When Softbank-backed residential real estate brokerage firm Compass went public on the New York Stock Exchange on April 1, it accomplished one of its main objectives. Compass was built with the intention of going public, its CFO, Kristen Ankerbrandt, told CFO Dive in an interview Wednesday.
It filed its IPO at a $7 billion valuation and ultimately raised $450 million.
In its S-1 filing, the company, founded in 2012, described itself as an "end-to-end platform that empowers our residential real estate agents to deliver exceptional service to seller and buyer clients.”
According to Ankerbrandt, it aims to deliver true transformation to an industry “that is really dying to be disrupted.”
Most traditional brokerages provide very limited tech support, CEO and co-founder Robert Reffkin told Realty Biz News, leading most agents to use several software platforms to do their job. Compass brings both software and agent support under one roof.
While Compass operates similarly to most traditional real estate brokerages, its differentiator, the company claims, is the suite of digital tools its agents can use to better market themselves and their listings.
Ankerbrandt felt Compass’ strategy was working when she joined as its CFO in 2018. “The market opportunity is massive; it’s a $2 trillion industry in the U.S. alone,” Ankerbrandt said. “The company already had a differentiated strategy with a focus on empowering agents, as opposed to just replacing the agents.”
Ankerbrandt oversees strategic and operational finance, acquisitions, partnerships, and investor relations. She joined Compass after 12 years at The Carlyle Group, where she led technology and business services investments for the company's $18.5 billion fund. She began her career as an investment banker at Goldman Sachs.
“I was able to bring to this role a unique set of skills because I had a lot of M&A experience, and experience working with investors and tech companies to help them grow at pivotal times,” she said.
Under Ankerbrandt’s leadership, the brand has entered a period of hypergrowth. In 2020, it transacted approximately $152 billion in residential real estate, representing 4% of the U.S. market and more than quadruple the $34 billion it transacted in 2018.
Compass’ $7.4 billion market cap is roughly quadruple that of holding company Realogy, which owns Century 21, Coldwell Banker and Corcoran and brings in twice Compass’ revenue, Curbed reported.
The company affiliates with more than 20,000 agents across over 40 U.S. markets, and is looking at growing beyond brokerage by adding title and escrow operations.
The company wants to “bring a spirit of financial discipline and rigor” to its analysis of its various growth opportunities. “Once we make the decision to enter a new space, whether it's a new geography, or a new area, like title and escrow, we want to do it in a way that allows us to maximize the opportunity for growth while also minimizing risk,” she said.
Compass is set to share its first earnings report as a public company on May 12; Ankerbrandt and her team are preparing press materials and drawing up a 10-Q filing with an eye towards helping investors understand the range of opportunities the company is weighing.
Ankerbrandt said Compass’ strategy for converting its hypergrowth into long-term, sustainable growth is multi-pronged.
Before its IPO, it spent over $300 million to acquire brokerages and tech companies, including Pacific Union International and Modus Technologies, in an attempt to scale.
On Tuesday, just a few weeks after going public, it announced plans to acquire Glide Labs, a real estate transaction management platform, its first acquisition since its IPO.
“The majority of our growth is organic,” she said. “We see opportunities from time to time that accelerate our product roadmap. Glide is a great extension of that; more than 60,000 real estate professionals use it. We’ll keep looking for opportunities for M&A, and potentially use them to accelerate growth into adjacent markets.”
Last spring, in the midst of the first shutdown, Ankerbrandt said Compass kept its agents “front and center” when mapping out its revised plans, adding that the move to remote work brought some unexpected benefits.
“We were able to accelerate certain elements of our product roadmap that were particularly relevant to our agents in the working from home environment,” she said. “We were also able to help them appreciate the value of running their businesses on our tech platform, because, once the market really started to shift in Q3 and Q4, our agents were extremely well-positioned to pivot to capitalize on the market opportunity.”
During the early pandemic days, Ankerbrandt said, Compass’ technology teams launched twice as many tools for agents as they had in the six months prior. “And keep in mind, they were all doing this while they were working from home themselves,” she said. “I think it really accelerated our agents’ adoption of our technology tools, simply because we were able to offer, specifically, the features and tools that would be most helpful for them in that critical moment.”
Finance leadership values
There are some qualities unique to the CFO role, Ankerbrandt said, that make the biggest differences to a team. The most important is the value of being direct.
“Compass is a hyper growth company, so [the executive team] needs to move quickly but thoughtfully,” she said. “A direct approach can really help drive success there.”
Finance, more so than other areas, is a team sport, she said; people learn by seeing other people do. “I think it’s critical, on my team, for everyone to understand that we win or lose as a team.”
Ankerbrandt also aims to lead by example, and says it’s always necessary to delegate, or lead, if the situation demands, products.
“I really enjoy digging into the details with my team, to inspire them, and to show them that I am working hands-on to help them as they're looking to to achieve their goals,” she said.