the road to listing on the New York Stock Exchange required that the real estate technology firm slash the size of its initial public offering by one-third and cut its price range the night before it began trading. This helped the stock rise nearly 12% Thursday.
“The goal of the Compass [IPO] was never a valuation or a price,” said Chairman, CEO, and co-founder Robert Reffkin, who spoke to Barron’s from the floor of the NYSE. “The goal was a capital raise…. From that perspective, we were successful because now we have hundreds of millions to infuse into the company that we will use to accelerate our investment into agent productivity and efficiency tools.”
(ticker: COMP) had filed to offer 36 million shares at $23 to $26, which it reduced to 25 million shares at $18 to $19 on Wednesday. It ended up selling 25 million shares at $18, raising $450 million.
(ULCC), which also went public on Thursday, closed at $18.85, 15 cents below its $19 offer price, making it a so-called broken deal. Two other companies that were also scheduled to trade, Intermedia Cloud Communications and Kaltura, pulled their deals.
“The IPO market has been challenging,” said Reffkin, noting the withdrawn offerings. “I’m very happy that we had a successful IPO that is giving us hundreds of millions of capital to accelerate investment in our platform, in our growth.”
He was joined at the NYSE by his mom, Ruth. A single mother, Ruth Reffkin worked as a real estate agent for most of her life. “She didn’t have the tools she needed to succeed,” Reffkin said.
Ruth is still a real estate agent and works for Compass in New York, said Reffkin, who calls her chief feedback officer. “She’s always giving me feedback on how to make the tools better,” he said.
Jokes aside, it was her experience that prompted Reffkin, along with Ori Allon, chief strategist, to launch Compass in 2012. The company provides a mobile, AI-powered platform to help real estate agents with in areas as prospecting, listing, pricing, and marketing. Last year, 19,385 agents used the Compass platform to help sell about $152 billion in residential real estate.
Real estate agents need a company that meets all of their needs, Reffkin said. He wants to make Compass the
(SHOP) of real estate. To do that, he has assembled a team of 700 software engineers and product managers to build the platform.
He’s also added some tech heavyweights. Joseph Sirosh, the former chief technology officer of artificial intelligence at
(MSFT), joined Compass in 2018, while Greg Hart, former head of worldwide video at
(AMZN), came on board last year.
“The average agent has to use nine different software providers to do their job,” Reffkin said. That’s why Compass has put everything on one single platform that is available on its mobile app, he said.
The real estate industry, which comprises 86,000 brokerage firms, is very fragmented. “It’s an industry of boutiques,” he said. “They aren’t making any meaningful investments in R&D. None of them have great Greg Hart or Joseph Sirosh building tools to be successful.”
One thing Compass isn’t looking to do is buy other companies. Acquisitions, Reffkin said, are not meaningful to its strategy right now.
Write to Luisa Beltran at [email protected]