Redfin CEO Glenn Kelman recalls a tense board meeting when his company discussed eliminating its customer commission refund in the latest Greymatter video from Greylock Partners.
Typically in real estate transactions, the seller of a home pays a commission of 5% which is split between the seller’s agent and the buyer’s agent. Traditional brokerages keep all of their commission. With Redfin, the company shares a portion of the commission with their customers.
After analyzing the data, Redfin learned they could eliminate the commission refund and it would not impact demand.Glenn hesitated to present this data to the Board. He knew that the commission refund was a critical part of Redfin fulfilling their mission, but that the board would push him to do the rational thing: maximize profits at the expense of the mission.
Surprisingly, a member of the board asked him, “Name one great brand that was built by someone that was entirely rational.”That question gave Kelman the permission to think a bit irrationally.
When you want to do something no one else can, he says, “you will always find a way to pay for it as long as the customer values it.”
