On March 13, 2020, Glenn Kelman, CEO of online real estate broker Redfin, was cycling to work when he got a call from Henry Ellenbogen, a longtime investor in Redfin who had started his own fund.
At Harvard, Mr. Ellenbogen majored in the history of technology. One great thing he learned, he said, is that technology is developed long before people’s ability and willingness to use it.
“Tell me something,” Ellenbogen asked Kelman, according to a report posted by the chief executive on the Redfin website. âWhen people start to visit homes through iPhones, won’t a lot of them decide, even after this whole pandemic is over, that it’s just a better way to view homes? And if this whole home buying and selling process becomes mostly virtual, how will other brokerage firms compete with you? “
Mr Kelman, a little concerned about how oddly empty Seattle’s normally busy streets were, said he didn’t know.
âI do,â Mr. Ellenbogen said. âThe world is changing in your favor. “
This was not a general opinion at the time, and it certainly was not what Mr. Kelman was going through. The first confirmed coronavirus death in the United States was a resident of a nursing home in a Seattle suburb on February 29. Within hours, the home sellers decided that maybe they didn’t want strangers to breathe in their living rooms and bedrooms. Buyers have also started to pull back.
For Redfin, it was the start of a crisis. In a matter of days, it closed its 78 offices across the country. Its stock plunged, losing two-thirds of its value.
“The magnitude of the decline was increasing every day,” Kelman said. He agreed to sell more shares to Mr Ellenbogen for $ 110 million, believing Redfin might need the money to survive a long drought. In early April, Kelman put 41 percent of the company’s officers on leave, who were salaried employees. More than 1,000 people have been affected.