Opinion: Want to build a profitable, fast-growing company? Bricks and mortar weigh you down

New research shows that fully remote businesses can perform better financially—and sell for higher prices—than their traditional peers.

New research shows that fully remote businesses can perform better financially—and sell for higher prices—than their traditional peers

The pandemic has disrupted patterns of work and communication throughout the world economy. Literally overnight, employees were forced to leave the office and work from home. Few people found themselves prepared for the assault on work styles, infrastructure and family life, but many quickly embraced WFH for its flexibility and the recovery of wasted commute time. For their part, managers were less excited about the loss of control as they tried to “manage” staff remotely.

As an investment banker specializing in technology company exits, I was surprised at the lack of exploration into the emerging trend toward fully remote companies, in favour of a focus on productivity, management challenges and employee isolation. The rise of completely virtual businesses, their work styles, culture and valuation in an exit transaction, has been overlooked.

The difficulties of transforming a large bricks-and-mortar (B&M) company into a fully remote one are significant, demanding changes to everything from culture to corporate hierarchies. Command-and-control management techniques developed over decades by big companies are hard to leave behind.  

Managing remotely takes a different skill set. Besides learning new communications technology and workplace apps, old-school managers need to learn to manage by empowerment and trust, with an emphasis on constant online communication. 

Virtual technology companies, however, don’t suffer separation anxiety from working remotely. To the contrary, being fully remote from their inception, they embrace WFH. Their millennial workers have lived their entire lives communicating digitally, and it’s relatively easy to bring that lifestyle into the workplace. As a result, virtual startups were more successful with a fully remote environment than B&M companies trying to make the transition.

Another surprising trend: fully remote, virtual companies actually sell for more money than conventional B&M businesses.

With Prithwiraj (Raj) Choudhury, an international expert on remote work and a professor at Harvard Business School, and Jan Bena, an entrepreneurial finance professor at UBC Sauder School of Business, our team at Strategic Exits began to research the comparative advantages of virtual companies versus to bricks-and-mortar categories.

Our research uncovered a gem: eXp World Holdings (NASDAQ:EXPI), a public virtual company. Although it isn’t a technology firm, real estate brokerage eXp uses the latest tech apps. We then found two public B&M real estate companies with which we could compare financial performance: Redfin and RE/MAX. Demonstrating the competitive advantages that eXp enjoys as a virtual company over Redfin and RE/MAX informed this Harvard Business School case study.

Glenn Sanford, eXp’s founder and CEO, is a pioneer in the virtual company space. We gained his insights into the exponential growth of eXp and his perspective on the operational and financial benefits of a fully remote company. 

In 2008, Sanford was running a traditional B&M real estate brokerage when the entire real estate industry nearly collapsed. Drawing on his strong tech background and his entrepreneurial vision, he created the virtual real estate brokerage of the future. Sanford reasoned that he could save the company only by dramatically eliminating the cost of bricks and mortar and moving the entire business to a fully remote online operation.

It was a brave move. Virtual companies were rare in 2010 and had never been considered in the real estate business. Could a real estate company with online courses, virtual teams and remote back-office functions survive in an industry built on community-involved personalities and neighbourhood bricks-and-mortar presence? Would homeowners trust a brokerage house with no head office, run entirely on computers, with the largest financial transaction that most people will ever experience? 

The answer was a resounding yes, and the financial results were dramatic. 

Financial Performance of eXp vs. Redfin
(select financial comparisons; all dollar figures in USD)






Annual revenue, 2020
($ millions)



Annual revenue, 2015 
($ millions)


Revenue growth, 2015-20



Profit before tax, 2020



Valuation as of August 26, 2021
($ billions)


Financing raised
($ millions)



Founders’ holdings, 2020



In the five years from 2015, eXp’s revenue exploded 78-fold, from US$23 million to US$1.8 billion, while Redfin grew at a more leisurely five-fold, from US$187 million to US$886 million. eXp became profitable in 2020, before Redfin.

eXp achieved this outstanding growth with almost no external funding, while Redfin raised net financing exceeding US$1 billion between 2015 and 2020.

With significant savings on facilities and overheads, eXp could afford to offer unmatched incentives through profit sharing and stock options, attracting more than 50,000 top-performing brokers who drove higher revenue and profit. eXp experimented with and assembled many software components to give salespeople, employees and clients more-timely market information. 

The acquisition of Virbela in 2017 provided a user-friendly online meeting capability that could enable gatherings for hundreds of people. eXp’s virtual operations have positioned the company at the forefront of the residential real estate industry. 

In broad strokes, using the comparison between eXp and Redfin as a template, our research confirmed why fully remote companies perform better financially than traditional bricks-and-mortar operations.

Looking ahead, we expect that a larger share of new enterprises will be fully remote from inception. The economics are just too compelling. 

Virtual companies have proven to be more agile and profitable, and to grow faster. Our crystal ball sees many more examples of nimble virtual businesses disrupting industry sectors—while established companies trying to pivot fall behind. 

David Rowat is a partner at Strategic Exits, where his goal is to create a valuable exit that puts more money in the pockets of technology founders. Vancouver-based Rowat has an MBA from Harvard University, a master of engineering from UBC and a bachelor of engineering from University of Waterloo. He has worked in many senior positions in the technology industry.