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 expertise 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. At the moment, the corporate is valued at $6.8 billion, bringing Sanford’s web price 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 enable 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 moderately distinctive brokerage?
A beneficiant 80-20 fee break up — and even a bit of the 20 p.c, if the agent brings in different brokers. That ongoing upstream income supply eats away at eXp’s web earnings. However that has not bothered Wall Avenue buyers as a result of the agent and income progress 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 at present — 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 price nearly $1 million at present. 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 Nineteen Sixties and Nineteen Seventies, the RE/MAX juggernaut within the Eighties and Nineties and with the Keller Williams rock-and-roll growth curve in the last 12 years.
Why? Brokers typically discover themselves alone on the earth and lots of of them want an organization that not solely delivers the products but in addition offers them a much bigger imaginative and prescient to comply with. Plus, Sanford has confirmed that an workplace is not important for making a connection and loyalty to the mothership.
Sanford is extra advanced than what meets the attention
He discovered rather a lot on the knee of his father, a inventory dealer who made a enterprise out of reverse mergers — shoving corporations into the shell of an current publicly traded however dormant or sputtering enterprise. Typically they had been Canadian penny shares. Sanford labored together with his father early in his profession, studying the methods of publicly-traded corporations.
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. Typically these shares will be “pump and run” operations that appeal to speculative buyers 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 Avenue has gone mainstream.
Sanford’s monetary engineering has paid off
Sanford has used shares of inventory over the past 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 alternate. (Earlier than, it traded on the OTC, the over-the-counter penny-stock alternate.)
Sanford additionally made positive he managed the destiny of the corporate. Collectively together 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 choices. It’s not an excessive amount of completely different than the management Wealthy Barton and Lloyd Frink train over Zillow or Mark Zuckerberg over choices at Fb, although every of these corporations did so by issuing two lessons of inventory. None of them have such a big outright stake of their corporations, as Sanford does.
What he finds himself answerable for at present is a web based 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 growth crew builders and mastered search engine marketing within the early days of the web to seize leads.
He’s the one massive actual property firm CEO who can write software program code.
eXp acquired Virbela, the 3-D, fully-immersive, cloud workplace setting, 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 corporations and authorities companies. And just like the cloud computing enterprise growth at Amazon and Microsoft, this could possibly be a wholly new income for eXp.
There’s additionally a pony within the firm’s plan to go international. By providing a lot better fee splits than sometimes present in different nations, eXp can develop internationally rapidly, very similar to the franchise giants did within the Eighties. However even simpler with its digital platform, decreasing the friction round workplace places and branding.
The one factor that would journey up this wonderful progress story is that if the expansion had been to stall. Then the eXp empire might take successful and even come tumbling down as the inducement for brokers to stay round could be diminished. The eXp narrative depends upon progress. For now, the booming inventory is one thing many brokers need in on. They watched know-how corporations develop and make many millionaires and even billionaires, however not brokers.
They’ve been unnoticed within the chilly, though they’re doing many of the work that created these on-line tech giants. Brokers haven’t any upside within the fairness of those corporations. KW mastered income sharing, however eXp has added the fairness wrinkle for brokers. A booming inventory market has made the supply much more enticing. And brokers shopping for eXp shares has helped enhance the inventory, making a virtuous cycle.
Earlier than eXp, Sanford tallied just a few enterprise wins, however he additionally began many corporations that went nowhere. His story is about how all of those diverse experiences got here collectively to make eXp.
I assume it’s not 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.