Iterate, iterate, iterate — we are 3.5 years into Knock and we still grind away every single day. We are constantly building better tech and process to make this insanely complicated transaction easier. And yet, we make mistakes every day that lead us to tearing down what we built and building it back up again. Just when we think something is done, we start over. If that doesn’t build grit, I don’t know what does.
I had the pleasure to interview Sean Black. Sean is the Co-founder and CEO of Knock, a revolutionary new approach to home buying and selling that is making it as easy to trade-in your home as it is to trade-in your car. Sean was also part of the founding team at Trulia, where he was involved in the strategy, growth and revenue from inception. Sean is an investor in other tech companies that bring radical transparency, convenience, and savings to consumers, including NerdWallet, SeatGeek, Zeel and NFX Guild.
Can you tell us a story about what events have drawn you to this specific career path?
I started my first internet company, Everymile.com, in the online automotive space while finishing my MBA in Boston in 2000. Long story short, Everymile became a statistic of the Web 1.0 deadpool just two years later. Humbled, I moved to New York City six months after the September 11th attacks to start over. At that time, cars and real estate were still two of the biggest classified sections in newspapers along with travel and jobs. But by 2002, travel, jobs and cars had all gone online in a big way and there were three large players in each category: Cars had AutoTrader.com, Cars.com and Autobytel. Jobs had Monster, HotJobs and CareerBuilder. Travel had Expedia, Travelocity and Orbitz. Real estate only had Realtor.com and, as their name implies, their primary customer was not the consumer. But with the bursting of the Web 1.0 bubble, funding had dried up and so too did potential competitors to take on Realtor.com. Coincidentally, I met Barbara Corcoran at a networking event while she was still running the Corcoran Group in New York. It was clear from my conversation with her that she believed wholeheartedly that the internet was going to change real estate. So I convinced her to hire me as a VP at Corcoran and I stuck to her like glue to learn everything I could about real estate while I helped Corcoran transform itself online. After 3 years at Corcoran, tech investors started to get off the sidelines, albeit slowly. I wrote a business plan for an online search engine called BigDiggs. My first investor went to Stanford with investors of a competing real estate search engine in San Francisco called RealWide. Our investors brokered an introduction that led to us consolidating efforts and renaming the company Trulia. My Knock co-founder Jamie Glenn joined six months later from Yahoo!, where he ran Yahoo! Real Estate.
Can you share your story of Grit and Success? First can you tell us a story about the hard times that you faced when you first started your journey?
Trulia was really focused on the buyer, and did an amazing job of democratizing the information available to consumers about homes for sale.
When we first started Knock, we felt we had already fixed the buy side of the transaction with Trulia, and were pretty adamant about not working with buyers at all. We were determined to fix the process for sellers, and at first we thought that meant cutting the buy side of the equation out entirely. We wanted to create advanced algorithms to figure out how to price properties accurately to help sellers sell their homes more quickly and cost-effectively, how to cut down the long cycle times, digitize the many parts of the process that are paper-based and/or manual, etc. This led to the creation of our original List Guarantee model, whereby we would guarantee to sell our customer’s house for market price in 6 weeks or buy it ourselves for that price. We were also offering to buy some homes directly from customers who were looking to sell fast.
However what we quickly found was that this model didn’t work, and that we couldn’t build one side of a marketplace without the other. In trying to democratize the sell side of the transaction, which is still almost entirely offline, we realized we need to build a two-sided marketplace connecting buyers and sellers to make the transaction more certain, convenient and cost-effective.
When you are creating a marketplace business, you are kind of creating two businesses at the same time: The sell side and the buy side. Well, in real estate, 71% of home sellers are also buying their next home at the same time — they are also a buyer. We couldn’t truly fix one side for our customers without also fixing the other.
Again, we had been pretty adamant against working with buyers since the beginning, so it was actually grit in this case that delayed us getting to where we needed to be for our business to truly take off. But it was our grit and intense focus on our mission of improving the transaction that helped us push past that and have the courage to innovate and transform.
Where did you get the drive to continue even though things were so hard
At its core, Knock is truly a mission-driven company. Since the beginning we’ve been on a mission to improve a process that is outdated, opaque, stressful and unnecessarily expensive — the typical real estate commission in the U.S. is 6%, while average commissions in some regions of Australia can be as low as 2%, and even lower in the U.K. at about 1.5%.
That has remained true as our business model has evolved, and it has helped us push through the challenges any startup faces at the beginning, but especially in a complex industry like real estate that is already dominated by some major players that have captured most consumers’ mindsets. But if it was going to be easy, someone else would have done it already.
Our mission to make the process more certain, convenient and cost-effective for consumers has always pushed not only us as founders, but every single one of our employees who also believe in this mission, through any challenges.
So how did Grit lead to your eventual success? How did Grit turn things around?
The same grit my co-founders and I have is something we look for in each and every single employee, and especially in our first hires early on. Even more so, we look for employees who were equally as passionate about our mission and motivated to push through the hard work it would take to achieve it.
Our company is highly distributed across 17 states, and one of the ways we keep everyone connected is through an annual All Hands offsite. At each of these offsites we have dedicated time to intense, outside-of-the-box brainstorming sessions.
At this session during our second offsite, we were addressing the challenges we’d come across with our original sell side-focused business model. One of our first employees pitched what seemed like a crazy idea, but what is actually now our core business model today. He proposed that we address all the needs of those 71% home sellers by buying their next home for them, and then helping them sell their old home. There was plenty of skepticism, but it was an “aha” moment for us. Through grit, we got the foundation in place to get the new model up and running within a matter of weeks, and never looked back.
So, how are things going today?
Putting the full scope of needs of our customer on both the buy and sell side of the transaction has proven to be hugely successful for Knock. Since the debut of the Home Trade-In program, Knock has helped over 2,000 customers successfully trade in their house for a new one. In our first market, Atlanta, market share has increased over 300% year-over-year.
So I’d say it’s going pretty great. As we continue to build the necessary technology to support our unique process, we’ll only improve our customers’ experiences, and better deliver on providing them with more certainty, convenience and cost-effectiveness than they could ever have imagined.
Based on your experience, can you share 5 pieces of advice about how one can develop Grit? (Please share a story or example for each)
1. Be Mission Driven — starting a company is hard. It is a daily exercise in problem solving and getting punched in the face. Having a worthwhile mission, what Steve Jobs referred to as making a dent in the universe, makes it easier to persevere. Our mission at Knock is to make it as easy to trade-in your house as it is to trade in your car. The home is the American dream, the biggest purchase most of us ever make and, therefore, our largest asset. Yet, it is also the most stressful, uncertain and expensive experience, so if we can fix it, we can make a big dent.
2. Fake it till you make it — from the getgo we knew we wanted to create a liquid marketplace for consumer to buy and sell homes, but the trade-in was not the original approach. We spent over a year creating and testing other ways to get the marketplace started. This is sometimes referred to as growth hacking. Effectively, we built 4 other products that failed before the trade-in, but each one taught us something that led to the trade-in.
3. Iterate, iterate, iterate — we are 3.5 years into Knock and we still grind away every single day. We are constantly building better tech and process to make this insanely complicated transaction easier. And yet, we make mistakes every day that lead us to tearing down what we built and building it back up again. Just when we think something is done, we start over. If that doesn’t build grit, I don’t know what does.
4. Time is on your side (eventually) — startups are a race against time and running out of money, but they are also a marathon and she who lasts longest wins. The longer you are focused on the problem you are solving, the more insights you glean and the bigger the moat you build around you that the next guy has to climb over. Time is your worst enemy when you start, but there is a critical tipping when you learn what works that it becomes your best friend.
5.Trust your informed instinct — I almost made this about having hope, but if hope were an effective strategy we would all win the lottery eventually. All the researching, planning, testing, grinding and iterating leads to lots of small insights that sometimes compound into something you cannot quite articulate. Sometimes you just feel it in your gut. If you haven’t done all the work to inform your gut, then that’s likely just gas. But when you do all the hard work to glean all those small insights, your gut can sometimes process all that information far better than your brain, so trust it!
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped you when things were tough? Can you share a story about that?’
As I mentioned, my first internet startup Everymile was a complete failure. I started that company while getting my MBA at Babson, which has an incubator in it. One of my entrepreneurship professors was an investor and board member. Dr. Ed Marram is very successful and experienced biotech entrepreneur. Ed did 3 things for me when Evermile failed: 1) I was broke, so he lent me $30k to move to New York and start over. 2) He told me every successful entrepreneur has failed at least twice, so I was halfway there! 3) He told me it takes pressure to make diamonds, so keep the pressure high. When Ed started his company dead broke he bought a brand new BMW he couldn’t afford so he would work like mad to make the payments.
How have you used your success to bring goodness to the world?
I’d have to point back to our mission, and how we are truly helping people through a journey they may not even think they’d be able to embark on otherwise. We are helping them achieve the American dream. The irony of the home is it’s what traditionally has been viewed as the American dream, but it’s also what holds many people back in life like a pair of golden handcuffs. The majority of Americans have their savings tied up in the equity in their current home. By making that savings liquid before their old home sells, we help families move up into bigger houses, in better neighborhoods, with better schools .
There are countless examples of families we’ve helped in this way. You can read about them in our hundreds of reviews on Zillow and Trulia, as well as in what we call our “Humans of Knock” series on our social media channels. Take this example from a recent customer testimonial:
“I wanted to move to get my children in a better school district. Education is one of the most important factors for any parent, but I feared that we just didn’t have enough money to do anything for at least another 5 to 10 years. Knock was able to help us move into our dream home incredibly fast. We actually put an offer on the first and only home we looked at because we loved it so much, and since they made an all-cash offer on our behalf, we were able to get it and move in quickly. Then we listed the old house and went under contract in just 3 days.”
Are you working on any exciting new projects now? How do you think that will help people?
Since we started Knock, one of the core things we’ve spent a lot of time and energy on is developing advanced predictive algorithms that help us accurately determine the final list price to place on customers’ homes, and expectations for how long they will take to sell. Fairly recently, we’ve begun exposing this intelligence to consumers through a unique home search tool we call Knock Deals. Through Knock Deals, we provide consumers with insights what homes within their search criteria are a great deal, and how quickly they can expect various listings to sell.
This year, we began exploring what the aggregate data on these listings tell us about trends in home prices, and sharing that with consumers in our current markets of Atlanta, GA, Charlotte, NC, Raleigh-Durham, NC and Dallas-Fort Worth, TX. We’re excited to have expanded the markets we can provide those insights for to 45 of the top markets across the U.S. with our National Knock Deals Forecast, which we plan to release quarterly. I’m excited about our potential to help people make more informed decisions about home buying and negotiating.
What advice would you give to other executives or founders to help their employees to thrive?
By far and away at Knock we believe the most important piece of a thriving employee population is a mission-driven culture that comes from within. We call our culture POPSICLE, a mnemonic of our values that were decided on very early on by our own employees. I’d recommend other founders take the same approach, and then establish methods and processes for keeping that culture alive as they scale. At Knock, these include a Slack channel dedicated to our values, annual POPSICLE awards and the yearly all-company offsite I mentioned earlier.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
To be honest, we think of Knock as a movement. Americans spend $1.6 Trillion on homes every year, the largest consumer industry in world. We have a chance to completely revolutionize the way its done, but we need every homeowner on board to make it work. If that’s not a movement, I don’t know what is!
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“When going through hell, keep going!” Winston Churchill. To see how I apply it to my life, read all my stories about being gritty and overcoming failure above!
How can our readers follow you on social media?
● Twitter: https://twitter.com/SeanBlack
● LinkedIn: https://www.linkedin.com/in/seanblack/