Compass, the rapidly growing New York City-headquartered real estate brokerage, on Wednesday announced its acquisition of Contactually, the Washington, D.C.-based creator of one of the industry’s most popular customer relationship management (CRM) tools.
The move has some of Contactually’s 37,000 users across the country, many of whom work for rivals to Compass, wondering if they should find a new CRM. It also raises new questions about data-sharing, the pace of Compass’ technology development and general concerns over using a key piece of brokerage technology owned by a competitor.
Will agents stop using Contactually?
Brooke Wolford, a Realtor with Verve Realty in Minneapolis, told Inman her biggest concern is product direction. Wolford uses Contactually as her CRM solution.
“One of the things I have loved about Contactually is how they have improved the product based on agent needs,” Wolford said. “With another real estate company owning it, how is it possible for that to continue?”
Bill Tierney, a real estate agent with Gibson Sotheby’s International Realty in Massachusetts, was more direct.
“I have been a [long] time Contactually user, but I don’t like the new ownership,” Tierney wrote in a comment on Inman Coast to Coast.
“What I fear is that the Contactually innovations will go first to the Compass products, leaving Contactually behind a bit,” Tierney added, in response to another comment. “And I am not willing to pay to fund a competitors product line.”
Berkshire Hathaway HomeServices Fox & Roach, recently announced it would be equipping its Agent Center for Excellence platform with a Contactually CRM. They have no plans to move away from Contactually at this time.
“Contactually is one of the multiple best-in-class technologies integrated into our Agent Center for Excellence (ACE) marketing platform,” said Larry Flick V, CEO of BHHS Fox & Roach. “We specifically designed ACE so individual applications can be swapped for more competitive software and are constantly evaluating options to ensure our agents have the best tools available.”
“It is interesting that Compass has continuously claimed to be developing their own CRM, but has instead invested in a product BHHS Fox & Roach rolled out months ago,” Flick added. “I guess you could say imitation is the highest form of flattery.”
RE/MAX’s biggest brokerage, RE/MAX Results, is currently listed on Contactually’s site as one of its clients. A spokesperson for RE/MAX’s corporate headquarters declined to comment on the acquisition, telling Inman that, “We don’t comment on other company’s business dealings.”
“We are excited about the work going on with booj and the opportunity to provide our solutions to our members who may now be in search for a new solution,” the spokesperson said.
Is a rival owning your tech really that uncommon?
Real estate brokerages have also invested in the development of tech platforms used by rivals. Windermere Real Estate, Howard Hanna and Long & Foster invest in MoxiWorks, a company that has routinely jabbed at Compass.
By using MoxiWorks, or SmarterAgent, which is owned by Keller Williams, or booj which is owned by RE/MAX and still has a client base of around 40 brokerages, outside brokerages are directly or indirectly giving money to their rivals.
As a direct result of Compass’ acquisition, rival CRM solutions have begun to court possible defectors. MoxiWorks CEO York Baur posted a long blog post on why users should switch to MoxiWorks for their tech solutions. KvCORE has apparently been running ads on real estate-centric Facebook groups, according to a poster on Inman Coast to Coast.
It remains to be seen how long Contactually will operate in its current form. A Compass source told Inman there are no plans to rebrand the product at this time, but that could change in the future. At present, there are no changes to pricing or billing, according to a blog post on Contactually’s website about the acquisition.
Brokerages that have enterprise agreements with Contactually are assured that they will be supported through the length of their contract. If contracts are set to expire in 2019, they can be renewed through year-end. The company is evaluating long-term support services beyond 2019.
Should you be concerned about your data?
For brokerages concerned that a competitor will now have access to their data, the post also explains that data from Contactually.com is stored on a separate server that is not accessible to the Compass team.
“It’s also our long-standing policy to never sell, give, or trade your data to other companies – even in the case of third-party partnerships – without your consent,” the post reads.
Alain Pinel Realtors began using Contactually precisely because of data security.
“Data security was a primary reason Alain Pinel Realtors selected Contactually as a vendor partner,” the company told Inman through a spokesperson. “We recently spoke with the leadership of Contactually who again assured us that the centerpiece of their business – the security of user data – is assured and remains paramount regardless of any ownership change.”
Many members of the Realogy Franchise Group are currently Contactually users. John Peyton, president and CEO of Realogy Franchise Group, also expressed concern over data sharing, and threw some shade at Compass’ own tech development, in a statement to Inman. Peyton, in his statement, refers to a recent lawsuit filed earlier this month by former Compass agent, Jill Schwartz, team leader of the Jill Schwartz Group in the Washington D.C. area, in which Schwartz alleged three former team members conspired to form to their own team while breaking written agreements with her and while continuing to use her technology, tools, apps, website, customer base and leads.
“As Compass feels the pressure to start delivering on promises made to its agents, and given their well-known and admitted technology development challenges, it comes as no surprise to us that they would use their venture capital dollars to purchase a CRM instead of continuing to try to create their own,” Peyton said. “Given the data-related allegations made against Compass over the years, including earlier this month, Contactually clients should get assurances – in writing – regarding the protection of their data from Compass’ use.”
Unlike Compass, Keller Williams and RE/MAX, Realogy is developing an “open-architecture” system, where franchises and its own-side brokerage NRT can take various tech solutions available on the market and put them together on Realogy’s platform. As far as industry titans, Realogy stands to be the most impacted by Compass’ owning Contactually for that very reason.
“This has been a fascinating week of CRM choices as Compass, RE/MAX, and Keller Williams have each stated directions toward single-option CRMs for their agents to use,” Dave Gordon, Realogy’s chief technology officer, told Inman. “We understand from experience that agents know best what tools help them run their businesses most successfully, which is why our next generation products are moving to a flexible, ‘plug-and-play’ and secure technology approach that offers agents the choice to use either third-party or Realogy-developed products as they prefer.”
What does the acquisition say about Compass’ tech development?
Compass’ acquisition of Contactually raised a number of questions about the pace of the brokerage’s technology development. In the release announcing the acquisition, Compass calls itself, a “real estate technology company,” twice, and never mentions the word brokerage.
“Dipping your venture cash ‘in the water’ to purchase a product that is the absolute core of an agents business doesn’t sound to me like a company who could capably develop innovative technology in-house, at scale, which is exactly what investors probably thought they were investing in,” Kyle Bennet, owner of The Bennett Group – Cincy Haus, at Keller Williams Seven Hills Realty, said in a comment on the original post.
Compass has raised $1.2 billion to date in venture capital funding and is currently valued at $4.4 billion, the company says. After its most recent $400 million funding round, the company said it would double down on technology development and hired a Microsoft executive and opened a new technology development hub in Seattle.
But Compass CEO Robert Reffkin has also acknowledged tech problems privately, in a year-end letter to Compass agents that was obtained by Inman in January.
“We launched some technology without testing it thoroughly with agents — and learned we can move too fast,” Reffkin wrote in the note. “To hit deadlines, we released new software before it was ready. The new tools were designed to simplify agents’ lives, but bugs in the technology made agents’ lives more complicated instead.”
The company has also come under fire in the past for bombastic claims over its place in the real estate technology ecosystem.
For some, the latest acquisition appears to be another admission that Compass’ technology isn’t quite what the company makes it out to be.
“Interesting announcement from a company that thought that they were the only ones capable of developing a “state of the art” agent technology tool kit,” Larry Knapp, vice president of industry relations for MLSListings and a former executive at Alain Pinel Realtors, added in a comment.
“At least they’re not too arrogant to admit they were wrong,” Knapp added. “This will help put them on a par with the many great traditional brokerages who have been using Contactually for quite some time.”
Compass’ acquisition isn’t strictly a tech acquisition — it’s also a talent acquisition, like their purchasing of the teams behind VeryApt and the e-commerce app Spring. Compass now has 30 more tech staffers, with a strong basis in real estate technology, in addition to the 175 already with the company.
It’s also not an uncommon move, acquiring a company’s tech and talent to speed up the development of a company’s technology offerings. RE/MAX acquired booj to build their end-to-end platform and Keller Williams acquired SmarterAgent to boost development of their end-to-end platform.
Tech giants from other industries have used acquisitions to create core products. Apple’s Siri was an acquisition, not developed in-house. Uber opened its Artificial Intelligence lab on the heels of the acquisition of Geometric Intelligence. Google Docs (later named Drive) was created after the acquisitions of Upstartle and then DocVerse.