Should Redfin prioritize increasing the number of virtual home tours to improve user convenience or focus on in-person tours to boost agent commissions?

Introduction

The trade-off we're examining today is whether Redfin should prioritize increasing virtual home tours to improve user convenience or focus on in-person tours to boost agent commissions. This scenario touches on the core of Redfin's business model and user experience. I'll analyze this trade-off by considering user needs, business implications, and technological factors.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about Redfin's current market position. Could you share any recent shifts in user preferences for virtual vs. in-person tours?

Why it matters: Helps understand if this is a reactive or proactive decision Expected answer: Slight increase in virtual tour requests post-pandemic Impact on approach: Would influence the urgency of implementing virtual tours

• Business Context: Based on Redfin's commission structure, I assume in-person tours are more profitable. Can you confirm the revenue difference between virtual and in-person tours?

Why it matters: Quantifies the financial impact of the trade-off Expected answer: In-person tours generate 20-30% more revenue Impact on approach: Would need to balance user convenience with revenue goals

• User Impact: I'm curious about user conversion rates. Do we have data on how virtual tours compare to in-person tours in terms of leading to actual purchases?

Why it matters: Indicates the effectiveness of each tour type in driving sales Expected answer: In-person tours have a higher conversion rate, but virtual tours reach more users Impact on approach: Would influence the balance between reach and effectiveness

• Technical: Regarding our virtual tour technology, what's our current capability and what would be required to scale up?

Why it matters: Assesses the feasibility and cost of expanding virtual tours Expected answer: Current tech can handle 2x increase, but major investment needed beyond that Impact on approach: Would affect the timeline and resource allocation for virtual tour expansion

• Resource: How are our agent teams currently structured? Would shifting focus impact our staffing needs?

Why it matters: Helps understand operational implications of the decision Expected answer: Agents currently split 70/30 between in-person and virtual tours Impact on approach: Would need to consider retraining and potential restructuring costs