With a heat and assured smile, eXp Realty founder Glenn Sanford offers off a nerdy, awe-shucks vibe. The 53-year-old Gen Xer has a twinkle in his eye like a personality out of the 1992 film Wayne’s World. He lives in Bellingham, Washington, the place the city’s motto is “The Metropolis of Subdued Pleasure.”
However beneath the understated veneer lies a savvy businessman, an imaginative technologist and a monetary whiz — a triumvirate of abilities that accounts for his success.
Earlier this week, eXp announced a two-for-one stock split. Shares soared greater than 20 p.c after the announcement. In the present day, the corporate is valued at $6.8 billion, bringing Sanford’s internet value on paper near $2 billion, and that of his ex-wife, Penny Sanford, nearly $1.5 billion.
One thing fairly private helped Sanford achieve entry into the residential actual property billionaire membership.
He purportedly has been motivated by a drive to “beat” Gary Keller, his former mentor who snubbed Sanford a dozen years in the past by not together with him in an elite Keller Williams mastermind group. Keller additionally allegedly wouldn’t permit Sanford to purchase a KW market middle.
These slights, some observers say, served as private motivations for Sanford in rising his empire. Brokers are flocking to eXp, with lots of them being peeled away from Keller Williams. Candy revenge.
What attracts brokers to this slightly distinctive brokerage?
A beneficiant 80-20 fee cut up — and even a chunk of the 20 p.c, if the agent brings in different brokers. That ongoing upstream income supply eats away at eXp’s internet revenue. However that has not bothered Wall Road traders as a result of the agent and income development charges have been staggering.
eXp is a growth story with a momentum stock, leaping from a split-adjusted 73 cents a share 5 years in the past to $97 right this moment — a 100X return. Throughout that very same interval, Zillow shares noticed a 7X return.
If an agent purchased 10,000 shares in 2016 for $7,300, these shares could be value nearly $1 million right this moment. EXp is minting actual property millionaires, and that’s serving to the corporate construct its agent community. Additional, it enjoys a cult-like tradition, one thing that’s occurred earlier than in actual property — consider the yellow jackets at Century 21 within the Sixties and Nineteen Seventies, the RE/MAX juggernaut within the Nineteen Eighties and Nineteen Nineties and with the Keller Williams rock-and-roll growth curve in the last 12 years.
Why? Brokers usually discover themselves alone on the planet and plenty of of them want an organization that not solely delivers the products but in addition offers them an even bigger imaginative and prescient to comply with. Plus, Sanford has confirmed that an workplace is now not essential for making a connection and loyalty to the mothership.
Sanford is extra complicated than what meets the attention
He realized lots on the knee of his father, a inventory dealer who made a enterprise out of reverse mergers — shoving firms into the shell of an present publicly traded however dormant or sputtering enterprise. Usually they have been Canadian penny shares. Sanford labored along with his father early in his profession, studying the methods of publicly-traded firms.
Quick ahead a dozen or so years and Glenn used these classes to take eXp public by placing it into Canadian penny inventory firm Desert Canadian LTD. Usually these shares will be “pump and run” operations that appeal to speculative traders with little to no transparency as to how the businesses function.
Consider it as a SPAC (Particular Function Acquisition Firm) earlier than there have been SPACs. Now, what was as soon as the underbelly of Wall Road has gone mainstream.
Sanford’s monetary engineering has paid off
Sanford has used shares of inventory during the last 10 years to draw brokers to hitch his rising enterprise. Three years in the past, eXp began buying and selling on the extra respected Nasdaq change. (Earlier than, it traded on the OTC, the over-the-counter penny-stock change.)
Sanford additionally made positive he managed the destiny of the corporate. Collectively along with his ex-wife, he owns greater than 50 p.c of the enterprise, so he can do roughly no matter he needs with firm selections. It isn’t an excessive amount of completely different than the management Wealthy Barton and Lloyd Frink train over Zillow or Mark Zuckerberg over selections at Fb, although every of these firms did so by issuing two lessons of inventory. None of them have such a big outright stake of their firms, as Sanford does.
What he finds himself accountable for right this moment is an internet platform with one proprietor and one easy enterprise mannequin. Most significantly, it scales. As a dealer, Sanford controls his own destiny. No center tiers of authority, territories or market facilities to deplete or confuse his management over the corporate.
He additionally has that distinctive capability to see across the bend. Sanford was one of many first individuals to construct a profitable crew below KW. He was additionally one of many first profitable enlargement crew builders and mastered search engine marketing within the early days of the web to seize leads.
He’s the one huge actual property firm CEO who can write software program code.
eXp acquired Virbela, the 3-D, fully-immersive, cloud workplace surroundings, for $11 million in 2018 after changing into its largest buyer. COVID made that wager a positive factor. Now, the corporate is licensing the platform to different firms and authorities companies. And just like the cloud computing enterprise increase at Amazon and Microsoft, this may very well be a completely new income for eXp.
There may be additionally a pony within the firm’s plan to go international. By providing significantly better fee splits than sometimes present in different nations, eXp can broaden internationally rapidly, very similar to the franchise giants did within the Nineteen Eighties. However even simpler with its digital platform, decreasing the friction round workplace places and branding.
The one factor that might journey up this wonderful development story is that if the expansion have been to stall. Then the eXp empire might take a success and even come tumbling down as the inducement for brokers to stay round could be diminished. The eXp narrative depends upon development. For now, the booming inventory is one thing many brokers need in on. They watched know-how firms develop and make many millionaires and even billionaires, however not brokers.
They’ve been disregarded within the chilly, although they’re doing a lot of the work that created these on-line tech giants. Brokers haven’t any upside within the fairness of those firms. KW mastered income sharing, however eXp has added the fairness wrinkle for brokers. A booming inventory market has made the provide much more engaging. And brokers shopping for eXp shares has helped increase the inventory, making a virtuous cycle.
Earlier than eXp, Sanford tallied a number of enterprise wins, however he additionally began many firms that went nowhere. His story is about how all of those assorted experiences got here collectively to make eXp.
I suppose it isn’t a shock that he has a new side gig as CEO of Success journal. It’s a unusual transfer, however then Glenn is a unusual man.