Robert Reffkin Comments on Compass Sale Rumors, Cash Burn
TRD’s Amir Korangy and Compass’ Robert Reffkin
Robert Reffkin went on the offensive Thursday.
In a one-on-one with The Real Deal founder Amir Korangy hours before the brokerage’s third-quarter earnings call, the founder and CEO shot down rumors of the company being considered for a takeover by a private equity firm.
When Korangy raised the possibility that Compass would ever be sold, Reffkin, who has voting power and holds about 6 percent of the brokerage’s stock, seemed to offer a clarification.
TRD’s Amir Korangy and Compass’ Robert Reffkin
“I would never sell the company,” he said. “I have never talked to any company about buying Compass.”
After years of expansion, the brokerage has pivoted to cutting costs in recent months with the goal of becoming profitable next year. On Thursday, a couple hours after Reffkin spoke, the company reported a quarterly loss of $154 million, including non-cash expenses like stock-based compensation. Compass burned through $76 million more than it took in during the third quarter, and has laid off hundreds of employees in multiple rounds of cuts since June.
Reffkin defended the company’s decision to spend nearly $1 billion building its tech platform, even as it’s now faced with reducing expenses.
“We raised almost $2 billion,” he said. “Nobody gave us money to put it in a bank account.”
Reffkin had an entourage of supporters who cheered loudly after he spoke at The Real Deal’s South Florida Real Estate Showcase + Forum. (Reffkin noted that his posse was not a group of paid actors.)
Compass’ goal, he said, is not technology, but to “be the best in the world and make the agents better. … Every time you read a headline that Compass lost money, what you’re really reading is that Compass decided to invest in agents.”
“I recognize that people put their hard work, their effort, their money into this company,” he said. “I’m all in with them. After the IPO, I didn’t buy a boat. After the IPO, I didn’t retire.”
TRD’s Amir Korangy and Compass’ Robert Reffkin
As part of the cost-reduction measures, Compass stopped offering equity or cash incentives to lure new agents this year.
“One of the narratives that have been weaponized against Compass is that agents only go to Compass for the money,” Reffkin said, adding that they are still recruiting.
He also spoke about being singled out over the years by his competitors, and recalled being on the same stage at a TRD event years ago when one brokerage head said Compass, which Reffkin co-founded in 2012, would be out of business five years later. Another said three years.
“This industry is full of a level of visceral negativity I have never seen,” Reffkin said.
And when Korangy asked Reffkin what would happen to agents’ commissions if the brokerage were to fold tomorrow, the executive wouldn’t entertain a response.
“There is no scenario where I’m going to let this company fold,” he said.
