. The first is that they get too greedy, they take on too much with Redfin Now, and what has been a group of very careful capital allocators gets themselves into balance sheet trouble and they have inventory they can't turn, and then they start hitting writedowns, and then it becomes very hard to recover from that. This is why homebuilders tend to be very careful. They tend to buy land, so when things get wonky, they really take some pretty hard hits. NVR is one of the only [ones] that does not do that. I think Redfin is careful enough to avoid that risk, but you don't know.
And then, of course, there are some heavyweights. Zillow is also in this market. Zillow does not have the same level of "do everything for you" that Redfin does. They still contract out brokers, you buy your leads from Zillow if you are a traditional realtor. It's interesting. Having said that, they're moving very aggressively into the instant-buying space. Zillow Offers is a real threat. Here at The Fool, I told you about Austin. We did a small experiment here in which we looked at three different types of brokers to make an offer on his house. Zillow came in at the top and called him and was very hands-on, asking questions about improvements. Then there was Open Door, which is a start-up that's very tech driven, almost exclusively tech driven. It came in with the lowest offer. There was no call. It was just assumed that there were no improvements on his house whatsoever. And right in the middle was Redfin. There was a little bit of touch, not as much high touch as Zillow. But the data was very solid. Zillow would have been the one that won the business just in terms of price. But, as is typical, Redfin came in with a pretty conservative but reasonable bid, right there in the middle. That's kind of the way they operate.
They do have some competition, and that's not going anywhere. But I think that Redfin is pretty well-positioned. It's going to take Zillow some time to build out the rest of that ecosystem that Redfin already has, and then decide whether or not they really want to go whole hog and build their own army of brokers that Redfin's already got. I don't think they're going to go there. Right now, they're using the fees that they get from brokers in order to build this other area of their business. It's a little bit of six one way, half a dozen the other. You don't want to totally disrupt everything at once, but they need to disrupt things. So Zillow is a threat, but I like where Redfin is positioned.
Sciple: Yeah. It's interesting for me, Zillow seems to be on the other side of that market from Redfin. If you're a real estate broker and you don't have a relationship with Zillow, you're going to have a really hard time getting leads. They provide the tools that allow the existing real estate brokerage industry to flow, have the leads flowing. Whereas Redfin is really disrupting the real estate industry at its core, changing the way that it services customers. Zillow has struggled more, as you mentioned, to move into parallel industries, whereas that has been a core aspect of Redfin's strategy from the very beginning.
Yeah, I think that this is a company that I really like. It's sold off since the announcement of Redfin Direct. There's been concerns about their antagonistic stance with the brokerage industry. I think this is a buying opportunity for the company. I don't think it added any more risk than the company already had. They're doing this in a very purposeful, strategic way. Even if it's a total flop, the business can still continue and maintain its momentum.
Before we go away, I want to read one quote from the CEO that I think is indicative of this company and its culture. He said at the end of the most recent earnings call, "The winner in our industry will have a culture of service and financial discipline. That culture depends on a thousand friendships between agents, engineers, and lenders, on love disguised as hard work, and hard work disguised as love. What's so strange about our society today is that we believe there's more magic in a company's technology than the people using that technology, or in the way those people treat one another. Redfin believes in technology, but technology on its own is just a glorified toaster oven. Our culture is our deepest source of competitive advantage. It's why we are more sure than we've ever been that we can win." I think that stands to [reason], Redfin is leveraging technology, but also having that high-touch, high-service relationship that people look for. I think the opportunity is big for them. I think they're well managed, and I think investors should look at shares of this company as something to invest in for the long term. Any last thoughts?
Beyers: Yeah, I just want to say, that is very consistent. That's a great quote that is very indicative of Glenn Kelman. He does a lot of interviews, he blogs at Redfin. That's Kelman. He's very sincere. He's in it to win it. This is the company I think he wants to retire with. This is it. This is his final act. He didn't need the money when he joined Redfin, he still doesn't need the money. He's doing this because he believes in it. That's the best place to be.
But something he said at the time of Redfin's IPO, I think you may want to go back if you're an investor and read this. It's super interesting! What he said was, he likened Redfin to Amazon, in two ways. One way, that they wouldn't be afraid to disrupt the industry, and second, that they would roll up and create efficiencies that were needed in this industry. He was talking about this back at the IPO. You knew that they'd been cooking this strategy for a while. They've been cooking this strategy, what we're seeing now, for a very long time. This is consistency of vision. It's ambition. It's very heartfelt -- they see this as a big mission. And when you have a mission-driven company with a little bit of an edge, it can go a really long way. I'm a pretty happy shareholder, too, Nick, I like this one for the very long term. It's a Rule Breaker!
Sciple: Yeah. And combine all that with an industry where the opportunities seem obvious for someone to come in and disrupt, and they're doing it. I'm sure we'll have you on again soon to continue following this company. I think this is going to be a winner for the long term. Looking forward to having you on again soon, Tim!
Beyers: Thanks so much, Nick!
Sciple: You're welcome! As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear. Thanks to Austin Morgan for his work behind the glass! For Tim Beyers, I'm Nick Sciple. Thanks for listening and Fool on!