Analyst: Can I start with the splits? Because from outside, the model looked clean. High split to the agent, capped company dollar, thin overhead. Where does that break?
Expert: It breaks because a split isn't a price. Sorry, that sounds like a line off a slide. A split is a recruiting weapon. It's the sentence a recruiter says on a cold call to somebody already unhappy where they are, and the trouble with a weapon is anybody can pick it up. Nobody owns eighty five fifteen. Somebody two markets over goes ninety ten with a lower cap on the Monday and you know by Tuesday, because your own recruiters forward you the screenshot with a sad face attached. Four years I spent on that internally. Never landed it.
Analyst: So a race to the bottom.
Expert: Worse. It only moves one way.
Analyst: Meaning you can't take it back.
Expert: You cannot un-improve a split. We tried once, and I'll tell you what that cost, because it wasn't what we budgeted for.
Analyst: Do that, but first put numbers on it. What did the split actually do to your economics over the time you were there?
Expert: Right. So the frame we ended up on, much later than we should have, is company dollar per agent per year. Not agent count. Agent count is a vanity metric, everyone in this business knows it's a vanity metric, and everyone still puts it on slide four, me included, for four years. It's what's left after the producing agent has taken theirs. When I started we were around sixty seven hundred. Sixty seven, sixty eight. Actually, no, I want to correct that. Sixty seven hundred is the number I carry around and it's the year before I got there. My first full year it was six four something. Six thousand four hundred and change. When I left, fifty one and a bit. Still pointing down.
Analyst: Over what period?
Expert: Fourteen quarters. Down in thirteen of the fourteen, and the one flat quarter we had a small celebration about, which in hindsight is embarrassing. That isn't seasonality and it isn't mix noise. That's a shape.
Analyst: Walk me through the drivers.
Expert: Tenure, first and mostly. The longer an agent is with you the better the deal they've negotiated, so your average split degrades exactly as your base matures, which is a horrible property for a business standing in front of investors saying retention is the moat. Then teams. Once a team lead gets past any size at all they capture the cap benefit for everybody under them, and you're subsidising an independent business that wears your brand on its yard signs. And then who we recruited, which I'd rather come back to later.
Analyst: Did the board see the company dollar number?
Expert: Agent count was slide four. Company dollar per agent was a footnote on nineteen. That wasn't an accident, and I signed off on the deck, so.