From the New York website: “I’m not a nice person when I play,” says Maelle Gavet. “I play to win.”
She’s referring to her tennis game, but the new COO of Compass could just as well be talking about her approach to business – though the French inflection takes a little bit of the sting out of her words.
We meet at Margaux, a nearly deserted Parisian-style eatery on West 8th Street, tucked into the Marlton Hotel. Gavet, clad all in black, seems a far cry from the larger-than-life characters one finds in all corners of real estate. After a career in operations for some of the world’s largest e-commerce companies, she’s taking a shot at an industry far more clannish and provincial in its approach to business.
But new territory has never been a problem for Gavet. As a college student learning Russian, she volunteered one summer at an orphanage near Moscow. There, she struck up an unlikely friendship with one of the orphanage’s financial backers and pitched him an event-management business. As the legend goes, the backer immediately pulled $50,000 out of his briefcase and handed it over, and she spent the next few years flying secretly back and forth from Paris each week. A decade later, Fast Company dubbed her the “Jeff Bezos of Russia” for her role in developing that country’s answer to Amazon.
She then moved over to Priceline Group, where she was seen as a potential future leader of the $87 billion company before a sex scandal forced the CEO out and his replacement had different ideas. She joined Compass at the beginning of this year, tasked with overseeing technology, product, and marketing.
“I come from industries where the tech is pretty mature and there have been enough competitors who’ve exited and entered that the environment kind of solidified and you knew what the needs were,” she says, nursing a meal of poached eggs with quinoa. “As the agents at Compass walked me through what they do all day, I was shocked by how much they still have to handle manually. I said to myself, ‘I can help with that.’”
The transition from catering to a massive consumer audience to dealing with a flock of feisty brokers has taken some getting used to. At the Compass HQ at 90 Fifth Avenue, everyone she bumps into seems to have suggestions for how to make the firm’s much-vaunted tech platform better.
“I was in the elevator the other day and an agent literally grabbed my arm,” says Gavet, suddenly seeming a bit more French. “I told him, ‘I promise we’ll meet,’ but we were off the elevator and I had to run to my meeting and he was still grabbing on. I come from industries where you have to chase your users — they’re not with you in the elevator and they certainly do not grab you by the arm.”
There will be even more agents for Gavet to fend off, soon. Compass recently raised a $75 million Series D round, led by Wellington Management, whose bets include Airbnb, Redfin, Warby Parker, and WeWork. The round catapulted the company past a $1 billion valuation, and it now has nearly 1,400 agents nationwide, with plans for aggressive expansion.
But it’s never managed to shake its detractors. Competitors say it lures agents with ultra-high commission splits and big paydays – both strategies, they say, with limited shelf lives. They say it’s just another residential masquerading as a technology company and won’t be able to make enough profit off its agents at scale to justify the valuation.
Gavet said she had concerns that Compass was overpaying for agents before signing on. When a New York headhunter connected her with Compass CEO Robert Reffkin and the two met in San Francisco, she asked to see those numbers.
“I did a very thorough due diligence to make sure that was not the case,” she says. “Now, I can tell you agents are not coming to us for the compensation.”
But certainly that was the case when it first launched?
“Maybe, but not today,” she says.
She compares the challenges faced by Compass to those faced by OpenTable – now a Priceline subsidiary – as it tried to get off the ground more than a decade ago. The restaurant business is more like the real estate business than you would think, she said.
“I have seen many industries where low margins haven’t stopped a business from growing, being profitable and being a good return on investment,” she said. “For OpenTable, the margins are extremely thin and Priceline bought them for $2.6 billion [in 2014.]”
The company made roughly a dollar per head for every reservation made through its website, Gavet said, so it’s the small efficiencies that the platform could provide for the restaurants that grew the user base and achieve scale.
“Managing your floor and managing your reservations so that the turnaround of your tables is actually good is the difference between a profitable restaurant and a nonprofitable restaurant,” she says. “It’s what makes it or breaks it.”
Gavet is hoping it will be the same for real estate transactions. But, do agents require not more handholding than restaurateurs?
“Restaurants do like to have face to face and be convinced they need you, so it took a long time for OpenTable to scale across the U.S.,” she says. “Now, when they want to open in a new city, they don’t have that problem because they’re such a big brand. But, in the beginning, it was very much like Compass, where you have to go to the restaurant, or the agent, and tell them how you can make their business bigger, faster, better.”
What she neglected to mention, however, is the nearly billion-dollar writedown Priceline booked on OpenTable in November 2016, following a lackluster international expansion.
Compass’ technology has always been a sticky point. Most people outside the firm don’t seem to see why it’s revolutionary. Gavet may be a believer, but she thinks there’s a lot of room to run.
“Where do you see Compass in five years?” I ask.
“Everywhere and better,” she says.
“I want to make sure the agents has the tools he needs at every single stage of the process,” she added, sounding a lot like her new boss. “The job of a COO very often is to make sure all the elements are working together and that, as you grow, nothing is breaking.”
With her experience at Priceline, which dealt with competition from other travel aggregators like Kayak and Trivago, it seems silly not to ask Gavet about the recent controversy surrounding Streeteasy, the listings platform that is a go-to for consumers but is enraging the big brokerage firms – which have the lion’s share of exclusive listings on luxury apartments – with its pay-to-play “Premier Agent” program. Reffkin warned earlier this month that the industry wasn’t equipped to fight the likes of a powerful aggregator.
Gavet says it’s too early to make any sweeping statements, only that “it will come down to whether the companies who are using the platform will be unified or not.”
“It’s interesting to see it happen here,” she says, “because it’s happened already in so many other industries.”