Online brokerage TheRedPin closes its doors
Toronto real estate start-up TheRedPin has shut down.
On Friday, the company’s Church St. office was closed. A man who answered the door identified himself as a representative of a corporate receiver but would not give his name. He said the company was placed in receivership on Thursday.
The Toronto Star has confirmed that CEO Keith McSpurren resigned on Tuesday, about a year into an attempted tech-based reboot of the online brokerage.
He was not available for comment Friday.
Founded in 2011, TheRedPin was among a clutch of pioneering online realtors known as virtual office websites (VOWs). It offered the full services of a traditional real estate company but also more online data and tools to inform consumers’ home search.
In an interview with the Star earlier this year, McSpurren said the company’s investors included ONEX Corporation founder Gerry Schwartz through his Trilogy Growth fund.
McSpurren, who had no real estate licence or background, was brought in for his start-up experience. He had hired a team of developers to help use software and artificial intelligence to enhance the home buying experience and transactions for consumers and agents.
McSpurren had streamlined the staff at the loft-like downtown headquarters from about 45 to 30 people and had a stable of about 80 agents.
The technological transformation plan may simply not have come together fast enough, said John Pasalis of the Realosophy brokerage, a VOW based in Leslieville.
“When you raise money from investors they want meteoric growth. They don’t want a small, profitable business. They want to get a steep profit out of it. That’s why they’re investing,” he said.
The brokerage business is tough to scale, particularly in one market, said Pasalis.
The slow real estate market may have also been a factor for TheRedPin, he said.
“If the business was struggling to begin with in a booming market and all of a sudden sales go down 30- or 40 per cent, that means their sales are going down close to that much as well,” said Pasalis.