Today’s Notorious Interview is of a super-interesting, super-smart guy many of you probably have never heard of. His name is Alex Doubet, and he is the founder and CEO of Door, a unique brokerage based in Dallas. He is also a VIP Subscriber and a longtime reader of Notorious.

Door is an interesting brokerage that combines W-2 agents with virtual representation to offer brokerage services at a flat fee. We go into his model, his operations, and his challenges, along with Alex’s opinions and views on the industry. It’s hard to describe, but I loved this conversation. Hope you will too.

Just a few factoids that are in this interview:

PS: If you have a strong emotional attachment to traditional real estate models, try not to get too emotional listening to Alex.

Conversation with Alex Doubet, Door

Bio of Alex Doubet, CEO & Founder:

Alex began his career at US Road Sports (USRS), an endurance event company that owned over two dozen events with over 120,000 participants across the country. USRS was sold to Life Time Fitness in the beginning of 2014. At USRS, Alex was the Director of Finance.

Subsequent to USRS, Alex was the Chief Operating Officer and Junior Partner of Advantix Marketing, a search engine marketing and optimization agency and a member of the 2015 Inc. 5000 list.

Throughout his career, Alex has bought and sold houses and multifamily apartment complexes. He has consistently been disappointed by how expensive the transaction costs were when selling real estate, and is building a better, more cost-effective service at Door.

Alex is a graduate of Harvard University with an AB in history and a secondary concentration in Economics.

About Door:

How it Started…

Alex Doubet couldn’t believe what just happened to his Mom. The costs of selling her home had just taken thousands of dollars of her home equity. Stolen, really – because for having some professional pictures taken and a sign placed out front, the Realtor earned over $2,500 per hour. Real money that his Mom, Holly could have used to reduce the payments on her new home or sav

Alex created Door.com, the next-generation real estate platform that includes non-commissioned and specialized employee agents with integrated technology and a focus on service over sales. Buying or selling a home with Door.com is a no-nonsense experience with professional licensed agents who are 100% aligned with your interests.e for her grandkids.

No one else should have an experience like Alex’s Mom – you should have an honest professional looking out for your interest instead of their commission check, and you should keep more of your home equity. And since its launch, Door.com has returned nearly $3.5M in commissions back to their clients – all while driving the industry’s highest customer satisfaction.

Work with a Trusted Team, Not an Individual

We believe the independent contractor model used by traditional real estate brokerages is broken. Because traditional real estate agents do not know when they will get their next paycheck, their strongest incentive is to find the next deal, not concentrate on yours.

Our real estate agents are employees because we believe that hard-working professionals managing what is frequently the largest transaction in a person’s life deserve great incomes and a company culture that fosters growth (both personal and professional) and learning. We believe that this model creates a company that is completely client focused.

Founded by an entrepreneur with a history of success, and backed by a team that has transacted more than $200 million of real estate in Texas, Door.com is now one of the fastest growing residential brokerages in Texas, Colorado, California, Pennsylvania, Georgia, Florida and Tennessee.

Here at Door.com, we are all working to build an unrivaled platform for unlocking the world’s home equity. We cannot wait to talk with you and work for you to successfully buy or sell a home.

Door.com is a licensed Texas real estate brokerage entity operating as Door Texas Realty, LLC in the state of Texas. Door.com is a registered trade name of the following real estate brokerages: Door Texas Realty (TX), Door California Realty (CA) and Door Southeast Realty (FL, GA, CO). One or more of its employees or affiliates are licensed real estate agents, salespeople or brokers in the states in which they operate.

Discuss in the VIP Lounge

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-rsh

6 Responses

  1. Fascinating story. Just a couple of questions came up for fodder… So Door’s path to profitability is 10,000 transactions per year? What’s the cash burn rate as they expand into new markets? How much new outside investment will be required to get to profitability? Is the exit strategy an IPO? Where is the investors’ money going, marketing and lead gen? What real assets does the company have?

    How much do it’s excellent agents currently earn selling seven houses a month and what’s the turnover? Of note, Door’s leverage is the very thing that Alex wants to do away with – the buyer agent and BAC. If buyer agent compensation is delinked and buyers don’t hire buyer agents, will his virtual cracker jack listing agents then become the defacto showing agents and be present for showings? How about those buyer commission rebates, what will replace those in the company’s marketing strategy when there’s no BAC to rebate?

    Lastly, if 80% or Door’s business is listings, what happens to Door’s margins in a market shift to a buyer’s market (Alex, you just admitted that dangling $10,000 in savings in front of buyers was not compelling enough for them to choose Door)? Rob, just stirring the pot for you…

    1. We have (and hopefully will continue) raised outside funding. Door.com, like many companies these days, does not have a breadth of real assets outside of software, etc.

      People ask me a lot: “Why would an agent come work at Door.com?” My favorite response is: “Can an agent earn more in the traditional space? Yes. Will they? Probably not.”

      Our agents earn, on average, over twice what the average traditional agent earns, and they have health insurance, a great company culture, benefits, etc. I think we offer a far, far better environment for agents to work in than does the traditional space.

      Finally, you’re right, we do rely on third-party buyer’s agents. Along with this, however, we employ third-party agents on a gig basis, so were BAC and buyer’s agents to ever disappear in a meaningful way, we would be well-insulated from the change because of our proprietary agent contractor network.

      Finally, even in a “buyer’s market” there are thousands upon thousands of transactions that occur each month in the big metros in the US. Days on market expand and volume decreases, but I think we’ll be fine. One of the things we have avoided from the beginning is taking on listings that, in our estimation, are overpriced (on the whole, we have been very good at this). A secondary driver to this choice is we don’t want want to have the reputation of not selling listings, particularly in a down market.

  2. Another fantastic interview! Alex was incredibly honest and absolutely on point. He reminds me of Glenn Kelman. His quote of 10% of buyers in the short term buying a home without an agent is the exact same number GK used on the last CC. I sincerely appreciate how open and real Alex presented his points. Very well done. It’s insane to believe most buyers will give tens of thousands of dollars to a buyers agent if the fees are decoupled. No way. People won’t pay it and they shouldn’t have to. Alex is right!!

    Questions: The door business model is forward thinking and innovative, but what is defensible? Anything proprietary? If it works, which it sounds like it does, why can’t Redfin and others (ie eXp) copy it?

    A lead generating website is so incredibly valuable. If you combined Door’s business model with Redfin’s website/mobile, the profit margins, not just gross margins, would be spectacular. It makes so much sense. Alex stating that Redfin hasn’t went far enough and they have a foot in each door, tells me Alex thinks they should too. Maybe RF acquires Door, but maybe more likely, RF begins to offer a virtual service.

    1. I think real estate is a funny space in that it takes a looooong time to develop a defensible network effect. Given that the average tenure in a home is 7-8 years, the real estate transaction is a recurring one, albeit with a very long time between reoccurrence.

      What starts to happen first–from a defensibility standpoint–is local market defensibility in which a given firm’s yard signs, client base, referral base, etc., starts to make their competitive position quite defensible. I believe this is particularly true with an employee-agent model because clients come back to work with Door.com, not just a specific agent that happens to be at a given brokerage (as in the traditional model).

      And to your final point, yes… a lead-gen website is INCREDIBLY valuable and provides a defensible hold at the top of funnel so long as a company with said website keeps a close watch on its organic traffic profile.

      1. Alex – thank you for the response.

        The apple I-phone sale cycle is 4 years. Apple has gross margins of 38%. They sell between 55-85 million units a year in the united states with an average revenue per unit used and new of ~650$.

        As you stated the sale cycle for a house purchase is 8 years with 5.96 million home sold in the United States in 2018. Accounting for 2 sided transactions that is ~12 million units a year. The average revenue per transaction at a 1% fee per side is ~2,860$.

        I see the real estate brokerage business, the same way I see the Apple I-phone cycle. Lower the price to 1% per side and maintain gross margins of 30-40% and steadily grow.

        Obviously, the cell phone started from nothing and went to mass adoption over a decade. But am I wrong that believing that the key is brand awareness? If a brand can own the consumer experience, not the agent, the brand can continue to capture the same consumer over and over again.

        Your comments about the cost of a buyers agent resonated with me. In what industry does someone pay tens of thousands of $ for professional services? Doctors – no. Lawyers – no. Perhaps large scale companies paying consultant fees?

        I think if the real estate industry started from scratch, similar to the cell phone, a real estate brokerage would be next to Apple as one of the largest businesses in the U.S. This industry is primed for disruption through consolidation. You sound like a person who will be a leader of that change. It will be fascinating to see what happens over the next decade.

        Best,
        Ben Thompson

  3. Great interview so far! Spot on…I’ve been doing virtual listings here locally for some years now for a flat fee and it’s worked well particularly with investors and developers.

    I’m 13 mintues in when the conversation raised this question in my mind:

    How do you avoid RESPA or Antitrust issues when you tie the buyer rebate to an incentive for using in house title and mortgage?

    Just seems like something the ‘Men In Black’ at these organizations would jump all over. Would love to hear your thoughts and thanks again!

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