Transforming Real Estate by Returning Value to Buyers, Sellers, and Agents

Today, Scaling Smarter would like to welcome Chad Link and Rob Brower to the show. They're real estate experts and technology expert, respectively. And and they've got a startup that you're really going to want to hear about. Welcome to Scaling Smarter, guys.

Ah, thank you for having us.

Thanks for having us, man.

And Rob, you're the CEO, right?

CTO.

CTO.

That's the CEO.

Right. And Chad is the CEO.

Yeah, I am. I am the head of this circus.

And that's what it always is when it's a startup. So tell us a little about the genesis of Swivel because okay. They're CEO of Swyvl, which you can see how it's spelled, S-W-Y-V-V-L.

Yeah. So I've been in real estate for 18 years, and during that time I, I've owned 3 real estate brokerages. I've been involved in training hundreds of real estate agents, and I've also personally helped over 1,000 clients successfully in buy-sell homes. So I know real estate very much from the retail end of things. And one thing that people don't know is that when you go to a middleman real estate platform like Redfin, Realtor, and Zillow, and you look for a home and then you ask to be connected with a real estate agent, That when you close on your home, that real estate agent is paying that platform what's called a client referral fee of 30%, 40%, 50% or more of the total commission. Now, this amount can be $5,000, $10,000, $15,000, $20,000 or more. And since I've worked with these platforms as one of their premier agents, and I— it's always felt wrong to me that the homebuyer or home seller had no idea that this is how the process works. It felt wrong to me that even though it's their business that's being sold, They don't get a share in any of that money whatsoever. And it also bothers me that these exorbitant marketing and client referral fees that are being charged by these middlemen, that those are actually being passed on to the homebuyer, home seller. Right. They're the ones that are paying that. So we're already taking a very expensive process and we're making it even more expensive. So over the years, it's always just grated on me and grated on me and grated on me. And then it was just like, okay, I need to put together a platform for real estate agents and homebuyers and home sellers that benefits The main purpose of it's to benefit the homebuyer and the home seller and the real estate agent, the actual players in the game, rather than giving billions of dollars. And that's what they make every year. The top 4 or 5 platforms make about $10 billion in a year rather than giving it to them. And it's not being used for anything other than fattening their bottom lines. Let's give that money back to the players in the game and allow them to decide how that money is going to be used so that they can use it for down payments and closing costs and moving expenses. And for real estate agents, they can use it for client acquisition costs, building their businesses, all of those things. So that was the genesis of all of it. It was just one of these things that over the years I'm like, this just sucks. It sucks that I have to keep it quiet. I can't say anything to the actual client. And even though it's like I said, their business that's being sold, they don't get to share any of it. So that was how this all started. And then I found Rob.

I—

he had done some marketing for my brokerage and had done some tech stuff for my brokerage, and I brought it up to him and gave him the framework of what I was looking for. And we were off to the races from there.

That's amazing. So, what was your impetus to finally start this project?

I— in real estate, we have a very high failure rate. People don't know this, but 87% of real estate agents are out of the business in less than 5 years, and about 50% of real estate agents don't even do a contract in a year. So, I wanted a good lead source, a good business framework for real estate agents where they would benefit them where they could take this money and they could use it to build their businesses. I had way too many real estate agents that as I was mentoring them, they would be sitting in my office in tears, breaking down because they were paying a platform like Zillow $72,000 plus a year for client leads. Those client leads weren't panning out to actual clients that closed. And now they're at the point where they can't afford that $6,000 per month and they're trying to figure out how to get out of a long-term, year-long contract that they've signed with all of it. So all of these things between helping my clients, helping real estate agents try to be successful in this business. And then COVID hit, and it was just— I've been doing this for now 15 years by the time COVID had hit. I was like, you know, it's time. It's time to take the shot. It's time to try to redefine how real estate is looked at and done in this country and really be able to change how that is. So, that was really the impetus of it. It was just enough. It was just time to do it.

Now, how— now, you're going to have quite a An uphill battle against the big platforms, right? Oh, of course.

They don't like our business model, right? It's completely different than theirs.

Hang on just a second, guys. I'm gonna pause this for a sec. But imagine you guys have quite an uphill battle when you— because you're dealing with these billion-dollar— you're competing, gonna be competing against and taking business away from these multi-billion-dollar websites.

Oh, yeah, 100%. Their business plan has to change, and we're changing it for them. Now, they've been on this business plan for about the last 15, 16 years. I remember when Zillow actually came into existence. And a lot of times, and this just tells you about their business plan and whether it works very well, when we initially started, we were paying these client referral fees at 10%, 15%, maybe 20%. Now we're paying client referral fees at 40%, 50% or more. So they've had to increase these referral fees and take more and more money from agents and hence homebuyers and home sellers just to be able to stay viable. Redfin In its entire existence has never turned a profit. So let that blow your mind. Entire existence, never turned a profit, yet just got purchased by Rocket for $1.75 billion. How is that possible? Yeah. So you tell me how that benefits the actual players, the homebuyers and home sellers and real estate agents that are involved with it. It doesn't. They're taking that money. It's benefiting them and their shareholders, but it's not benefiting us on the retail end. And that's why we're so different. But you're very right. We're a massive threat to them because our being Being a startup, one of the things about being a PropTech startup, it's a struggle, right? Beginning any business, whether you're doing a convenience store or if you're gonna start, you know, if you're gonna start Microsoft, it's a struggle. But the reality is one of the benefits of when you're starting is you're flexible. You're able to change as you need to in order to fit the business environment that you are trying to benefit. They can't. They already have these massive expenses of billions of dollars every year, and they can't just trim those. They can't all of a sudden change their business model to benefit the homebuyer and the home seller like we can. So that's really where our— even though we're going up against the behemoths, right? But this is very equal to, and it's used all the time, but I like to bring it up. This is just like using Netflix and Blockbuster, right? You were of a certain age. I'm not gonna lie, Rob, with all of this. And we all remember going to Blockbuster and we all remember getting the videos and all the stores. And if anything, like when we started switching that business model over to streaming, they should have been the ones who did it. They should have been the ones who survived and they should have been the ones who thrived.

Yeah.

But they weren't able Because their business model was so entrenched in the physical that they couldn't then switch over into the streaming on their side. So that's where our benefit is when you're right, we got some big boys, right?

So you're saying they weren't able to swivel?

They were not able to swivel.

Not able to swivel.

There we go.

Cute.

But they really true, right? They're not able to swivel because when you get so locked into something, when you get so locked into a business structure, a business plan, they can't all of a sudden start benefiting the homebuyer. They're not all of a sudden going to give billions of dollars back to the homebuyer. the home seller like we can. So that's where our strength is. But you're very right. The hardest part for us is really getting our message out there. And this is one way that we can do that, right, through podcasts and through educating the home buyer and the home seller. This is how the real estate industry works. This is how it is not benefiting you. But here you can do this. And Rob is very good with this. He always likes to say, hey, listen, you can go to Redfin or Realtor and Zillow and you can find your house and you can buy or sell your house. And at the end of the day, you bought or sold your house. Okay. But you can go to Swivel and you can buy— find a house to buy. You can sell your house through one of the agents that you're connected with and you get to do the exact same thing. But at the end of the day, you're getting $10,000, $15,000, $20,000 back. That message is very clear.

No-brainer. It's a no-brainer.

Yeah, yeah, yeah. No question. So you're now— a lot of my audience are startups and scale-ups. Most of them are like you, SaaS-related, software-related. Startups and scale-ups. So you guys right now are at that, let me see, that apex between, between a startup and a scale-up, right? Where you've got just some revenue and you're about to go through some raising money. And so tell me a little bit about that part of your journey and how you're threading that needle.

Yeah, you can, from the tech side, it's always a challenge because your tech stack has to grow As your company grows. And one of the biggest challenges is what you perceive in the beginning stages is not always what you end up with in the end. And so—

It never, it never is.

Yeah. And if you are, I mean, you're, you're a rarity. But when Chad first came to me, he basically said, hey, listen, this is what I need. I need a website built. I need it to do this and this. Real estate agents are going to come in. So there needs to be some sort of a membership thing where they log in. I said, yeah, we can do that. And then they're going to basically see properties listed by buyers and sellers, and they're going to bid how much of their commission are they willing to give back at the end of the day. It's gonna be a 5-day deal. We're calling it a share experience. So yeah, we can do all that. We got all of that done and then we started having conversation. I was like, so it's interesting. So somebody's gonna find a property that they wanna buy. Where are they finding that property? On somebody else's site?

Mm-hmm.

So then he goes, you know what? We need an IDX feed. And I was like, Yeah, I'm sure we can do that. I've never integrated an IDX feed and connecting API keys and embedding stuff is— that's easy, right? But the issue is where do you get the data? And that became a really big challenge for us to solve. Where do you get the data? And it's no problem.

You go to 700 or 800 different MLSs.

Exactly.

You sign up, you become members, you pay the membership fee per month.

None of them wanna give it to you.

Exactly. That's the thing is you have to cash out your trust fund. And if you weren't a trust fund baby like me, then, uh, you don't have a trust fund to spend on all that, but We basically— syndication was the only route that we could go. And I don't know if you know this, David, but in syndication with the MLSs, they require you to pull the data twice a day. Now, we're talking about every listing of every house for sale that they have. So, it was like a 3.5-hour process.

Wow.

We had to bring on another engineer to run our Azure servers. And so, we had to invest more money in Azure servers. And it was ridiculous. And then, I'm looking at the photo load times and we're comparing our photo load times to these other guys and we're like, Why are our photos always taking longer to load? And I'm like, we're— these are huge photos that they've taken, HDR photos of these properties, and we got to load that for every single house. And I was like, man, we should be able to direct link to these photos, have them in one repository, and everybody's just going to them. Come on.

Yeah.

But it was very serendipitous. We were at a trade show in Vegas, and there was a guy from another startup and the CEO, and he came to us and he goes, I think we need to work together. We're like, Sure, what do you got? He goes, I can get you all that MLS data at much cheaper, much faster. I was like, wait a second. He piqued my interest. And then we started talking and we look at— took a look at the data he was providing. And it was a no-brainer. It was a good fit. And so now we actually have a relationship with all the MLSs. We have a broker record in every state. So we actually have more listings on our site than these major competitors do. And it's pretty awesome. And so I would say for all of those that are in startups, man, if I could give one piece of unsolicited advice, it's Don't be afraid to let go of what you know and start all over. We've had to scrap our tech stack several times now and just ask tough questions. Is this gonna be able to do what we need it to do? And if not, where do we need to go? And, uh, we had to adventure out into the unknown. And the only way you're gonna win big is you gotta take some risks. And, uh, we can say that about the tech side of the business, the financial side of the business.

Yeah. Yeah. It's, uh, just on that data side, it was $60,000 a month. So, just give you a quick idea.

Oh yeah.

You get $60 grand a month in order to be able to access that data. Now, as a startup, we don't have $60,000 a month to burn on just one aspect of the platform.

Yeah, right.

Just one aspect of the platform. And one of the things that Rob was talking about, and we've talked about a little bit as far as the flexibility end of things, is you gotta get out there. You gotta get out there and you gotta meet people, 'cause you'll be surprised by how many other people are looking to solve other problems that are associated. They may not be directly your problem, That are looking to solve other issues that are associated with yours. And then when you combine and come together, you now have this great solution to this really big problem that apart you wouldn't have been able to solve.

Absolutely.

Yeah.

One of the biggest mistakes that I see, not the biggest mistake, but one of the big ones is that they are worried about people stealing their intellectual property. And so they don't want to talk about it with anybody because they're afraid of opening up the kimono and somebody stealing what they got. Yeah, that is not how successful startups get start to leverage and launch and build partners and values. They do it by doing what you did. They get out there, they talk to everybody they can about what they're doing and where they're struggling, and then they just opportunities start to happen.

Yeah, we talk to everybody. It doesn't matter whether you look like you would be a direct fit or benefit to our company. You may know somebody who is. Everyone is related. Everyone's tied into things. It's even something I told my real estate agents when on a much. smaller scale. I'm like, you have to get out there. You have to meet people. You have to talk to people. When I was in real estate, I was teaching a homebuyer's class. And I had this older guy who sat in on this homebuyer's class. And it was 5 hours. So, this guy sat there for 5 hours. And this was for first-time homebuyers just to teach them the basics, go through all of it. And after the end of the class, he comes up to me and he said, hey, we have a home— we have a construction business. And it's been handed off to my nephew. And my nephew, we have a home development. It's about 125, 150 homes. He's having a hard time selling it. Do you think you can help him sell it? So, if I were doing a homebuyer's class where I was just teaching homebuyers in order to— one deal, all of a sudden, I got my first home construction listing of a new home development. And you would never have connected one to the other, right? You would never have thought to yourself, hey, by spending this 5 hours teaching this class, I'm going to end up with my first new home construction development. But that's how it happened. And it's the exact same way with the PropTech side of things. You really have to get out there and just have conversations with people.

Mm-hmm. So now the big question, how are you using workflow automation and AI? How are you leveraging that in your business? Because that's pretty much—

Talking, talking about letting people know.

Yeah.

How much are you gonna let 'em know?

So we just released our final beta and we've got some technologies that we've introduced into the product, but we've got a lot of stuff, cards that we're holding close to our chest for 2.0. Once we hit 2.0, after we've introduced a solution to the pain point, how do we Get money back in the hands of agents and homebuyers and sellers. The next question that we're tackling is how do we help agents do their job better? And so we are looking to introduce AI into many aspects of the home search process and the home purchasing process that is not being leveraged for right now. And we're looking at not only AI, but using blockchain technology for things like smart contracts. And we're excited to introduce it. I'm telling you right now, AI's not really a big player on our site right now. But it's going to be, and it's gonna, it's gonna open up a lot of different doors and change the way that people are buying and selling homes.

I'll give just a little bit on our end for the AI thing. The problem with AI is this: everybody likes to throw the term around, but the reality is they're not really sure how to use it and how beneficial it can be on their platforms. They just—it's just a keyword, right? It's just a word that piques interest, but they really have no idea. For us, and how we are incorporating it and will be incorporating into our platform, is this is the pain point or the problem: a real estate. agent will talk to somebody like you who's a home buyer and you'll say, hey, I'm looking for a bed— a house that's 3+ bedrooms, 2+ baths, and I want it to be near water. There must be water within a mile radius of it because I really want to be near water. So we'll spend the next 3 to 6 months sending you homes, looking for homes that all meet this criteria. And then at the end of the 6 months, you send me a home that meets none of the freaking criteria, and that's the one that you buy. And the problem is that right now, how platforms are set up, they deal with the intellectual input, but they don't deal with the emotional And of course, as we know, buying and selling homes is an emotional thing between human beings. But human beings as a whole are not able to articulate their emotions. So we'll be able to use AI. For example, we'll be able to look at someone's search. And while they may tell us that they want to be able to have a nice chef's kitchen, what they won't be able to tell us or what they won't be able to articulate is that there's something there that is emotionally that they're attaching to, whether that's the gas stove, whether that's the overhead, whether that's the color of the granite. And AI will be able to— It's the backsplash.

Exactly.

Whether it's the backsplash that's on there, whether it's something that they—

Right.

Big seat in the side. So they'll be able to— AI will be able to determine and take what I call the emotional response. And it will allow us to have the emotional input that the individual doesn't even know how to articulate. And we'll be able to put that into the home search and the home buying and selling process. And that will become more powerful than someone being able to say, okay, I want 3 bedrooms, I want 2 baths, et cetera. We'll be able to find them the home that will be emotionally attaching to that they don't even know they're emotionally attaching to, but AI identifies what They're emotionally attaching to and brings it to the forefront.

We joked about having an app where people just swipe right and left on homes they like and dislike until they're happy with the home.

It'd be really smart. Yeah, it'd be smart, but some people would be very intimidated by that. That depends on their age, right? Yeah. If they've ever used an app that— the swiping apps, you know, if it was my son, that would be how he'd buy all his homes. But yeah.

And, and, and that is something that for Swivel that we're looking at, we're really While we want to be able to serve, and I hate to say this, my generation and older, what we're really looking at is we want to make Swivel to be the real estate platform that services all the generations below. We want to make sure that eventually Alpha, as they come up, and we're looking at Generation Z, etc., we want to be the real estate platforms for Millennials and for Generation X. That's been Redfin, and that's been Trulia, and that's been Zillow over the years. We want to be that next platform that when they think about buying a home and they look at buying a home, they say, hey, Swivel services our needs and also provides the information we want in the way that we want it while these other platforms don't.

So now I'm going to ask a question I always ask everybody. Let's imagine for the moment, forget about real estate or not, imagine you had no budget limitations and no technology limitations. Oh, what problem in the world would you solve, Rob?

Oh man, that is a really good question. I've been really interested in what some of the smaller organizations have been able to do in third world countries with the modern technologies. Right now, they invented a machine with a solar panel about the size of a small window, and this machine can generate clean drinking water just out of the moisture in the air.

Yep.

And they don't need any electricity or anything like that, don't need any batteries, very low maintenance. But they've just— they've created this gel, a hydrogel, that basically just sucks moisture out of the air and then compresses it. And So basically it just runs all night and they leave a container there and in the morning they have drinkable clean water and little things like that. Like how do we take first world living and bring it to the third world? I'm interested in that kind of humanitarian stuff.

Please send me a link for that because I'm working on a, probably a 2 or 3 year project right now to do the same thing just to water my property. 'Cause I have a 3/4 acre property and it takes a lot of water and we're in California.

Of course.

And so I'm working on something that pulls That out of the air when it's dry, and also as a fog catcher and dew catcher. Yeah, yeah, absolutely. Basically combines all those things. Yeah, yeah, it's amazing stuff. I love that. I'm glad I asked that question. I'm always glad I asked that question. Okay, so favorite books that you think other people in my world would really appreciate?

Okay, so this is really weird. You're probably expecting me to give some sort of a leadership book or some sort of a tech book, but honestly.

Mm-hmm.

William H. Golding's Lord of the Ring, or Lord of the Flies, is still one of my favorite books. And one of the reasons that I love it is I don't care if you're looking at it from a business perspective, a tech perspective, it's about people and it's about humanity. And I think when we lose sight of that, like, why are we doing this? There's a pain point to humanity, and that's why Chad started Swivel to begin with. When we lose sight of the humanity factor, we start devolving into less than, and we see things happening. This tragedy that happened this last week, people start to make crazy decisions. We don't need that. We need to be able to live in a world where we can love each other and all move forward together.

Agreed. I like that. Yeah. Okay. So Lord of Flies, that is definitely a unique book recommendation. Yeah. You got one, Chad? One I think most people are familiar with. Yeah. Yeah. How about yourself, Chad?

On mine, I gotta be honest with you. I don't have a specific book. And I guess this is the, the, this is where I defer a little bit. I, I, I have this sarcastic comment and we've all heard it, but I think there's a truth to it. But I think that those who do and those who can't teach, and what I mean by this is you have to, and I see this, it's paralysis by analysis. I will see people prepare and prepare and prepare. They'll read everything. They're looking at everything. They'll Google search everything. They'll read every book, but they never pull the trigger in order to be able to move forward. And you have to, yeah. That's a really good point. And I think you have to be careful with that. So, for example, on my end, and this is a story that Rob knows, but I think it's important for everybody. It's about what's inside. with it. When I was building my current real estate brokerage, I went through a divorce and I could not— as I was expanding, and it happened right as I was expanding. So, as I was growing, my expenses are going up, though the money coming in has not reached that because you're taking that risk every time you grow.

Yeah.

This is what's happening, right? Income versus your debt. And now, I have a divorce and I can't afford to keep on doing this. So, at some point, I had to say, okay, Do I keep on building my business and keep the resources there and take my personal expenses out of it? Or do I drop the business and use my personal expenses but know that I probably will never come back to it? I'll never be able to get back to this point of where I'm at. So, I literally gave up my home, gave up my place to live. I slept in the driver's seat of my car and in parking lots. I slept on an air mattress in my office. And I did that for over a year in order to be able to have the income to be able to build my business because I knew it wasn't going to be forever. But I needed that extra income to be able to continue the growth with all of it. So I guess mine will be the anti of all of that. I will say, hey, it's not bad to read. It's not bad to look into things. It's not bad to get other people's perspectives. But you have to be very careful about allowing— because you can find anybody's perspective. I can find someone who will give me a perspective that argues A, And I can find someone who will give me a perspective that argues B. But at some point, you have to be able to make sure that you move forward and you push forward. So, I'm going to go with the opposite of the book reading, sorry, and say, at some point, you got to dive in and you really got to have that drive.

Oh, I agree. I'm not suggesting that somebody stop and read a book. Yeah. But there are some books that have a lot of value, like, that are contextual for what you're trying to do. Oh, yeah. Yeah. Because there's one that I always recommend often when I'm interviewed. It's called the mom test.

Okay.

So when you're thinking of starting a business or you're thinking of adding functionality or whatever, how do you ask questions? Let's say you go to your mom, right? And let's assume you have a good relationship with your mom and you say, hey, mom, I wanna do this business where we deliver books real time every day to people that like to read a lot. What do you think of that business? She's gonna say, oh, I think you're gonna be successful because I love you and I know you're smart and you're not going to get any valuable input from that question, right? So it's called the mom test because how would you ask questions about something you want to pursue from your mom and get actual honest answers that are of high value? And this is by a guy named Rod Fitzpatrick and he has successfully started and exited several software companies. So it's, and this is a methodology that he's honed and used himself. And I think it's brilliant. you basically never talk about your product. That's, you talk only about the problem and it has a whole framework around how you do that. So that's one example. Another one which I'll throw at you guys called Connection Expansion, which is by a guy named Devon Sizemore who I've interviewed and it's a bestselling book and he has built these massive, in several companies that he's worked for, these massive referral networks. 10x what anybody else at his organizations have been able to accomplish. And it's how he did, it's how he built it. He's got a very prescribed methodology that you can just implement into your workflows.

Yeah.

So those are the kinds of things I really like because we actually have by the numbers things that you can follow. But you're right, if it's about, if you're reading something from a professor who's talking about how you should pursue business and they've never run a business, that's a big mistake.

It definitely can be. And I do, I agree with you. There's definitely information that's out there that will help shorten your experience as far as making the mistakes, shorten your journey a little bit on those ends of things. But like I said, my only caution to people is at some point you have to get out there and learn the hard lesson of how to, how to get data from 600+ MLSs and learn how to get it into your platform and be able to get it through your IDX feed and all those other good things.

And those books aren't out there because the people who have successfully done that are sitting happy as middlemen, they ain't just raking in the butts, and they don't want to share that information.

No.

By the way, Chad, I don't know if I told you this, but when I was in college, I got, I got kicked out of a programming class because I said that to my professor. I was working as a developer, putting myself through college, and he goes, you're gonna have to need to know this stuff if you want to be a programmer. I said, no, you don't. This stuff is all garbage. This is all outdated. And the reason you're teaching this class is because you, you haven't programmed in 20 years in the real world.

So I picked the right CTO. Oh yeah, he— I got kicked out of that class.

It was Yeah, I still got an A in it because I had to take the final, but I wasn't allowed to attend the class.

Oh wow, that's impressive. I'm impressed. All right, Chad and Rob, thank you for being on Scaling Smarter. It was a great discussion.

Thank you for having us.

Absolutely great to be here, man. It was awesome.

Oh, if somebody wants to get a hold of you, would they go to swivel.com, spelled S-W-Y-V-V-L dot com?

Yeah, and also on on our podcast that we do, we also have been giving out our personal contacts. So if you want to go to rob at swivel dot com. to reach out to him on the CTO end of things. We're always willing to help anybody and share our experiences. And then chat@swivel.com, those resources are also out there to, to all of your listeners.

And, and we're on most of the social platforms.

Yeah. And as a quick reminder to my audience, if you have a software project and you're struggling with an existing tech team, or you're looking to start something and you need an exceptional team and exceptionalism is important to you, reach out to me, davidhirschfeld@tekyz.com. David at Tekyz, spelled T-E-K-Y-Z.com. Thanks again, guys, for being on Scaling Smart.

Thank you. Thank you.