Guy Gal is a tech entrepreneur, innovator and angel investor who founded three companies – Kingmaker, a video commerce company, TheBizMedia, a digital video agency and Kognitive Marketing, a retail sales consulting firm – before setting his sights on the real estate industry in an effort to help top-producing agents transform themselves into market-leading businesses.
“It became very obvious that you had this segment of real estate professionals that was unlike most others,” said Gal, who launched San Francisco-based Side in 2017 with Edward Wu and Hilary Saunders. “Across the country today, there are roughly 1.4 million agents that are licensed and members of the national association, and only about 6% are full-time, experienced high-volume – facilitating at least one transaction a month – professionals. When we looked at the industry, every brokerage that existed served the 1.3 million agents who were part-time and not as experienced, but no brokerage has ever been created and designed specifically to address the needs of those agents who are high volume. We saw that they were really underserved and thought we could create something purpose-built to address their needs and interests, which are very different than the average agent.”
HousingWire caught up with Gal to talk about his alternative brokerage model.
HW: Let’s go over your business model. Is it correct to say that you partner with high-performing agents and take over their back-end operations, freeing up their time so they can focus on activities that actually make money, such as prospecting for new clients or directly working with existing clients?
Guy Gal: Yes, and, most importantly, allowing them to better serve their clients because that’s the thing that increases your business the most.
HousingWire: What criteria do you use to select your partners?
Guy Gal: The first thing we look for is demonstrated ability to facilitate a fair amount of business, because that’s typically indicative of an agent’s experience and the quality of their service to clients. Most agents become top-producing agents for two reasons: They spend a lot of time in the industry – usually 10+ years – and they do really good work for their clients so they get referrals and repeat business. That is a great indicator for Side, to know that a person is committed and serious about their profession and career. We also want them to have a growth mindset, and we look for folks that are collaborative and that we can work with in partnership.
HW: Is there geographic exclusivity – do you limit the number of agents per market?
Guy Gal: No, it all depends on how big the market is. Some cities have 10,000 transactions, and no single agent could ever serve it. Some markets only have 300 transactions a year, and in that case, we will work with maybe one or two partners in that market, max. We want to provide agents with a distinct competitive advantage over other agents they compete for clients against. We are highly discerning about who we work with and how many people we work with in any given market. Our focus is quality, not quantity.
HW: How many applications do you get per year from people wanting to become partners of Side, and how many do you accept?
Guy Gal: We get hundreds of applications. I’m not sure exactly the percentage we accept, but the way to think about it is that only 6% of agents nationally would qualify to work with us.
HW: Let’s talk about the financial model. Are there any fees to the agent to partner with Side?
Guy Gal: Agents do not have to pay anything to work with us upfront. It’s not a franchise model. Instead, we invest between $50,000 and $100,000 into setting up the business and brand for the agent. We cover all the salaries, the cost of vendors, the cost of signage – that’s all our investment in their business and in their success. So, there’s no upfront fee to them, but there is an upfront cost to Side that we treat as an investment in them. All they have to do is transfer their license, and then, just like every other brokerage relationship, they pay on a per-transaction basis. We are a capped model, so past a certain point they no longer pay us anything, and there are zero fees on every transaction after the cap. Over time and over the course of our partnership, we cover our initial investment from the proceeds of splits.
HW: In addition to taking over back-office operations, Side claims that it will build a brand for the agent. How do you accomplish that?
Guy Gal: Most of the folks that are high performing do not have a brand, or they just have a logo. Their brokerage is branded on everything, and maybe their name is next to it. In partnership with Side, our brand does not appear on anything. We are entirely white label – a silent partner that’s the broker of record behind them. We don’t want consumers to interact with the Side brand. We want them to interact with the brand the agent now owns, which is distinctly their own. We have an in-house team with a creative director and brand strategist and graphic designers that will work with the agent to conceive of and create a new brand that is a reflection of their standards, values and client promise.
HW: How many states are you operating in now?
Guy Gal: Three – California, Texas and Florida. This time next year, we will likely be in over 10.
HW: How many partner agents do you currently have?
Guy Gal: Over 200, and over 1,000 agents across the teams we represent.
HW: Side is a private company, but can you give us any indication of your performance – growth statistics, revenues, number of clients, etc.?
Guy Gal: Our revenues go up more than two and a half times a year. We are a very fast-growing company so our revenues are increasing very quickly. Last year, at the end of the year, we represented roughly five billion in annual home sales across all of our partnerships. At the end of this year we will be representing somewhere in the vicinity of 12 to 14 billion in annual home sales across all of our partnerships. Next year that should more than double again.
HW: Side is venture-backed, so you must be planning some sort of exit. Are you anticipating an IPO or an acquisition?
Guy Gal: We have no interest in selling the company. We have had plenty of offers from all the usual suspects, but that’s not what motivates us. We are motivated by making a real impact and a real difference for real people who deserve it. That means we want to build an independent company that lasts the test of time. That does mean that one day we will take the company public. That is not going to happen for another three to five years. That’s not the goal – it’s just one more milestone on our path to accomplishing our mission, but it’s an important mechanism for establishing the company and making it indestructible so it’s always there and agents always have us there to help them.
HW: If I’m an agent reading this interview with you, what’s your best pitch for why I should apply to be a Side partner?
Guy Gal: They need to take their own advice and stop renting their career and actually take ownership of a business and be in a position where they’re not just making money but actually accruing equity. We are all about putting them in a position where all of the efforts they’re already making are now contributing value to an asset they actually own and they deserve to own, because they’re the ones creating the value.