For years, Thaddeus Wong felt he was living inside “The Emperor’s New Clothes.”
He and his partner, Mike Golden, had built Chicago-based @properties into the city’s largest independent residential brokerage, steered it through the Great Recession and consistently turned a profit while fighting off every upstart competitor that tried to buy, break or steal their business. But in the late 2010s, it seemed like none of that mattered.
SoftBank and other venture capital firms kept throwing boatloads of money at Compass, and the narrative around residential brokerage — what it is, what it should be and what metrics mattered — began to get warped. Agents could not resist the siren song of equity, brokerages were forced to chase growth and lost both business and top producers to the deep-pocketed upstart, and whole firms were absorbed as Compass grew into a behemoth. In 2018, Wong took advantage of overheated brokerage valuations by selling a stake in @properties to private-equity firm Quad-C, but mostly he watched and waited.
Early last year, the capital markets had a change of heart: Growth at all costs was out; profitability was in. The emperor was naked, the child yelled, and this time, everyone could hear him.
“I’m relieved, because it lasted so long and they had such reinforcement from the media,” Wong said during a conversation with The Real Deal from his art-filled Chicago office in December. “They started speaking their own language and people were adopting that language, and then a person would get frustrated and second-guess themself and say, ‘What am I not seeing?’”
Now, it’s @ that’s in expansion mode. It brokered about $24 billion in deals last year, according to Real Trends, making it one of the country’s top 10 firms by volume. It also bought the real estate arm of luxury auction house Christie’s, a move that Wong hopes will provide traction and instant brand recognition to @’s franchise operations across North America. It’s been targeting top agents across the country to partner with, inking a deal this November with Aaron Kirman in Los Angeles.
Wong broke down what the Christie’s deal means for his company, gave his unfiltered thoughts on the state of brokerage and his competitors and got candid about his life and career.
This interview has been edited and condensed for clarity.
Born: June 5, 1969
Lives: Lincoln Park, Chicago
Family: Married (to broker Emily Sachs Wong), four children
You grew up in Minneapolis, the son of divorced psychologists. What were you like as a kid?
I was kicked out of a few schools. They really wanted to put me on Ritalin, but my mom, being a psychologist, said, “Over my dead body.” I think today they’d put me in a coma. I had a lot of energy and was a class clown. I did a lot of things wrong, a lot of things illegal, usually in the name of getting other people to laugh.
You lived with your mom.
I didn’t really value all the things she was doing until later on in life. We had this huge sidewalk that went down one side in the front. My mom would get me out of the house on nights it was snowing and we’d shovel the whole thing. And then she’d wake me up before school and we’d shovel it again. She taught me how to shovel the sidewalk in such a way that old people in the neighborhood could get around without slipping. And in our house, you either did it right or you just didn’t do it. And right was perfect.
As a mixed-race kid with an Asian last name, did you have to deal with any racism?
A couple people called the house and you’d answer and they’d say, “Wong number.” But really, I didn’t notice any of that stuff till I moved to Chicago. Minneapolis, even though it’s much less diverse, it’s a very educated city.
But in Chicago, when I moved here, I worked my way through college on the trading floor [at the Chicago Mercantile Exchange]. And that’s a very barbaric place. It’s almost like going back 50 years. What you saw and heard was prehistoric. I was called a chink a few times. They sounded so idiotic when they said it that it didn’t affect me negatively. Someone who says something so stupid … you almost have to laugh at them versus feel bad for yourself.
The Merc is an eat-what-you-kill environment, similar to brokerage. What made you fall out of love with being a trader?
I’d never seen money like that in my life. And that was outrageously alluring. But I worked down there my whole way through college. I went to school at night. And by the end of it, I realized that the things that were important to me, which were relationships, didn’t exist down there. And I also didn’t want how I felt to be dictated by whether I made or lost money that day. I didn’t want something else to control how I felt.
You have an unusual sense of self-assurance. When do you think that came about?
When I was 22, I got sober. Prior to that I was partying, like most kids. But I was definitely an addict, especially with alcohol. I woke up one morning and looked up AA, and I went on the train to a meeting and never stopped going. And so I spent my 20s doing a lot of self-exploration and development of who I am as a person and repairing past relationships.
You were the top broker at your old firm, Property Consultants. But my sense from previous stuff you’ve said is that there’s a little bit of resentment about not being appreciated.
At the time. [Now,] I’m so grateful that I wasn’t treated in a way that you would want to treat someone, because I would’ve stuck around. I’m a very loyal person.
How do you avoid your own top agents feeling that way?
I’m a big believer in availability. If you’re not available, you’ll probably be replaced. Everybody in the organization knows if they reach out to me, I’m available and I’m there for them. Obviously, it’s a business transaction, so it’s through compensation and service and product and physical location and all those things. But after that, is it a brand that the agent feels good about representing?
Did you and your partner ever consider giving equity to top performers?
Never. When we opened, we had one other person that wanted to have some ownership and we said no. But it was more about just keeping it super simple. I was very fortunate to have a really great partner in life and in business. If you read about the demise of so many companies, the more people that have a say in something, the less likely it is for it to stick together and succeed.
What trait in your business partner do you most admire?
He’s incredibly flexible. I am less so. If we were so similar and he was as bullheaded as I am, that would’ve been terrible. We would’ve clashed all the time. But because he isn’t that way and he’s much softer, he’s much more willing to appreciate another view. So if I come at something in a very reactive, powerful way, he has the ability to absorb that. He brought a great temperament to the table, a temperament that I really needed, which helped us come up with some good strategies, good conclusions, great responses. Neither one of us needs to dominate the other person.
In 2018, you sold a stake in @ to private-equity firm Quad-C. What led to that call?
The asset had gotten to be valued at a level where it would’ve been irresponsible to our families not to divest some portion of it. We had gotten through the Great Recession. We’d seen the value climb, collapse and climb again. If I saw a collapse again and I had not sold some portion of it, I would’ve looked at my family and thought, “What kind of idiot am I?”
Quad-C’s partnership with us has not affected the company at all — though [without it] we definitely wouldn’t have bought Christie’s. It would’ve been taking on too much risk.
2018 was peak VC, “Let’s throw money at this and turn it into a SaaS play.” Was the move to sell at all reactive to what was going on in brokerage at the time?
No! We were very aware of what our competitors were doing. People were really relieved that Compass didn’t buy Christie’s. A lot of people felt that would’ve been the nail in the coffin, giving them an international network and a luxury brand that’s recognizable around the world. That would’ve been the smartest thing they could’ve done, because it would have spelled the end of a lot of different companies and would’ve given them another source of revenue that they could build on, that would be — in reality, not in tech world — at a higher multiple with recurring revenue.
[But for us] what was going on back then, you didn’t want to take advantage of it and you didn’t want to react to it. You just wanted to let it play out.
I remember the “Don’t ask for directions from a tourist” billboard that you commissioned outside the Compass Chicago digs. Is there an element of pleasure in seeing some of their struggles?
Nobody ever takes pleasure in someone’s failure, even though they [Compass] have done so much damage to the industry. I remember being at Inman and hearing [former Coldwell Banker CEO] Ryan Gorman talk about them. He was so articulate and knowledgeable, he might have been the smartest residential mind in the room. And afterwards, he just got trashed for being a disgruntled competitor.
I’m a big believer that privately owned independent companies, whether franchise or not, with boots on the ground, operate the best companies. There were some great privately owned companies that I really admired that didn’t want to sell. But they had to make good business decisions and ended up selling. So now in some of the coolest markets you have one independent left. And you really eliminated a lot of awesome culture. Those agents had no choice in going to where they went.
Is the role of the agent existentially challenged today?
Absolutely not. Pre-Great Recession in our market, about 13.5 percent of homes were sold through discount brokerages. The Great Recession eliminated effectively all of them.
You grew up seeing those signs in handwriting : “Will buy ugly homes.” That’s iBuying. And if you even have a big [institutional] iBuyer, a local iBuyer is going to kill you. Because they’re going to have the trades they’re working with, they’re going to be able to operate on a smaller margin. So that scalability piece, I don’t buy.
With Redfin, I’m dumbfounded the board hasn’t chosen a new path, brought in a new CEO. I wanted to take Redfin private before they went public and was trying to quietly raise money in order to do that. I thought that they had the best user experience in the entire market. And the fact that for well over a decade it’s been wasted on trying to play the brokerage game is ridiculous, because they could have had a greater valuation than Zillow if they [were] a lead generator.
Can a CEO’s charisma blind people to the fact that they’re doing a lousy job?
Ego is what you’re talking about. And ego is blinding. Numbers aren’t blinding. In each of those examples, whether it’s Compass or Redfin, they don’t make sense financially. With Robert [Reffkin], when [TRD] gave him the microphone and asked about the stock, the No. 1 thing he should have said is, “I’m sorry.”
I would never have agents buy into the company, ever, ever, ever. I’d rather close than have that responsibility. He must have some cult following, because most people would be like, “Get me outta here.”
I don’t think losing money should be an option in a residential brokerage world, unless you have come up with something that is truly scalable to the end consumer — not to the agent.
What’s your moonshot for the Christie’s brand?
Theoretically, we should be able to over time pick and choose our partners to have a significant position in all the major markets in North America. One thing I learned is that [for example] Hilton & Hyland might be a great brand in Los Angeles, but when you bring it to Connecticut, nobody knows what it is. And if you don’t have a brand that’s associated immediately with luxury, it makes it really difficult. Because in real estate, you’d rather trickle down than trickle up.
Our technology platform is in the first phase of consumer adoption, where it just tracks the timing of the transaction. My goal is to give a far better consumer experience when it comes to the real estate transaction. Having access to that buyer, knowing what they’re going to buy, when, how much they’re paying for it, is probably some of the most valuable data in the world.
Do you still broker residential deals?
I stopped selling in ‘03. My wife is our No. 1 producer. She had the flu some years ago, and I had to pick up a client for her at the train. I came home and I dropped the contract on the bed. She said, “I knew you wouldn’t come home without a contract!” And so I closed one of her buyers in one day, which was always my thing: I sold [clients] what I felt was the best real estate at the best price, and if they agreed with me, we’d get the deal done in one day. I love that aspect of the business. I miss it. I don’t miss a lot of other things about it.
How do you give up that rush of dealmaking?
By solving the problems of agents on a daily basis that are going through that exact thing. It’s almost like parenting. You get to solve your kids’ problems with them and work through them because you’ve fallen on your face plenty. I don’t know how you lead a brokerage if you’ve never sold real estate.
I noticed you just sold a development site on the West Loop to Russell Galbut. How big is that side hustle of real estate investing?
I think the first place I put under contract was maybe in ‘96, two-flat, 1954 Damen [Ave]. My interest rate was 8.6 percent and it didn’t even matter.
We’ve had some decent deals, but I’m usually not a seller. This one [West Loop] wasn’t on the market. These guys knocked on our door and put it in an offer.
You had your first child, Ella, in 2003. How did fatherhood change you?
I remember it because I was at the park and I was just feeling this overwhelming love. It was palpable, it was unbelievable. And what I realized was that’s how my parents love me. And that changed everything for me. That appreciation for being a child and being a parent became profound in that moment, because it really made everything else meaningless.
How do you connect with your kids as they’re growing up?
A lot of times in life we think that we’re so terminally unique. Whereas if you’re willing to share with somebody, the person you’re sharing with might say, “You know what, I did that too.” I want to re-create that with my kids so that when something’s really troubling them or they’re really hurting, they feel totally open and secure sharing that with me. So just being vulnerable with them, making sure that they don’t feel ashamed, making sure that they feel loved and that it’s a safe space. It’s very much the long game. Which is probably like real estate, right?
Are you still in love with your wife?
Yes [laughs]. It’s changed for sure. I think “in love” changes, by the way. “In love” means that no doubt you’d step in front of a bus for them — that’s just what you do. I value my wife in a way that’s more powerful than being in love. It’s important to have the logical be as big as the emotional. Watching her and being with her and seeing how she approaches things, the assets, the liabilities, the humanity within her … I would not want to be with anybody else.
What does money mean to you?
Access, freedom, flexibility.
Abe Grossman was the first rich kid I ever met. He had a huge house. I realized that I wanted that at a very young age. Clothes were a big deal to me. I did everything possible to dress as nicely as possible, probably to look as rich as possible. Maybe I had some imposter syndrome.
What’s your biggest extravagance?
When I grew up, my mom liked [French Post-Impressionist artist Paul] Gaugin. She would get the poster, cut off the piece that said it, and get it framed. In 1997, I had just started making money in real estate. I lived in a $600 apartment, tiny, tiny, but I had this original piece of art in my kitchen.
You’re a prominent donor to Democratic politicians, including Hillary Clinton, Barack Obama and Joe Biden.
People call it politics, call it whatever you want, but you have to figure out who you are and what you stand for. Equal rights for everyone, period. That piece of it is crucially important to me. Separation of church and state. Public education access — to think that only the wealthy are going to produce the smartest kids? That’s a joke. I’m a big believer in trickle-up economics, not trickle-down. So that puts me in one group, unfortunately. I wish these were values that were shared by more.
And that puts you at odds with most of the other people in your industry — definitely the people at your level.
Who is the industry dominated by? A lot of older white guys. You get a lot of the same people in the room, they all think the same way.
Would you ever consider throwing your own hat into the political ring?
I used to. My dad would say to me, “It doesn’t matter how much money you have, the government’s pen dwarfs you.” The Bill Gates Foundation is a rounding error in the United States of America [budget].
But now, you are trashed, your family’s trashed. Because there’s no campaign finance reform, all your time is raising money. Every relationship is monetized. At the end of the day it’s like, do I want to spend my last 30, 40 years doing that?
If I can have an impact on the greater good, I would like to do that in whatever way possible. But I just don’t think I’ll ever have a bigger engine than this [business]. There’s nothing more beneficial than the help you give someone that nobody knows about.
I agree with that, but the counterpoint would be the donation you made. I know about it because it was a donation with naming rights.
I suppose I could have done it anonymously. I never really worried about that. If anything, I hope it encourages other people in real estate to contribute at a decent level if they can.
What’s your biggest regret?
I have one child that I could have done a better job with. I think that I could have been more inquisitive and I could have created an environment where they were more comfortable. And I wish that I would’ve put more energy into that.