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Episode 87 - GRIT The Real Estate Growth Mindset with Guy Gal

Guy Gal has always been a problem solver. Growing up, he liked to solve complex problems especially when they affect people he cares about. He also liked t

Brian Charlesworth

Brian Charlesworth

Chairman & CEO

Brian is a highly accomplished entrepreneur, business builder, and thought leader in the real estate industry. With a track record of success in software, telecommunications, and franchise businesses, Brian has a talent for identifying and realizing business opportunities. Driven by his passion for technology, Brian is dedicated to using his skills and experience to bring about positive change and improve people's lives through the advancement of technology.

Guy Gal has always been a problem solver. Growing up, he liked to solve complex problems especially when they affect people he cares about. He also liked to do it for those who deserve to be helped because they were exploited or mistreated. This had a great impact on how he made decisions in his life.

Guy started his first company in college and what started as a little weekend project eventually grew into a company with hundreds of employees.  Many years later, he realized that this was not how he wanted to live the rest of his life.  He wanted to live his life more deliberately and find something that he will enjoy doing forever. It didn’t matter how difficult or complicated it was, as long as it’s worthwhile.

Then he remembered how he, as a consumer, had both good and bad experiences with real estate. He wondered where that inconsistency came from and asked an agent about it. He was told that no matter how much creativity, effort and hard work an agent puts in a transaction, it’s the brokerage that gets the credit.  That’s why some agents prefer to have a company of their own without having to operate a brokerage to do it.

That’s when Guy had the idea of starting an “invisible” brokerage that will come in and do all the back-office work to serve the agent and his brand with no compromises whatsoever.


Today, Guy Gal is the CEO and Co-Founder of Side Inc, the only real estate brokerage that exclusively partners with top-producing agents to help them operate, develop and grow their businesses.  He is dedicated to transforming high-performing agents into market-leading boutique brands and believes that the future of real estate is local, boutique, specialized, and agent-owned.

Let’s hear from Guy as he shares his insights about the real estate industry, his mission to go against the monoliths in the business,  and how his achievements paved the way for his company to earn the title - Company of the Year by INMAN.

Top Takeaways:

07:24 Why Guy chose the real estate industry

09:05 The magical “AHA” moment that started Side

13:08 Who was Side’s very first partner

21:35 Why Side only caters to 3 states

24:21 The most important question to ask when you’re building a business

24:40 What the real estate industry needs

26:12 The difference between a meaningful enterprise from a financially sound one

40:16 Why entrepreneurs need to start with the end in mind

42:27 Where is the industry headed to 3 to 5 years from now

44:13 How brokerages contribute to the commoditization of the agent

51:18 The most important statistic for Side

51:52 What Guy is most proud of about his business

To know more about Guy Gal, visit:

Podcast Transcript:

Brian Charlesworth  0:34  

Alright, hello, everyone. And welcome back to the Grit Podcast. I'm Brian Charlesworth, the founder of Sisu and your host of the Grit podcast and excited for our show today. Think I've been trying to get this guest on for about a year now. And you know, he was going to be on about a month ago, and then I ended up getting COVID and had to cancel on him, which was a difficult thing for me to do. So anyway, super excited, though. We are with Guy Gal today. And Guy is the CEO of Side Inc. and also the founder and, you know, I'm super impressed with what he's done there. I got to go in and see their operation about a year and a half ago, probably. And you know, it was really cool experience. Number one, their offices are amazing. Their team was super great to me that day. So I enjoyed spending time with them. Then Guy took me out and we went on a little walk around the neighborhood. And we went to that park. What's the name of that park Guy? 

Guy Gal  1:35  

South Park

Brian Charlesworth  1:36  

South Park, I should, how do I forget that? Right?

So we went to South Park, and he's like, hey, you know, here's the partner at, you know, benchmark and you know, just all the top VCs. So anyway, it was kind of a fun experience. But really let me know, you know, the value of being in that world that you're in down there, where you know all these guys like firsthand. So anyway, Guy has built multiple businesses. We'll talk about that today. His most recent is Side Inc, which is a new real estate, tech brokerage, and we'll get into more of that maybe Guy would call it something different. So

Guy Gal  2:18  

The call to the good.

Brian Charlesworth  2:21  

Anyway, Guy, anything you want to add to that. And thank you for joining us on the show. 

Guy Gal  2:24  

Well, thanks for having me. It's nice to see. I'm glad you're back in good health and in good spirits. I love seeing the sisu dashboard behind you over there. No pretty and useful as always,

Brian Charlesworth  2:36  

You know, that's my wife's business. So it lets me always see, you know, her growth and what's going on there, which is awesome. 

Guy Gal  2:42  

Love that. That's really great. I'm sure she doesn't love it as much. But

Brian Charlesworth  2:48  

Actually, surprisingly, she loves it. So that's great. You know, love accountability, but they love positive accountability. That's what I've learned. So it's all about helping them reach their goals. That's another story then.

Guy Gal  3:02  

Yeah, it's not because accountability can be perceived as punitive. Right?

Brian Charlesworth  3:06  

Yeah. Yeah.

Guy Gal  3:08  

Like, accountable. That's gonna hurt. Yeah.

Brian Charlesworth  3:13  

Yeah, for sure. In fact, if you look it up in the dictionary, it does come across as you know, it's a negative thing versus positive, which is why I call it positive accountability.

Guy Gal  3:23  

But yeah, you could write a book on that.

Brian Charlesworth  3:25  

Yeah. I actually plan to

Guy Gal  3:29  

You heard it here first.

Brian Charlesworth  3:31  

Yeah, yeah. Yeah. You guys all witness as I'm starting my book,

Guy Gal  3:36  

Brian, starting a book positive accountability. I love it.

Brian Charlesworth  3:41  

So anyway, Guy, you know, maybe just give us a little bit more about your background. I know you started a few other businesses and built some other companies, but not in real estate. So I kinda like to know, like, why real estate? And how did the evolution of that happen?

Guy Gal  3:58  

Naturally, organically, in a way that was not very deliberate. But that's how most things happen in life. Yes. I was always a problem solver. Solve problems, I was compelled to try and fix it. Felt like I knew better. I don't know, Hardart understands exactly why it was that way. But that's always something I've been I like to solve complex problems, especially when they affect people that I care about or that I think are deserving, or that I feel like being exploited or mistreated. I also grew up as a bullies bully. I was that kid in school who came to the rescue of kids that were being pushed around for no other reason, then maybe somebody asked that they looked funny or how to odd name or, yeah, whatever the case might be. And that has a big impact in how you the decisions you make in your life. And of course, decision making your life or what makes your life what it is. So in college, I started my first company. And it was because I stopped, you know, I had an age that nobody else was scratching, I figured, might as well scratch it for myself. And a little weekend project became something a lot bigger with hundreds of employees. You know, many years later, I was like, how did that happen? This is not what I want to spend the rest of my life doing. So I made the very hard decision to move beyond and past it and left that company in the very capable hands of my friends and business partners. It took a bit of a sabbatical to figure out what was next. And long story short, I was very fortunate to be invited to participate as an entrepreneur in residence at one of the world's best venture funds here in the San Francisco Bay Area called matrix. They've been around since the early 80s. Well before the movie with the same name, the top 10 by performance fund, really highly celebrated. And I was incredibly flattered, they invited me to come on and be that fellow. And it was with the explicit intention of figuring out life's work. Brian, I was like, Okay, I need to stop doing accidental things. I want to be more deliberate about what I do next, I want to find life's work, I want to find something I can spend 20 years doing, and feel great having spent all that time doing it, even if it's hard, or complicated, or heart-wrenching, it doesn't matter to do something worthwhile. And I thought I could figure that out in two weeks, I thought, Oh, two weeks, two months, I'll figure it out. It took nearly two years to figure that out. It was quite a process. And at the end of that process was the beginning of Side and Side started five years ago. And Side is my life's work. This is the thing that I'll be doing forever, as long as it's possible for me to still be effective in terms of representing and advancing the interests of Sides. Partners, right, the agents that work with us, the independent brokerage owners, the teams, that I'll keep doing that. But that's what I'm doing today. And the way that it all came together was I as a consumer had a not-so-great relationship experience, rather with real estate. And then several years later had a really good one. And try to and this was during the time when I was thinking what do I do next? So that was top of mind. And I asked myself, Why was this experience really good? And that one not good at all? What's with the inconsistency? I initially gave that credit to the brokerage of the agent who had helped me that, with that new transaction. Yeah, that person got really frustrated, because, you know, it helped me we're friends. So there were a lot more forthcoming. But his whole thing was people always give my brokerage credit for the work that I do. They had nothing to do with the experience that you just went through. That was all me, it was my creativity, my care, my experience, my expertise, my money, my time, my business what I do. But you're giving all the credit to this company here

Brian Charlesworth  8:27  

That's the name on a sign.

Guy Gal  8:29  

Yeah, that has a site that I pay a quarter-million dollars a year to. And I feel like I get very little value in return. They audit my files, and they get in my way when I try to be creative. And that agent he worked with many years ago, they actually are part of the same company, that company owns multiple brands. And that's one more of them. And that agent actually is a part-time agent, but you didn't realize that as a buyer, because they came in and told you how much business the office does. And they showed you listings that other agents in the office are responsible for. And that's how our industry works. All of these brokerages take credit for the work that agents like myself do and they use that to make it possible for agents who don't know what they're doing to take business away from me that I should be doing. And I am so frustrated in one day, one day I will start my own brokerage, I will have my own company, and I will no longer be frustrated. I will no longer be annoyed by it all. That was the magical sort of aha moment that started Side because my response to him was well why this one-day thing? Why not now? Why not? Now, what's holding you back from doing that? Now you're in a great position. You're doing you know, 70 units a year in sales like 40 plus million in volume, you're clearing a million GCI you're you know what you're doing, you're great. And his whole thing was well I do run my own business now. But operating a brokerage is different. I don't want to operate a brokerage, I want to own the business that I'm running, I don't want to take on all the back office, I don't want to be legally responsible for it all, it's really daunting. I feel like it's been set up to make it impossible for me to actually fulfill my aspiration of independence. And that is when the light bulb went off because he was somebody who had spent time money energy trying to solve this problem for themselves and couldn't for no other reason than the way things had been set up, to create a barrier to fulfilling that ambition, that aspiration. And what I saw as the first thing to recognize, the second thing I recognized was that he was not an agent. He was an entrepreneur who happened to be an agent, you actually running a business and he was carrying the cost of sales. He was carrying the cost of marketing, he was carrying the cost of all the revenue. He was responsible for winning all the business servicing all the business. And he had to go off and hire two people full-time to fill in the operational gaps where his brokerage could seven units a year, they just couldn't service him in a sophisticated enough way fast enough, because it's not the average agent doing three deals a year. 

Brian Charlesworth  11:17  

How many? How many was he doing at that time?

Guy Gal  11:19  

70 units a year 

Brian Charlesworth  11:20  

70 units. 

Guy Gal  11:22  

That's a lot of units.

Brian Charlesworth  11:23  

And what is he doing now? Do you mind sharing?

Guy Gal  11:26  

You know, I don't know. He actually is in Canada, so he doesn't work with Side.

Brian Charlesworth  11:32  


Guy Gal  11:34  

We are not there yet. Ironically, yeah. I imagine he's probably still stuck in and around that number.

Brian Charlesworth  11:42  

Hey, I assumed Guy that that was like one of your wishes on companies versus teams or brokerages. But

Guy Gal  11:52  

Well, I'll use that as a segue to give you that example, real quick. That's that was the, you know, aha moment for the business. His whole thing was I want to own my company, I don't want to operate a brokerage in order to do it. My whole thing was what why doesn't somebody create an invisible brokerage that works for you, the agent, it's your business. At the end of the day, you own the business, it's your brand. It's distinct and custom to you. You hire an invisible brokerage to come in and do all of the back office work the way broker of record a managing broker, or an auditor or a compliance officer, deal doctor, Secretary, a clerk would do, but it's delivered to you as a service. It's delivered over software, and it's delivered white label. So it's serving into your company, your brand, and no compromises at all whatsoever. And his response to that was how does it not exist, that I wish that thing existed. And if it did exist, that's exactly what I would then use to go off and establish myself and take ownership of the business that I'm already running without having to operate the brokerage. That was the beginning of Side. But it was another eight months still, Brian before we started the company because we were really keen on making sure we there were no false signals, no false positives, no false negatives, really wanted to find someone who was so compelled by the idea of this, they volunteered themselves to do it with us, as opposed to selling them in right, like motivating them or compelling them. And that that was Michelle Kim shocking when we first met her was doing $23 million dollars a year in sales in San Francisco was seemingly already tapped out as far as capacity because you know, agents don't sell houses they sell time. Right? That's right. And she's got three kids and she's doing all that work, which is a full-time job in and of itself. And that just meant that she was referring a whole bunch of her business to other agents because she couldn't take it. So Side's very first partner was her. And it was our first order of business. Let's transform Michelle into a team because she was an individual. So that was the first thing we did. And then a year later, Michelle was that was 56 million in volume. Now, this is the fifth year of Michelle, our partnership with Michelle. Today, Michelle is no longer just Michelle. She's no longer just Michelle Kim, the agent. She's no longer Michelle can group the team. She is actually mosaic real estate. They're 12 producing agents, they'll close over 300 million in volume this year. That's awesome. Five years later, and it's a wonderful, amazing thing to have gotten to be a part of a Side, right to come in there and actually create that brand and in partnership with that agent, to establish it to help grow it to put a plan around it to execute into it. And then to watch everyone succeed and make that progress. It's the most fulfilling thing in the world. And I'm excited to do another 1520 years of it because it's already been five. But there's a lot more left to do. But that is how site came to be five years ago, this year, we'll close well over 20 billion for our partners for those partner companies, you know, the brands you see here behind me next year to be over 40.

Brian Charlesworth  15:31  

Okay, so you have, you're in three states today, I believe, and you have around 400 partners or brokerage companies,

Guy Gal  15:43  

Over 400 partner companies. So 75% of those used to be top producing agents or teams instead of somebody else's brokerage. And you've helped them create their own company and go live without having to operate to draw pictures, that's we do 25% of those partners, you are independence, they will already fully independent, they hire site to come in and take over their back office and unconstrained them and get them to be a bit more sophisticated and consistent about their distribution and marketing efforts. So that over time, they get to start growing the company again. So that's that and then across those four companies, it's well over 3000 agents today.

Brian Charlesworth  16:28  

Okay, so congratulations on your growth and your success. What? Like you guys, you're the first that lets a team or an independent brokerage, I believe that's really who your primary partners are

Guy Gal  16:48  

Definitely a top producing agents, teams, and Indies.

Brian Charlesworth  16:51  

So you let them come in and they brand their own business. I'm really interested in this because this is very close to home with me and what we're doing at Sisu. But I know you guys have targeted really top producing agents, and teams, and independent brokerages. The exact same people we work with, right? Like why is that? Why do you believe that teams independent brokerages? Like that's the future? And I know like from your perspective, I'm really interested to hear this because you know, you're coming in and really making a play against that traditional brokerage, if you will. So just I really want to get your thoughts on the future and like, why why are teams and independent brokerages? Like why is that the direction things seem to be moving? I mean, if you talk to if I talk to most leaders in this industry, they're saying, you know, teams are the future of the industry, right? 

Guy Gal  17:52  

Right. And that's because teams are actually the past two. They just said in the past, teams were effectively organized into small boutiques, and then the big conglomerates came in and acquired them all and consolidated the industry, and created these monolith companies and brands, that as they grew, unlike the boutique look, local boutique model hyperlocal ownership of small offices that were serving in a particular community, those one size fits all type conglomerates, the way that they define service level was to the average producing agent at on the roster, which happens to be an agent doing less than three deals a year. And so anyone that was able to be more successful than that immediately wasn't getting a service from the brokerage that was designed to meet their specific needs. 30 units are very different than three units. And so that's when agents being entrepreneurs first started to take it upon themselves, to form into their into teams, because they recognize that the only way to perform at that level of volume and to be able to meet the demand that the market was sending their way because they're such the so good at their service that they had to organize into teams and in that way have more leverage and more time to service more business and fill in the operational gaps that exist in the relationship between them and their brokerage. Because they break the mold. They break the three units a year mold. Yeah. And brokerages are designed to serve into that mold. Because when they make the most money, that's what the average agent actually happens to be. And it so happens that over 70% of the transaction is done nationally are done by part-timers, right. So that's the incentive structure you as a big brokerage are incentivized to work with The most number of agents that will pay you the highest fee per split. And that typically means part-time and casuals. So you're not actually designed to take care of the team. That's where the team was forming in the first place. Side just saw that that was already happening, we looked out and said, Look what's happening in this industry, it's set up to support an individual part-time agent and to prop them up. That's what everybody says to do every single company set out to do that. That's their ideal. That's what they prefer. Nobody is actually designed in a purpose-built way for this smaller segment of agents that we believe over time will take up more share. Because they deliver better service, they create more value in the transaction. And that over long periods of time is what wins. It's not capital innovation, or, you know, consolidation or impossibly onerous contracts between brokers and agents. What wins out of them today? Is people creating real value for other people, at top producers do that, and teams help them deliver that with more consistency at a greater scale? So we just saw that happening, Brian, and we said, Something needs to exist that is built for this and not for that. And at that time, there was nothing like nothing had ever been attempted like that before.

Brian Charlesworth  21:33  

Yeah, yeah. Okay. So you guys have kind of built this reputation like is this up-and-coming brokerage? You're only in three states? Like what's involved for you to get into more states? Because I don't think your challenge is getting these teams to come into Side, I think your challenge, maybe a little bit more. How do we get expand Side into different markets. 

Guy Gal  21:59  

So the challenge is not us finding willing, top-producing agents teams in the zoo. Why want to fulfill a lifelong aspiration to actually establish their own company, and get to own that and have the upside of that asset value without having to take on the burden of the back office and the brokerage. That the challenge, that demand is already inherent, it's already late. It's there. Yes, sneaking what we're doing. And that's important, why we're only in three states because we've had so much business to service in the in California, and to a smaller degree. Now, Texas and Florida since we entered last year during COVID, that it's already drinking from a firehose, and we're struggling to keep up with all of that. So we haven't had the wherewithal to be able to turn our attention to say, Okay, let's distribute this to other markets and help other agents and teams and indies do the same. But earlier this year, we raised a whole bunch of additional capital, and we have exchanged a bunch of that capital for more awesome people on the team. And we've dedicated them to distributing the future that is Side, right to national expansion. And in that way, we're able to now make that progress. And in the new year, we'll be launching in 15 new states that we wanted before.

Brian Charlesworth  23:28  

Okay, so the growth was probably much faster than you expected, you have way more partners coming in, in each state. So just servicing those partners was taking all of your bandwidth. 

Guy Gal  23:39  


Brian Charlesworth  23:39  

You raise more capital, which I mean, we should point out Guy that you did that at a two and a half billion-dollar valuation. So that's impressive. I mean, 

Guy Gal  23:49  

Yeah. Wow.

Brian Charlesworth  23:50  


Guy Gal  23:51  

One second

Brian Charlesworth  23:57  

so, you know, I think something you know, it's mostly real estate, people that listen to this, there are a lot of entrepreneurs that listen to this as well. And, you know, I'd love to hear more about just that, that process of how you raised your different rounds of capital and at which point and I think you can bring a lot of advice to those entrepreneurs looking to go out and build a business like that.

Guy Gal  24:21  

Yeah, the most important thing when you build a business is asking yourself, Does this deserve to exist? Is it going to create more value than it ultimately will capture because it has to if you don't create more value than you're going to capture? There's no point don't create one more of the same if it already exists, the world doesn't need another one. The world didn't even one more of the same brokerage. Right? It had all that what it needed was an invisible white label brokerage platform, we needed a company to come in and commoditize the brokerage brand and reveal that it's all emperor's new clothing and actually, you know, and, and, and that it's actually the boutique Whether it's most valuable, not the big, giant monolith. So you have to ask yourself that question and so that in definitive and be really intellectually honest about that, you have to have conviction about it. Because if you don't, especially when you got to raise capital, you're never going to be able to do it. Because investors sniff that out more than anything. You need to make sure that you're addressing a market that's large enough to be investable in the first place. investors think about that as hey, can you create a company that will get to at least $50 million in revenue in five years?

Brian Charlesworth  25:32  

You know, I recently did around, and I think they've kind of increased that from 50 million to 100 million.

Guy Gal  25:39  

You know, it only goes up, right?

Brian Charlesworth  25:42  

Yeah, like the mindset that I think mindset has moved shifted up in that aspect from

Guy Gal  25:47  

50 million and 100 million for a quote-unquote, successful venture-backed company is 12 months. Like, right, like, if you're, if you're near five to 15 million in revenue, the expectation of the investors who put money into your business, at that level at that point is that next year, you're doubling to 100. Again, so it only gets harder now. Which is to say that raising capital means signing up for a very particular thing. It's you saying that you're going to go out and look to build a generational company that lasts the test of time, that can be entrenched forever, and can create a new kind of value that did not exist before. What I like to refer to as pretty a meaningful enterprise, right, as opposed to just a financially sound one. Yeah, and, and a lot of investors will invest in companies that don't have that potential or that ambition, because then know that this company, maybe will only raise x amount of dollars, and then sell for X times five, to another company, that's a good enough return for them. But the kind of investors that Side has at the table are our legacy investors, their legendary investors, they're the ones that only want to put money into companies a consequence that does end up establishing is lasting forever.

Brian Charlesworth  27:21  

I don't recall, was matrix one of those?

Guy Gal  27:35  


Brian Charlesworth  27:35  

Yes. Okay. 

Guy Gal  27:37  

Yeah. Yeah, matrix, Trinity, which is the money behind back in the day loop net and blue pad high tower VGS, things like that. Sapphire, which, of course, is Paul Levine, the ex President CEO of Trulia is the general partner there. And then our latest board partner is Rahul from Kotaku, which is one of the top three new tech IPO underwriters, that's the fun. And then we have our wonderful independent director, who is clearly Peters, whose family owns one of the largest boutiques in New York. And she was the founder of fun called meta prop and just an awesome investor in her own right. But our seed round, the first round of financing was really hard. Right? It took four months, I had to fly to New York and spend six hours with Kalia to get a $20,000 investment from her. Because back then prop-tech stuff real estate wasn't obvious wasn't quote-unquote, hot. It wasn't something that people were really interested in. Compass just raised a bunch of money. It was very easy to lump the two of us together even though we're very different business, right? Yeah, they're a lot more similar to a Coldwell Banker.

Brian Charlesworth  29:00  

I actually had people lump us into Side and compass. I'm like,

Guy Gal  29:06  

Oh, like what do you do? Yeah. So so the thing I want to convey here is our seed round. Our first one was really, really hard. You know, we had like 30 Plus pitches. Before we got a lead investor. That was a VC also prolific real estate investors. And great they gave us that life we need and then five months later matrix came in and led the series A because matrix only does series eights, right? That's very discipline but great. That was an easy round. We didn't talk to anybody. We got it done real quick. The next round the series B. That was three years into coming into Sides’s life. So it's two years ago. Over 30 venture funds passed on us, Brian.

Brian Charlesworth  29:53  

Yeah. So I think that's the Side people don't see. You know, most people think oh, yeah, they just raise all this capital, you know, Guy's got this unfair advantage or whatever, right? He sits in the backyard. He's friends with these guys. But what people don't see is all the nose and understand like, I think every entrepreneur receives that kind of nose. I know I do all the time, right?

Guy Gal  30:17  

I tell founders, you're gonna go out, raise your first capital prepared for at least 30 passes, even if the ideas you think is really great. But even Side, right, two years after that, two years after getting over 30 knows we only got one. Yes. Okay, we pitched what I felt like was every fund in the Bay Area. And only one fund saw the company instead. This is awesome. And that was Trinity. Like, this is awesome. This is we really like this, like, really, you really like this because everybody else is like this. We like this. We really like this like, Oh, that's amazing.

Brian Charlesworth  30:54  

So what was the difference there? They just saw the vision they saw they really impact the industry. I guess a lot of people don't understand this industry. And it's hard for me 

Guy Gal  31:04  

Exactly. Trinity in particular had a really good insight into everything real estate because they were early investors and early real estate companies. 

Brian Charlesworth  31:13  


Guy Gal  31:14  

And so most venture funds at that point five, five and a half, six years ago, had not even started to think about real estate yet because the industry to seem too capital intensive and weird and odd. So great. But notice last rounds earlier this year, we went in literally pitched a fund that in the series B pass the dice. And I remembered every single face in that room because you remember those things as a founder when people pass on you. And at the end of the pitch, you're like, This is an awesome business. How have we not seen this business before? How do we miss you the last one in the round? Before that. I was like you didn't miss us. We pitched to you passed on us

Brian Charlesworth  31:58  

Don't you love it? It's like,

Guy Gal  32:01  

Yeah, yeah, it all blends together. So it can't be difficult. But then the series D, this last round was not difficult at all it was we went out to raise $50 million. In nine days later, that became $150 million. And we close that out with Cotu, which again, is one of those top three amazing tech IPO underwriters, and that was a billion-dollar valuation. And then the funds that we did not end up working with that were also interested at that time, came back and made us an offer to invest another 100 million in the company at a much higher valuation, which was a 2.5 billion. So that's not what Side is actually worth today.

Brian Charlesworth  32:43  

What was the difference in those time timeframes from the billion to the two-point 5,000,000,003? Three months? Three months? Okay, I want to talk I want to come back to that in a minute. But I know you're going to share another point.

Guy Gal  32:55  

Also, when you're when it rains, it pours. Look Side is not worth two and a half billion dollars today, our fair market value is probably more like eight to 900 million today. But because they look at signs that oh, wait, you're 90% in California, 10%. In Texas, in Florida, you need to raise one 50 million, you need to distribute this across the whole country, you need to get aggressive. You need to hire people everywhere we need to go let's do this. Yeah, that is what motivated folks is over is that we had this discipline over the last five years to build the right business. And the right way, even though it meant it was narrow and deep. And everybody kept telling me oh, you need to show that you can be in more markets, if you want to raise more capital. I always resisted that because it wasn't what felt right. And, and it paid off.

Brian Charlesworth  33:45  

Yeah. And listening to those people that don't understand your business can be a big mistake a lot of times, right.

Guy Gal  33:52  

You have to have conviction, which is to say you should be open to feedback and you should listen. And you should let it bounce around in your head and be intellectually honest. But at the end of the day, you also have to be stubborn about what you know to be right and what you know to be the truth. Yeah, and then and then you just do what's right, no matter what the consequences, whatever, whatever follows will follow at that point. But, you know, you sort of have to say here's what I believe is true and what I believe to be true the industry doesn't really to be true. And that means we're gonna have to run up against the grain you know, Side we spent the last five years running against the grain of the industry. We were ignored. We were ridiculed. We've been everybody's people have other brokerages have fought against us tooth and nail, because was such a threat to the status quo model, but in a way that actually increases the value created in the industry as opposed to an extracted yeah very hard thing to compete with. We've had all of that happen. And then what happens last week is we get named the Company of the Year by Inman. So it took five years of nobody getting it. Nobody understands everybody making fun of it, you know? Not taking you seriously. Not giving you a seat at the table. That's okay. You just continue to persist and do what you believe is right. Because you see signs all around you that it is, right, yes, Michelle kins who go from 20 to 200. In the bread Jennings, you go from 100 to a billion, like is amazing partnerships you've established with great people and how they've grown and how they've helped people on their teams grow. It's beautiful. It's wonderful. It's amazing. And that's how you know that you're doing the right thing, even though the industry is not there just yet. And then what's what's gradual, become sudden, very quickly in your company of the year.

Brian Charlesworth  35:56  

Yeah. Well, congratulations on that announcement. And it's been fun to see like, for instance, Brett Jennings, one of our customers as one of your customers. Because you brought it up? 

Guy Gal  36:10  

Yeah, it's how we know each other so well.

Brian Charlesworth  36:12  

Yeah. I mean, I mean, there's a lot of overlap in our businesses. So it's, it's really fun it when I say that in our customers, right? Not only in our business, so our customers. Yeah, yeah, yes. So anyway, it's been, it's been fun to see. And there's nothing, nothing that makes you feel better as a CEO of a company to see your customers doubling their business every year or more,

Guy Gal  36:36  

Nothing, nothing, nothing is better than that. Nothing is better than especially because that's the thing day one that you promised them and say, Look, I don't know much about real estate. But I know what it takes to build a small business. I've done it. I know what that looks like, I know how to cash flow that I know how to set that up. I know what to do from a marketing standpoint. And I think that together your real estate brain, and our business brains and our technology if we combine them, we can create this thing that didn't exist before and make something beautiful and wonderful. But you don't really know that that's possible. You just believe it. Yes. So to then go out and make it possible, is not just feel good. It's also really relieving. Because you have this great obligation to the people who put the, you know, the Michels, who put their trust in you say, Hey, this is the livelihood of me, my family. But let's roll. Let's see, let's see what happens. And for that to then actually work. Ah, best feeling ever.

Brian Charlesworth  37:40  

Yes. Yeah. So let's go back a little bit, you went and set out to raise $50 million. In your most recent, we raised 250 rounds, and you went up to 250 million, you went up to a much higher valuation than you anticipated, I'm sure. Which allowed you to bring in more money and not create as much dilution right. So, which is amazing, congratulations, I love stories like this. One thing I wanted to talk about, I think there are a lot of entrepreneurs that are like, you know, you want to build this lasting company, I want to build this lasting company, there are a lot of entrepreneurs that are really about how quick can I build a company and sell it? Right? So so it's really a different mindset. But one of the things I wanted to hit on is, like, with you guys, now having raised money at a two and a half billion dollar option, or two and a half billion-dollar valuation, like selling, is no longer really an option for you. Right? So only to certain buyers, so

Guy Gal  38:43  

No, nobody could afford to buy sighs Yeah.

Brian Charlesworth  38:47  

So your option today is really we're gonna build this and at some point, likely go public, I'm guessing

Guy Gal  38:53  

The only option has ever been for us to build a sustainable, meaningful enterprise. That last that's a tie. That was always the intention was always the motivation. I was never interested in doing anything but that I always believed that this was a company that should be generational. And I really wanted to go out and work to accomplish that is true that from a financing standpoint, now that's the only path forward for us. I love that I love burning the boats. I'm a big burning the boat kind of person. I don't do half measures. Extreme who it's one or the other. It's a switch on a dial. It's like you're on or off. Yeah. That's just who I am. That's how I I tend to be it's the only way I know-how. So others are different in their different paths for but that's my own. But it is true to say that yes, our only path forward now is to sustain independence. And that does mean that the next few years will take the company public.

Brian Charlesworth  39:58  

Yeah, so the only reason I want to point that out, I think there's just a lot of entrepreneurs listening to this. And you know, every, every time you bring in capital, you may have fewer options as far as that kind of stuff moving forward, but you knew where you wanted to go from the beginning. So you're right on that path.

Guy Gal  40:15  

And I would encourage all entrepreneurs listening to this to start with the same way, start with the end in mind. Because if you know what your end scenario is, you can plan for it. So if you are trying to build a company, that you get to like $20 million in recurring revenue a year, and then and you know that that's the ceiling on it, because maybe the addressable market, the available number of customers are such that you can never get to more than $20 million, a lot of companies like that right point solution type businesses. But if that's what you know, you want to accomplish Do you want to get to that point, and then sell the business for like, 50 to $100 million, after five years? Five to call it eight years, then great. Now you know that you can only raise so much capital, and now you know how much you have to grow every year. And you can thread that needle in, it's a really important one to thread because if you're going to build a company, that gets to $50 million, sorry, to $20 million in revenue with the intention of selling it for 100, then you can't raise more capital than, say 30 40 million. rank you do you as the founder and your team are not gonna make any money. It's gonna all go to the investors. Yep, exactly. So you, you have to think about those things really critically. Side, we raised relatively small amounts of capital, every single round before this one. And it was because it's all we really needed to fund the next phase. And that's how we've always thought about things like what do we actually need to get to the next place and let that be? What guides valuation as opposed to maximizing for no reason?

Brian Charlesworth  42:09  

Yeah, so I know, we're a little limited on time here, Guy. And, you know, I think listening to you is great for any entrepreneur. So thanks for coming in here sharing this with us today. I just have a few more questions with you. One is, like where do you see this industry? Being in three to five years from now? Because you're obviously a visionary you, you know, you've set out on this mission to completely change. What used to be the, you know, the traditional brokerage, I'll call it, where do you think this is all going?

Guy Gal  42:45  

Look, there's no more room for average in the industry. There's no more room for the middle. You have it's bifurcating right, in two directions to budget into on the one end of the spectrum is budget, and the other is is premium. And that's not price that's service level and experience. And cost like commission fee, not. It has to do with the price of a home or a price of a property. And so you're going to have a lot of players that do the Redfin thing where they're like, Hey, if you're going to work with one of the 990 4% of agents that are part-timers, who do 70% of the transactions in the US every year and have a bad experience a two and a half percent commission, don't come work with Redfin and pay us less, right. So have a bad experience. But for less money, that's the core value proposition there. And they're able to position that way as our companies like, you know, like Rex, who this is like the for homie, it's like oh, pay a flat fee and relist your home. Because the industry has allowed that to happen by deprecating the average service level that the average agent is able to deliver to the average client. You know, 20 years ago in California, the average agent was doing 11 deals a year today, it's three deals a year. It's by design doesn't happen by accident. So that is has allowed real estate industry to have a lot of players to come in, that are going to compete on budget experience, very DIY, but less cost, right? Yeah. It's already happened. It's going to happen more that represents what I call a commoditization of the agent. Yeah, that's where no two agents are different. It's like no two educators are different. All the same, right? The cogs in a machine. You just you you work with anybody. It's all the same. That is where the industry He was heading really, really fast before Side started to invest in our mission. Because that is the status quo. That's what the big brokerages are doing every single day, they're not reversing course on it. They're just trying to extract more and more value faster before things catch up with them. But that's the one force that's informing where we're moving towards, is a force towards the commoditization of agents, the reduction of commissions on a per-agent basis, and lots more agents doing lots less blood bless deals each.

Brian Charlesworth  45:38  

That's where it's been, right? 

Guy Gal  45:40  

That's, that's where it's been, it's never been worse, and it's getting worse, it's gonna get worse. It's gonna get worse. Because it's already been like that momentum, like the next five years, they're already kind of baked. So it's going to get a bit worse before it gets better. It's going to allow more of those interests to come in. But that stuff happens on you know, 50-year horizons, not five-year horizons, it takes a lot of time for these forces to play out. Like again, in California, it's 20 years to go from 11 deals an agent to three and a half, 20 years. The other force is a force that prior to Side was organic and inherent in the industry already. There was already there. It just was not organized. And that's the team force. That's a top producer. First, let's the entrepreneurial force that represents that wave the commoditization of brokerages, not the commoditization of agents, the brokerage is trying to commoditize the agents. But what's happened in the last 20 years is that those with the rise of the Internet and the ability of an agent to go direct client and the clients go, director and agent, they've broken up that brokerage retail monopoly, that distribution monopoly, they've gotten really sophisticated about it more than the brokerages are. And they've been able to build their own companies, within other people's companies. They're like, exploiting the loophole to satisfy their own interests, and the interests of their clients, and none of the public good. And that has happened nascent Lee organically. In a way it was not at all organized Side, of course, now was organizing that we're investing behind it. We're really designing for it that way, accelerating it all. And I am of the mind that if we do that, well, if you continue doing that, well, that in 10 years time, instead of 70% of the transactions being done by part-timers, we're gonna have an industry where 70% of the transactions are done by really great experienced agents, and folks on their team who are maybe newer, but are serious and are learning and getting mentored and apprentice, so that they can slip. So having 2 million agents, you're gonna have 400,000 agents doing 6 million units a year, it's better for the consumer, it's better for the public interest. I personally am biased and believe that's going to get organized into 1000s of local boutiques, as opposed to five big national brokerage brands. Because it's those very brand structures that allow the part-timers to do all the business. So you have to dismantle that if you want to change things. But I do think there will still be what you'll see in the market is application. And you'll have either a really awesome agent that's a team that that is part of that is this boutique company that is locally owned, and focused and specialized. And you're getting a full commission and everything and your maybe half the business in the market. And the other half of the business in the market are like Androids and robots and agents that have been retrofitted into cyborgs on Redfin. You know, a AI assisted do it yourself with chatbots and workflows where consumers are self serving, but paying less, those are going to be your two things. And it's going to be hard to say how much of total transaction volume each lawyer present. I'm of the mind that 70% will stay with Agent assisted if the agents are excellent.

Brian Charlesworth  49:18  

Yeah, I agree with pretty much everything you just said. I think there's definitely gonna be fewer agents doing higher production. When and they're gonna be on teams that are high producing. You didn't use to have these businesses. I remember five years ago Guy, I was sitting in masterminds with the top teams in the country. And at that time, they were all talking about, you know, $100 million was the number. Well, you and I both you and I both know we have multiple customers doing over a billion right now, our partners and so like, hundreds of millions is becoming commonplace for these teams. How are you going to compete with that as a solo agent, when they're so efficient and just doing such a great job?

Guy Gal  49:59  

Team always outperforms the individual. And in teams are how brokerages actually used to work back when they were no 30 agents. And there was one office. Yeah, right. So in a lot of ways, it's a return to the past, to the golden days of real estate, the difference now Brian is you have the internet and the internet can connect all that would have otherwise been these disparate single points, you know, like beacons of light, yellow boutiques, and connect them onto powerful bargaining, a collective bargaining organization that allows them to actually exert their own influence, which, in my opinion, is an influence that is much more aligned to the public good, and the needs of the client. And that's where everybody should be investing. So obviously, I'm biased, but that's what we're gonna continue to do inside. And so far, so good. It's been a lot of fun. I'm excited to get into Utah, as well as see a little bit more often.

Brian Charlesworth  51:02  

Yeah, yeah. Likewise, excited to have you, Guy, thank you so much for joining today. It's been a lot of fun. Just congratulations on all of your success Company of the Year from in men, two and a half billion, just $250 million raise, congratulations, that's

Guy Gal  51:18  

The most important and important stats for Side are over 400 companies exist today that did not used to exist before. It's a beautiful, wonderful, amazing thing. Over half of them are owned by women, which is way, way, way higher than the industry average for real estate company ownership. Over 30% are minorities. We really love making ownership more accessible to people. It's such an important foundational part of our mission. And that's what I am most proud of when it comes to site. It's not the valuation, or whatever that's all means to an end, what really matters is that real people are now in a better position than they were before. And they have more control. They have real ownership, and it makes me feel good. So again, thank you for the time, it's always nice to be able to talk about like the history of the industry and why it is the way it is. Because these things can oftentimes be so surface level. You see a lot of nothing, but But going back to the fundamentals, I think is so important.

Brian Charlesworth  52:27  

Yeah, yeah, totally agree. And yes, absolutely. Without the 400 companies that you're partnered with to build this site wouldn't be anything, right. I mean, that's what it's about. It's about solving problems for them, so we can

Guy Gal  52:42  

End it here at Inman when they like Company of the Year Side. My thing was No, no, we're all going up. It's not Company of the Year. It's companies of the year. Like these are all your companies. We just happen to connect them all.

Brian Charlesworth  52:56  

Yeah, yeah. All right. Well, thank you so much for your time. I look forward to catching up with you and your team here in the very near future.

Guy Gal  53:02  

Likewise, talk to you soon. Bye. 

Brian Charlesworth  53:04  


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