Side, a real estate technology company that works to turn agents and independent brokerages into boutique brands and businesses, announced Monday that it has raised $150 million in Series D funding.
Coatue Management led the round, which brings San Francisco-based Side’s valuation to $1 billion and total funding raised to over $200 million since its 2017 inception. Existing backers Matrix Partners, Trinity Ventures and Sapphire Ventures also participated in the new financing.
The round is notable in that the amount raised is significantly higher than the $35 million Side raised in a Series C round in November 2019. Valuation too increased nearly 7x compared to the $150 million valuation at the time of its Series C. Sapphire Ventures led that investment and managing director Paul Levine, who was previously president and COO of Trulia (through its IPO and multibillion-dollar acquisition by Zillow), joined the company’s board of directors at that time.
The startup pulled in between $30 million and $50 million in revenue in 2020, and expects to double revenue this year. In 2019, Side represented over $5 billion in annual home sales across all of its partners. Today, the company’s community of agent partners represents over $15 billion in annual production volume.
Side was founded by Guy Gal, Edward Wu and Hilary Saunders on the premise that most real estate agents are “underserved and underappreciated” by traditional brokerage models.
CEO Gal said existing brokerages are designed to support “average” agents and as such, the top-producing agents end up having to do “all of the heavy lifting.”
Side’s white label model works with agents and teams by exclusively marketing their boutique brand, while also providing the required technology and support needed on the back end. The goal is to help partner agents “predictably grow” their businesses and improve their productivity.
“The way to think about Side is the way you think about what Shopify does for e-commerce…When partnering with Side, top-producing agents, teams and independent brokerages, for the first time in history, gain full ownership of their own brand and business without having to operate a brokerage,” Gal said. “When you spend years solving the problems of this very specific community of agents, you are able to use software to drive enormous efficiency for them in a way that has never been done before.”
Existing brokerages, he argues, actively discourage agents from becoming top producers and teams, because agents who serve fewer clients can be forced into paying much higher commission fees on every transaction, which means the incentives between brokerages and top agents and teams are misaligned.
“Top producers want to grow and differentiate, and brokerages want them to do less business at higher fees and be one more of the same under the same brand,” Gal said. “Side, rather than discouraging and competing with top producing agents and teams, enables them to grow and scale their own business and brand.”
Today, Side supports more than 1,500 partner agents across California, Texas and Florida.
The startup plans to spend its new capital on “significant hiring” and toward an expansion outside of California, Texas and Florida — the three markets in which it currently operates. It also plans to boost its 300-plus headcount by another 200 employees.
About a decade ago, I remember having a conversation with a friend about big data. At the time, we both agreed that it was the purview of large companies like Facebook, Yahoo and Google, and not something most companies would have to worry about.
As it turned out, we were both wrong. Within a short time, everyone would be dealing with big data. In fact, it turns out that huge amounts of data are the fuel of machine learning applications, something my friend and I didn’t foresee.
Frameworks were already emerging like Hadoop and Spark and concepts like the data warehouses were evolving. This was fine when it involved structured data like credit card info, but data warehouses weren’t designed for unstructured data you needed to build machine learning algorithms, and the concept of the data lake developed as a way to take unprocessed data and store until needed. It wasn’t sitting neatly in shelves in warehouses all labeled and organized, it was more amorphous and raw.
Over time, this idea caught the attention of the cloud vendors like Amazon, Microsoft and Google. What’s more, it caught the attention of investors as companies like Snowflake and Databricks built substantial companies on the data lake concept.
Even as that was happening startup founders began to identify other adjacent problems to attack like moving data into the data lake, cleaning it, processing it and funneling to applications and algorithms that could actually make use of that data. As this was happening, data science advanced outside of academia and became more mainstream inside businesses.
At that point there was a whole new modern ecosystem and when something like that happens, ideas develop, companies are built and investors come. We spoke to nine investors about the data lake idea and why they are so intrigued by it, the role of the cloud companies in this space, how an investor finds new companies in a maturing market and where the opportunities and challenges are in this lucrative area.
To learn about all of this, we queried the following investors:
Caryn Marooney: The data market is very large, driven by the opportunity to unlock value through digital transformation. Both the data lake and data warehouse architectures will be important over the long term because they solve different needs.
For established companies (think big banks, large brands) with significant existing data infrastructure, moving all their data to a data warehouse can be expensive and time consuming. For these companies, the data lake can be a good solution because it enables optionality and federated queries across data sources.
Dharmesh Thakker: Databricks (which Battery has invested in) and Snowflake have certainly become household names in the data lake and warehouse markets, respectively. But technical requirements and business needs are constantly shifting in these markets — and it’s important for both companies to continue to invest aggressively to maintain a competitive edge. They will have to keep innovating to continue to succeed.
Regardless of how this plays out, we feel excited about the ecosystem that’s emerging around these players (and others) given the massive data sprawl that’s occurring across cloud and on-premise workloads, and around a variety of data-storage vendors. We think there is a significant opportunity for vendors to continue to emerge as “unification layers” between data sources and different types of end users (including data scientists, data engineers, business analysts and others) in the form of integration middleware (cloud ELT vendors); real-time streaming and analytics; data governance and management; data security; and data monitoring. These markets shouldn’t be underestimated.
Casey Aylward: There are a handful of big opportunities in the data lake space even with many established cloud infrastructure players in the space:
Decades ago, a software program called Trillian introduced a way for internet users to interact with multiple IM networks, like ICQ, AIM and MSN Messenger, in a single window. Now, Pebble founder and Y Combinator Partner Eric Migicovsky is revisiting this concept, but this time with a focus on centralizing access to modern-day chat applications. Through the newly launched app, Beeper, users can connect with 15 different messaging services, including WhatsApp, Telegram, Signal, Instagram and Twitter DMs, Messenger, Skype, Hangouts and others — even, through a few tricks, iMessage.
Migicovsky says he first came up with the idea for a universal chat app while working on the smartwatch pioneer Pebble, before its acquisition by Fitbit.
“We really wanted Pebble to be able to send iMessages, but we could never figure out a way to do it because there’s no API for iMessage,” he explains. But the idea for Beeper came to a head two years ago when he learned about a protocol called Matrix. “All of Beeper is built on top of Matrix, which is this open-source federated, encrypted messaging protocol,” he says.
Migicovsky describes Matrix as mostly “a hacker thing,” but believes it’s starting to take off among developers. Basically, Matrix offers an API that allows developers to connect with other chat networks using a “bridge,” which relays the messages back and forth from one side to another.
“When I learned about that, I was like ‘Hey, we could build Trillion using Matrix,'” Migicovsky says.
Image Credits: Beeper
Migicovsky began to work on Beeper as a side project with Tulir Asokan, a Matrix contributor he met in a Matrix chat room.
To make Beeper (previously called Nova) work with all the different chat apps, they had to build these connecting “bridges.” This code is also open-sourced and available at Gitlab.com/Nova.
“We think it’s really important for people to know what code they’re running — so it’s all open source. People can inspect it,” notes Migicovsky.
Because of this, people also don’t have to pay Beeper the $10 per month it’s charging for access to the service. If they know what they’re doing, they can just run the bridges on their own servers, if they choose.
While every messaging platform has its own unique setup in Beeper, making iMessage work was the most complicated. And the workaround here is somewhat involved, to put it mildly.
Beeper actually ships its users an old, jailbroken iPhone (iPhone 4S, because it’s cheap) to serve as the bridge. The code installed on the iPhone reads and writes to the database file where your iMessages are stored. The iPhone encrypts the messages with your own private key and then sends it over the Beeper network. This means Beeper, the company, can’t read your messages, Migicovsky says.
This process allows Android, Windows and Linux users to use iMessage. But it’s not the only way Beeper can make iMessages work. Mac users with an always-on device can instead choose to install a Beeper Mac app to work as the bridge.
Migicovsky says he’s not afraid of any shutdown attempts or litigation by Apple.
“What are they going to do?,” he asks, rhetorically.
Even if Apple somehow stopped Beeper from providing jailbroken iPhones to users, the company could redirect their customers to acquire their own old iPhones from Craigslist instead. Meanwhile, the software itself is open source and running on an iPhone at the user’s house — so Beeper isn’t really “hacking” into iMessage itself.
“I think given the current climate of messaging freedom — I think it would be insane for Apple to start picking a fight with their own users,” Migicovsky adds. Plus, he notes that the European Commission is working on draft legislation similar to the GDPR that mandates all companies to open up messaging for other platforms.
“When that passes, they legally won’t be able to block people from doing something like Beeper,” Migicovsky notes.
Image Credits: Beeper
Beeper, of course, is not the first or only startup focused on trying to break through the iMessage lockdown. Other apps have tried to do this in the past, like AirMessage or weMessage, for example. They have only seen limited adoption, however. And Beeper is not the only startup to try to centralize chat applications, either — Texts.com is developing a similar system.
That said, signups for Beeper were bigger than Migicovsky expected, he says, though declined to share the details. He says Beeper is slowly onboarding users as a result. (For that reason, we have not been able to actually use Beeper. We can’t speak to its claims or usability.)
Despite the competition, where Beeper may have an advantage is in understanding what makes for a great user experience. Pebble, after all, sold over 2 million watches.
Today, Beeper promises features like search, snoozing, archiving, and reminders, and works across MacOS, Windows, Linux, iOS and Android.
Longer term, Migicovsky envisions a platform that could do more than just text and share media, stickers and emoji, like other chat apps. Instead, the team is building a platform that would allow people to build more tools and apps on top of Beeper — a system sort of like Gmail’s plugins. For example, there could be tools that would let users schedule calendar events from within their chats. Or perhaps a tool could help you see all the most recent messages you’ve had with a particular user across different platforms, like Clearbit.
Migicovsky declined also to detail how the work on Beeper is being financed but when asked if Beeper could be the next step for him — as in, a new company to work on — he replied, “possibly.”
“I’m enjoying my time at YC. It is fantastic. I was just inspired by all the companies that I work with to do this. Part of being VC is talking to all these founders who are building cool stuff and launching it. And I got a little bit jealous,” he admits.