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about this episode
Want to trade your home in for a new model, but hate the massive clutter and endless costs? Legendary investor and operator Keith Rabois has the solution. In episode 630 of “This Week in Startups,” taped at LAUNCH Festival 2016, the co-founder of Opendoor discusses how his disruptive startup is streamlining real estate’s painful, drawn-out process by buying your home same-day and dealing with all the details. Keith also shares some hard-won insights on innovation, startup rules, and his take on the current political fray…! Then Cyan Banister delivers an inspiring presentation to the LAUNCH Angel Summit on how and why she invests — and won’t stop.
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- Real estate doesn’t have to be such a painful process
Anyone who’s sold a home knows what a headache it is. (Jason himself attests!) But Keith’s company Opendoor aims to take your house off your hands in as little as three days, clean it, fix it up, and sell it, often without involving an agent at all. The fee is slightly more than the typical broker fee (9% vs. 6%), but it combines a lot of the legwork all in one place.
- Soon, you might be able to Airbnb your future home
Jason suggests that Keith might want to offer buyers the chance to trial-run their future homes with a short rental period or Airbnb stay — and Keith confirms that’s something buyers want. It’s just a matter of getting the people selling their homes, who might need the total upfront, on board with the premise. Keith thinks that eventually, Opendoor may accomplish that.
- Entrepreneurs need to keep up the tempo
While discussing the problems with Zenefits, Keith praises his colleague David Sacks for correcting so many of the company’s problems at a rapid rate. “You can tell sometimes from afar if a company’s going to make it,” he says. “They have this operating tempo that’s super impressive. And it’s clear that he’s got that mentality, and it’s being implemented.” When Jason suggests that tempo got them into trouble in the first place, Keith clarifies that it’s more the tempo of a well-oiled football team where there’s no “wasted motion” and you’re “running more plays than the other team.” For inspiration, Keith suggests you look to Bills legend Jim Kelly.
- Don’t lose sight of the main thing
In 2016, Keith thinks entrepreneurs need to focus more. “The shockingly different thing to do in these companies is to focus,” he says. “It’s surprisingly easy to get distracted by everything except the main thing. There’s usually only one or two things that actually really matter.” While Keith admits it’s easy to neglect the main thing, since it usually involves what he calls “A+ problems,” he stresses that you shouldn’t just check B+ and C problems off your list.
- Expand your portfolio by looking into your own personal network
Cyan says prospective investors are always asking how she finds new companies — and the answer is way more obvious than people think. Although she has picked up some startups at events and festivals, she recommends you begin with “alumni,” or your own former coworkers. Chances are they’ve gone on to create exciting new companies, and you should get in before they take off.
3:13-4:53: Keith gives some details on the number of homes in Opendoor’s inventory and what fees they charge customers.
4:59-7:21: Who’s funding this operation? Keith explains where the early capital came from and who invested in Opendoor later, even in the midst of market woes.
7:22-9:17: Jason asks Keith how Opendoor works with real estate agents.
11:30-12:52: Jason and Keith gripe about how real estate agents currently operate.
12:53-14:53: Keith explains how Opendoor is shaking up the sales side of the housing market.
15:06-16:23: Jason and Keith discuss the possibility of a “try before you buy” concept where prospective buyers rent the home for a few months.
16:49-18:36: How many homes will Opendoor be holding once it really takes off? Keith breaks down all the variables in the company’s growth.
18:37-20:45: Jason asks Keith how San Francisco can fix its insane housing market.
23:15-24:21: Would Opendoor ever come to San Francisco? Keith says yes, but it’s not a priority.
24:22-25:23: Jason wonders if Keith should Airbnb homes in the Opendoor stable while they’re finding a buyer.
29:40-31:33: Keith shares his best advice for entrepreneurs in 2016.
31:34-32:35: Keith lays out the perks of being an investor.
32:36-37:47: Jason asks Keith, a professed member of the GOP, what he thinks of Trump’s odds for the presidency.
37:48-39:30: Is it the end of the two-party system in America? Will Congress have to pick the president? Could Michael Bloomberg still sneak in? Jason and Keith continue their political discussion.
41:36-42:14: Cyan underlines the importance of having a business partner who complements you.
42:15-43:34: How do you find new companies for your portfolio? Cyan says you should start with alumni and networking events.
46:01-47:18: Where should the rest of your money go? Cyan preaches the virutes of philanthropy.