Stephen London, president and co-founder of Fello, has a simple suggestion. “Leads you already have are worth more than leads you buy.”
Fello is the lead nurturing platform behind Felix, an artificial intelligence-powered outreach agent. London has seen top real estate teams running on the treadmill for years, with existing databases chasing new leads without deals.
For London, Felix is the answer to their lead development problems. And he’s betting that whatever disruption AI brings to real estate, the results will be net positive.
London is one of a handful of senior real estate leaders named to the Inman Advisory Council. Council members will work directly with Inman leadership on editorial direction, events, and community strategy.
Mr. London recently sat down with Mr. Inman to discuss why the traditional real estate-driven model is disrupting, what the agential wave of AI means for real estate agents looking to adapt, and what he’s most looking forward to about joining the advisory board.
The following conversation has been edited for length and clarity.
Inman: Ferro recently shared an article about Inman that discussed what co-founder and CEO Ryan Young called the “lead trap.” When did you start to notice the problem clearly? How do you think Felix would solve it?
Stephen London: There are two major inflection points that we’ve noticed firsthand. Fello started as a company called Flash House. At the time, we were essentially doing agent-driven iBuying. ryan [Young] He runs one of the best real estate teams in the country, and while we were using his database to find cash offers, we noticed that he kept buying leads.
What happened next was that he found someone in his database that he hadn’t talked to in a while, and they didn’t know we were from the same company, so they contacted us on his behalf. Sometimes there were people he was really close to. Like, “Why is my cousin reaching out to this company?”
That was Light Bulb No. 1. I ran some calculations and found that basically 10% of my database does transactions every year. If you have a large database, there are 5 to 10 times as many trades you could have made just by sitting there, and you’re missing out on them.
Lightbulb #2 is looking at the economics of all of these teams, especially the commission-sharing component of certain deals. It makes sense to build a business as a loss leader, but when you look at it from a long-term ownership perspective, it’s very easy to see why the natural response would be “I want more leads,” even if you’re not leveraging the database you already have.
Do you think the attitude has been for a while that you get as many leads as you can, but you don’t necessarily have to do anything with them?
I think it worked before. There is a book called “Who Moved My Cheese?” The concept is that once a mouse finds cheese, it keeps returning to the same spot even after being moved.
That old lead strategy worked well until the mid-2010s, maybe late 2010s. A lot has changed since then. Consumer expectations have changed, the economics of portals have changed, and the volume of leads has increased dramatically. What once worked on commission shares is now under pressure.
The fundamentals of real estate economics have changed, but people are returning to the same strategies, even though there are new strategies that the most profitable teams are already using.
I wanted to ask about the technology itself. One of the most interesting things was hearing Felix on the phone with potential clients, some of whom mistook him for a human. Is that a concern from a disclosure or trust perspective?
From an ethical point of view, we ensure that Felix claims it to be a digital assistant. We’re not trying to hide the fact that it’s an AI.
My basic theory, and I’ve been thinking about it for a while, is that people will eventually prefer AI for many interactions that don’t require deep trust. If the AI is really good, it’s easy.
There is nothing else on the agenda. Don’t feel bad if you feel like hanging up or asking stupid questions. But when it comes to actually selling a home, the emotional and trust-heavy part, you need a human.
I think we’ll see hybrid models emerge in many industries. AI handles conversations and tasks that real estate agents don’t really want to do, like going through 10 rejections to find someone who raises a hand.
Then the agent has a great conversation in someone’s living room and builds a relationship. If we can build a model where we both become the best versions of ourselves, that’s the goal.
When I wrote about Felix, I talked about this second wave of AI. The first wave was content generation. The second wave is agent-based AI products like Felix. Do you think most people in the real estate industry understand the implications of what’s going on?
In fact, I’ve been surprised at how much progress some people have made. However, I read a statistic that less than 10% of AI users utilize agent functionality. The whole world is now waking up to this possibility.
I’m a glass half full person. There are definitely catastrophic and optimistic versions of AI. The optimistic view I think is that it will help people automate tasks they don’t want to do.
I have to send monthly financial update emails to 4 people and I hate it. AI just takes care of it. Think about it yourself. People are starting to wake up to the idea that while they’re doing well at this job, they can do more of what they love.
In Felix’s case, we’re seeing it now. People say, “This is texting me back at 2 a.m. while I’m sleeping. It’s not just a slogan, it’s actually working while I’m sleeping.”
What is the general sentiment in the real estate industry about AI? Is it as mixed as the wider world?
It’s definitely mixed. I personally struggle with this issue all the time. It’s about feeling doomed or feeling like you might be on the edge of abundance.
When it comes to real estate, I think people with an entrepreneurial mindset will become better at it and enjoy their work more. Those who are already struggling with adoption will have an even harder time.
But if you’re an entrepreneurial single agent, small or medium-sized team, I believe you have leverage that wasn’t possible before. Instead of hiring humans for sales, marketing, and operations, you hire AI agents that are more consistent.
I also think it will net create more jobs, contrary to what many people think. More people will become more entrepreneurial and do more.
What is not well covered in real estate technology?
Where are consumer searches and information heading? Zillow created this entire category, but with the advent of the LLM, that will change dramatically. If you were looking for your next home a year or two from now, what would that process look like?
I don’t think people will use the portal in the same way. It will probably be more conversational and more personalized. I don’t really know if it’s going to be an app built on LLM or something else. However, I know that the experiences are very different.
Inman created the advisory board in part because the industry’s media consumption habits are rapidly evolving. What is the most important thing for real estate news organizations to get right?
You could call it trust. We built an internal LLM-SEO tool in Fello that allows you to send out unlimited articles, but many of them are sloppy.
Winning news organizations will strengthen their position as trusted gatekeepers. If you go there, you will get carefully selected answers. This is going to be a huge problem going forward, because it’s very difficult to know what to believe at this point.
You have experience in many industries, including healthcare. How did you get into the real estate industry? What do you think is unique about the real estate industry?
ryan [Young] And I’m a childhood friend. I left my previous company on good terms, but I didn’t know what to do next. One thing I knew was that I wanted to work with people who were really fun to work with. The industry didn’t matter. And I’ve always loved real estate. So Ryan and I started a company together and built it from there.
What has helped me in every industry is understanding first principles. Being an outsider can be an advantage at first. You start asking stupid questions like “Why do we do this?” — Because you’re not tied to the usual structure. I’ve always found that an advantage. Innocent lenses, stupid questions that no one wants to ask.
What excites you most about serving on the Inman Advisory Council?
i said [Inman CEO] tom [Bohn]and it’s not lip service, I think they have a really great opportunity. No other major organization can unite the industry like Inman. We are in a transition and we are creating more communities and resources to help people get to the other side of the transition. It’s right in front of me.
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