|  Estately, Startups

Profitable

We are celebrating a profitable 3rd quarter at Estately this week and an October already in the black. This in spite of the market’s typical Fall-Winter dive (Google Trends illustrates it elegantly in 2008 and 2009 – so does this) and the worst housing market in my lifetime.

About a year ago, after launching New York and Chicago, we looked at the year ahead and realized that:

  1. The capital markets were hosed – the “raise more” door was closed
  2. There was a chance we weren’t going to make *quite* enough on our existing trajectory to make it into the black

It was time to get creative.

What Did We Do Right?

Get Even Leaner

We looked high and low to find every expense we could cut. We couldn’t save much by cutting the co-founders’ “living wage” (aka “insulting wage”). So we slowed down our geographic expansion because new markets require upfront investment. We also froze technology purchases and skipped a couple of business trips.

Then we set out to improve the bottom line.

Test. Test Again

By last winter, we began A/B testing on a weekly basis. We started by making it easier for anyone who wanted to tour a home on Estately to do so – and increased our “property tour rate” by 200%. The changes we made were significant and are the reason we are successful today. The awesome thing is that we can improve further: Our most recent A/B test improved our conversion rate by over 30%.

1) Introduce Distractions. 2) … 3) Profit!

We chose this route in a very round-about way. We get a lot of inquiries from people who want a white-label Estately, but until this year we considered white labeling to be a potentially fatal distraction. Andy Liu’s story on NetConversions, the company he started right in the midst of the dotcom crash and eventually sold to aQuantive, changed our thinking. During a conversation he probably doesn’t remember, he told me they did “semi-related and pretty-unrelated” side projects to keep the lights after the dotcom crash. We realized we could do that, add some more revenues to the bottom line, and not lose sight of other priorities.

We were lucky enough to find Sutton West Coast, a Vancouver-area real estate brokerage that wanted a world-class real estate search product, but didn’t want to build it in-house. We penned a deal in the spring and we launched Sutton’s Vancouver Real Estate search service early this month. We also worked out an arrangement with Findwell, an awesome Seattle-area brokerage, to power their search.

Our white label deals are only a small part of our revenues. We probably would have been better off financially if we had focused solely on Estately, but we we weren’t in a position to risk some downside for a bigger upside. Regular and predictable revenues from the white label sites reduced the risk of running out of money.

What Can We Do Better?

Our real estate search product is already fantastic, but we know dozens of ways we can improve – and become the de facto real estate search in the markets we operate in. We just need to execute.

World domination

We Forgot To Tell the Story

We haven’t introduced ourselves to people who want to write about us. When we do, we don’t always tell them about our awesome snappy map search, our compelling features like transit-search (think convenient to BART), or the ability to search within a distance of an area (like West Babylon).

We got involved in feature releases and improvements, leaving fantastic new features un-blogged and unmentioned. The most popular feature request was for sales history on every home – a feature we launched without any fanfare in the spring (see it live on this Naperville home). We need to keep people better informed of what we’re doing!

Consumers who have used Estately love it – most of them have just never tried it.

Our Agents are Awesome – But you’d have to ask us to find out

We collect feedback from everyone who interacts with one of our agents and we have aggressively promoted our best agents. Thousands of people have worked with an Estately partner agent and people rave about our agents. There is no sign of this on Estately.

OK, we got a little distracted

We launched with what was hands-down the best search interface in the industry, but we’ve been working on so many new features and projects that we have occasionally lost sight of the core mission: search. User interface, speed and data accuracy are what have kept consumers coming back to us – we need to keep it that way.

What is next?

Seeing the end of your “runway” lengthen and eventually disappear into the horizon is liberating.

This winter will see us back on the road – expanding into new territories – and, more importantly, back to our product-development, user interface-obsessed roots. We’re taking Estately from being very useful to indispensable for people searching for a home.

  • http://www.menuism.com John

    A HUGE congrats to you guys! Getting profitable in these times is huge testament to how well you guys are executing, and I learned a lot from your did/didn’t do list.

  • http://housemeetsowner.com Josh Ferris

    Wow! Congrats on having a profitable 3rd quarter! Your a/b test numbers are very impressive. Do you have any resources you can recommend to learn more about how to do a/b tests?

  • http://www.raincityguide.com ARDELL

    Congratulations to Galen and all of the Estately.com team!!! Wishing you continued success. You always had the right “why”…keeping best for consumer users as your focus. It’s great to see a Company succeed, who is also doing all the “right stuff”.

  • http://blog.findwell.com Kevin Lisota

    Galen & team,

    Congrats on the success! We’re happy to be a small part of that success and love our new search interface. More importantly, our customers love it and it keeps them coming back to find that perfect home.

    You guys have created a ridiculously good real estate search website with a ridiculously small staff of talented folks. You definitely make your competitors looked bloated with overhead in comparison.

    Looking forward to long term success for both of our companies.

  • http://www.retrove.com Jessie B

    Galen, congrats on the success of getting in the black, it is a testimonial to your focus on the consumer.

  • http://www.shackprices.com/ Galen

    Josh, I’ll do a follow up post sometime soon about how we do A/B testing.

  • FredS

    Nice. Congrats!

  • http://energysavvy.com Aaron

    Congrats guys – you guys rock and are also excellent neighbors!

  • http://www.nosnivelling.com Dave Schappell

    You forgot to mention that you stopped buying office supplies, and instead keep borrowing them from other startups in your building — pretty sneaky.

    Congrats, Estately!

  • http://wr-studios.com Greg Robertson

    Galen,

    Way to go man! Congrats!!

  • http://repdx.com Ron Ares

    Lean and mean is the new normal. Nice job, you’re well-positioned for the future. You can also afford to be less demure about your accomplishments!

  • Chris C

    Congratulations! A great milestone, and kudos are well-deserved.

  • Loren Bast

    Fantastic work, Galen. Even more fantastic that everyone pretty much wrote off the real estate industry for the next few years, yet you still made it work.

  • http://www.zillow.com Spencer Rascoff

    Congratulations Galen

  • http://blog.findwell.com Kevin Lisota

    I like Galen’s approach to obtaining VC funding. Stealing office supplies from your VC-funded neighbor seems a sneaky, yet elegant way to get funded without having to ask for it :)

  • http://www.shackprices.com/ Galen

    It’s true Dave: we owe much office paper going forward.

  • http://Www.energysavvy.com Scott

    And with Galen not stealing office supplies from Dave and the guys at Teachstreet, it has opened the door for the rest of startups in the building to bum envelopes, stamps, phonecords, water, cupcakes, and such from them. Congrats and thanks Estately.

  • http://www.TheRealEstateHour.com Mike Kelly

    Great job of marketing. The only way I found out about you folks was by reading Inman.com where a blogger was mentioned in reference to a story about “new branding of real estate companies” and I went to his twitter site and saw him mention you folks. Not to be too much of a pessimist but just what is “Profit” to you guys? And since I abhor percentages as a measure of performance what does 200% increase in your search engines really MEAN!
    And no offense but what the F**K do you guys do!?

  • http://www.CharlestonAddress.com Jane Dowd

    Does it cost the realtor a fee to become part of the Estately network and then a 20% referral fee on top of that? Email me if Estately wants to move South.

  • http://www.EricOnSearch.com Eric Blackwell

    Hey Galen;

    I just posted about you on BHB. Congrats on getting profitable! @Mike Kelly…ummm profitable means making the tough decisions to cut the burn rate to zero or negative.

    For a new technology based real estate industry company in this environment that is as young as Estately is, this is a good thing, why the rudeness?

    Best

    Eric

  • http://www.jboyerhomes.com James Boyer

    Congrats on the profitable quarter. Good to see some outfits are doing ok. I managed to have a better year this year than the past few years but I don’t know anyone else who did.

  • http://www.AgentsCompared.com Michael Erdman

    Congrats, Galen, to you and your team.

    -Michael

  • http://rentbits.com Dan Daugherty

    Congrats!

  • http://www.thermopylae.net Leo Shklovskii

    Congratulations Estately! Here’s to the good cheer spreading down the hallway!

  • http://www.LovingCharlotte.com Keith Lutz

    This is awesome, it is nice to see someone expanding and going black, when the rest are dying or just surviving! Congrats!

  • http://www.luvfreesamples.com/ ghino01

    Congrats on the success of getting in the black. That was great, having a profitable 3rd quarter!

  • http://handheldgolfgpsunits.com/ mark brown

    Congrats and Goodluck

  • http://loanconsolidtionhelp.co.cc jow

    Congrats on getting into the black, good to see someone is doing good.

  • solveworld

    Great info :)

  • solveworld

    Great info :)

  • http://www.googlefirstpageone.com first page google

    Awesome

  • VPanchame

    I’m determined to be Estatelys #1 Queens, NY agent!! My part in helping raise that profit margin :-) So I can say I was with ya since “the early days”. Great working with the referral team. Can’t wait for the customer feedback portion to develop, that’ll just get me MORE motivated.