Release the hounds: Attack email targets Compass, alleging number fudging and toxic work culture

16-page presentation anonymously sent to brokerage chiefs and agents

TRD New York /
Sep.September 27, 2016 11:33 AM

Forget Decision 2016. The real estate world is dealing with its own version of a political attack ad.

A 16-page presentation and YouTube video sent to a string of brokerage chiefs and agents across New York and Los Angeles last weekend took aim at Compass, saying the venture capital-backed brokerage poached agents, artificially inflated its valuation to north of $1 billion and stole data from other companies.

“Brokerage, tech start-up or money-burner with a hidden agenda?,” the emailed presentation, reviewed by The Real Deal, read. “They claim to be [sic] unicorn in the industry, but we’re still not sure what industry they’re in.”

The email, titled “Compass: Helping Agents Lose Their Way Since 2012,” was sent by a certain William Gilbert, which appears to be a pseudonym. William Gilbert was a 16th-century English physicist whose work was crucial to understanding how a compass functions. An email TRD sent to the address bounced back.

“We understand the frustration and concern that many of our competitors must feel after so many exceptional agents have chosen to join Compass TRData LogoTINY and build their businesses here,” a spokesperson for Compass told TRD Tuesday. “It is unfortunate that a competitor has chosen to invest a significant amount of time in an attack ad full of misinformation to scare agents rather than focusing on improving the experience for their own team.”

While many of the claims in the presentation are completely unverified and may be without merit, it does cite some of TRD‘s own reporting, which showed that Compass has sought to make its numbers look more appealing by basing them on historical performance of its agents, rather than business actually conducted while they were at the firm.

It alleges that Compass’ valuation is artificially inflated and that, even as a tech startup selling a product to every agent in the U.S., it would not be worth more than $1 billion. The company was valued as such in its latest $75 million funding round, led by Wellington Management.

The presentation was sent to brokers within Compass, as well as to those at rival firms such as Warburg Realty. It claims that Compass agents are paid 6- to 7-figure signing bonuses, in some instances accompanied by 100 percent splits, and that Compass’ contracts with agents are “lengthy and filled with confusing jargon,” specifically when it comes to stock options and terms of dissolution of contracts. It also alleges that the work culture has grown toxic, cherry-picking negative Glassdoor reviews to make the point.

“If you’re a Compass agent reading this, you should probably log into the Compass CRM and take out your contacts… if they’re yours anymore,” the presentation warns.

Reffkin previously told TRD that only 1 percent of top agent recruits were offered bonuses. A “very small minority” of new hires have been offered equity in the company, he said. In March 2015, TRD revealed that Gene Martinez, now a regional senior vice president at Compass, was offered a starting salary of $400,000, a signing bonus of $120,000, and an annual bonus of $175,000.

The presentation warned brokers that expecting a big day from a Compass IPO was unrealistic.

“The number of common shares already in circulation dilutes any potential value,” it stated. “[Compass CEO]Robert Reffkin, a former banker at Goldman Sachs, lures agents with signing bonuses that seem too good to be true, but in the end fall quite short of ‘life-changing’ money.”

Compass, on paper at least, is the most valuable residential brokerage in New York City , and has raised about $210 million from investors. At the time of its Series D round in August, it had a presence in 11 markets.


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