Compass CEO Robert Reffkin, pictured in 2019. (Photograph by Brad Barket/Getty Photographs for Quick Firm)
Getty Photographs for Quick Firm
9 years after its founding, actual property brokerage Compass went public on Thursday, minting an enormous windfall for the corporate’s buyers and staff. As of early afternoon Japanese Time, cofounder and CEO Robert Reffkin was value greater than $500 million, Forbes estimates.
Reffkin, 41, owns 2.three% of Compass’ regular Class A inventory and 100% of its Class C inventory, which holds 20 occasions the voting energy of regular shares. Total, Reffkin has 46% of the corporate’s voting energy, a quantity which will rise additional primarily based on stock-based compensation. He offered no shares as a part of the preliminary public providing.
“I do not assume I ever considered promoting shares,” Reffkin mentioned in an interview on Thursday. “That is what I anticipate would be the lowest valuation we’ll ever see.”
Fueled by over $1.5 billion in funding, together with from WeWork backer SoftBank, Compass has ballooned into a large with 19,000 brokers and $three.72 billion in 2020 income. That progress has incurred large losses: $270 million final 12 months and $388 million in 2019.
For the reason that firm’s founding, Compass brokers have closed greater than $300 billion value of offers from greater than 275,000 homebuyers and sellers, the corporate stories. Compass holds a four% share of the nationwide brokerage market—which is historically extremely fragmented—making it the most important impartial brokerage as measured by gross transaction quantity.
Traders are betting that Reffkin can flip Compass worthwhile within the coming years, and they’re paying him handsomely to attempt. His whole compensation in 2020 clocked in at $69.three million, in keeping with company filings, together with efficiency and incentive-based awards.
Previous to Compass, Reffkin labored as White Home Fellow within the Division of the Treasury, then spent six years at Goldman Sachs. He finally rose to develop into chief of workers to the agency’s president and chief working officer.
After leaving Goldman In 2012, he cofounded Compass alongside Ori Allon, an Israeli tech entrepreneur. Allon served on Compass’ board of administrators till this February; he’s value an estimated $401 million. (A 3rd particular person, Avi Dorfman, claims he additionally cofounded Compass and is suing for an fairness stake; that case is slated to go to trial within the fall.)
Now Reffkin’s activity is proving that Compass deserves its sky-high valuation—over $eight billion as of two:45 pm Japanese Time on Thursday. Some buyers view the enterprise as a know-how agency, quite than a conventional brokerage, which has pushed that quantity steadily greater.
“The query is, do they deserve the tech a number of….Primarily based on their headcount and R&D spend, it is a bit of a stretch,” Pete Flint, common companion at NFX, mentioned previous to the IPO. However, he added, “I believe they’ll develop into this valuation.”
Reffkin, for his half, says he’s centered on the core enterprise. “Valuation is not my obsession. It actually isn’t,” he says. “My obsession is brokers and constructing one of many world’s nice corporations.”