#AIS: Divvy Homes CEO Adena Hefets breaks down the state of the US housing market

This talk was recorded LIVE at the All-In Summit in Miami and included slides. To watch on YouTube, check out our All-In Summit playlist: https://bit.ly/aisytplaylist 0:00 Adena Hefets breaks down the state of the US housing market in 2022 16:56 Bestie Q&A with Adena: differences between 2008 and 2022, housing market reaction time, chances of a collapse, and more 30:08 Adena does a Bestie Intro for herself! Follow Adena: https://twitter.com/adenahefets Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect

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

• 0:00Speaker 00

  Awesome. Hi, everyone. My name is Adena. I'm the CEO of Divvy Homes. It's a pleasure to meet y'all. Thank you for being here.

• 0:24Speaker 00

  All right. So while they're pulling that up, I will just kick it off and get started because we're about three hours behind at this point.

• 0:33Speaker 00

  My passions are at the crossroads of finance, housing, and inequality, and trying to solve all of these. I'll get into what my company does at the very end of the presentation. It's not what I really want to focus on. But I want to start off with a little story that I think explains why this is so important to me. When it was about the 1980s, my mom decided to go on a little road trip with her friends. And she was in Israel, and she was backpacking, and she was hitchhiking. And a man picked her up. She got into that car, fell in love, and got pregnant. That man is my dad. My mom and dad quickly got married, immigrated back to the U.S., and found themselves very young, 21 and 24, pregnant, and trying to figure out

• 1:17Speaker 00

  what they were going to do with their lives. They couldn't get a mortgage to buy a house and settle down and be able to raise a family. But they were fortunate enough to find a woman who gave them seller financing on their house. So this woman financed the purchase of the house to let my parents pay an installment. And in that house, they had three additional kids. I'm the third of four. And then eventually, we were able to get a mortgage, take cash out of that house, and use the cash that they took out to pay for all four kids to go to college. And I tell you this because, to me, this is the heart of the American dream, which is being able to provide a better life for your children than what you actually have. And so so much of what we're going to be talking about here is why that American dream

• 2:00Speaker 00

  has disappeared for so many Americans and what we at Divvy are doing to try to address that. So let's dive in. I have these bright blue slides. The goal is to just give you the takeaway so you don't have to figure it out. I try to stick to one chart per slide to keep it super simple, and I'll explain it. But this is the takeaway that you should get from the next couple of data points I'm going to give you, which is wealth inequality is rising across America. I think you all know this chart, which is that 99% of wealth is owned by the top 50% and the bottom 50% only own 1% of wealth here in the United States. So this chart shows distribution of wealth by what your household income is.

• 2:42Speaker 00

  So the top 10% of owners, sorry, the top 10% own 76% of wealth. The next 40% own 23% of wealth. If you sum that up, 99% of wealth is owned by the top 50%. And what's even more interesting is that the rich are getting richer while the poor kind of stay at the same level of income. And so what this chart actually shows is income percentiles. So on the x-axis, the zero is if you're at the very bottom end of the income spectrum, 100%, you're at the top end. And then the blue line is how much income or family household wealth you had in 1963, almost 50 years ago. And the yellow line shows how much wealth you have today.

• 3:22Speaker 00

  So if you were in the top 1%, your household wealth was on average $2 million 50 years ago. Today, it's about $10 million or a 5x growth. And if you were in the bottom 50th percentile, you haven't seen your household income change almost at all. And so you might be asking, okay, why is this the case? Is it that wealthy people are making more in salary? I would say while there are some salary differentials, the main driver is asset appreciation, access to assets. And when I say assets, I'm going to use that pretty liberally. It can mean stocks, it can mean housing, it can mean small businesses, direct investments. But all of that, I'm going to group together as investments and assets. And so you can see, this is a really simple chart where I took what were the 20-year

• 4:06Speaker 00

  returns by income as well as asset. And you can see that household income has not appreciated much in the last 20 years, whereas the S&P 500, as well as if you owned equity in your home, you'd see an increase in your value of over 100%. You want to see something even crazier? You get leverage on your home equity, which is something that most of you, some of you might get leverage against your equity that you mess in the stock market, but most of you aren't. And you can actually lever up your home equity. Right? And so you can take out debt that's cheap because it's backed and guaranteed by the government. 80% leverage at what has been almost 3% cost of capital. No one else can get that sort of cost of capital at that sort of leverage.

• 4:51Speaker 00

  And you're forced to amortize, so you build up savings in the property. And a house has dual utility. You cannot live in the S and P 500. You can live in a home. And so if we click on, and so the takeaway has to be those who own assets are more likely to have a higher net worth. And so this is a chart that I stole from the New York Times, so credit goes to them. But if you look on the left-hand side, the blue bars, all of the bars kind of sum up to 100% going across. So the blue bars is the percent of family, so bottom 50 percentile of income earners, 50%. 50th, 80th percentile, 30%, so on. And what this is saying is that the bottom 50% of families and households

• 5:34Speaker 00

  own 1% of overall equities in the market. And when you look at directly held stocks, so stocks in the stock market, they own 0%, right? And if you look at the top 1% of income earners, they own 38% of overall equities, which includes like retirement accounts and everything, remember I said that big asset class. And they own 51% of all directly held stocks. So if you ask, why are the rich getting richer? It is because they own assets. Assets compound over time. There's also a ton of tax benefits around owning assets, long-term capital gains, which I'm sure you all know. And another way to look at this, which I think is really interesting, is your net worth by renter versus homeowner.

• 6:19Speaker 00

  Homeowners, on average, have 75 times the net worth of a renter. This is all census data. It's all publicly available. I'm happy to share it. And I think what is so interesting here is that I'm not saying the answer is homeownership. You want to invest in crypto? Great. You want to put your money into the S and P 500? Even better. However, the majority of Americans, as you just saw on this slide, Don't invest in equities as much, right? It's just hard to conceptualize, whereas a house is actually pretty easy to conceptualize. And because the debt amortizes, you're forced to save over time. It's highly illiquid, it's hard to take your money out of it. It is what makes a great investment.

• 7:02Speaker 00

  And so when you look at why this chart is so high, it's not because homeowners are saving a tremendous amount more, right? It's they're saving, they're putting money into the equity of the home they're being forced to in their payments. So despite the benefits of homeownership, it is starting to become fundamentally inaccessible. So this is a chart, really simple, of average home prices. There's a bunch of different ways you, different sources you can measure home prices, but you can see that at the bottom of the recession, which was actually 2012 for home prices, the average home price in America was $163,000. And that today it's closer to $338,000. That's a 200% increase in 10 years.

• 7:44Speaker 00

  At the same time, real median income has only increased from about $57,000 to $67,000. So what has caused prices for homes to increase so dramatically? If I do, I'm pretty sure that none of this is new news. You all have been seeing how much home prices have risen. For those of you who have bought while interest rates were three, were still 3%, good on you, because that is probably the lowest they're going to be in a really, really long time. But here's the quick history, which is from 2000 to 2008, we were building on average one and a half billion homes, sorry, million homes a year, not billion, gosh, one and a half million homes a year, and that equated to roughly four to five months of inventory.

• 8:26Speaker 00

  Months of inventory mean that if, if there were no more homes that were put on the market, how long would it take to sell all those homes? Four to five months. And that's generally considered a balanced real estate market.

• 8:38Speaker 00

  Then what happened? The global financial crisis. There was a mass number of foreclosures. The market was completely flooded. And all of a sudden, you could buy an existing home that was going into foreclosure for $163,000. And so builders, who had to pay for labor, for lumber, right, to actually build a house, couldn't build a house for that cheap. The cheapest that a home builder can build a home is roughly $200,000, all in costs, right? And so if you can sit there and you're like, "I can only build a house for $200,000, which means I have to sell it for more than $200,000." Well, I can't compete with existing foreclosure inventory. So home builders stopped building. They went from building 1.5 million a year

• 9:21Speaker 00

  down to about 750,000 homes a year after that. And it stayed like that until about 2015. And at that point, a lot of the inventory that came from foreclosures were absorbed, and they started actually rebuilding again. But they didn't rebuild at the same rate that they had prior. We're rebuilding, right now, we're building probably new inventories 1.2 million annually. And so then this massive thing happened, which is COVID. And all of a sudden, everyone went from living in their studio apartment to saying, "I need a backyard. I need an extra room for childcare, and I need an office." And there was this mass spike in demand after years of not building enough inventory. And so what happens when demand starts to spike, and there's not a lot of supply? Well, home prices took off,

• 10:06Speaker 00

  which you can kind of see right over here is that little spiky part at the very end.

• 10:12Speaker 00

  And what's amazing is that it's actually just gotten incredibly harder, not just because home prices are getting more expensive, but because of the impact that that has in terms of how much you actually need to save to buy a home. So the left-hand chart shows, the yellow bar is your average down payment, and you can see that that's grown roughly 2X. At the same time, median income in the last 20 years hasn't gone up. So on an absolute dollar basis, you now need to save 2X the amount that you would have had to save back in 2000. So one, it's down payment is an issue. The second issue is that post-global financial crisis... Rightly so, the government tightened underwriting requirements. They said, "You know what? Turns out when you cause a global worldwide recession, we should maybe change how we're

• 10:57Speaker 00

  doing things." And so they pulled back and said, "We're gonna make you have a higher FICO in order to be able to purchase a home," which is probably the right answer, but also pretty painful, because people don't wake up one day and they're like, "I no longer need a home," right? And so if you take a look at this, the average FICO for home buyers is well above what the average FICO is for the general population, and anyone who's under 45 years is even lower because FICO cures over time. And so what does this all come together and say is that unless you, you know, have the ability to save 2X the amount, unless you are above average in terms of FICO when you're starting off your life in a starter home, you're gonna struggle to actually be able to buy a home. Now, this chart seems a little confusing, but I think it's really important to look

• 11:41Speaker 00

  at and understand, so I'll walk you through it. So what this chart shows is mortgage rates: 3%, 6%, 9%. We were at 3% call it a year ago. We're at, I think, 5.5% right now is roughly where the 30-year fixed is. And then 9%, who knows, maybe, hopefully not in the future. And that says what is your mortgage tax and insurance payments, what you have to include for a $400,000 home, which is roughly average home price. And I know a little different in Miami, but this is kind of across the US. And then I said, "How much income do you need in order to get that mortgage?" And you can see that your income that you need goes from about $94,000 of household income up to about $160,000 of household income.

• 12:24Speaker 00

  And then I said, "How many households could qualify for that?" Because there's data on how much income households make across the US. There are 126 million households in the US. And you can see that historically, almost 40%, sorry, 30% of households actually could afford a mortgage where we were before. And that number today has gone down to now 22%, and will go down to about less than 15% of people who can actually get a mortgage on a home. This is insane. So over here, I kind of, I like to just overly simplify things, so I kind of put it here, which is a $10,000 increase in home prices means 1 million fewer families can own a home, or a 1% increase in mortgage rates means 5 million families can actually own a home.

• 13:08Speaker 00

  So we're in a little bit of a tough situation here. So when I started Divvy, the goal was to help solve wealth inequality by giving Americans access to assets. This is the sole goal, the purpose, what I really believe in, which is that access to assets and compounding wealth in something that you cannot easily pull your money out of and you just leave it there is the way that we can help people generate wealth for their families, for their children, for their next generation. So the way Divvy works is very similar to a mortgage, except it's not a mortgage. You come to our website, you apply, we give you a budget. So we might say, "Hey, you're approved for a $500,000 home in Miami. Go out shopping."

• 13:52Speaker 00

  You shop with your realtor, the same way you would with a mortgage. And when you're ready to buy a home, you just let us know what home you choose. We say, "Great." We put out an all-cash, quick-close offer for you. So you can compete with every other investor offer that's out there. We'll take care of it for you, because we know how to bid on these homes. We then take care of the inspections, we cover all closing costs, all fees, everything. We head to closing, and you commit either 1% to 2% down, which is about a tenth of a usual down payment. Down payments are 10% to 20%, and we say 1% to 2%. And that's your initial equity in the home. You own that. That is yours. And then you move in, you make one monthly payment, part rent, part equity. The same way a mortgage is principal and interest.

• 14:36Speaker 00

  And the equity piece builds up your percent ownership. We let you build up to 10% over the course of three years. At any point in time, you can get a mortgage or refinance and take us out, or you can cash out your equity and walk away, hopefully with tens of thousands of dollars saved up. So that is how we work. We operate in 16 metros. Our biggest ones are Georgia, Texas, and Florida. Florida's a big one, up in Tampa. The average income of our customers is about $50,000 to $150,000 household income. 50% of our customers are people of color, and 80% of our transactions are female-led.

• 15:17Speaker 00

  And so I think the most important thing is are we successful in our mission and what we're trying to do. So 51% of Divvy customers who have come to the end of their three-year lease have been able to buy back their home, probably another 20% on top of it, aren't yet ready for mortgage. And so we just let them build more equity over time. And about 30% of people turn over, which is completely fine. Sometimes you have an extra kid or two and you need a bigger home and that's okay. We actually love that people can cash out their money and continue moving on. Over here, we have what I think is one of the more powerful things, which is the average renter savings versus the average savings that a Divvy customer has in their home. We're almost 25 times the savings that the average renter has.

• 15:59Speaker 00

  And this is because they are building up equity in their property over time. Over here, just to show, we're growing quickly and we're doing it profitably. Actually, I think this is super important is you can sit here and say that you're a building a mission-oriented company. You have to show scale. You have to show growth and you have to show that people, there is adoption and you're actually having an impact. And so this year alone, we'll deploy over $1 billion of capital. We measure our margin as the rent that we collect, less home costs, less interest. So it's like a true profit all-in margin, where we're almost, probably going to be at about 25% all-in profit margin.

• 16:36Speaker 00

  And now I think we have, yeah, thank you.

• 16:41Speaker 00

  I think that there is a video, but I don't know if they're showing it. So we can maybe go to Q and A from running close on time. Okay, cool. Thank you.

• 16:56Chamath Palihapitiya?

  I know that Friedberg's going to talk to you about consumer credit, but let me just tee up something before. There's a tweet, I just want to read it to you and maybe we can use this as a jumping off point. Blackstone calls homes almost as unaffordable as the 2007 peak. They just said that today. His name is Joe Zittle, who's I guess a senior partner there. But he believes a crash is unlikely due to a major difference, which is that most owners aren't using their homes like an ATM, like they did back then.

• 17:27Speaker 00

  Yeah.

• 17:28Chamath Palihapitiya?

  Can you just explain sort of the broader state of housing, actually?

• 17:33Speaker 00

  Sure.

• 17:34Chamath Palihapitiya?

  And why some people feel like we're actually...

• 17:37Speaker 00

  Okay.

• 17:38Chamath Palihapitiya?

  Right at the brink of a crisis again? And some people don't?

• 17:41Speaker 00

  Okay, yeah, interesting. So, the global financial crisis is very different than this because it was obviously a housing-led crisis, where we had people overextend and they didn't have enough equity that was built up in their house to cushion a decline in home prices. I'd say that this is a very different situation today. And I'd say that because, one, we don't have a lot of supply. And so fundamentally, when you're thinking about pricing, supply and demand dynamics, number one, we don't have a lot of supply. Now, what you can probably argue is there is an equilibrium point, meaning interest rates are increasing, which is starting to stifle some demand. Don't get me wrong, we're actually seeing that a bit in the market. And then there's new home builds that are coming online. And at some point, there's going to be enough inventory coming online, that there's going

• 18:26Speaker 00

  to be enough supply, and a decrease enough in demand, that it will impact home prices. Now, I don't know that that's going to be in the next six months. I actually think it's going to be more like 12 to 18 months. And I don't think that it means that there's going to be a mass fall-off like it was in the global financial crisis, but it will slow down the price of which homes are growing up.

• 18:44Chamath Palihapitiya?

  How much of this is just the, like, miscast housing policy that a lot of states and cities have? I'll give you an example of where I live. I just got, you know, an email from our mayor. And basically what it said is like, in the state of California now, they've basically said you need to have a certain amount of housing density. They're trying to figure out how to do it.

• 19:03Speaker 00

  Yeah.

• 19:04Chamath Palihapitiya?

  They're not going to build high-rises because those aren't allowed. Then they, you know, you allow these ADUs to get built that qualify. And it's all gamesmanship, because as far as I can read it, the NIMBY-ism of not wanting to have high-density homes.

• 19:17Speaker 00

  Yeah.

• 19:18Chamath Palihapitiya?

  And that seems to be a very just-American phenomenon.

• 19:21Speaker 00

  Well, I actually think that it's a little bit that the markets just react slower. Like, this isn't, the houses aren't equity markets. They don't just, you can't just buy and sell rapidly. It's like, oh, I want to build an entire community of homes. Five years, I'm gonna have to now plan in order to get the government licensing, the regulation, the permits to actually build. And so you see a problem, you're like, oh, home prices are increasing. And then it's like, five years later, you can actually do something to actually impact it. And by then, the entire market has like completely changed. I mean, Russia invaded Ukraine and COVID took over and there was a global pandemic. And so I think the bigger issue is that the housing market can't react as quick to keep up with public equity markets.

• 20:05Speaker 00

  And a lot of that is because the government highly regulates the building of homes, which takes a tremendous amount of time. And especially right now where builders are like, I think that most builders missed their Q1 numbers, how many houses they were actually gonna build by almost 60%, which was mostly supply chain. So even when they rush it, a lot of other factors are impacting it.

• 20:26Chamath Palihapitiya?

  And then what do you think about the, because I've talked about this a little bit on the pot, because it's something that's really, I think, poorly understood but important, in my opinion, where Fannie Mae and Freddie changed the upper bounds of mortgage, of mortgages, where, you know, you can, they can be conforming now at like a million dollars, whereas before those used to be considered jumbos.

• 20:44Speaker 00

  Yeah.

• 20:45Chamath Palihapitiya?

  Anyways, the reason I'm asking this question is, I feel like there's a lot of financialization and engineering here in the housing market that is poorly understood, that in some ways tricks consumers to getting in a little bit over their ski tips. And then in a moment like this, where rates rise, their job's a little bit more insecure, this is when all of the parade of terribles happen.

• 21:06Speaker 00

  Yeah, so we just added a wonderful woman. Her name is Kimberly Johnson, says actually our first independent. She was the COO of Fannie Mae. And I brought her on to like fully understand as much of this as possible. So the last time the government changed the underwriting criteria, it led to the global financial crisis. So if you ask them if they're like really excited to do it another time, they're like, no, no, we, we learned our lesson once. So I'd say that they're actually, because they've been under conservatorship, so most of Fannie Mae's operations have been very dictated by the government, they're not actually taking probably the level of risk that they should in this current market. And what I mean by that is, if home prices go up by 30%, What actually qualifies as a conventional mortgage

• 21:50Speaker 00

  needs to go up by 30%. But that is such a massive change for government to make because they're so shell shocked, I think, from having made a change before and it having such a negative ripple effect. So when I spoke to Kimberly, her response was, "No, no, no, no, no. We're not here to start making these changes to make it easier for consumers to get a home. That's your job. You disrupt us. You do that. I'm not here to take risk."

• 22:16Jason Calacanis?

  But they felt the government just felt like they still like I they felt like that was just a natural change that had to happen?

• 22:25Speaker 00

  Raising the amount?

• 22:26Jason Calacanis?

  The upper bound cap?

• 22:27Speaker 00

  Yeah, I mean, of course. Everyone is. What's actually even crazier is I'm waiting for them to actually raise the debt to income ratio because of what I showed you earlier, which is if your income is not increasing and mortgage rates are going up and home values are going up, you now need to spend a larger percentage of your income on housing. That's it's a math issue.

• 22:46Jason Calacanis?

  That's a lending change, right? But isn't that up to the individual banks they could change?

• 22:50Speaker 00

  They put overlays on top of Fannie Mae's requirements, but Fannie Mae, because they actually put so when the global financial crisis happened, there were such very high fees and penalties that went for banks that didn't have really strict overlays, that actually had a ton of defaults. And so now banks are super nervous to lend to people and actually take risk that they actually follow Fannie Mae's guidelines very strictly and actually put overlays on top of it. So they actually are more conservative a lot of times than what the underwriting requirements are. And so in order for them to actually start to take risk, I think Fannie Mae would have to encourage it and they'd have to do it in such a way that they don't penalize.

• 23:25Jason Calacanis?

  Yesterday, we had Bill Gurley and Brad Gershner on. I don't know if you saw that panel.

• 23:29Speaker 00

  Didn't hear about it, no.

• 23:30Jason Calacanis?

  Oh, okay.

• 23:31Speaker 00

  Yeah.

• 23:32Jason Calacanis?

  So you did see it or not?

• 23:33Speaker 00

  Yes.

• 23:34Jason Calacanis?

  Okay, okay. We looked at all of assets being inflated from used cars to NFTs and everything in between. And we've now seen compression, and we talked about this on the pod, in every single sector.

• 23:50Speaker 00

  Yeah.

• 23:51Jason Calacanis?

  Except housing.

• 23:53Speaker 00

  Yep.

• 23:53Jason Calacanis?

  And so we're all sitting here wondering, what are the chances that housing collapses? I was talking to my pal Palmer backstage, my new bestie.

• 24:06Jason Calacanis?

  Interestingly, we went backstage and No, no, no, don't ruin it. No, we just sat there and we had a great conversation about 10 different things. It was pretty interesting. So, what are the chances, and we were talking about the chances of a collapse. He said, "Oh, maybe it's 30% chance this real estate collapse." We were watching your talk, 30% chance maybe the real estate market collapses. What are the chances, in your mind, being so close to it, that we will see housing collapse and this be a bubble?

• 24:32Speaker 00

  Look, there's no question that housing growth is going to slow down.

• 24:36Jason Calacanis?

  Slow down, but I'm asking you chances of a collapse. You mean price, price for new homes?

• 24:42Speaker 00

  Pricing. Yes, pricing. The growth will slow. Now, whether it goes negative or not, I think is more a matter of what the economy does over the next 24 months. But I actually think that what we will definitively see, which we have seen, I'd say in the last two weeks, we've seen a slowdown in the rate of growth for homes. Now, the global financial crisis was very different than what we're seeing today. And if you, anybody, bottom of the stock market for the global financial crisis? 3909. Bottom of housing prices? June of 2012. Three years later. Why? Because the housing market moves so slowly compared to the equities market. And so, it is not surprising that housing is going to be the last thing that's going

• 25:26Speaker 00

  to actually start to compress in terms of value.

• 25:29Speaker 03

  Because people live there for a while, they can afford their mortgages, then their income drops, then they can't afford their mortgages, then they get foreclosed, then it's six months later.

• 25:35Speaker 00

  Yeah, but also like you see the stock market drop and you're like, "I should sell my home. That's going to take 30 days. Then I have to find someone. Oh, that's going to take another 30 days. Oh, then I have to wait till they move in. That's another 30 days." And so, it's three months before you can, like, make a trade. You can't log on to your Robinhood account and be like, "Yeah, no, the market's sinking. Let's get rid of our house."

• 25:52Jason Calacanis?

  Can I shift the conversation for a second? You're a founder of a unicorn, right? Raised a big round recently. Congratulations.

• 26:02Speaker 00

  Thank you.

• 26:04Speaker 00

  Time's it right.

• 26:06Chamath Palihapitiya?

  So, well, this is what I was just gonna ask you. Can you talk to us about your mindset in this moment now? In terms of your valuation, in terms of your cash, in terms of your burn, in terms of your employees? What's sort of front of mind? What are you doing? Same, different?

• 26:21Speaker 00

  Yeah. I'd say, so we raised a $200 million round from Tiger. It was preempted back about six months ago, or maybe even nine months ago at this point.

• 26:35Speaker 00

  And I think that it's actually interesting, because I listened to you guys on the pod. The besties. And I think that, you know, for me, as a founder, when I was going through that moment, I was like, well, shit, man, it's a Black Friday sale. Like, I can raise a ton of cash, I'm getting preempted left and right. And so I actually think that founders, like, obviously, I should have played the game that I played, which is like, why wouldn't I raise a ton of capital? And take less dilution? There was nothing, that was the right chess move at that point in time. And now, kind of to your point, and by the way, it's not founders' fault that the market got overheated. You guys gave us the term sheet.

• 27:13Chamath Palihapitiya?

  You did the rational thing.

• 27:16Chamath Palihapitiya?

  By the way, don't point at me. You did the, no, no, no, you did the rational thing. Rational.

• 27:21Speaker 00

  Completely.

• 27:21Chamath Palihapitiya?

  Yeah, but now?

• 27:22Speaker 00

  But now, now you have to just, now, I'd say, look, Divvy, we make, I don't know, we haven't probably put out there, but hundreds of millions of dollars in revenue. I burn less than, I don't know, five to 10 million a month, so less than 5 million a month. We have 300 employees, and do I think you have to be conservative? Yes. Do I think you have to be conservative along the entire way of building a company? Yes. Every second, I thought, my company can die at any moment. Right? 100%. And I run my company like that. My, they, my employees joke, they're like, you're the most frugal person ever. Like, every single time, we're like, we need to spend on this. I'm like, yeah.

• 28:02Speaker 04

  I want to invent some a tiger around there.

• 28:03Speaker 00

  Thank you, yeah.

• 28:05Chamath Palihapitiya?

  Do you rely on your late-stage investors in moments like this to like help you navigate? Or how do you do it?

• 28:11Speaker 00

  No.

• 28:11Chamath Palihapitiya?

  Do you rely on your early-stage?

• 28:13Speaker 00

  First of all, I don't think you rely on investors ever. No, I don't mean that offensively. I think that some investors are great, but no one's building this company with you. I am building this company with my employees, but ain't nobody else there with me. And so when times get tough, it is on you to make sure you can have a path to cash flow profitability. If you can actually raise another round of capital, but you try to support your employees and work together to kind of weather through this. But I don't expect any of my investors to show up with a hail mary. And I think that it's on me to run a really strong profitable business.

• 28:49Chamath Palihapitiya?

  And so any changes from June to now? Or not really? Just kind of stay the course? Get to the cash flow breakeven? Like meaning nothing to accelerate it?

• 28:59Speaker 00

  So I think we plan out a bunch of different cases. So we always have the base case, target case, and then what I call the off-ramp, which is cash flow positive. And every week, my CFO, COO, and I get on a call and we just say, how's the market doing? How do we feel? Do we want to switch from our base to our target case? Do we want to go down the off-ramp path? Nope, this week feels the same. The All-In Podcast didn't change our sentiment and we continue on on Monday morning as planned.

• 29:27Jason Calacanis?

  We All-In Sentiment Index. I like it. It's great to have you here. And I had had you on my podcast earlier and I had told you like, God, I thought this was going to be the most boring podcast and it was one of the best of the year. You are...

• 29:42Speaker 00

  Thank you. I don't know if that's a compliment or an insult.

• 29:45Jason Calacanis?

  Tell us how you really feel. No, it was like a boring topic and you educated... No, but again, please tell us how you really feel.

• 29:51Speaker 00

  Okay.

• 29:52Jason Calacanis?

  It's like a really boring topic, but a great guest. And you made it really, really...

• 29:57Speaker 00

  Both for...

• 29:58Jason Calacanis?

  Really educational, I think the audience... You're still fully until right now.

• 30:03Jason Calacanis?

  Wow.

• 30:04Speaker 00

  Wait.

• 30:06Speaker 04

  Jason Peetson, day one.

• 30:08Speaker 00

  I do have, as we're heading towards ending, I do have an intro.

• 30:12Jason Calacanis?

  Oh.

• 30:13Speaker 00

  Because I thought we were all gonna get...

• 30:15Jason Calacanis?

  Sabre tribe this, it didn't work so well for him.

• 30:16Speaker 00

  Okay, well, I thought we were all gonna get intros.

• 30:19Speaker 04

  Anyone?

• 30:23Speaker 00

  Okay.

• 30:24Speaker 04

  Free Bird's Mom, everybody.

• 30:25Speaker 00

  So I made myself an intro, which I feel like I should give, which is, um... All right, y'all ready for it? Yeah! I'm in Miami chilling with the besties on this stage in a minefield of testies. J. Kell kindly invited me to share my passion, so here goes in true all-in fashion. I play the housing long game as the stock market will jitter, but solving inequality is less flashy than almost buying Twitter. I'm the rent-to-own leader in the prop tech arena. I'd like to reintroduce myself. My name is Adena.

• 31:01Speaker 04

  Yeah! Nicely done, Adena! That's awesome.

• 31:08Speaker 00

  Pleasure, pleasure.

• 31:10Speaker 04

  Thank you. That was awesome.