The real estate technology startup previously known as SoloPro made a splash a year ago, with a commercial during the Super Bowl advertising a cheaper, easier way to buy or sell a home.
Though the Durham startup went on to close 100 real estate transactions in 22 states in 2016, the founders, brothers Tommy and Shayne Sowers, had a key realization mid-way through the year.
They were moving too slow.
The a-ha came during a two-year-old, elite and invite-only Silicon Valley accelerator called NFX Guild. Different from most three-month startup accelerators, this one serves and invests in companies that will only succeed by creating a network effect. That means once word gets out with an influential group of users, it spreads fast and both sales and transactions follow.
Completion of the program aligned with a $1.75 million round of funding announced last week. Investors included NFX and Lowes Companies, bringing the total raised past $3.4 million.
With mentorship and advice from NFX managing partners like Pete Flint, a Trulia co-founder and former CEO, and James Currier, who has founded, invested and advised numerous marketplace startups over the last 16 years, GoldenKey is now set up to handle transactions in any U.S. state by any of 1.8 million licensed real estate agents. 2,000 are already part of the GoldenKey network.
But the time at NFX last summer wasn’t without big changes, including the company’s name and a pretty significant culture shift.
SoloPro had focused on the independence associated with its offering. Rather than hire a Realtor and pay a 6 or 7 percent commission, it gave buyers and sellers the ability to handle some aspects of the process on their own and pay a la carte for the rest.
Turned out that a lot of consumers were scared and intimidated by that prospect. They still wanted to save money and take advantage of the conveniences provided by SoloPro, but they wanted a trusted and vetted person to take them from list to sale or from contract to closing.
When sellers learned they could pay 3 percent in commission, buyers learned of the rebate check they’d get at the end of the transaction and agents learned of an easy way to pick up extra work, many said the service sounded too good to be true.
The name GoldenKey plays on the magic that seems to happen when consumers and agents use GoldenKey instead of the traditional real estate process.
Culturally, GoldenKey had to change the way it thought about growth. Most marketplaces grow by entering and penetrating one new city or region at a time. But most are also constrained by supply—Uber and Lyft need to find and train local drivers. GoldenKey already had that resource in what CEO Tommy Sowers calls “the largest licensed, trained, insured and underutilized workforce in America.”
Pricing also changed. Rather than let agents set their prices, GoldenKey has spent a lot of time testing various set prices so there’s no mystery in pricing. GoldenKey collects the fees and splits them with a Realtor. The rate of the split changes based on region of the country and factors like real estate laws (which requires Realtors in some states do more than others). One Triangle Realtor made $10,000 from GoldenKey transactions last year.
“If you’re part-time, that might be perfect,” Sowers says.
Sowers says he’s saved consumers more than $800,000 in commissions so far, with its agents transacting more than $32 million via the site.
Here’s the startup’s pitch at the NFX Demo Day, which drew more than 200 Silicon Valley investors:
The pitch was another focus of the accelerator. NFX helped Sowers see the pitch as just another product to think about selling. Here’s his advice below.
GoldenKey continues to grow its headquarters team in Durham and a sales staff in St. Louis (where Shayne Sowers resides), but now has developers in San Francisco, as a result of relationships built during NFX. The headcount is 15.
Sowers says that GoldenKey sped up by five times after completing NFX. Besides consumers, it’s starting to work with major acquirers of real estate, like asset managers Blackstone or Apollo who are drawn to an easy resource to close real estate deals in any U.S. market.
Strategic investors like Lowes are key to adding more buyers and sellers. A $5,000 Lowes gift card giveaway going on now has nearly 120,000 entries with three weeks to go. (Note: ExitEvent parent Capitol Broadcasting is also an investor.)
A lot comes back to the time in San Francisco.
“There is a reason so many companies are started out there,” Tommy Sowers says. “There is a speed and pace that we had to adjust to. But we sped up and it’s been great.”