Startup Revolution: Sarah Mclaren Of Sellona On How Their Emerging Startup Is Changing The Game

Startups are at the forefront of innovation, driving change across various industries with fresh ideas and cutting-edge technologies. These emerging companies are not only disrupting traditional markets but also creating new opportunities and transforming the way we live and work. What makes these startups successful, and what can we learn from their journeys? As a part of this series, I had the distinct pleasure of interviewing Sarah McLaren.

As a former real estate agent with the preeminent luxury brokerage in Washington, D.C., Sarah McLaren has a deep appreciation for the complexities of the business and the many people who work to represent their customers. In response to deep seated customer frustration with expensive commissions and the lack of viable alternatives, Sarah and her cofounders created Sellona, a digital infrastructure to buy and sell homes without commissions. In Sellona, Sarah has created a platform that leverages powerful AI and other burgeoning technologies to connect people and professionals.

Thank you so much for your time! I know that you are a very busy person. Can you tell us a story about what brought you to this specific career path?

I was a longtime real estate agent with the preeminent luxury brokerage in Washington, DC. I loved my work as an agent, namely because of the relationships I had with my clients and colleagues.

When I first entered the industry, the 6% commission structure was never questioned. If I listed a home, home sellers knew they’d pay 6% to list their home with me: 3% would go to my broker and 3% would go to the buyer’s broker. Conversely, when I represented a buyer, we rarely discussed my compensation as it was assumed my share would come out of the sellers’ proceeds (which, of course, it always did).

The industry started to change in 2021 when interest rates hit historic lows. The low interest environment coupled with the lack of housing inventory led to a frenzied market where agents were making far more by doing far less. In order to successfully buy a home during this time, buyers were regularly advised to pay all cash, waive all contingencies and oftentimes allow months-long rentbacks to sellers. Many agents during this time were making millions of dollars in commissions for very little work. I knew agents who simply wrote “clean offers” (all cash, no contingencies) and made hundreds of thousands of dollars per transaction.

During this time, I really started to question the fairness of the commission structure. How could agents justify getting paid so much money for just a few hours of work? And I wasn’t the only one questioning the traditional structure; buyers and sellers were growing deeply frustrated by what they saw as a totally outdated system that put agents first and home buyers and sellers second. Day after day I saw more home buyers and sellers seeking alternative methods for buying and selling homes but finding no good options. This deep-seated consumer frustration is exactly how Sellona came to be. We said, “Let’s build an entirely new model that removes commissions and puts consumers in control of their transactions.”

Can you share the most interesting story that happened to you since you began at your company?

On Sellona, home buyers and sellers shop for help in the Sellona Expert Marketplace. Our marketplace is an incredible resource for consumers to compare and shop for help with their transaction. Expert categories include, but are certainly not limited to, attorneys, lenders, home inspectors, stagers, movers, photographers etc.

What I’ve found most interesting since starting Sellona is just how much our experts love our platform and the fact that we’ve opened up a way for them to market their services directly to customers. I knew how much my clients were frustrated with the status quo, but I didn’t realize just how frustrated all of the other industry stakeholders were as well.

We are regularly approached by experts from across the country asking to reserve a space in our marketplace when we expand to their market. The experts in our marketplace are extremely good at what they do, and they are committed to providing great service, transparent pricing and an exceptional customer experience.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

How much space do I have to answer this question!?! I’m pretty sure I make mistakes every day! One of the most difficult parts of being a ‘tech entrepreneur’ is the fact that I don’t have an engineering background. In the early days of our platform development, I would nod my head and go along with our engineer discussions even though I only understood what felt like every third word. Sometimes I would slyly look up a definition to stay on pace and other times I would stay quiet and hope that someone else would ask a clarifying question. I finally got to the point where I said to myself, “This is ridiculous . . . stop being afraid of asking a stupid question, it doesn’t benefit you, or the company, when you don’t understand something, so ask!” The most important lesson I gleaned from this experience is that personal or professional growth isn’t going to happen if you don’t push yourself outside of your comfort zone and do the things that might be uncomfortable at first.

What are some of the most interesting or exciting projects you are working on now?

Honestly, I am so excited by our whole platform and all the R&D we have going on. Our team regularly makes fun of me because I am (too) often brought to tears when a new product goes live. I just can’t help it! It’s incredibly rewarding to see your vision come to life in a clickable, beautiful, thoughtful, useful and usable way.

As for exciting and interesting . . . we have some big product launches just around the corner. Everyone wants to know how AI is going to change the real estate game and even though many companies have responded, none of them are doing what we’re about to do. We are thinking about AI in a truly revolutionary way. I can’t reveal too much, but think about this . . . can companies that still rely on the traditional real estate model (namely agents and commissions), really use AI to its fullest potential? Absolutely not. And that’s what makes us so well poised to do something revolutionary. Because we are not beholden to commissions, brokerages, MLSs, NAR, we can use AI in a way that no other company can. And we’re doing it in a way that’s consumer-first, transparent and free. How cool is that!?

You are a successful leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

One thing that made me a successful agent is my ability to actively listen. Listening is key to building trust in relationships, both personally and professionally, and its importance cannot be overstated. It was only by listening to my clients’ needs and frustrations that I was able to think about real estate in a totally different way.

Something you learn early on as an agent is what you are NOT: you’re NOT an attorney, you’re NOT a mortgage lender, you’re NOT a home inspector, etc. What this means is that you need to be comfortable with what you are and what you are not. This concept underscores an important character trait: know who you are and totally embrace what you are not (at least what you are not at that moment). Embracing shortcomings in a really honest and thoughtful way results in 2 things: 1) it allows you to lean on others and to seek out answers from experts in a particular field, and 2) it offers an opportunity for personal growth and introspection.

Perhaps the most important trait of all, and one I have to constantly work on, is operating with a sense of gratitude. Running a startup can be hard, it’s full of uncertainty, which is particularly challenging for someone like me who is characteristically risk averse. However, even during the most challenging times, I always remind myself to take stock of our incredible team, what we’ve built together and embrace all of our individual experiences that brought us to this place. It’s incredibly powerful to break up the day-to-day by stepping back to appreciate the journey.

Ok super. Thank you for all that. Let’s now shift to the main focus of our interview. What was the initial inspiration behind your startup, and how did you turn that idea into a reality?

My co-founder, John Tramonte, and I worked together on a lot of transactions over the years and we both began to notice shifts in the industry around the same time. We started to talk about where we thought the industry was headed, speculating on how the NAR and commissions lawsuits would play out, and where we saw our own careers going in light of these changes. We both agreed that the current structure of 6% commissions was unsustainable, and we started to talk about what real estate would look like if agents, MLSs, the NAR and commissions all ceased to exist. We concluded that buyers and sellers would need a place to connect securely, and they would need an easy way to find lenders, attorneys, etc., who could help them with questions and to ultimately get them successfully through a transaction. Once we came up with this initial concept, we started putting our ideas on paper (I slept with a stack of about 200 pieces of paper under my bed to jot down thoughts and inspiration . . . these were all filled, front to back, in about 10 days). At the same time, we were having conversations with our tech friends who we trusted with our idea to help us figure out just how to develop our thoughts into a platform.

Can you describe a significant challenge your startup faced and how your team overcame it?

Our most significant challenge is summed up by the adage, “You don’t know what you don’t know.” When you embark on this equally challenging and rewarding path, every day is different so having the ability to adapt is important, but doing so in a strategic way is more so. When we come across something we must address quickly we’ve learned to evaluate it against our outstanding priorities. It’s easy to deal with new issues in a knee-jerk way, but by forcing ourselves to be deliberate in our approach we’ve been able to lean more heavily on existing relationships which in turn help us yield better, faster results.

What strategies have you found most effective in scaling your startup and reaching a wider audience?

The focus groups we’ve conducted have been instrumental in scaling up. Everyone can identify with the topics of real estate and the pain of commissions, so our focus groups have not only been incubators of great, new ideas but have also created communities of force multipliers who transmit our message to their networks.

How do you foster innovation within your company to stay ahead of the competition?

As we continue to grow and bring on new team members, it’s important to us for everyone to feel like they can freely contribute. We want all our team members to feel comfortable sharing their ideas and perspectives because we wholeheartedly believe in the power of diversity and radical collaboration.

Based on your opinion and experience, what are your “5 Things You Need To Create A Highly Successful And Innovative Startup” and why.

1. A great team. Most startups are small, so each team member must wear a lot of hats as well as be willing to pivot on a dime. I am so fortunate that everyone on our team has these abilities in spades. We all bring something different to the table, but we all share in our willingness to work toward the singular goal of making our company succeed. Our leadership team brings together years of legal and real estate expertise, successful software engineers and prolific tech entrepreneurs.

2. A great idea. One of the best things about our company is that it’s so easy to explain. We all laugh that we so often hear, “I wish I had Sellona when I bought my house?!” Real estate and commissions are relatable, understandable and something everyone loves to talk about. It’s been really fun and easy to engage with people about Sellona and hear their real estate stories. It was through this preliminary feedback we really knew we were onto something. We quickly realized we have an amazing opportunity to do something on a large scale that’s highly impactful and disruptive.

3. Money. Talk about an education! From cap tables to dilution to SAFEs to convertible notes to burn rate to ARR, the list goes on. Running a startup is as intensive in new vocabulary as much as it is in establishing a robust business model and projections. We have been incredibly fortunate to have been taken under the wing of the brilliant Startup Banking Team at JP Morgan who offer us everything from advice to networking opportunities to practical software solutions. We have also been referred to fractional CFOs to assist us with models that were far out of our expertise. My advice when it comes to money is to outsource and seek advice only when it comes from the most trusted people in your orbit. My other piece of advice is to be as nimble and trim as possible but spend money when and where it makes sense.

4. Being value driven. Defining our values was a similar experience to writing a thesis statement in school. The way I approached this with Sellona was the same as I did in school; define it early enough but only after the big ideas were solidly in place. That is to say, a whole lot of work, research and development needs to take place before distilling the core message. For Sellona, once we closed in on our v1 platform release, we were able to define our values: transparency, affordability and being consumer-first. The wonderful thing about having clear values is that strategy and prioritization becomes easier. With each new initiative we have a litmus test to use, which makes decision making far easier. For example, when developing our AI tool, we are constantly asking ourselves, “Does this tool offer transparency, is it affordable and is it consumer-first?” (it’s a yes to all three questions, by the way!)

5. Testing my assumptions and getting out of my comfort zone. I would classify myself as an introvert and attach certain proclivities to that definition: enjoying personal time, tending to observe before acting, listening before speaking, and being more reserved. I’ve learned, however, often through embarrassing situations, that when I test these assumptions about myself, I grow and learn far more than I otherwise would have. Running a startup provides me with daily opportunities to test my assumptions and embrace uncomfortable situations. For example, I decided to simply say, “Yes,” to every networking opportunity for a period of time. What I took away from that experience was certainly enjoyable experiences with fellow entrepreneurs, investors and innovators, but also learning a lot about myself. I started to become acutely aware of my natural inclinations and then nudged myself into taking a different tack. The reason I’m putting myself through this self-imposed torture is to train myself in approaching problems, and for that matter, solutions, from different perspectives and from a place of greater self-awareness.

More than four out of five startups fail. What have you done to break out from that pattern, and be successful when so many others have not?

I can honestly say that my life experiences so far have all combined to get me here. I look back on the big events of my life, both personally and professionally, and can extract a lesson from each that I use in my work today. Had I not worked as an agent for so many years, I would have never gained the insights and built the relationships I’ve relied on to build Sellona. Most notable, I would never have met my business partner, John, had it not been through my real estate work. Additionally, I am generally a pretty risk-averse but decisive person, and I think those two factors pair well in a startup setting.

Because of the role you play, you are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

Sellona is such a movement! We are transforming an entire industry, the way Uber did with transportation and Airbnb did with travel. No other company purporting to disrupt real estate is doing what we are doing. No other company, public or private, has come up with a substantive way to address housing affordability and save consumers 6% on their home transaction TODAY. We have ambitious, value-driven goals that put consumers first and saves them money. It feels so good to know that we’ve created an entirely new way for American consumers to buy and sell homes that is built on honesty, transparency and affordability.

This was really meaningful! Thank you so much for your time.