How to Build a Real Estate Marketplace - Kaz Nejatian, Opendoor CEO

Opendoor is trying to make it easier to buy a home. Kaz Nejatian just joined as CEO to help them succeed. In this episode, a16z General Partners Alex Rampell and Erik Torenberg sit down with Kaz to cover all things real estate and marketplaces. They cover Kaz’s vision for Opendoor, the problem with copying the hedge fund model, how to build through economic downturns, and the importance of ambition and long-term thinking.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  There are things you have to deal with in a public company that are amplified. Like in a private company, these problems are discussed with your VCs at a board table. In a public company, they're discussed on Reddit and it's kind of the Wall Street Journal. So if you care a great deal about what's said about you in the Wall Street Journal, running a public company is incredibly difficult. It's just very difficult. Luckily, I just don't care.

• 0:22Speaker 01

  Buying a home is supposed to be the American dream. Instead, it's one of the most painful, opaque and inefficient markets in the economy. On this episode of the A16Z Podcast, I'm joined by A16Z General Partner Aliter Ampel, who leads our apps practice, and Open Door's new CEO Kaz Nejatian, to talk about fixing those issues. We discuss why real estate has resisted disruption for decades, how a marketplace model could finally break the real estate agency cartel, and why Open Door's mission to make buying and selling a home as seamless as clicking buy now is much bigger than just flipping houses. Kaz shares what it's really like stepping into the CEO's seat of a public company, why Open Door is really a software business, and how he's putting the company back on offense. Let's get started.

• 1:09Speaker 01

  Kaz, welcome to the podcast.

• 1:11Speaker 00

  Thanks for having me, man.

• 1:12Speaker 01

  I feel like you're the man of the moment. You recently took over as Open Door's CEO. It's been a few weeks, a month.

• 1:17Speaker 00

  It's day 16, I think.

• 1:18Speaker 01

  Day 16, and I feel like you're pioneering a new way of being a public company CEO. First, what got you excited about the opportunity? And then coming into it, what was your mindset going into how you were going to be CEO of this company?

• 1:28Speaker 00

  I think Open Door will become like this generational company because I think people, like when you go to business school, like you should have a business plan and it should be 17 pages and it should have like Porter's Five Forces on it. And that's how it's going to work. And that's just like generally not how great businesses are built, at least not that many of them.

• 1:48Speaker 00

  I think it's important that great businesses start with a very like simple statement that people can buy into or disagree with, right? Like it's, that's been, it was actually important that you're saying something. I think homeownership is good for the world. The more people that can own a home, the better off we are. This is objectively a broken process, so we can fix it. So I think I was just like generally excited by the mission of the company. And I'm just kind of a fan of it for a while and looking from the outside in, I'm like, look, this feels like the type of problem that I can help with. So we're 16 days into this journey. Let's find out if that ends up being true.

• 2:26Erik Torenberg?

  Wow, well, let's trace a little bit of the history. Alex, you led our investment into the company. What was the thesis or vision that got you so excited about it?

• 2:33Alex Rampell?

  I'm going to talk for a little bit of the background and I'm going to start with Amazon and then I'll get to Open Door. So I remember I met Eric Wu when he had first started Open Door with Keith. And I think they had flipped maybe 70, 80 homes, like right around Phoenix. And the reason why Phoenix is a very interesting market is there's a term that I'm sure you're intimately familiar with called cap rate or capitalization rate. And think of it as like the income of some asset divided by the price of the asset. So the Bay Area has very low cap rates. So you could buy like a $20 million house in pack heights. If you wanted to rent it, it might rent for like $10,000 a month or 20, which is a lot, but not as a percentage of the price of the asset. That is very, very low yield. And a place like Phoenix, all the homes are pretty similar. I'm exaggerating.

• 3:16Alex Rampell?

  I'm not trying to upset people who live in Phoenix, but you would have a $200,000 house that might rent for $20,000 a year. So like a 10%, so the net operating income divided by the asset, like that's your cap rate 10%. You can actually make a lot of things work because there's always a default buyer of somebody who will say, I can arbitrage this. I'm holding a house. I don't have to sell it to another person that wants to buy a house. I can now rent it out. And because I can get a mortgage from a bank for 5%, like I can make the whole math work. So Eric had started flipping homes in Phoenix and made money on most of them. But I was like, ah, you know, I don't know. Flipping homes seems kind of challenging. I mean, it sounds great when all prices go up, but what I was really drawn to is the vision that he laid out.

• 3:58Alex Rampell?

  And when I finally invested, I thought he was pretty along towards getting that vision become a reality, which was, this is what I mentioned, I'm going to talk about Amazon. Amazon started off in the 90s, basically selling every book in the world, hence Amazon, in Jeff Bezos's garage or basement or warehouse or something. And by selling every book, like having infinite supply of books, he got all of the demand. And then because he got all of the demand, he could say, all right, I want to now sell something that isn't books. I'm going to sell CDs and DVDs. That was next, but I also still stock those in the warehouse. But eventually it's, I'm going to sell TVs. I'm going to sell something else. I'm not going to stock them, but I already have all the demand. And I got the demand because I had all the supply for something else. So I start up, this is the chicken and egg problem. Do you start off with supply or do you start off with demand?

• 4:42Alex Rampell?

  And marketplaces, we know are very valuable, but you have to start somewhere because nobody wants to sell if nobody's buying. Nobody wants to buy if nobody's selling. So the Amazon model was like, find something in one niche, use that to get all of the demand. And then, once you get all of the demand, now you can actually attract the supply in a non-principle risk-taking way. So fast forward to opedore. So I remember when Eric was flipping all the homes in Phoenix. I was like, that's clever, but I don't know. Like, I know other people that flipped homes in Phoenix. But I think it got to the point where in one of the markets, I think it was Charlotte, if I remember correctly, almost 10% of homes in Charlotte that were under a certain price, call it like $600,000 homes, which actually buys you a lot of houses in Charlotte, 10% of the homes were bought by opedore.

• 5:27Alex Rampell?

  So now imagine that I want to go buy a house in Charlotte. I can go to the multiple listing service, the MLS, which is, you see that on Zillow, Redfin, all of these other sites, kind of, they just mirror the MLS. But that's only going to show me 90% of homes for sale. The other 10% are only on this thing called opedore.com. So you don't have to get 100% of the homes in order to get 100% of the users. You get 10% of the homes. You get 5%. It's kind of like the Laffer curve. You can't exactly define what it is, but there's some quantum, and I would call it 10%, where if you get 10% of all of the supply, you get 100% of the demand. And once you have 100% of the demand, now you could break this horrible monopoly. I did this whole video out of, which I know I said to you, this horrible monopoly of real estate agentdom.

• 6:11Alex Rampell?

  And you could say, you can list your house on opedore.com, and we'll charge 1%. And if you pull that off, it's the biggest market in the world. And that's what made me so excited because eBay is a marketplace for everything except for homes. And it's a $45 billion company. There aren't actually big companies in residential real estate. It's kind of strange. Like, the biggest ones are CoStar and Zillow. There's no $100 billion-plus company in residential real estate, which is kind of bonkers because it's a bigger asset class than like everything sold on eBay.

• 6:40Erik Torenberg?

  And so why is that?

• 6:41Alex Rampell?

  Why is that? Because it's so hard to aggregate the supply and the demand. And what Zillow and others do is they just do lead generation. It's a terrible business model from a consumer perspective. Like, it should have like negative 100 NPS because you're just getting called all day by real estate agents. You're not actually improving the value proposition. And Open Door, it's not about flipping homes. I mean, maybe it is. You run the company. It's about how do you build a marketplace, the biggest marketplace in the world? I mean, to give you a sense of how crazy this is, there's a company called Copart, public company. You know what they do? It is auctions for not used cars, but for like totaled cars. So if you get into a car accident and State Farm's like, oh, that's a total loss, what do they do with the car? They sell it on Copart. Copart, I think it has like a $70 billion market cap. Who buys it?

• 7:26Alex Rampell?

  Who buys it? Like, people would rush it. Well, no rush anymore. But like, all sorts of like, I buy it for parts, or I'm gonna go fix it up. But Copart is a bigger company than Zillow. How is that possible? It is just because nobody's tackled this. It's the biggest market in the world, but you have to build, hopefully, a capital-light marketplace.

• 7:46Speaker 00

  Like, I think Open Door is a deeply misunderstood as a company. Like, I think you have to think about companies as like, category problems are real in public market investing. I remember like when I first joined Shopify in 2019, I think it was like among the most shorted stocks on Wall Street. Because people made a category mistake about Shopify. They're like, well, it's another e-commerce company. What are the odds? It will build all the warehouses. That's gonna like, that's a category mistake. Shopify does e-commerce, it's not an e-commerce company. Like, just their leverage point for Shopify does not come from e-commerce. It obviously comes from software. It's very much like the software. I think that's actually a problem that Open Door has had, is that like, externally and

• 8:30Speaker 00

  admittedly for some time internally, the company thought of itself as essentially an investor in real estate as an asset class, which is not the job of the company. This is not... That's what the company does. It's a software company designed to solve that problem. I think if you attack it like that, you just fundamentally do different things, right? If you look at, I mean, it's a publicly traded company. You can actually look at the numbers. The company has repeatedly been buying fewer and fewer homes every year, right? Because they're like, if they're cool, I'm going to buy an asset class. You only buy homes that are mispriced. But turns out not that much in the world is mispriced for a very long time.

• 9:09Erik Torenberg?

  Yeah.

• 9:09Speaker 00

  Right? It may become a good business, just won't become a big business. And that's, I think, a fundamental mistake the company has made in the past few years.

• 9:18Erik Torenberg?

  Yeah. Let's understand this problem a bit deeper. Maybe, Alex, you could share a couple of points from the talk that you gave, or maybe you explain more sort of the monopoly real estate agents have, or give some more context here.

• 9:27Alex Rampell?

  So, real estate agents, for a very, very long time, there are about 2 million registered real estate agents in the United States of America. And the stat that I quoted a couple of years ago, I assume it's still the stat, but...

• 9:36Speaker 00

  It is. I looked it up. It's true.

• 9:38Alex Rampell?

  So if you remember mean, median, mode. Mean is the average. Median is the one in the middle. And mode is the most frequently occurring number. The mode number of transactions per agent per year is zero. So it's kind of like, well, I'm an actor. Oh, well, what was the last film that you're in? Well, I'm kind of a waiter right now. I'm waiting to get a film job. And that's what a lot of real estate agents are. So even the really good ones, they don't do that many transactions per year. And they fundamentally are misaligned with their customers. Because if I'm a buy-side agent, the more money you spend, the more commission I get. So I normally get 2.5% to 3% as a buy-side agent. So normally you have 5% to 6% as a commission pool, half of which goes to the sell-side agent, half of which goes to the buy-side agent. And there have been numerous, numerous lawsuits,

• 10:21Alex Rampell?

  some of which have gone to the Supreme Court attacking this as this kind of like evil, not oligopoly, but this monopoly behavior. And there's an expression that I love. It's by the playwright George Bernard Shaw. "Every profession is a conspiracy against the laity. And it's very, very hard to deal with problems of concentrated benefit and diffuse harm." So there's a concentrated benefit to the 2 million real estate agents, small number of whom actually do active transactions. But they conspire, literally conspire, to keep these commissions very, very high because you buy a house once every 10 years. And you are absolutely harmed because if you're a buyer, well, wait a minute. Like, the more that you convince me to pay, you get more of that. And then why is it misaligned as a seller? Because the sell-side agent is getting more if you sell for more. Because they just want to move on and get their check tomorrow.

• 11:05Alex Rampell?

  So if I say, okay, you're selling a $10 million house. That's a lot of money. And then there's another seller who will offer you $10 million, $10,000. Well, the sell-side agent is like, well, I get 3% of that. I don't really care. But you get an extra $10,000. Like, you really do care about that. So there's just, this is where the whole, the phrase, principal agent problem. Doesn't come from this, but it's like, this is a personification. Or like a real-life version of the principal agent problem. So there are just so many things broken where it's like, every other auction is fair. It's like, I see, okay, I want to go list that, I can, I can sell a used car on eBay. They actually do a pretty good job of that. And I see there are 24 bids, here is my reserve price. And like, it's just very opaque.

• 11:45Alex Rampell?

  And because it's a very infrequent transaction and you have concentrated benefit and diffuse harm, there have been so many attempts to like, really, really violently disrupt this industry. And, and one of them, and I should, I should say, I'm on the board of Rocket Mortgage, which bought Redfin. And Glenn Kelman is an amazing guy, started Redfin and really wanted to disrupt real estate. And said, okay, we're gonna, we're only gonna charge you 1%. Actually, let me take a step back. The funny thing about real estate agents, I've bought many houses. I've never used a real estate agent. Actually, that's not true. I did use a real estate agent one time to buy a house. But I was trying to say, I don't want to use a real estate agent to buy a house because you're gonna charge me money. It's like, no, no, no, no, you don't pay me. The seller pays me. And I'm like, where does the seller get the money from? They're like, well, from their bank account.

• 12:30Alex Rampell?

  I was like, no, no, no. I send the money to the escrow agent. And then the seller gets the money from the escrow agent and then pays you. No, no, no, it's different money. It's like, and I remember like, talking, this is when I bought a house in Palo Alto. I told the real estate agent. I will not name and shame him. I was like, with all respect, or maybe whenever you say you mean no respect, but with all due respect.

• 12:52Speaker 00

  You mean all due respect.

• 12:54Alex Rampell?

  Yes, with all due respect, of which I give you none, you must think I'm an idiot, or I think you're an idiot. Like, those are the only two options, because it's like, it's just absurd to say that like, it's free to be represented by a buy-side agent. So what Redfin started doing, and this actually did have like, a very, very positive impact on the industry, was like, why don't we bring down the 3% buy-side fee to 1% by rebating part of it back to the, to the, the consumer. But you know, the state of Oregon bans that, going back to every profession is a conspiracy against the lady. If I say, hey, use, use me, Eric, and not Kaz to buy your house, and I'm gonna take that 3% that's, that's advertised as a commission, and I'm gonna share it back with you, nope, you'll

• 13:35Alex Rampell?

  go to jail, you can't do that. It's like, that's absurd. So, and then even if you say, I'm gonna do buy-side representation for 1%, well, the seller still has to pay 4% now, right? Because if it's a 3% listing arrangement, and then 1%, you know, then maybe it's 6% all-in, but like, of the 3%, 2% goes back to you, the whole thing is messed up. So the only way to really violently change this is to have your own marketplace, in my, my perspective.

• 14:01Speaker 00

  I think, I think actually, the key part here is, like, transactions that happen incredibly infrequently usually end up being full of fraud. Like, there's a reason why carnies leave town. That's a real thing, right? There's like, I got your money, I'm out of here. Like, the odds are, you're gonna buy maybe two homes in your lifetime, and the odds are, you're not gonna use the same process to buy both of them. And it's like, people, people intuitively understand this about used car dealers, right? They're like, hey, like, I'm not gonna go to a used car dealer that doesn't offer certified pre-owned cars, because I don't like, I don't trust the car party, I need someone else to certify this thing,

• 14:46Speaker 00

  right? That's a very real thing. This is why, like, by the way, in software, we have a very hard time understanding this problem. Because in software, like, most of us get paid every month someone uses our product. It's a long-term relationship, right? Like, the more you use it, the more money I make.

• 15:04Speaker 00

  But it's the knowledge experience through software and back-end software was also had this problem. Like, you kind of want to, the best way to align counterparties is to take the transaction and stretch it out over time. Sure. To make sure that I'm interested in you liking me 10 years from now. And if you do that, most of these problems tend to get solved. But in order to do that, you need a counterparty, or at least a third party, to certify that this thing is good. That has an interest outside that one transaction immediately. And it's why, like, Amazon works so obscenely well. Like, you buy things from Amazon, you don't like it, you can return it. Which, by the way, we launched just yesterday at Open Door in Dallas, Texas. You buy a home from Open Door, you don't like it, you can return it.

• 15:49Speaker 00

  Like, you can move in early. Yeah. Try it out, don't like it, return it. Wow. And this is like, no one would do that. Like, this is not a thing that would happen regularly with a regular real estate transaction. Which is why, if you've ever bought a house, your agent has said something along the lines of this. Oh, they just turned down an offer exactly like that. Or, oh, they have another offer coming on Tuesday. They never have another offer coming on Tuesday. They didn't just turn down an offer like that. So I think there's a very real thing that, like, you just need to, A, have a counterparty who is interested in the long term. Or it's such a transaction. And B, remove the, I make all my money from this one thing transaction right now thing.

• 16:32Speaker 00

  And that's, both of those things just tend to, in any market, lead to bad outcomes. Where there are agency problems, they'll lead to terrible outcomes. Yeah.

• 16:40Alex Rampell?

  Well, there's a corollary to that as well, which is on the financial services side. So part of it is like, well, if you, if I only make a transaction happen every once, every 10 years, I don't know it that well. But if you're only doing two of these a year, candidly, you don't know it that well.

• 16:53Speaker 00

  Yeah.

• 16:54Alex Rampell?

  And then you have this other complicated thing like, how do you buy a house? How do you afford a house? And to me, it's kind of crazy that like the financing stuff is totally divorced from like the buying and selling, which is like, I mean, the part of how we became friendly is through a firm, right? Where how do you divorce buying and selling from financing? They are one in the same. And like, I can't, I can't buy a house until I sell my current house. And like, the real estate agent is not going to help me with that. They don't have a big checkbook.

• 17:21Speaker 00

  No, I think the agency problem, but I first thought the agency problem that exists in real estate is actually multiplied along the chain. Because there's usually an agent involved in the mortgage. There's usually an agent involved in the insurance. There's usually like, in every single thing you do, sometimes even the escrow, like there's usually like, so you have like, like, let's say, one principal agent problem is a bad one. In a real estate transaction, you usually have five. So it's multiplied. And let's say, one person making money off you once and never seeing you again is bad. In a real estate transaction, usually have at least like, at least five, sometimes a lot bigger number. Like the guy who does the inspection for your house.

• 18:05Speaker 00

  You're never going to see that guy again. Like, like, it's a very, and I think that actually is, but I think people, you have a very good people along this chain, the whole chain. And you end up with very terrible outcomes. Because the system is basically designed to not lead to good outcomes.

• 18:25Alex Rampell?

  Well, and the thing is, you have a lot of these subscale things that actually are pretty cool, that have never been productized and rolled out. So if you are an English professor at Princeton or Stanford, you probably can't afford to buy a house. But the university helps you buy a house. Where they will subsidize a mortgage. Or, you know, one of my favorite examples is, there's something called seller financing. So every now and then, you'll see a house sold by a very rich person, who is like, you know what? I don't need all the cash right now. You can pay me over time. It's like BNPL, I mean, a mortgage is BNPL. But like, this is somebody saying, "I will be your financing option and not a bank." These are all really interesting ideas. But like, you know, only Stanford and Princeton and other schools do that for their English professors.

• 19:10Alex Rampell?

  And only really rich people do this for homes where you can see, "Oh, here's a home that's listed for sale that has this like special financing." And that's done in like the brick and mortar like retail world every day. That's called like every day that ends in Y. It's like, "Oh, we want to sell more stuff." Like Procter and Young, "We want to sell more stuff, here's a coupon." Or Xbox wants to sell more things, or you know, Lexus wants to sell more cars. You know, 0% financing, 0% APR, Labor Day sale. Like, doing that for homes makes so much sense. But like, the real estate agents are not, they just don't, they just don't know what they're doing.

• 19:41Speaker 00

  There is one area in real estate where I think actually there's far fewer of these problems, which is when you buy a brand new home from a builder.

• 19:49Alex Rampell?

  Yes.

• 19:49Speaker 00

  When you buy a brand new home from a builder, like when you walk into a Lennar community and buy a home from them, like they've solved most of these problems.

• 19:57Alex Rampell?

  Yeah, it's a production one.

• 19:58Speaker 00

  They're like, "Everything is bundled." You have very few agency problems. You have some still even then if you shop with your own financing. But the odds are you shouldn't, just take their financing, because it's like optimized for you. And this is, I think, this is like a very classical problem. And basically, it's a marketplace problem that you'd have to solve. And I agree with you, the way to solve it is you need to just gather significant inventory and make it possible for counterparties to like, make it desirable for a counterparty to come to you to buy it. Like, this is like, we spend so much of our time in the first 16 days of like me being in this company, working on buyer stuff.

• 20:40Speaker 00

  Because like, it must be beneficial to buy a home from us. In a way, it wouldn't be somewhere else, so you can actually start the flywheel.

• 20:47Alex Rampell?

  Yeah.

• 20:48Erik Torenberg?

  And you said a company that could do that will be one of the biggest in the world. Has a company like Amazon or other big companies tried to do something like this? Or is it just so far afield that they would never?

• 20:59Alex Rampell?

  Well, the other thing that's, I think, very unique about this industry is it's so fundamentally local. So if you say, "I want to beat the MLS," there is no MLS Inc.

• 21:08Erik Torenberg?

  Sure.

• 21:08Alex Rampell?

  It's not like, "Ooh, I'm gonna go beat those guys." And the commander's intent of the general is like, "Take that hill." You, it's, every market is different. And that's the thing, it's like, just because like you could dominate Charlotte, and that does not make a single dent at all in Hawaii. And actually, the one case where I used a real estate agent to buy my house was in Hawaii. I have a house in Hawaii and they don't use the MLS there. It's just like this captive system where it's just like they make sure that you go through. And like those agents do so well because like it just shows the value of a marketplace. But you could have a company that decides I'm going to go run the table in XYZ place. And it doesn't show up in a different geography.

• 21:49Alex Rampell?

  So what you do see, going back to these kind of pockets of esoteric products, either financial or real estate, executive move. This is actually like a big thing. So imagine that you're hired as, actually I have a friend who was hired as the CMO at Home Depot. And she and her husband lived in New York. And guess what? Home Depot is not in New York. They're in Atlanta. They're like, okay, we will buy your old house from you and we'll pay like top dollar cash. We'll help you buy a house over here. We'll put you up in an apartment for two months. We'll do all of these things. Why? Because they want to get this person hired as the CMO of Home Depot. And they bundle in all these other things. They're not trying to say, I want to go disrupt the MLS. I mean, they should.

• 22:32Alex Rampell?

  I mean, I would hope that eBay, and I don't know the history on this. I'm sure you probably have looked into it. Like I know eBay has tried doing real estate. And there's another company called auction.com that really got into the distressed commercial real estate space and some distressed residential. Because if it's distressed, like you haven't paid your property taxes. Government seizes your home. Government doesn't want to hold on to home and pay its own property taxes to itself. So it auctions it off and it needs to close within five days. Like that's what like something like auction.com is like very well situated to do. But I find that you have some of these bespoke products for, as an example, executive moves. And those are done in the very, very first class way. Like why can't, this is the cool thing about technology. It's like, would you rather be the richest person in the world in 1900 with no penicillin and no iPhone and no Netflix?

• 23:17Alex Rampell?

  Or a middle, lower middle class person in 2025 with penicillin and Netflix and iPhone? I'd much rather be the lower middle class person than the richest person in the world in 1900. What technology often does is it helps diffuse these amazing products down to every book. Like, everybody gets the education of a billionaire. Like, that's the, I think that's the motto of Alpha School, right? Like, let's do all of these things. So you have some of these products for executive moves, and I kind of point to that as an example. And you have had attempts at like, kind of taking parts of the market and turning it into like, an actual, you know, either open outcry, English auction, or what's called the second price auction, a Vickrey auction. Like, do all of these cool things that are known to work, that are known to maximize the price, but they'll work for one market.

• 24:01Alex Rampell?

  And then just because I got one market, it doesn't help me at all. And then, by the way, you have like, 2 million people, but call it a subset of those 2 million people who are like, "I want you dead, and I will vote to change the law in Oregon to like, ban this product." So like, this is, this is what everybody's up against.

• 24:13Speaker 00

  Yeah, I think it actually is a hard, look, I think it's a hard problem, which is why I know how to solve it. And like, lots of smart people have worked on this problem, or at least subparts of it. Though I think, like, there's been three, like, structural flaws that have basically killed every attempt to solve this. The first one is like, let me solve a part of it. Let me solve the tiniest, like, most profitable part of it first, which objectively has failed, like, every single time it's been tried. Like, when Amazon started, they didn't say, "Hey, let me solve, like, selling books is not that profitable." But it's a really good way to get inventory, right? Because you can get all inventory of all books. There's a PDF you get, and it has literally every book. So like, the first problem's been like, essentially like,

• 24:57Speaker 00

  narrowing yourself down to one thing. The second problem has been basically a channel problem, which is that like, hey, I'm going to solve this problem through traditional channels. And that objectively just has failed, like, I think miserably, like, every single time. And a third problem, which is like, some people have gone like, relatively, like, some relatively large businesses that do this in some pockets of the world.

• 25:24Speaker 00

  But they all essentially tip over and fail because they've solved it by throwing human beings into treating it as an operational problem. It was like, there's three buckets of problems why no one's kind of solved this.

• 25:36Speaker 00

  And for what I think before like Carvana solved it for cars, this exact same problem was like the exact same set of problems, same way it was existed for cars. It's a very, I'm not a Carvana, it's like what 3% US car market, I don't know how much, but like probably somewhere around there. So I think there's a very real like parallels of like, there are things that probably could not have been solved in a way that was affordable and efficient like 10 years ago. Like generally think it's actually a real thing.

• 26:08Speaker 00

  And there were other problems that were solved the wrong way because for a brief period of time, money was free.

• 26:13Erik Torenberg?

  Yeah.

• 26:14Speaker 00

  And like everyone made all the wrong decisions they possibly could.

• 26:18Speaker 00

  But I do think we're in this like special time, this window where like basically all the tools you need to solve this problem kind of exist.

• 26:26Erik Torenberg?

  Sure.

• 26:28Erik Torenberg?

  We just get deeper there for a second. How much is real estate like healthcare where sort of the regulatory landscape has distorted the market and prevented, you know, mass, and feel free to quibble with that even framing of healthcare, but or is it just a hard, is it like the, the market dynamics you were describing, is that just emergent in how real estate sort of works?

• 26:49Speaker 00

  So I think, I think it's far more similar to automobiles than healthcare.

• 26:55Alex Rampell?

  I agree.

• 26:55Speaker 00

  Like it's just like basically identical. Honestly, like if you look at like how cars were sold, basically till Tesla, everyone had a dealer network because once you had a dealer network, one was required. But Tesla's like, hold on a second, if I don't have one dealer, I don't have to have any dealers. And the answer is yes, outside New Jersey, I think.

• 27:14Alex Rampell?

  And I think Texas, you're not allowed to buy a car unless it's sold at a car dealer.

• 27:18Speaker 00

  Yeah.

• 27:19Alex Rampell?

  So like, again, regulatory capture.

• 27:20Speaker 00

  There's a couple of these things. So for example, in North Carolina. Uh, Georgia and Louisiana, I think those three states. You can't close a real estate transaction digitally. You have to have a wet signature. That's kind of annoying. That's a real thing. But, but it's not at all like the healthcare system. It's much more similar. Like there are regulations, some of them good, some of them terrible. But they're in nature, much more similar to how cars were built. But how can we solve this in cars? And it's just because it's. We hadn't solved this. We had not solved this in car until like five years ago. Like we solved this car. For new cars, Tesla solved this. And for used cars, Carvana solved this.

• 28:02Speaker 00

  And keep in mind, like those are actually like, they're very real operational challenges that Carvana has that don't exist for homes. Right? Like Carvana moves every single car they buy. Like, Open Door does not move homes. Like homes stay where they are. Yeah. So there's a very real, like the upsides to trying to solve this problem in homes rather than cars. There are obvious downsides too. But I think it's like a very real, and the underwriting for what it's worth is like similar-ish. The underwriting of a car is as, is difficult, or even a home is difficult. They're not, they're similar-ish difficult. Like different problems, but similar-ish problems.

• 28:40Alex Rampell?

  Well, this is the nice thing is that you can really subsegment the market. I mean, the reason why I help, I can, we could talk for like 10 hours about why healthcare is messed up. But fundamentally, there are no prices.

• 28:48Speaker 00

  Yeah.

• 28:48Alex Rampell?

  It's like, how much does this cost? Like the doctor doesn't even know. And then like, oh, well, we're going to bill your insurance company this much. They won't pay it. And then because they won't pay it, like the doctor charges more. It's like the whole thing is messed up. And here you have price transparency for sure. It's like, I know exactly how much everything is going to cost. You get a little bit misled by some of the agents who say like, oh, buy side is free because the seller pays, blah, blah, blah. But there are, you could, you could chop this up into different markets, right? So I mean, this is what's very helpful to understand, like selling $50 million luxury homes and like how to price those. Like a $50 million house that's a spec home could sell for 25. Like there's not really, but this is the cool thing. Like for real estate, because you are almost more so than cars. Real estate, people need to live somewhere and they either rent or they own.

• 29:33Alex Rampell?

  And then of course, there are different models in between. You can like, you know, rent to own.

• 29:36Speaker 00

  Yeah.

• 29:37Alex Rampell?

  You can, you can, you can like get your friend to like give you a free spot and not charge you anything. But you're the renter, you own. And then the floor on valuation is what's the rental price? And how does that compare going back to like cap rates? Like, how does that compare to the cost of capital? So the vast majority of homes in America, number one, they qualify for what are called conforming mortgages. So there already is this idea of it's like where they're like really expensive homes. That's where you get like a Jumbo mortgage. And then there's like everything else. And the pricing of everything else is a lot more like cars.

• 30:07Speaker 00

  It's actually more transparent too. It's far more transparent than cars. Like, this is very real. Like, you don't like, this is very, like, with cars, there's a very real thing about repair of cars where like, it's very opaque. You can't really know, like, it's just very hard, like.

• 30:23Alex Rampell?

  Structural damage.

• 30:24Speaker 00

  Structural damage, like, or like, like your fan belt. I don't know what a fan, like, it's very, there's things that are like difficult. And there's OEM, like, this whole thing, like, like an OEM part, non OEM part. There's like a variety of like things that, the decision matrix is much bigger. Whereas for homes, it's relatively transparent. And by the way, like, to Open Doors credit, this is a thing that Open Doors exceptionally good at. Open Doors exceptionally good at pricing renovations and changes. Like, just, they have just like, like, it's your credit to me. They've dialed this in. And, like, in a way that's actually surprisingly good.

• 31:02Alex Rampell?

  So which, which makes sense because who's going to get a better shipping rate with UPS?

• 31:07Speaker 00

  Right.

• 31:07Alex Rampell?

  Me who ships one package a year or like Amazon, who eventually got such a good shipping rate that they couldn't get any better unless they started their own shipping network called Amazon Delivery, right? So you have economies of scale that never go to the agent, that never go to the customer, but that should go to a company.

• 31:22Speaker 00

  Yeah. I said, we all think, and this is like, actually, like, the real thing. This is like, I'm relatively ideological about this. Like, I think you can make it such a, like, Open Door is an exceptionally good business. And the average person pays less for a house and the average person sells a house for more. Like, I think you can, it's actually not, the math here is not that difficult. How do you do that? There's just so much friction at home. But if just, just, let me just give you an example. If Open Doors does nothing else, then help you time your closing of your new house with buying your new, like, selling of your old house with closing of your new house. Like, if just, if that's all Open Door does, you would now have avoid on average about three mortgage payments.

• 32:08Speaker 00

  Like, like, who was getting paid that money?

• 32:12Erik Torenberg?

  Right.

• 32:12Speaker 00

  Like, why? Like, why? Like, and that's a real thing that everyone, like, everyone pays at least one extra mortgage payment or one extra rent payment. And it's frequently more. That's just like, one thing. And I thought it's like a service that Open Door can deliver to most people, even without buying their house. Like, there's a very real thing. So like, I think there's a bunch of these things that exist, and the agency problem is real. Um, the very real thing on cost of capital, which like, when you aggregate lots of homes, your cost of capital tends to be lower. Therefore, you're like, that's a real thing. The very real thing about like, the level of underwriting you can do on warranties.

• 32:52Speaker 00

  Like, the reason Open Door can offer, you know, a seven-day trial of a home is because we own lots of homes. Like, you don't like this one, if we take it back, the odds are you're gonna buy another house from us, right? So this is like, there's all these frictions that exist because the system everywhere is subscale, one. Two, because there's so many principal agency problems, right? The second one. And third, because there's so many of these transactions that are one-time transactions.

• 33:20Erik Torenberg?

  Yeah.

• 33:23Erik Torenberg?

  Okay, let's zoom back into the company for a second. So Alex, you, you make the investment, and you've got this vision for the company and the opportunity. What have we learned about the feasibility of the opportunity based on the company performance? Is another way of asking, like, for people who haven't been following the company trajectory, you know, how have things gone? What have we learned? What have the ups and downs been, et cetera?

• 33:42Alex Rampell?

  Well, so, uh, there was a point in time where Open Door was such a good idea. Um, you know, there's a saying we use a lot of venture capital, it's like, you know, you want to invest in a bad idea, that suddenly it looks like a bad idea that's actually a good idea. Because if it looks like a good idea, then it becomes a bad idea. And Open Door was somewhere in between the two of these, because Zillow was like, oh my god, like, in a rich bargain, comes back to Zillow, Spencer leaves, and it's like, I have to go do what Open Door does. Everybody was getting into iBuy, and then Offerpad, you know, popped up, but like, Zillow was the big one, and, um-

• 34:16Erik Torenberg?

  They couldn't do it.

• 34:16Alex Rampell?

  Uh, well, so, but, but here's why they couldn't do it. It's an interesting story and like the other part of the story is like Ben Thompson wrote a post that almost like kind of summarizes in a more eloquent form like what I was talking about with like, you know, if you get all the, if you get all the supply or just a small sliver of proprietary supply, you get all the demand and once you have all the demand, then you can have your, then supply just comes to you. And that's how you finally build a marketplace. And I think rumor has it that Rich Pardon reads Ben Thompson, as everybody should, because Ben Thompson is very, very smart. I was like, holy shit, we have to do this. So they start doing this and they're making infinite money. But this is where cohort math is so important because the first homes to sell are the positive selection homes. So imagine that, you know, what is it?

• 34:57Alex Rampell?

  It's October right now. Kaz and I buy a thousand homes today. The best homes will sell tomorrow. And then the homes that we're stuck with two years from now, like, you know, there are ghosts that live in those homes or like the termites, like they're like mega termites, like there are things that are wrong with it. So Zillow thought as a public company operating in the public limelight, they're like, we're making so much money on iBuying because we're holding everything that hasn't sold at NAV, a net asset value, and then we're yielding profits all along the way. But you have to let the whole cohort cure, as the term goes, and then it's like, uh-oh, we lost a lot of money on that cohort. So what happened was Open Door now is getting outbid by, because this is such a good idea, everybody thinks it's a good idea, kind of started

• 35:41Alex Rampell?

  becoming a little bit of a bad idea pre-marketplace. Zillow starts paying more. In fact, Zillow even had like, hey, you don't sell to Open Door, sell to us, we'll pay a dollar more. And you always have to realize, if you talk to anybody who's a professional trader in the equity markets, they're like, you have to assume that it's an adversarial process. Is that, you know, any time that you have, anybody, somebody hits your bid, like, there's something wrong, right? It's like, you should assume that you're about to get taken advantage of. Zillow didn't really understand that, but they kind of muddied the waters for everybody else. Eventually, Zillow pulled out of that business. Money started becoming not free. And if you're stuck with a huge amount of inventory, you know, being a market maker, I mean, if you look at the most profitable companies in the world, like Jane Street is a market maker, Virtu is a market maker,

• 36:24Alex Rampell?

  Citadel Securities is a market maker, they don't win all of the time. Because if they did, then they were doing something, you know, probably illegal. They make money most of the time. They have a weighted coin and they hold inventory and they're making money on this bid ask spread from somebody who's hopefully not taking advantage of them, which is why they want retail flow. And what happens, though, is that if you, like, a lot of the market makers in the equities world, they don't like to hold positions overnight. Because things could change. So Open Door is holding a lot of positions beyond just overnight. And then interest rates went from like 0% to like 4%. And 4% is not high in the history of the world, but it's really high to go from like 0% to like 4% in like a few months.

• 37:02Speaker 00

  The pace at which interest rate increased were, I mean, I think we can say in hindsight, this was a deeply irresponsible for the country. Like, I don't think, I think it was very.

• 37:13Alex Rampell?

  So why Silicon Valley Bank went bankrupt?

• 37:15Speaker 00

  I think this is actually a very.

• 37:16Alex Rampell?

  Asset prices went down. Yeah.

• 37:17Speaker 00

  I think this is like, look, I think Open Door has made lots of mistakes regardless of interest rates. But like, there's a very real thing that happened, which, and companies shouldn't take credit or blame for macro. But what happened in the US with interest rates had basically never happened before. And I think will literally never happen again because it was so obviously stupid.

• 37:38Alex Rampell?

  So basically what happens is like you're left with all this inventory. And the whole point is like, if you're just buying and selling and you make money 51% of the time and you're earning a spread between like, you know, the, basically you have the, the top bid and the lowest ask. And then there's like this, this margin in between. And if you just kind of keep buying, keep selling, you can actually make this work. And this is again, how, this is why Jane Street makes a lot of money or Citadel Securities or any of these companies that you've heard of, they're doing it very, very frequently. They're typically not holding on to assets for a very long period of time. Some of them never hold on to assets overnight, just as a standing rule. And Open Door has a lot of assets. And then what happens is when asset, when, sorry, when interest rates go up, what happens to asset prices, they tend to go down.

• 38:23Alex Rampell?

  Because now it's like, think of it in, in terms of like a mortgage payment. Like, well, before my mortgage payment used to be a thousand, like I only have a thousand dollars a month to, to switch from like my rental payment to buying a house because I can make a down payment. Well, wait a minute, now it costs me $2,000 a month. So therefore I don't want to buy the house. What happens when aggregate demand goes down while prices go down? And actually, this didn't happen as much in housing as would have been anticipated because we have a shortage of homes and that's a separate topic. But asset prices in general went down. Like SVB, Silicon Valley Bank went bankrupt because interest rates go up. And if you're stuck with a bunch of like, you know, 75 basis point 10-year T-bills, they're worth half as much as they were before. Now you have to go sell them, uh-oh, you're bankrupt. So the pace that this happened was very, very high.

• 39:07Alex Rampell?

  Nobody really, I mean, people anticipated, okay, our rates are low. But it's like, oh, well, the Fed were raised by 25 basis points, another 20. Like, it wasn't like boom. And that was the like five sigma, or I'm making up the number of sigmas. But it was a many, many standard deviations beyond the norm in terms of what you can anticipate. And then it's like all of the risk cap, actually, it was kind of a double whammy because risk capital, like, you know, venture capital is risk capital. So when interest rates are low, well, I don't want to earn 75 basis points on T-bills. I'm going to invest in riskier things. I'm going to give it to venture capital. I'm going to give it to private equity. So risk capital kind of pulls back. Asset prices go down. Demand for homes goes down because interest rates went up.

• 39:47Alex Rampell?

  So my monthly, so it was kind of like this, everything went wrong at the same time. And the vision of the company, at least my vision of the company, I'm not the founder, but like my vision as an investor was like, you guys have a chance of building a marketplace, but it's going to take time. You can't just like snap your fingers and boom, you have a marketplace. Like, how long did it take Amazon to build a marketplace? How many like very, very sad, despondent shareholder letters did Jeff Bezos have to write before a marketplace appeared? A long, long time. And then Open Door, I think, was on the path, but then just kind of got hit with this like triple, quadruple, or maybe quintuple whammy.

• 40:20Speaker 00

  There's also a real thing, look, I think companies, it's very good when companies are blamed for their mistakes, actually a good thing for the world. And we should all admit our mistakes because that's how we learn. The same thing happened to Amazon much earlier.

• 40:36Speaker 00

  And to Carvana around the same time.

• 40:38Erik Torenberg?

  Yeah.

• 40:39Speaker 00

  But Amazon and Carvana reacted differently to that thing happening. Like, I'm like, cool, was the original idea a good idea? All right, what was the mistake? Let's just shed the mistakes and go. I think what Open Door publicly did was essentially abandon the original mission. We'll say, cool, we're gonna de-risk this company a lot. We're just gonna like, de-risk the company across the entire segment. I think that actually is a very hard spiral to recover from. Cause you've now made it like, you've now made a category mistake about who you are, which makes it really easy for everyone else to make the same mistake. And then like, I, I don't.

• 41:23Speaker 00

  I think if, if Open Door is an old fashioned operational house flipper, like, that's not that, it could be meaningful, it's not that big a business, right?

• 41:34Erik Torenberg?

  And they, they lost faith in the original vision and the feasibility of it? Or what would explain to the sort of?

• 41:39Speaker 00

  Uh, I mean, I think, look, I think there's a very real thing about being a public company that like, there are things you have to deal with at a public company that are amplified. But I think private companies basically all have the exact same problems. But in a public company, like in a private company, these problems are discussed with your VCs at a board table. In a public company, they're discussed on Reddit. And it's from the Wall Street Journal. So if you care a great deal about what's said about you in the Wall Street Journal, running a public company is incredibly difficult. It's just very difficult. Luckily, I just don't care. So like, it's, it's slightly.

• 42:15Erik Torenberg?

  Right.

• 42:15Speaker 00

  Easier.

• 42:16Erik Torenberg?

  So you've come back and you, you, you, you've joined and you've said, hey, let's, let's go back. The original vision was a good idea, but let's, let's bring it.

• 42:24Speaker 00

  Well, look, I, I, I think the mission is a worthwhile one. I think Open Door has made mistakes along the path and we should learn from our mistakes. But the company is not made better by becoming neater.

• 42:40Speaker 00

  Right?

• 42:40Erik Torenberg?

  Yeah.

• 42:41Speaker 00

  That's a very real thing. Will we make mistakes again? 100%. We will for sure make mistakes again. Like, we just launched a trial before this seven-day trial of homes in Dallas, Texas. It's day one, I don't know how it's gonna go. We'll find out. But I was telling this to one of our product managers this morning. I got to Open Door and I felt... Have you ever watched Braveheart? There's a scene where Mel Gibson's standing in front of Scottish Army, and the English are coming with weapons, and Mel Gibson's standing there saying, "Hold, hold." I'm like, "Don't hold, attack." I got to Open Door and I felt like for like three years,

• 43:23Speaker 00

  someone had stood in front of a company saying, "Hold, hold, wait." Like, just wait for the macro to recover. And you just don't tend to build great software companies like that. I think you can build great hedge funds like that. But Open Door's not a hedge fund. If it was a hedge fund, it needed to be six guys in New York with laptops. We're not that. We're a software company. And software companies need to be basically always on attack. Like, always, always, always on attack. We'll attack some wrong hills, we'll accidentally lose some ships, but like, always on attack.

• 44:03Erik Torenberg?

  Yeah. What advice have you given to Kaz? Or what would you be thinking about in terms of what strategic decisions you have to make? Or what's important if you were taking over as CEO?

• 44:14Alex Rampell?

  I think a lot of it. I think when I first heard that he was taking the job, I think I sent you my YouTube video. It's actually my most viewed ever video, largely by real estate agents who hate me and want to kill me. This was like circulating, speaking of Reddit, and the courage to be disliked, it's a good book. Courage to be disliked.

• 44:30Speaker 00

  It's an excellent book. Take a camera. Courage to be disliked is among the best books to read as a founder. You must read it.

• 44:37Alex Rampell?

  Yeah.

• 44:37Speaker 00

  It's excellent.

• 44:38Alex Rampell?

  It's this whole Socratic dialogue, like, in this Adlerian psychology mode. It's very, very interesting. So... After giving that talk, oh my God, the number of real estate agent hate mail. I didn't know that there was such a thing as like real estate agent hate mail because I was basically saying like these people are like leeches on society. And like low and behold, they don't like being called that.

• 44:58Speaker 00

  They don't like being called leech on society.

• 45:00Alex Rampell?

  And I know some real estate agents, but it's just like the whole process doesn't make sense. There should not be a 6% tax, which by the way, I make this point in the presentation. It's unique to America. You go pick any other country in the world, it's nowhere near that that level of spread and you don't have all this regulatory capture. It doesn't make any sense. So I think my, my big thing was it's like, if you have a marketplace for homes, it is the biggest marketplace in the world. Right? Like, we know that the stock market is big, but you know what? The residential real estate market is bigger. So we know that, you know, everybody like, why is the NYSE and NASDAQ worth a lot? Like, why is eBay worth like all of these things that do everything but homes? If we, if you stick to that, which I think the company, I mean, this is what Eric Wu was kind of committed to doing.

• 45:45Alex Rampell?

  And it just became, it was an untenable situation where it's like all of your public, it's hard to do it in the public eye, for sure.

• 45:51Speaker 00

  I think it's harder, but I don't think it's like, I think the company could have still died in the public eye. But just the company just had to learn a bunch of wrong lessons.

• 45:59Alex Rampell?

  Yeah. And that was, that was the point. It's like when money is free, like success is a terrible teacher. And it's like, oh, we're making all this money flipping homes and the real, the real magic is going to happen if it's like, open door.com does not take principal risk on a house. And it just means that like, it's the lowest cost to sell. It's the, it's the best way to buy. And that's what, by the way, like buying stuff on Amazon is, that's what buying stuff, I mean eBay has kind of lost its luster. But still, if I catch a new home run at a Giants game, where do I go sell that? Who has the deepest liquidity? It's going to be eBay and I'm going to sell it there. And everybody who wants to buy a baseball, they go to eBay and like eBay does not have to take possession of the baseball. That's why they have an amazing business. They probably have too many people that work there. They have, you know, it's a shadow of its former self.

• 46:43Alex Rampell?

  Apparently it's still using the same .net library and like 1997. So all sorts of issues there, but like, I'm just excited about this vision of having a housing marketplace. And then also kind of coming up with creative financing options. Because finance is like, all of these are one offs to your point. And then by the way, you can come up with like better insurance options. If you control the entire thing and to your point, if you have like a lifelong relationship with that customer, there are so many things that you can do.

• 47:09Speaker 00

  This is a, this is a very, I mean, look, underwriting a home for mortgage and underwriting a home for insurance and underwriting a home for buying it. Fundamentally not that different as exercises. There really, there really aren't. But all the players in this space come up with different answers to these questions. Right? It's just like this, this, this all should very clearly be done by one person. Like, it's very clearly one company should do this. And you and I, like, are money nerds. So I, I wrote a book about, about

• 47:42Alex Rampell?

  Yeah, I know, you did.

• 47:43Speaker 00

  Pay Miss in the US. So I, I think there's a, I'm genuinely excited about this. I do think for what it's worth that the right model actually is much closer to Amazon than to eBay.

• 47:55Alex Rampell?

  Yeah.

• 47:56Speaker 00

  Because I actually think for, I think Open Door will have principal risk on quite a lot of its inventory for a very long time. Now, should only have that? Obviously not. And it's also not a binary thing. It's not like zero risk or 100% risk. There's like, it's a gradient. You can live anywhere along the chain. You can deliver different values to like, like, we don't have to agree with a seller on the price of the home. We can say, cool, we agree it's at least this.

• 48:23Alex Rampell?

  Right, right.

• 48:24Speaker 00

  We'll give you at least that. And then let's sell it. You take the rest of the risk. We'll take the risk for the first bit.

• 48:29Alex Rampell?

  Yeah.

• 48:30Speaker 00

  And there's a lot you can do here. It's not like quite binary and becomes like a UX problem rather than underwriting problem, but fixable.

• 48:37Alex Rampell?

  Well, that's the thing. It's like there is a market order and a limit order.

• 48:40Speaker 00

  Yes, yes.

• 48:41Alex Rampell?

  And there's a value, there's, there's a place for both.

• 48:43Speaker 00

  Yeah.

• 48:43Alex Rampell?

  And there's a lot of liquidity, you know, beneath the kind of the, the top big and the lowest ask. There's, there's always a lot of liquidity there and those are the limit orders.

• 48:53Speaker 00

  Uh huh.

• 48:55Erik Torenberg?

  Peering towards the, the future, what, what else can you hint at in terms of the biggest priorities or decisions or strategic directions that you're, you're focused on?

• 49:06Speaker 00

  The thing I admired, deeply admired about my time at Shopify is that, like, if you actually, if you watch chess players, like, go back in time and, like, start chess, they'll teach you, like, opening strategies. They'll be like, this is what you should do. If you look at modern chess players, they use something called positional chess. Right? Like, always put yourself in a better position. Like, play for the next position, then what after that? And just like, give yourself more options. And that actually is the right way to build a company transparently. Like, you don't wanna like, you wanna hold the strategy very loosely. Not the mission, but the strategy. So I don't have like a secret bag of tricks.

• 49:46Speaker 00

  But I think there's a very real thing where Open Door does too little for its sellers and does almost nothing for its buyers. Like we'll solve both of those problems. I think there's a very real thing where like, I think due to some bad advice, the company tried for a little while to essentially only buy homes that were mispriced. Like, we will only buy homes that are mispriced by 20%. And turns out, just, again, you can build a hedge fund doing that. You can't really build a software company doing that. Like, our goal is to buy and sell homes for a fair price. Like, for a fair price, we will buy and sell homes.

• 50:28Speaker 00

  And I think those are like three big, like, everyone that way-ish. And then what we'll do is we'll just like, ask people to hold us to account against this mission. Like, hold us to account against this mission. That what we are going to do out there is try to be the person you transact with quite frequently when buying selling homes. Not just like 0.5% of the time, but a significant percentage of the time. And then, well, I think that's like, and by the way, we've already, like, when I started at Open Door, Open Door was only available in 48 markets in the US. It is now available in every market in the US.

• 51:11Speaker 00

  Because like, you can push pixels relatively easily.

• 51:14Erik Torenberg?

  Yeah.

• 51:14Speaker 00

  So there's a bunch, but a bunch of that stuff. It's like, I think, I think people should expect us to be a much more ambitious company.

• 51:20Erik Torenberg?

  Well, in terms of holding you to account, one thing that's so remarkable about the company, among other things, is how many people on the internet feel so passionate about the company, the Open Army. How do we explain why Open Door is a company that so many people feel so passionate? And how does that, you know, impact at all sort of the business? Or how you think about?

• 51:38Speaker 00

  Well, I never.

• 51:41Speaker 00

  I never worked on Wall Street and until I started this job, I owned one ticker. It was Shopify at some point soon I'll own this ticker.

• 51:52Speaker 00

  Once, you know, I'm allowed to. I'm not like, I'm not a stock analyst, I'm just not one. I build products for a living.

• 52:01Speaker 00

  But I think there's a very real thing that happens where people feel like the natural intuitions of the average American is a very good indicator of what's true. Like William Buckley used to say, he used to rather grab the phone book of Boston, Massachusetts than go to Harvard professor's book for like advice. Because it's a very real thing about the natural intuition of people is real. And I think people look at real estate and how those transactions are done. And they say, well, this is stupid. Like this is not how this should be. And it makes it like, I think that's what it is. I think that like people are looking at and saying, hey, this is not how this should work. There's a company out there who's supposed to, who has told us they're gonna fix this problem.

• 52:46Speaker 00

  We want them to go fix it. And what I think like this, the most wonderful thing about this is that if you engage with the average person, they tend to be deeply reasonable. Ask really good questions, have really good ideas. Whereas if you engage with like supposed experts, they have like preconceived biases and they're like usually wrong, just like a whole like pretense of knowledge thing that happens.

• 53:15Speaker 00

  So I think it's actually deeply helpful for the company to be a company where like, like, cool. You know who I want advice from? The average person who owns this stock and is about to buy or sell a home. I want advice from that person. Because the odds are they have a wider aperture of possibility. Like this is a real question that someone asked me the other day saying, hey,

• 53:36Speaker 00

  why can't, why can I return what I buy on Amazon and not a home? Like, that's a really decent question. That's like the honest to goodness, like, like from the time someone asked that question to the time we launched a product was maybe, I think, 12 days?

• 53:56Speaker 00

  Because there's a certain amount of like, there's something broken here that is like, it is intuition, like is intuition is crystallized knowledge and intuition by lots of people is literally knowledge of like significant number of people. And I think it's important. It is a bad thing for the world that people in this country can't afford to own their home. Like people who own homes, kids that grow up in homes that are owned by their parents have better life outcomes. People who live in homes have better communities, lower crime, higher health results. If you're so inclined to solve this problem with us, my DMs are open. Find me. We are going to build the most aggressive team in software. And we're always recruiting.

• 54:44Speaker 01

  Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at A16Z.substack.com. Thanks again for listening and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies

• 55:26Speaker 01

  discussed in this podcast. For more details, including a link to our investments, please see A16Z.com/disclosures.