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On March 13, 2020, Glenn Kelman, CEO of online real estate broker Redfin, was cycling to work when he received a phone call from Henry Ellenbogen, a longtime investor at Redfin who had set up his own fund.
Mr. Ellenbogen majored in the history of technology at Harvard. One big thing he learned was that the technology was developed long before people’s ability and willingness to use it.
“Tell me something,” Mr. Ellenbogen asked Mr. Kelman, by an account The CEO posted it on Redfin’s website. “When people start navigating their homes via an iPhone, won’t many decide that this is a better way to see homes, even after this pandemic is over? And if this whole process of buying and selling homes is mostly virtual, how will other brokerages compete with you?”
A little preoccupied with Seattle’s normally busy streets being eerily empty, Mr Kelman said he didn’t know.
“Yes,” said Mr Ellenbogen. “The world is changing in your favor.”
This was not a general opinion at the time, and certainly not where Mr. Kelman lived. The first confirmed coronavirus death in the United States was in a nursing home resident in a suburb of Seattle on February 29. Within hours, home sellers decided they didn’t want strangers breathing in their living rooms and bedrooms. Buyers began to attract, too.
For Redfin, this was the beginning of a crisis. Within days, it closed 78 offices across the country. Its stock faltered and lost two-thirds of its value.
“The magnitude of the decline is increasing day by day,” Kelman said. Thinking that Redfin might need money to survive a long drought, he agreed to sell Mr. Ellenbogen more shares for $110 million. In early April, Mr. Kelman took 41 percent of the company’s salaried employees on leave. More than 1000 people were affected.
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