Andrew Flachner: ‘We’ve found value in empowering agents, not replacing them’

Andrew Flachner is the CEO of RealScout.

Describe what you do in one sentence: I support our team by hiring the best talent, removing obstacles and focusing resources on initiatives that are most likely to help us realize our vision.

Age: 26

Degree, school: Business administration, concentration in financial management, minor in real estate development. Cal Poly San Luis Obispo.

Location: Mountain View, California

Social media: LinkedIn, Twitter

flying
Andrew Flachner

What’s your favorite activity outside of work and why?

Ever since I can remember, I’ve been fascinated with flight. There’s just something remarkable about our ability as humans to fly. About a year ago, I made it a priority to act on my fascination and began the process of earning my private pilot’s license.

It’s been more rewarding and thrilling than I ever imagined. Flying commands absolute focus and attention while at the same time providing an incredible sense of freedom and awe. There’s no better break from the day to day than soaring a few thousand feet above the beautiful California coast. Being up in the sky certainly changes your perspective on things, helps you clear your head and refocuses you on what’s truly important.

What’s your favorite classic piece of literature and why?

I’m more of a business book guy myself, and one of my favorites is “Delivering Happiness” by Tony Hsieh, the CEO of Zappos. Tony is an incredibly successful entrepreneur who has not only built up an incredibly valuable businesses, but he has also done so in a way that kept the focus on people first.

His book has helped me think a lot about the culture that we want to create at RealScout and the experience we want to deliver to our own customers. Most importantly, it taught me that formalities and processes can get in the way of good people. I’ve tried hard to eliminate things that slow us down or make us dull. Rather than build processes, I’m focused on building a great team that can create “wow” moments for our customers.

How’d you come up with the idea for your startup?

RealScout was born out of a frustration that something like it didn’t exist for agents already. Prior to founding RealScout, I was an agent for several years and experienced firsthand the pain of running my business with antiquated software. My homebuyers refused to use the IDX search widgets on my site, instead using the national search portals. I spent hours educating clients who cited inaccurate listing data and expired information often found on those sites. It was a complete black box. I didn’t know what they were searching for, what they found appealing and how valid the information was that they were sharing with me. It didn’t help that they were bombarded with ads for other real estate agents.

It was pretty evident that my workflow with homebuying clients was broken. After more than 100 hours of interviews with peers and their clients, we came to the conclusion that this was a real, industrywide issue. We knew that there had to be a better way for agents to build and nurture relationships with their clients. While portals have focused on homebuyers without an agent, there was no platform that helped agents engage their active buyers.

Describe a time when you felt particularly insecure about the future of your company. How did you bounce back?

After developing the first version of RealScout’s software and piloting it with a handful of local real estate agents, we knew we were onto something. In order to flesh out our software and begin acquiring new customers, we decided to raise money. In July of 2013 we began fundraising, and it wasn’t clear at the time whether or or not our early traction would be compelling enough to raise a meaningful seed round. There are so many factors that go into a successful raise, and some are out of the company’s control.

It was our first time pitching a venture capital, so needless to say the process was a little intimidating. Fortunately, we had established a relationship with our lead investor, DCM, about one year prior — allowing them to become familiar with our product, team and vision. DCM would end up taking half the round.

We approached Formation 8, a San Francisco-based venture capital firm, to round out the financing. Founding member of Formation 8, Joe Lonsdale, had written an essay about smart enterprise earlier that year, and our aim to empower real estate agents fit nicely within that thesis.

Long story short, we closed a $1.1 million seed round, led by DCM with participation from Formation 8, in August 2013. The capital allowed us to grow our team and expand our customer base.

What would you describe as your company’s biggest victory since launching and why?

As I mentioned, building the best team is my focus, and this year we’ve attracted some of the best talent to help grow the business. Arthur Kaneko, formerly investment VP at DCM, joined as RealScout’s director of business operations. Duke Fan, formerly a VP of Product at realtor.com, also joined the team to lead our product development. Finally, we hired Chris Conley, previously a director of engineering at Monetate, to lead our engineering team. The biggest victory has been seeing our team develop.

workspace
Andrew Flachner’s workspace.

What’s been the biggest obstacle your business has encountered, and how have you dealt with it?

After expanding quickly in California markets, we entered Seattle, Washington, in late 2013. At the time, we were relying exclusively on an outside sales team to win new customers, and the strain of managing a remote team became a distraction. We quickly learned that inside sales was a much more scalable way to enter new markets. Since changing our approach, we’ve built a loyal customer base in that market. By keeping sales inside, we’re able to better understand and address the unique needs of our customers in Seattle.

What puzzles you most about the industry?

The ubiquity of embedded IDX widgets has always been a head-scratcher for me. Today most agent websites offer home search, and yet homebuyers are still allergic to it, flocking by the millions to national search portals. As a former agent myself, I tried everything to engage my clients with a cutting-edge Web presence and search experience. Ultimately, I was faced with the hard truth: My search widget was no match for other search destinations, and the agent/brokerage branding on my website led visitors to believing they were looking at only my broker’s listings.

Despite agents realizing the futility of installing — and paying monthly for — embedded search products, it just seems like one of those things “you’re supposed to do.” If we were more honest about the effectiveness of our marketing spend, we’d probably invest in areas that have higher ROI than embedded IDX search widgets.

What is the most important lesson you’ve learned about building a business since launching your company?

I think that multibillion-dollar incumbents can easily intimidate early stage companies. It’s important to remember that big companies have hurdles to overcome that startups typically don’t have to deal with — like moving more slowly due to organizational complexity and pressure from Wall Street. I’ve learned not to be intimidated by size and dominance in the industry. This applies across the board, from attracting talent to competing for customers.

What’s the most overrated real estate technology?

Over the past decade, we’ve seen countless real estate technology companies promise to eradicate real estate agents and replace them with software. Conventional wisdom is to uproot industry mainstays and disrupt multibillion-dollar industries. To be sure, the role of agents, brokerages and technology will evolve. But don’t expect two-click home purchases anytime soon. We’ve found a lot more value in empowering real estate agents, not trying to replace them.

How will the role of the real estate agent change over the next five years?

There will be no shortage of places for homebuyers to search for a new home. There will be more photos, more listings and more details online and on mobile devices than ever before. Homebuyers won’t need more information. What they will need is someone who can guide them through the process and help them understand and interpret all of the data. They will need a trusted advocate who can help them get the home that’s right for them.

What motivates you more: power or money?

I’ve never really thought about it that way, because neither are particularly important on their own. Money is nice, because it helps us achieve our mission. It’s the fuel that allows us to build our technology and empower our customers every day. It’s definitely not why you show up every day to work at a startup. Our purpose is to help agents be loved by their clients, to look like rock stars. That’s what keeps us pumped.

What is your biggest professional fear?

Acting like a big company. Being a startup means we get to be nimble, we adapt, we seize opportunity and we make changes based on feedback from our customers. There is no bureaucracy. We are all accountable, we have the ability to make change, and we don’t have to slow down. I’m constantly taking steps to fight the tendency to slow down as we grow. TPS reports, bureaucracy — those are my biggest fears.

Are you the first entrepreneur in your family?

My mom was an entrepreneur when I was very young. She invented a pillow that helped mothers nurse their newborns. It was a successful small business that inspired me to start my first company — a disc jockey service — at 8 years old. From that point forward, I was hooked on building businesses from the ground up.

Who do you respect most in the industry?

I admire Sherry Chris (president and CEO of Better Homes and Gardens Real Estate). She’s developed a progressive personal and professional brand in an industry that is notoriously slow-moving, and that has paid big dividends for her business. She’s built a great culture, recruited some of the best in the business and has created a new and incredibly valuable brand in a crowded space. She’s inspiring. Plus, we’re both Canadian.

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