I first met Opendoor co-founder and CEO Eric Wu in 2016 when he called me for a reference check on an executive he was considering hiring. In the course of our conversation, I asked Eric about his company. Eric proceeded to tell me about his vision for Opendoor, and I was hooked. He had me from the start. At the time, Opendoor was operating only in Phoenix.
Eric was then, and remains today, deeply passionate about improving the lives of consumers as homeowners. He founded Opendoor to remove the headaches, uncertainty and risk of buying and selling homes. Eric wanted to directly address the friction and pain involved in the process. He wasn’t looking for small improvements. He wanted to make it dramatically easier for consumers. Eric had an expansive vision to address a huge problem.
While I agreed that Eric and his team were addressing an important and enormous market opportunity, one had to wonder, could they really pull it off? To build a company that was going to buy and sell homes at scale was enormously challenging. Any such company was going to need to excel at multiple activities: finding likely home sellers, setting accurate prices on their homes, convincing them to sell to your company, fixing the homes up just enough, finding likely buyers, setting accurate prices once again, and convincing likely buyers to buy from you.
This sounded like a monumentally complex task: to do all this in volume, in dozens of markets, across thousands of homes worth billions of dollars. And, doing it cost effectively on tight margins.
In the meantime, real estate insiders were thinking, “The problem is too big. Home pricing is too variable, market by market. Consumers are too used to buying and selling homes the old-fashioned way. A platform approach won’t work. Technology can’t solve these issues.” This was coming from a traditional industry that had seen very little disruption and innovation over the years.
Despite the evident challenges and complexity inherent in Eric’s vision, we were enthusiastic supporters of Opendoor from the moment we met the company. In our purview, it was clear that consumers deserved better solutions from the real estate industry. And Eric and his colleagues were just the team to make that happen.
A Technology Platform Focused on the Buyer & Seller
Since those early days, the industry narrative has dramatically shifted and Opendoor’s home buying and selling platform is now the largest, most trusted digital platform for residential real estate.
One reason (among many) for Opendoor’s success has been the team’s relentless focus on improving the consumer buying and selling experience. In fact, at every single board meeting since our initial investment in 2016, Eric has shared a unique customer video with the board. Time and again we saw that buying or selling a home is the single largest financial decision a consumer ever makes, and that process is filled with stress, anxiety and inconvenience. We saw that consumers appreciated the transparency, certainty and speed when selling their homes to Opendoor, without ever having to stage an open house. And we learned that buyers valued the option to self-tour homes on their own schedule and without any pressure from an agent.
Uniquely leveraging machine learning and data science to fairly price homes and a sophisticated technology platform to automate the workflows associated with home inspections and repairs, Opendoor has transformed and simplified the home buying and selling process for 80,000 customers in over 20 markets around the U.S. As a full-service real estate company, they’ve created a new way to buy, sell, or trade-in a home that emphasizes certainty and speed. In doing so, they have delighted consumers nationwide.
Current Market Trends
We remain excited about the opportunity in front of Opendoor. We are currently witnessing in the US an unprecedented demand for single-family homes due in part to historically low interest rates and an increased rate of migration to suburbs due to COVID. In an August 2020 Opendoor survey, 53 percent of respondents indicated that the pandemic influenced their decision to relocate.
We often say that the best companies in our Norwest portfolio are on the right side of history and are poised to take advantage when their market opportunity accelerates. Opendoor fits the bill perfectly. Eric and team are very much on the right side of the historical trends in the residential real estate industry. And, they are uniquely positioned to capitalize on the elevated demand for single family homes. They have a profound opportunity to improve forever how American consumers buy and sell their homes.
Core Values, Internal Alignment, and a Great Team
One final thought. At Norwest, we believe that core values, internal alignment, and a great team are essential to the success of any company. Eric did not disappoint on any level. He is a unique founder. He has a well-formed vision and purpose, but at the same time, he listens well. He seeks advice. He knows when to ask for help. He then takes that input and figures it out.
Along with his co-founder and CTO Ian Wong, Eric has been able to attract a group of exceptionally talented and mission-driven executives. They have taken a huge vision, and with brilliant and motivated colleagues across the company, they have redefined the future of buying and selling homes while building a once-in-a-generation company. They are not only visionaries, they are problem solvers and operators.
Don’t let anyone ever convince you that building a great company is easy. Building any successful company, let alone a great company of operational complexity and scale, is a daunting challenge. It is hard, hard work. One needs to be relentless in the pursuit of operation excellence and resilient in the face of multiple setbacks. It is never easy for anyone, and it has not always been easy for Opendoor. Eric and his team have been both relentless and resilient at every step of the way.
Recognition Well Deserved
Today, we are so proud of Eric, Ian and the entire team for reaching this important milestone of becoming a publicly-traded company (NASDAQ:OPEN). We are grateful to have been a part of the journey. This is one of many milestones towards their mission of building the largest, most trusted platform for residential real estate and are empowering millions of Americans with the freedom to move.