The CEO Who Saved Homebuyers A Billion Dollars: Why Founder Mode Is A Lie | Glenn Kelman

0:00He offered the job to somebody else because I said I still might go to medical school, but I need a job today. But then the other guy asked for severance. And then he called me back and said, the other guy wants severance. Do you want severance? And I said, no, if you fire me, I don't deserve diddly squat. And he's like, you're hired. And the rest is history, as they say.

0:18Jeff Markowitz:I love that. Didn't want to give him a severance. Jeff, do you agree, though, that when people start getting fancy about severance, it's a bad sign. It's a bad sign. Yeah, especially in the negotiation process.

0:36Jeff Markowitz:What would happen if we just told the truth? Welcome to TruthWorks, where we dig into the nitty gritty of leadership and work. And what needs to change? I'm Jessica Neal. And I'm Patti McCord. Our journey together started in HR, but trust us, it's evolved into something wild, honest, and well, a bit rebellious. So throw out the handbook. We're here to redefine rules to work for us, not against us. Let's dive into another episode.

1:13Jeff Markowitz:Hi, everyone. Welcome to another episode of TruthWorks. I'm Jessica Neal, your host, and I'm here with my co-host, Jeff Markowitz. Hi, Jeff. How are you? I'm great. I'm good. Yeah, I might get sucked up in a tornado, but other than that, I'm great. that'll be an experience to talk about for sure it would be it would be a little a little fun and a little drama for the podcast but we've got bad weather in texas but um but i am good but you are going to introduce our guest today who i'm so excited about i am i am so excited to introduce glenn as you know i used to be at graylock and i feel very confident saying that glenn was my favorite CEO to work with.

2:02And look, yeah, he's like, no question. We just, we bonded. Come on. We sold it out together. He's just an amazing person, an amazing leader. And I got to know Glenn when I joined Greylock in 2011 or 12. Well, I probably got to know you in 2012 because I and joined in late 2011. But Glenn co-founded Plumtree Software in 1997. He took it through its IPO and he joined Redfin. And I think he spent a couple decades at Redfin, if I have it correctly. Two. And just transformed it into the leading technology-powered real estate brokerage in the world and saved consumers billions of dollars, I would say.

2:55So Glenn's ability to attract leaders, to attract great board members, I think is just unprecedented because of the way he operates. So I'm really happy to have him on.

3:10Jeff Markowitz:Now I'm excited too. Man, I'm embarrassed, Jeff. You're embarrassed? You should be flattered. Yeah, that's really sweet. Yeah, that is sweet. I'm going to ask you a question, Jeff, because you work with so many CEOs and founders, and you mentioned a couple of things about Glenn, but what made him different from everybody else? You know, I think a combination of tremendous passion for everything he was doing, at least when I interacted with him. I think Glenn just showed up and was always on. And I don't think that that was artificial. I think that's just who he is. And, you know, people, I worked with Glenn on a bunch of board stuff and, you know, he was able to attract amazing people to his board because his energy is just infectious.

4:01And look, when you believe so passionately in what you're doing, people see it. And I think that's, it was not just a job for Glenn.

4:12Jeff Markowitz:Yeah. That's my interpretation. Well, Glenn, welcome. And look at you. Geez, thanks for the kind words, Jeff. I have to say that Jeff was my favorite partner at any venture firm. We had this soulful relationship. You really struggle when you're trying to bring on executives and board members, whether you have someone who's going to go the long, hard way with you. And I sometimes felt self-conscious saying why I didn't like someone or what I was looking for. And Jeff created this space where I could be my complete self and connect with other humans who would expand that complete self. And so that's why we have such a wiki bond.

4:55It's really deep.

4:56Jeff Markowitz:Well, I love that. I love this. So, Glenn, we always like to go back in time a little bit because you probably didn't plan out that you were going to be the founder of Plumtree and CEO of Redfin. How did this all happen? Where did it start? I think I am the luckiest person on the face of this earth. I tried to screw up my life over and over and over again, and the hand of God just came down and redirected me toward amazing people. I read somewhere that you were going to write a book, and you didn't really like the business world. You didn't want to be a part of it or something. I don't know. Well, I think we all grow up wanting to do something really good, and I just couldn't figure out what that was.

5:44I am the son of a Jewish father, and he once told me this story about the three kinds of Jews. So a long time ago, Peter the Great said that Jews can't own land, and therefore a small number were allowed to go to university. So there were farmer Jews that were kind of banished, and then there were the university Jews, doctors, lawyers, accountants. And then everybody else had no way to make a living. And they were the absolute lowest of the low. They were the wheeler dealer Jews. And so I think he was worried that I would become a wheeler dealer Jew, which is just another word for an entrepreneur.

6:22Right. But I tried to go to medical school. I thought about law school. I thought about becoming an academic. I didn't know what to do with myself. And when I got out of college, I tried to write a book. And my girlfriend broke up with me because I'd been unemployed for so long. And eventually I ended up at a little tech startup and that saved my life.

6:44Jeff Markowitz:Wow. So what were you writing a book on? What was it going to be about? Well, whenever you're 21 years old and writing a novel, the only subject is yourself. I'd grown up in this crazy family and I was trying to write a story about that family. My older brother had struggles with drug addiction. My dad wanted to sail a boat around the world that was about the length of my desk. Each of us was crazy in his own way. And so I just wanted to tell that story. But what I found out, and I think this is relevant to the whole conversation we're going to have, is that when you go into a little room with your computer and try to be creative all by yourself, there are some amazing people who can do that.

7:24Leo Tolstoy or Mark Twain or Virginia Woolf. And then there's the rest of us who just get really blue. I didn't think that could happen to me, but it did. And that's how I discovered that I wanted to be creative, but with other people. And that's just another word for business.

7:41Jeff Markowitz:Right. And so you go to a technology company and it saves your life and you just decide then that this is what I'm doing. Yeah. Well, there's a few components to that. I mean, the name of the company was Stanford Technology Group and it employed, it was three Stanford founders who were about 25 and they employed three Berkeley people. and I'd learned that I should ask about the business. Did they treat you poorly? Well, I should explain. They were the best people ever. I still love those three guys, but their business model was three Stanford people start the company and three Berkeley people do all the work.

8:15And I had such low self-esteem that that seemed like a good deal.

8:20Jeff Markowitz:Right. But they were all geniuses. Of course. And still really young. And I think if I'd worked for a 45-year-old person coming out of school, I would have said, well, I have to learn how this whole business world works. But instead being firsthand with three dingbats, figuring it out as they went, I thought I can do this. And so a couple of years later, that gave me the confidence to go out with one of them, actually, to start Plumtree. But it was just a really entrepreneurial, weird environment. And I felt like I loved it. If it had been all stuffy and suits and ties and stuff like that, I probably would have tried to be an artist again or do something else.

9:03But Silicon Valley really spoke to me in the 90s that you could build a business and be kind of countercultural or your goofy self. And it felt very messianic and mission driven. And I wanted to do all that. And so I just got sucked up into the most beautiful movement ever.

9:19Jeff Markowitz:Yeah, no. And it continues to be a beautiful movement, you know. Yeah. So tell us about Plumtree because that was really your first startup and it was wildly successful, which is kind of rare. I think it was medium successful. We started it in 1997. Sequoia backed it. The idea was to build portal software, to take all the stuff in big databases somewhere on a corporation's local network and put it all on the web so that people could see all this information on the web. and still today we talk about portals. And I think the big lesson from that was that I had such low self-esteem. We were talking about doing Quicken for food, where it would measure your calories instead of how much money you had.

10:07And our rationale was it was so small and unpleasant that no one else would want to do it. And then my partner, Kirill, one of the 3P partners actually, said, why don't we do the big thing, which was to take everything and all these big backends and put it on the web. And I don't know if it seems big now, but it seemed huge to me at the time. And I felt like that gave us more room to move, more latitude to make mistakes, but more excitement to share with people. When we were recruiting and talking to people about counting calories, I could see their face fall. But when we said, we're going to take everything in a corporation and put it outside on the web, people were like, oh, that sounds kind of big and exciting.

10:46and so now I have a bias towards tilting at windmills, trying to do something big because I think everybody wants to be a part of it.

10:54Jeff Markowitz:Yeah, absolutely. Go ahead, Jeff. No, I was going to lead into, you know, I don't even know if I've ever heard this story, but leading into Redfin. So how do you get to Redfin? I mean, it's so different from Plumtree. Yeah. Well, I mean, I should back up a step. I almost went to medical school right before starting Plumtree because I just wanted to do something good. I felt like I'd been given some modest amount of talent. I should use it to make the world better. And then I just decided that software was so creative and exciting that I wanted to do it. But by the time I got done with Plumtree, I felt like enterprise software is sometimes kind of neutral where good companies use it, bad companies use it.

11:42You're selling it to everyone. and I'd had sort of a great night of the soul. I know this is kind of meandering and weird, but that's the way life really is, isn't it? My older brother, who I'd already mentioned, couldn't stop drinking. He called me when I was still at Palm Tree and he said that he thought he was going to die and I thought I could talk him out of it. So I came up to the Northwest to sit with him every day and tell him, don't have that beer. And I found out, by the way, two things. Number one, you can't get somebody to stop drinking unless he wants to stop. But number two, we went to the emergency room so often that I would argue with his wife about which one to drive to.

12:23We drove because one had better food, but it was a little further away. So if it seemed like he was kind of okay, we'd go to the one with better food. And then he would come in really angry because he was dying. And these doctors who had seen him the week before and the week before that and the week before that didn't do the calculation that a business person would do, that there was no percentage in this person that he was a lost cause. They work their tails off to save his life every week. And I thought, man, I haven't met people like that. I want to be good like that. I just want to be good like that.

12:56And so I almost went to medical school again in my 30s, but it wasn't for me. And I thought, I'm going to do something good in business. And that led me to a business where you're working directly with consumers. You try to find an industry where you can make a difference. And real estate is perfect for that. I felt like housing is this fundamental need. There's a massive amount of data around it because public records were created. Writing was created to store who had which property. And so I could use all my nerdy stuff to help people get into homes. And I thought I would do it for a few years and then move on to something else.

13:33And I got addicted to it. And we can talk about why if you want. But I think I've said enough here. It was the luckiest thing that ever happened to me that I happened on to.

13:41Jeff Markowitz:How did it come about? Did they reach out? Or how did you stumble upon it? Well, I had been watching Oprah Winfrey in the middle of the day with Mark, my older brother, and just getting bluer and bluer because he wasn't getting any better. And then I just felt like I have to find a job today. like I went downtown to Seattle met all the VCs in one day and said I will take whatever you have even if you think it's not going to work we're going to make it work but it just has to be something good and Paul Goodrich over at Madrona my longtime friend and partner had just put in $500 ,000 to this real estate website that had been left for dead and I said that's the greatest idea in the history of capitalism put all the listings on a map which is an idea that some other websites ended up copying.

14:38We're going to revive it and make it go nationwide and figure out a business model for it where we can actually make housing better. Put me in coach. And then I think he actually offered, I do remember now he offered the job to somebody else because I said, I still might go to medical school, but I need a job today. But then the other guy asked for severance. And then he called me back and said, the other guy wants severance. Do you want severance? I said, no, if you fire me, I don't deserve diddly squat. And he's like, you're hired. And the rest is history, as they say.

15:10Jeff Markowitz:I love that. Didn't want to give him a severance. Jeff, do you agree, though, that when people start getting fancy about severance, it's a bad sign. It's a bad sign. Yeah, especially in the negotiation process, like towards the end. because it's like, I don't know, either they're too worried about it, right? Or they're not confident in themselves. I don't know. Yeah. Or they're not worried enough because they actually are likely to get fired. Yeah. I don't know. Yeah. I don't know either. But yes, you and you have hired many people too over the years. And Jeff and I know this because we were raised in recruiting, but it's very telling when you get to the negotiations of what people's priorities are and some of the true colors come out.

16:00Jeff Markowitz:And I've passed on so many people at that moment just because of how they're handling those conversations. Can we talk about that? Because I am in awe of Jeff and I'm probably going to be in awe of you. No, no, no. I want to talk about this. This is for my benefit. I felt like I tried so hard to get better at deciding who was going to be good, who was going to be bad, which grain will grow. And maybe I got 1 % better over 20 or 30 years, but mostly I still think it's a crapshoot. It is so hard to do that. And I just wondered what you learned about it. Yeah. Well, Jeff, you want to go? About getting better at the recruiting side?

16:48Jeff Markowitz:How do you know whether somebody's going to be great or not? I don't think you know, but I always used to tell people that when you're interviewing and spending time with somebody, you're looking for all the reasons why they wouldn't be right. Because if you're looking for reasons why they wouldn't be right, then if they're going to get over the bar, they got to be pretty darn good. Because you've essentially gone in saying this person's not right, and I'm going to find all the reasons they're not right. But it's just one step of it. No, that's really wise. You know what you told me a long time ago that really liberated me to get better at recruiting?

17:33I felt like I'd put this person through his paces. Dinner, drinks, references. And I wasn't excited about hiring him. But we'd come so far. I was walking down the aisle. I couldn't cancel the wedding now. and you told me if you are not excited, truly excited to hire this person, we're not doing it. And of course, the headhunter who was paid a fee on that pooped his pants when I called and said, Jeff Markowitz gave me permission to wait for somebody I really love. But you have to have that confidence. And I think it's hard when you're 25 and it's easier when you're 35 or 45. It's interesting. It's a bit of a segue, not to the recruitment side, but a little bit of what you were just talking about.

18:23You've really always said like the hardest business problems are really questions of sort of the heart and the soul. And they're not always answered technically. And so talk a little bit about that for the audience. Like how I think people lots of times don't trust their gut and their instincts, kind of the heart and soul side of it. And therefore they make bad decisions. But that's not how you operated. And not to say that you never made bad decisions, but you always led from your gut was my impression. I tried. another person gave me permission to do that it's Peter Churnin he ran Fox Entertainment for a long time reported to Rupert Murdoch liberal Jewish person who praised Rupert as the last great buccaneer greenlit the Titanic the Simpsons in Living Color and one time I saw him I think at a Greylock event where he was talking about green lighting the Titanic which was like a three and a half hour historical epic.

19:37There's never been a movie that made money like that. And he said, the only thing I really know is what I like. And I decided I liked this movie. And if I was going to go down, it wasn't going to be for something that other people liked. It was going to be for something that I liked. And I used to feel that subjectivity was a bug, not a feature, that admitting this person just isn't my cup of tea, we're not going to work well together, was something I had to get over so I could be objective. And Peter, not that I know I'm on a first name basis, but Mr. Churden gave me this permission to kind of embrace my subjectivity and say, well, this is who I am.

20:20This is the kind of team I'm trying to build. And so what I feel about this person paying attention to just, do I want this interview to keep going? Or, oh my God, He was so smart and he had all the right qualities, but I'm just really glad I'm done. With that interview, I guess I got that from Peter Chernin's decision to greenlight the Titanic. I think it's so important what you're bringing up because a lot of people, maybe they don't have a Peter or a Jeff in their life and they don't get this permission or this advice.

20:55Jeff Markowitz:And then they do exactly what you were going to do, which was not cancel the wedding and keep going down the path and not listening to that, like whatever gut thing is happening. Right. And then they they end up doing it and it ends up not being great. And it's not because the person's not great. They're just not great in your construct. Right. And then, you know, three to six months later, you're back at it again. And then you've just lost all this time, a lot of money, maybe, you know, because you're, you know, you're, you're looking at the wrong signals, I think, because you're looking at like, like, I should like this person because they check this box, they check that box.

21:38But it's always a conflict, too, because you're essentially in conflict with what you truly believe, and you're making decisions for reasons that don't align with your values. And I think Glenn, and I think your board, because I know you had such a soulful connection with your board, Glenn, and you could talk a little bit about that. You made decisions that were aligned with your values, and it was very obvious when you were faced with something that wasn't aligned with your values because it created a problem for you. Yeah, I used to feel embarrassed about that. I always felt like I was this Berkeley hippie who was pretending to be a business person and saying that a decision would be values-driven instead of profit-driven seemed shameful or embarrassing.

22:30And then actually this one board member you helped me recruit, Austin Ligon, who used to run CarMax, he was the founder of it, just told me, name a great entrepreneur who's completely rational. you know the strawberries are so much better than they have to be at whole foods because i think it's john mack whoever the founder was of whole foods was just crazy about fruit yeah john mackie and and apple was that way with design and and everybody's got something that they really care about and most businesses don't have a real relationship with consumer because consumer knows it's just one profit calculation after another but when you pick up an iphone one of those first ones and you think someone crazy made this product someone cared too much about the beveled edges or whatever it might be you don't feel like such a sucker for falling in love with a corporation or a corporation's product and so the board really gave me permission to do that sometimes too much and by the way I had such a fraught relationship with our board at the beginning.

23:37It didn't start out the way that it ended. And Jeff was the one who told me, we can fix this. And some of it was about bringing different people on the board. But a lot of it actually was about me growing up and not blaming the board for problems that were my creation. So we could talk about that if you want. Yeah, let's talk about it. piece because I think entrepreneurs, I don't believe they always understand how to work with a board in a productive manner. And I think you excelled at that. And I think your board members would say you excelled at that. So explain how you thought about the relationship between you and your board.