EVERY SPOKEN WORD
60 min read · 11,879 words- 0:00 – 0:25
Introduction
- ETErik Torenberg
There are things you have to deal with in a public company that are m- uh, 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 said in 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.
- KNKaz Nejatian
[laughs]
- 0:25 – 1:51
Becoming Opendoor CEO: Mindset & Mission
- ETErik Torenberg
Kaz, welcome to the podcast.
- KNKaz Nejatian
Thanks for having me, man.
- ETErik Torenberg
I feel like you're the man of the moment. You recently took over as Opendoor's CEO. It's been a few weeks, a month.
- KNKaz Nejatian
Uh, it's day 16, I think.
- ETErik Torenberg
Day 16. And I feel like you're, I feel like you're pioneering in a new way of being a public company CEO. W- what was your mindset sort of... W- w- first, what got you excited about the opportunity? And then, you know, coming into it, what was your mindset g- going into how you're gonna be CEO of this company?
- KNKaz Nejatian
In... I, I, I think Opendoor will become like this generational company because I think people do a lot of like when they, when, like when you go to business school, they're like, "You shall have a business plan, and it should be 17 pages, and it should have like Porter's five forces on it."
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
"And that's how it's gonna work." And that's just like generally not how great businesses are built, at least not that many of them. I think it's important that like great businesses start with a very like simple statement that people can buy into or disagree with, right? Like it's... That, that's when you know it's actually important that you're saying something.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
I think like homeownership is good for the world.
- ETErik Torenberg
Mm.
- KNKaz Nejatian
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, uh, of the company.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
And, uh, gen- I've just been a fan of it for a while, and looking from the outside in, I'm like, "Look, I... This is like a, this feels like a type of problem that I can help with." So, you know, we're 16 days into this journey. Let's find out that it ends
- 1:51 – 4:43
The Opendoor Origin Story & Market Dynamics
- KNKaz Nejatian
up being true.
- ETErik Torenberg
Wow. Well, let, let's, let's trace a little bit of the, of the history. Alex, y- you led our investment in-
- KNKaz Nejatian
Yeah
- ETErik Torenberg
... into the company. What was the, the thesis or vision that, that got you so excited about it?
- SPSpeaker
Well, I'm gonna, I'm gonna talk for a little bit of, of the background.
- ETErik Torenberg
Sure.
- SPSpeaker
And I'm gonna start with Amazon, and then I'll get to Opendoor. Um, so I remember I met Eric Wu, uh, when he had first started Opendoor with Keith, and I think they had, they had flipped maybe like 70, 80 homes in, like right around Phoenix.
- ETErik Torenberg
Mm-hmm.
- SPSpeaker
Um, and the reason why Phoenix is a very interesting market is there, 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, um, the Bay Area has very low cap rates, so you could buy like a $20 million house in Pac Heights. If you wanted to rent it, it might rent for like $10,000 a month or 20, like which is a lot, but not as a percentage of the price of the asset. Like that is very, very low yield. In a place like Phoenix, all the homes are pretty similar. I'm, I'm exaggerating for, you know-
- ETErik Torenberg
Yeah
- SPSpeaker
... so don't... I'm not trying to upset people who live in Phoenix. Um, but you would have like a $200,000 house that might rent for $20,000 a year, so like a 10%. So the, the, 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 like 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 kinda challenging." I mean, it sounds great when all prices go up, but what I was really drawn to, uh, is the vision that he laid out. And when I finally invested, I thought he was pretty along, um, towards getting that vision become a reality, which was... This is what I mentioned I'm gonna talk about Amazon. Amazon started off in the '90s basically selling every book in the world, hence Amazon, in like Jeff Bezos' garage or basement or, or, you know, s- the warehouse or something. And by selling every book, like having infinite supply of books, he got all of the demand. Um, and then because he got all of the demand, he could say, "All right. I wanna now sell something that isn't books. I'm gonna sell CDs and DVDs." That was the next, but also still stock those in the warehouse. But eventually, it's like, "I'm gonna sell TVs. I'm gonna sell something else. I'm not going to stock them, but I already have all the demand."
- ETErik Torenberg
Yeah.
- SPSpeaker
Um, and I got the demand because I had all the supply for something else. So I start up because this is the chicken and egg problem. Like do you start off with supply, or do you start off with demand? And marketplaces we know are very, very valuable, but you have to start somewhere because nobody wants to sell if nobody wants to... if nobody's buying. Nobody wants to buy if nobody's selling. So the Amazon model was like find something in like one niche, use that to get all of the demand, and then once you get all the demand, now you can actually attract the supply in a non-principal risk-taking way. So fast-forward to Opendoor. So I remember when Eric was flipping all the homes
- 4:43 – 9:15
The Real Estate Marketplace Problem
- SPSpeaker
in Phoenix. I was like, "That's clever, but like, I don't know." Like I know other people that flipped homes in, in, uh, in Phoenix. Um, 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 got- buys you a lot of house in Charlotte, um, 10% of the homes were bought by Opendoor. So now imagine that I wanna go buy a house in Charlotte. I can go to the multiple listing service, the MLS, which is you, you see that on Zillow, Redfin, all of these other sites, kind of they just mirror the MLS. But that's only gonna show me 90% of homes for sale. The other 10% are only on this thing called opendoor.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 kinda 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 can break this all, you can break this like horrible monopoly, uh, and I, I did this whole video on it, which I know I sent you, this horrible monopoly of real estate agentdom, and you can say, "You can list your house on opendoor.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.Um, and it's a $45 billion company. Um, there aren't actually big companies in residential real estate. It's kinda strange. Yeah. Like the biggest ones are CoStar and Zillow. Um, there's no $100 billion-plus company in residential real estate, which is kinda bonkers because it's a bigger asset class than like everything sold on eBay. And so why is that? 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 they're just, you're just getting called all day by real estate agents. You're not actually improving the value proposition. And Opendoor, it's not about flipping homes. I mean, may- maybe it is. You, you, 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, um, public company. You know what they do? It is auctions for like not used cars, but for like totaled cars. [chuckles] 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? Uh, who buys it? Like people in Russia. Well, no, no Russia anymore. [chuckles] But like all sorts of like, "I buy it for parts"- Yeah ... or, "I'm gonna go fix it up." But Copart is a bigger company than Zillow, right? How is that possible? And it's just because nobody's tackled this. It's the biggest market in the world, but you have to build hopefully a capital light marketplace. Yeah, I think this is actually like a very... Like I think Opendoor is like deeply misunderstood as a company. Like I think you have to think about companies as like category problems are real in public market investing. Like I remember like when I first joined Shopify in 2019, I think it was like among the sh- highest, most shorted stocks on Wall Street because people made a category mistake, uh, about Shopify. They're like, "Well, it's another e-commerce company. Like what are the odds it will build all the warehouses that's gonna like, like..." That's a category mistake. Shopify does e-commerce. It's not an e-commerce company. Like just the very real, the, the, the, the leverage point for Shopify does not come from e-commerce. It obviously comes from software because it's very much just like a software. And I think that's actually a problem that, that Opendoor has had, is that like externally and for admittedly for some time internally, the company thought of itself as essentially an investor in real, like real estate as an asset class, which is not the job of the company. Like this is not, that's not what the company does. It's a software company designed to solve that problem. And I think if you, if you attack it like that, you just fundamentally do different things, right? Yeah. Like if you look at, I mean, it's a publicly traded company, you can actually look at the, uh, numbers. The company has repeatedly been buying fewer and fewer homes every year, right? Because they're like, "Okay, cool, I'm, I'm gonna 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. Yeah. Right? And that just becomes a... I mean, it may become a good business, it just won't become a big business. Um, and that's like I think a fundamental mistake the company has made in the past few years. Yeah.
- 9:15 – 12:00
Real Estate Agents & Industry Misalignments
- SPSpeaker
Let, let, let's then just understand this problem a bit, a, a bit deeper. Maybe Alex, you could share a couple points from the, the talk that you gave or maybe explain more sort of the monopoly, you know, the real estate agents have, or give some more context here. So real estate agents, um, for a very, very long time, there are about two million registered real estate agents in the United States of America, and, and the, the stat that I quoted a couple years ago, I assume it's still the stat, but if- It is. I, I looked it up. It's- Um, 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 of the... It's kind of like, uh, "Well, I'm an actor." "Oh, well, what was the last film that you were in?" "Well, I'm kind of a waiter right now. I'm waiting to get a film job." And like 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, um, the more money you spend, the more, the more commission I get. So I'm, and I normally get two and a half to 3% as a buy-side agent. So normally you have five to 6% as a commission pool, half of who- half of which goes to the sell side agent, half of which goes to the buy side agent. And, um, there have been numerous, numerous lawsuits, some of which have gone to the Supreme Court attacking this as this kind of like evil, not oligopoly, but this m- monopoly behavior. And there's an expression that I love, um, 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 two million real estate agents, you know, small number of whom actually do active transactions, but they conspire, l- 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 seller gets more... Like the seller, sell side agent is getting more if you sell for more because they just wanna move on and get their check tomorrow. So if I say, "Okay, you're selling a $10 million house, that's a, that's a lot of money." Um, and then there's another seller who will offer you $10,000,010. Well, the, the sell side agent's like, "Well, I get 3% of that. I don't really care." But like you get an extra $10,000. Like you really do care about that. So there's just... This is where the whole, uh, the phra- the phrase, uh, 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, um, where it's like every other, uh, auction is fair. It's like I see, okay, I wanna go list at, uh... 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's my reserve price. And like it's just very opaque. Um, and because it's a very infrequent transaction and you have concentrated benefit and diffuse harm, um, there have been
- 12:00 – 14:13
Attempts to Disrupt Real Estate
- SPSpeaker
so many attempts to like really, really violently disrupt this industry. And, and one of them, and I, I should, I should, um, say I- 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, um, and said, "Okay, we're gonna ch- we're only gonna charge you 1%." Or actually, let, 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 wanna use a real estate agent to buy a house because you're gonna charge me money." He's like, "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." I was like, "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."
- KNKaz Nejatian
[chuckles]
- SPSpeaker
It's like... And I, I remember like talking-- But this is when I bought a house with Paul Alter. I told the real estate agent, I will, I will not name and shame him. I was like, uh, you know, "With all respect," or maybe whenever you say that you mean no respect.
- KNKaz Nejatian
[chuckles]
- SPSpeaker
"But with all due respect, either-"
- KNKaz Nejatian
You mean all due respect. [chuckles]
- SPSpeaker
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." And 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, Erik, and not Kaz to buy your house, and I'm gonna take that 3% that's, uh, that's advertised-
- KNKaz Nejatian
Sure
- SPSpeaker
... as a commission, and I'm gonna share it back with you." Nope, you'll go to jail. You can't do that. It's like, that's absurd. So, uh, and then even if you say, "I'm gonna do buy-side representation for 1%," well, the seller is supposed to pay 4% now, right? Because if it's a 3% listing, uh, arrangement and then 1%, you know, and 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, my perspective.
- KNKaz Nejatian
I think, I think actually the, the key part here is
- 14:13 – 16:49
Agency Problems & Transaction Frictions
- KNKaz Nejatian
like transactions that happen incredibly infrequently usually end up being full of fraud, which is the reason why carneys leave town.
- SPSpeaker
[chuckles]
- KNKaz Nejatian
That's a real thing, right? There's a thing 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 counterparty. I need someone else to certify this thing," right? That's a very real thing. Um, 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. Um, but it's the same experience through a software, and back then software was also had this problem. [chuckles] Like you kind of want to... The best way to align counterparties is to take the transaction and stretch it out over time-
- SPSpeaker
Hmm
- KNKaz Nejatian
... 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. Um, and it's part of why like Amazon works so seemingly well. Like you buy things from Amazon, you didn't like it, you can return it. Which by the way, we launched this yesterday at Opendoor in Dallas, Texas. You buy a home from Opendoor, you don't like it, you can return it.
- SPSpeaker
Wow.
- KNKaz Nejatian
Like you can move in early.
- SPSpeaker
Yeah.
- KNKaz Nejatian
Try it out. Don't like it? Return it.
- SPSpeaker
Wow.
- KNKaz Nejatian
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, right? Stretch out a transaction.
- SPSpeaker
Hmm.
- KNKaz Nejatian
And B, remove the, "I make all my money from this one thing transaction right now" thing. And that's both of those things just tend to, in any market, lead to bad outcomes, where your agency problems still lead to terrible outcomes.
- SPSpeaker
Yeah. Well, there's a corollary to
- 16:49 – 20:54
Financing, Insurance, and the Home Buying Chain
- SPSpeaker
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.
- KNKaz Nejatian
Yeah.
- SPSpeaker
But if you're only doing two of these a year, candidly you don't know it that well.
- KNKaz Nejatian
Yeah.
- SPSpeaker
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, part of how we, we became friendly is through a firm, right?
- KNKaz Nejatian
Yeah.
- SPSpeaker
Where how do you divorce buying and selling from financing? They are one and 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's not gonna help me with that. They don't have a big checkbook.
- KNKaz Nejatian
No, I think the agency problem, by far forth with the agency problem that exists in real estate is actually multiplied, uh, 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.
- SPSpeaker
Yep.
- KNKaz Nejatian
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, you usually have at least like, at least five, sometimes a lot bigger number. Like the guy who does the inspection for your house. You're never gonna see that guy again. But like, like you just, you know, like it's a very re- And I think that actually is... But I think people can have very good people along this chain of com- the whole chain, and you end up with very terrible outcomes.
- SPSpeaker
Right.
- KNKaz Nejatian
Uh, because the system's basically designed to not lead to good outcomes.
- SPSpeaker
Well, and the thing is, you have a lot of these sub-scale things that actually are pretty cool that have never been productized and rolled out. So, uh, if you are an English professor at Princeton or Stanford, you probably can't afford to buy a house.
- KNKaz Nejatian
Right.
- SPSpeaker
The university helps you buy a house.
- KNKaz Nejatian
Yeah.
- SPSpeaker
Or they will subsidize a mortgage. Um, or, uh, you know, one of my favorite examples is, uh, 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? Uh, I don't need all the cash right now. You can pay me over time." It's like, like BNP- 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, and only really rich people do this for homes where you could see, oh, here's a home that's listed for sale that has this like special financing.
- KNKaz Nejatian
Mm-hmm.
- SPSpeaker
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 wanna sell more stuff. Like Procter & Gamble, we wanna sell more stuff, here's a coupon. Um, 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-
- KNKaz Nejatian
You know-
- SPSpeaker
... 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.
- KNKaz Nejatian
There, 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.
- SPSpeaker
Yes.
- KNKaz Nejatian
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 mo- they've solved most of these problems.
- SPSpeaker
Yeah. It's a production line. I know exactly what you mean.
- KNKaz Nejatian
Like they're like-
- SPSpeaker
Yeah
- KNKaz Nejatian
... everything is bundled. You, 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, you should just take their financing 'cause it's like optimized for you. Um, and this is, I think, the second, like a very classical problem in basically it's a marketplace problem that you have to solve, and I agree with you. The way to solve it is, um, you need to just gather significant inventory, uh, and make it possible for counterparties to like, make it desirable for a p- counterparty to come to you to buy it, right? This is like we spent so much of our time in the first 16 days of this c- like me being in this company working on buyer stuff 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
- 20:54 – 26:39
Lessons from Other Industries: Cars, Amazon, eBay
- KNKaz Nejatian
start the flywheel.
- SPSpeaker
Yeah. And you, you said a, a company that could do that will be one of the biggest in the world. Has a company like Amazon or, or other big companies tried to do something like this, or is it just so far field that they wouldn't, would never? 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.
- KNKaz Nejatian
Hmm.
- SPSpeaker
It's not like, "Ooh, I'm gonna go beat those guys."
- KNKaz Nejatian
Yeah.
- SPSpeaker
And the commander's intent of the general is like, "Take that hill." You d- 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. Um, and, uh, actually, the, the one case where I, I used a real estate agent to buy my house was in Hawaii.
- KNKaz Nejatian
[chuckles]
- SPSpeaker
I, 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 gonna go run the table in X, Y, Z place," and it doesn't show up in a different geography. So what, uh, what you do see, going back to these kind of pockets of esoteric, you know, products, either financial or, or real estate, um, executive moving. 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, uh, she and her husband lived in New York. And guess what? Home Depot's not in New York. They're in Atlanta. They're like, "Okay, we will buy your old house from you, um, 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 wanna go disrupt the MLS." I mean, they should. I mean, I, I would hope that eBay, and I, I don't know the, the history on this. I'm sure you probably have looked into it. Like, I know eBay has tried doing real estate, and, uh, there's another company called auction.com that really got into the distressed commercial real estate space and some distressed, uh, residential because if it's distressed, like you haven't paid your property taxes, government seizes your home. Ne- government doesn't wanna hold onto a 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 a 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, or a middle, lower middle-class person in 2025 with penicillin and i- you know, and Netflix and an iPh- 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 everybody, where like everybody gets the education of a billionaire. Like that's the, I think that's the motto of, uh, of AlphaScore, right? Like, let's do all of these things. So you have some of these products, um, for executive moves, and I would 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 a second price auction, a Vickrey auction. Like do all of these cool things that are known to work, that know- that are known to maximize the price, but they'll work for one market. Um, and then just because I got one market, it doesn't help me at all. And then by the way, you have like two million people, uh, but call it a subset of those two 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.
- KNKaz Nejatian
Yeah. I think, I think actually it is a hard pro- look, I think it's a hard problem, which is why no one has solved it, and like lots of smart people have worked on this problem, or at least saw parts of it. So I think like there's been threeLike 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, 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? So you can get all inventory for all books. There's a PDF you get, and it has literally every book. So like the, the first problem's been like essentially like narrowing yourself down to one thing. The second problem has been basically a channel problem, which is that like, "Hey, I'm gonna solve this problem through the traditional channels." And that objectively just has failed, like I think miserably, like every single time. And the third problem, which is like some people have gone like relatively like start some relatively large businesses that do this in some pockets of the world, but they all essentially tip over and fail because they've solved it by throwing human beings and treating it as like an operational problem. You do like, like I said, it's three buckets of problems why no one's kind of solved this. Um, and fourth, 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... But Carvana is like 3% US car market. I don't know how much, but like probably somewhere around there. So I think there's 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.
- SPSpeaker
Yeah.
- KNKaz Nejatian
So I generally think it's actually a real thing. Um, and there were other problems that were solved the wrong way because for a brief period of time, money was free.
- SPSpeaker
Yeah.
- KNKaz Nejatian
And like so everyone made all the wrong decisions they possibly could. 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.
- SPSpeaker
Hmm. We just get deeper there, but like how, how much is real
- 26:39 – 33:02
Regulations and Networks
- SPSpeaker
estate like healthcare, where sort of the regulatory landscape has distorted the, the market and prevented, um, you know, mass, mass... And feel free to quibble with that even framing of healthcare, but... Or is it just a hard, uh, is it like emer... The, the market dynamics you were describing, is that just emergent in how real estate sort of works?
- KNKaz Nejatian
Well, uh, so I think the, I think it's far more similar to, uh, automobiles than it is to healthcare.
- SPSpeaker
I agree.
- KNKaz Nejatian
Like they're just like basically identical. Honestly, like if you look at like how cars were sold [clears throat] 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, right?
- SPSpeaker
And I think Texas-
- KNKaz Nejatian
Yeah
- SPSpeaker
... you're not allowed to buy a car unless it's sold at a car dealer.
- KNKaz Nejatian
Yeah.
- SPSpeaker
So like again, regulatory capture-
- KNKaz Nejatian
There's a couple of, there's a couple of these things
- SPSpeaker
... a couple of places.
- KNKaz Nejatian
So for example, in, uh, 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.
- SPSpeaker
Yeah.
- KNKaz Nejatian
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. Um, but they're in nature much more similar to how cars were dealt.
- SPSpeaker
But then how come we've solved this in cars and it's just 'cause it's-
- KNKaz Nejatian
We hadn't solved this in car, we had not solved this in car until like five years ago.
- SPSpeaker
Yeah.
- KNKaz Nejatian
Like we solved this car... For new cars, Tesla solved this, and for used cars, Carvana solved this. Um, and keep in mind, like there's actually like, there are very real operational challenges for, like Carvana has that don't exist for homes, right? Like Carvana moves every single car they buy. Like Opendoor does not move homes.
- SPSpeaker
Yeah.
- KNKaz Nejatian
Like homes stay where they are.
- SPSpeaker
Yeah.
- KNKaz Nejatian
Um, so there's a very real, like there are upsides to trying to solve this problem in homes other than cars. There are obvious downsides too. Um, but I think there's like a very real... And underwriting for what it's worth is like similar-ish. The underwriting of a car is as, is difficult. Underwriting a home is difficult. They're not-- They're similar-ish difficult. Like different problems, but similar-ish problems.
- SPSpeaker
Well, this is the nice thing, is that you can really sub-segment the market. I mean, the reason why health- I, I can, we could talk for like 10 hours about why healthcare is messed up, but fundamentally there are no prices.
- KNKaz Nejatian
Yeah.
- SPSpeaker
It's like how much does this cost? Like the doctor doesn't even know. And then like, "Oh, well, we're gonna 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. Like I know exactly how much everything is gonna 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, um, 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.
- KNKaz Nejatian
Yeah.
- SPSpeaker
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. And then of course, there are different models in between. You can like, you know, rent to own.
- KNKaz Nejatian
Yeah.
- SPSpeaker
Um, you, you can, uh, you can, you can like get your friend to like give you a free spot and not charge you anything. But, um, you either rent or 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, um, 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 whether they're like really expensive homes, and 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.
- KNKaz Nejatian
It's actually-
- 33:02 – 33:40
Opendoor’s Business Model Evolution
- KNKaz Nejatian
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 the, there's all these frictions in, that exist because the system everywhere is subscale, one. Two, because there's so many principal agency problems, right? That's the second one. And third, because there's so many of these transactions that are one-time transactions.
- SPSpeaker
Yeah. 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, uh, and the opportunity. What have we learned about the feasibility of the opportunity
- 33:40 – 40:28
Market Shocks: Interest Rates & Company Response
- SPSpeaker
based on the company performance? It's another way of asking like for people who haven't been following the company trajectory, w- you know, how have things gone? What, what have we learned? What have the ups and downs been, et cetera? Well, so, uh, there was a point in time where Opendoor was such a good idea. Um, you know, there, there's a saying we use a lot in venture capital. It's like, you know, you want to invest in a bad idea that something that 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. Um, and Opendoor was somewhere in between the two of these because Zillow was like, "Oh my God," like, you know, Rich Barton comes back to Zillow, Spencer leaves, and it's like, "I have to go do what Opendoor does."
- KNKaz Nejatian
Yeah.
- SPSpeaker
Um, everybody was getting into iBuying and Offerpad, you know, popped up, but like Zillow was the big one, and, um-
- KNKaz Nejatian
They couldn't do it.
- SPSpeaker
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-
- KNKaz Nejatian
Yeah
- SPSpeaker
... 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 own, then supply just comes to you. And that's how you finally build a marketplace. And I think rumor has it that Rich Barton reads Ben Thompson, uh, as, as everybody should because Ben Thompson is very, very smart. Like, "Holy shit, we have to do this."
- KNKaz Nejatian
Yeah.
- SPSpeaker
Um, so they start doing this, and they're making infinite money. Um, 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? It's October right now. Kaz and I buy 1,000 homes today. The best homes will sell tomorrow. Um, 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 Opendoor now is getting outbid by, uh, because this was such a good idea. Everybody thinks it's a good idea. It kind of started becoming a little bit of a bad idea pre-marketplace. Um, Zillow starts paying more. In fact, Zillow even had like, "Hey, don't sell to Opendoor. 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, 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. Um, 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, 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, um, 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 Opendoor 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 is really high to go from like zero to like 4% in like a few months.
- KNKaz Nejatian
The pace at which interest rate increased-
- SPSpeaker
Right
- KNKaz Nejatian
... were, um, I mean, I think we can say in hindsight this was objectively, like deeply irresponsible for the country. Like I don't think... I, I think it was very re- like I don't-
- SPSpeaker
That's why Silicon Valley Bank went bankrupt, right?
- KNKaz Nejatian
I think this is actually a very-
- SPSpeaker
Asset prices went down. Yeah.
- KNKaz Nejatian
I think this is like, look, I don- I think Opendoor 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.
- SPSpeaker
So, so ba- basically what happens is like you're left with all this inventory, um, 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 kinda keep buying, keep selling, you can actually make this work. Um, 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 onto assets for a very long period of time. Some of them never hold onto assets overnight just as a standing rule. And Opendoor 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. 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 $1,000 a month to sh- 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 wanna buy the house. What happens when aggregate demand goes down? Well, prices go down. And actually this didn't happen as much in housing as would've 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. Um, so the pace that this happened was very, very high. Nobody really... I mean, people anticipated, okay, our, our rates are, are low, but it's like, oh, well the Fed will raise by 25 basis, by 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 wanna earn 75 basis points on T-bills, I'm gonna invest in riskier things. I'm gonna give it to venture capital. I'm gonna give it to private equity. So risk capital kinda pulls back. Um, asset prices go down. Um, demand for homes goes down because interest rates went up, so my monthly... So it was kind of like this everything went wrong at the same time. Um, and the vision of the company, at least my, my vision of the co- I'm not the founder, but like my vision as an investor was like you guys have a chance at building a marketplace, but it's gonna 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 Opendoor I think was on the path, but then just kinda got hit with this like triple, quadruple, or maybe a quintuple whammy.
- KNKaz Nejatian
There,
- 40:28 – 49:01
Learning from Mistakes & The Path Forward
- KNKaz Nejatian
and, and also a real thing, look, I think companies, um, 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 'cause that's how we learn. Um, the same thing happened to Amazon much earlier and to Carvana around the same time.
- SPSpeaker
Yeah.
- KNKaz Nejatian
But Amazon and Carvana reacted differently to that thing happening. Like Amazon and Carvana are 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 Opendoor publicly did was essentially abandon the original mission. Was like, "Cool, we're gonna de-risk this company a lot. We're just gonna like de-risk the company across the entire segment." Um, and 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... I think it's if Opendoor is an old-fashioned operational house flipper, like that's not that... it could be meaningful, it's not that big a business, right?
- SPSpeaker
And they, they lost faith in the original vision and the feasibility of it, or w-what explained the sort of-
- KNKaz Nejatian
Uh, I mean, I think, look, I think there's a very real thing about being a public company that like, um, there are things you have to deal with in a public company that are, uh, 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 heard in 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.
- SPSpeaker
[laughs]
- KNKaz Nejatian
Um, so like it, it's a for, for, it's slightly-
- SPSpeaker
Right. So you-
- KNKaz Nejatian
... fair.
- SPSpeaker
So you've come back and you s- you, you, you're, you've joined and you've said, "Hey, let's, let's go back. The original vision was a good idea. Let, let's, let's bring it," or how did you say?
- KNKaz Nejatian
Well, look, I, I think the mission is a worthwhile one. I think Opendoor has made mistakes along the path, and we should learn from our mistakes. Um, but the company is not made better by becoming meeker, right?
- SPSpeaker
Yeah.
- KNKaz Nejatian
Like, so that's a very real thing. Will we, will we make mistakes again? 100%. We will for sure make mistakes again. Like we just launched, tried before this, 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. Um, but I was telling this to, um, one of our product managers, um, this morning. I got to Opendoor, and it felt... Have you ever watched, um, Braveheart to the scene where Mel Gibson's standing in front of the Scottish army, and the English are coming with, like, weapons, and Mel Gibson's standing there saying, "Hold! Hold!" I'm like, "Don't, don't hold. Attack."
- ETErik Torenberg
[chuckles]
- KNKaz Nejatian
I got to Opendoor, and I felt like for, like three years, someone had stood in front of our company saying, "Hold! Hold! Wait!" Like, just wait for the macro to recover. Um, and you just don't tend to build great software companies like that. I think you can build great hedge funds like that, but Opendoor's not a hedge fund. If it was a hedge fund, it needs 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.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
Like always, always, always on attack. Um, we'll attack some wrong hills. We'll accidentally, like, lose some ships, but, like, always on attack.
- ETErik Torenberg
Yeah. A-Alex, what a- what advice, uh, have, have you given to Kaz or, or what would you be thinking about in terms of what strategic decisions you have to make, um, or what's important if, if, if you were taking over as CEO?
- SPSpeaker
Uh, well, luckily I'm not.
- ETErik Torenberg
[chuckles]
- SPSpeaker
So thank, thank you for doing this service for mankind. Um, I, I think a lot of it, I, I think, uh, when I first heard that he was taking the job, I think I sent you my YouTube video. You had a p- It's actually my most viewed ever video, largely by real estate agents who hate me and wanna kill me.
- ETErik Torenberg
[chuckles]
- SPSpeaker
Uh, this was, like circulating, speaking of Reddit, and, uh, you know, "The Courage to Be Disliked." It's a good book. "Courage to Be Disliked."
- KNKaz Nejatian
It's Courage-- It's an excellent book. So I, I took camo.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
"Courage to Be Disliked" is among the best books you to read as a founder. You must read it.
- SPSpeaker
Yeah. It's this-
- KNKaz Nejatian
Excellent
- SPSpeaker
... it's this whole, like, Socratic dialogue, uh, like i-in this Abelardian psychology m-mode. It's, 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 a such thing as, like, real estate agent hate mail because I was basically saying, like, these people are like leeches on society, and like, lo and behold, they don't like being called that.
- KNKaz Nejatian
[chuckles] They don't like being called leeches on society.
- 49:01 – 51:58
Strategic Vision & Future Priorities
- SPSpeaker
and a limit order.
- KNKaz Nejatian
Yes. Yes.
- SPSpeaker
And, uh, there's a val- There, there's a place for both.
- KNKaz Nejatian
Yeah.
- SPSpeaker
And there's a lot of liquidity, you know, beneath
- KNKaz Nejatian
Uh, the kind of the, the top big and the lowest ask.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
There's, there's always a lot of liquidity there, and those are the limit orders.
- ETErik Torenberg
Mm-hmm. Gearing towards the, the future, um, what, what else can you hint at in terms of the biggest, uh, priorities or decisions or strategic directions that you're, you're focused on?
- KNKaz Nejatian
I, I think there's a very, like, um... Like, there isn't a five-year Soviet plan here.
- ETErik Torenberg
[chuckles]
- KNKaz Nejatian
There just isn't one.
- ETErik Torenberg
Right.
- KNKaz Nejatian
Um, because I think that's just like-
- ETErik Torenberg
To plan not to work out anyways
- KNKaz Nejatian
... that just doesn't work out that well. Um, 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. Opening str- like this is what you should do. If you look at modern chess players, they do something called positional chess, right? Like, always put yourself in a better position.
- ETErik Torenberg
Mm.
- KNKaz Nejatian
Like, play for the next position, the one after that, and just like give yourself more options, and that's actually is the right way to build a company transparently. Like, you don't wanna like... Like, you wanna hold the strategy very loosely. Not the mission, the strategy. So I don't have like a secret bag of tricks, um, but I think there's a very real thing where Opendoor does too little for its sellers and does almost nothing for its buyers. Like that's, like we'll solve both of those problems. Uh, 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 it turns out just... Yeah, 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. And, um, I think those are like three big, like, like every one 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, the person you transact with quite frequently when buying, selling homes, not just like .5% of the time, but a significant percentage of the time. Uh, and then, well, I, I, I think that's like... And by the way, we've already, like when I started at Opendoor, Opendoor was only available in 48 buckets in the US. It is now available in every market in the US because, like, you can push pixels relatively easily.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
So there's a bun- there's a bunch of that stuff that's like, I think, I think you should, people should expect us to be a much more ambitious company.
- 51:58 – 55:44
Community, Intuition, and Opendoor’s Mission
- ETErik Torenberg
Well, in terms of holding you to account, one, one thing that's remarkable about the company, among other things, is how many people on the internet feel so passionate [chuckles] about the company, the, the Open Army. H-how do we explain why, why Opendoor is a company that so many people feel so passionate about, and how do, how does that, you know, impact at all sort of the, the business or how, how you think about it?
- KNKaz Nejatian
Look, I, I never, um, I never worked on Wall Street, and until I started this job, I owned one ticker.
- ETErik Torenberg
[chuckles]
- KNKaz Nejatian
It was Shopify. At some point soon, I'll own this ticker.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
Um, once, you know, I'm allowed to.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
Uh, I'm not like a, I'm not a stock analyst. I'm just not one. I build products for a living. Um, 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.
- ETErik Torenberg
Hmm.
- KNKaz Nejatian
Like William Buckley used to say, he used to, used to rather grab the phone book of Boston, Massachusetts than go to a Harvard professor's book for, like, advice.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
Because it's a very real thing about the natural int- in- 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."
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
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 it saying, "Hey, this is not how this should work. There's a company out there who's supposed to s- who has told us they're gonna fix this problem. We want them to go fix it." And by the way, I think like this is the, the most wonderful thing about this is that, um, 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 pre- perceived biases and they're like usually wrong. There's like a whole like pretense of knowledge thing that happens. Um, 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 a stock and is about to buy or sell a home. I want advice from that person.
- ETErik Torenberg
Yeah.
- KNKaz Nejatian
Because the odds are they have a wider aperture of possibility. Like there's this real question that someone asked me the other day saying, "Hey, why can't, why can I return what I buy on Amazon and not a home?" Like, that's a really decent question. It's like the honest to goodness, it's like, like from the time someone asked that question to the time we launched the product was maybe I think 12 days.
- ETErik Torenberg
Gosh.
- KNKaz Nejatian
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 a significant number of people, and I think it's important.
- ETErik Torenberg
Yeah. I think it's a good place to, to wrap.
- KNKaz Nejatian
Can I do the thing I'm supposed to do and plug for a second?
- ETErik Torenberg
Please. Yeah.
- KNKaz Nejatian
Um-
- ETErik Torenberg
So please, please, any plugs.
- KNKaz Nejatian
Uh, look, uh, 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. [upbeat music]
Episode duration: 55:53
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