WEBVTT 00:00:00.000 --> 00:00:02.680 I want you to try a little experiment with me. 00:00:02.980 --> 00:00:05.700 It involves a bit of mental time travel. I want 00:00:05.700 --> 00:00:07.219 you to think back to the last time you had to 00:00:07.219 --> 00:00:09.619 sell a car. Oh, I'm already getting stressed. 00:00:10.400 --> 00:00:12.939 Right. Not the fun part where you get the new 00:00:12.939 --> 00:00:14.939 one, but that miserable part where you have to 00:00:14.939 --> 00:00:16.780 get rid of the old one. Oh, I know this movie. 00:00:17.419 --> 00:00:20.980 You're talking about the weird Craigslist meetups 00:00:20.980 --> 00:00:23.879 in a grocery store parking lot at 8 p .m. at 00:00:23.879 --> 00:00:26.559 night with some guy who might or might not show 00:00:26.559 --> 00:00:30.179 up. Exactly. The weird texts, the constant lowball 00:00:30.179 --> 00:00:32.920 offers, the guy who wants to pay you in some 00:00:32.920 --> 00:00:36.640 crypto you've never heard of or trade you a jet 00:00:36.640 --> 00:00:39.070 ski. It's just. It's a nightmare. It is a total 00:00:39.070 --> 00:00:40.770 nightmare. But then think about the alternative. 00:00:40.929 --> 00:00:43.969 You drive to a CarMax or a dealership. You pull 00:00:43.969 --> 00:00:46.429 in. A guy with a clipboard walks around your 00:00:46.429 --> 00:00:49.270 car, checks the odometer, maybe kicks a tire, 00:00:49.570 --> 00:00:52.570 takes something into an iPad, and 20 minutes 00:00:52.570 --> 00:00:55.590 later, bam. Check in hand. You walk away. You 00:00:55.590 --> 00:00:57.969 walk away. It's done. It is the ultimate exchange 00:00:57.969 --> 00:01:00.670 of value for convenience. You know you're probably 00:01:00.670 --> 00:01:02.530 leaving a few hundred, maybe even a thousand 00:01:02.530 --> 00:01:04.730 bucks on the table compared to a private sale. 00:01:04.870 --> 00:01:06.989 Yeah. But you don't care. Not at all. You paid 00:01:06.989 --> 00:01:10.750 that money to avoid the headache. And in finance, 00:01:10.870 --> 00:01:13.650 we call that removing friction. Right. Friction. 00:01:14.310 --> 00:01:16.450 Take that exact concept, that instant liquidity, 00:01:16.609 --> 00:01:19.629 that CarMax experience and apply it to the single 00:01:19.629 --> 00:01:22.390 biggest, most terrifyingly expensive and most 00:01:22.390 --> 00:01:25.489 illiquid asset you will ever own. Your house. 00:01:25.689 --> 00:01:28.250 Your house. This is the holy grail. I mean, this 00:01:28.250 --> 00:01:30.609 is what people in fintech and prop tech have 00:01:30.609 --> 00:01:33.569 been dreaming about for decades. Imagine you 00:01:33.569 --> 00:01:35.849 get a new job across the country. You don't clean 00:01:35.849 --> 00:01:38.010 the house. You don't stage it with fake fruit 00:01:38.010 --> 00:01:40.329 bowls and sad beige furniture. You don't have 00:01:40.329 --> 00:01:42.510 to, you know, herd your family and your dog out 00:01:42.510 --> 00:01:44.140 the door every Sunday. afternoon for an open 00:01:44.140 --> 00:01:47.079 house, you just push a button on an app. An algorithm 00:01:47.079 --> 00:01:49.739 somewhere in a server farm in Virginia looks 00:01:49.739 --> 00:01:51.659 at your house from space, or at least from Google 00:01:51.659 --> 00:01:55.659 Maps, crunches some numbers, and wires you half 00:01:55.659 --> 00:01:58.120 a million dollars. That is the promise. It's 00:01:58.120 --> 00:02:00.299 a beautiful promise. It's the sci -fi future 00:02:00.299 --> 00:02:03.439 of real estate, where a home is just like a share 00:02:03.439 --> 00:02:06.079 of Apple stock. It's liquid. It's tradable. It's 00:02:06.079 --> 00:02:09.400 instant. But as we know, sci -fi stories usually 00:02:09.400 --> 00:02:11.780 have a twist, right? There's always a point where 00:02:11.780 --> 00:02:14.099 the robot turns evil or the spaceship blows up. 00:02:14.300 --> 00:02:17.500 And today we are doing a deep dive into the company 00:02:17.500 --> 00:02:21.099 that tried to build that spaceship. We are talking 00:02:21.099 --> 00:02:24.259 about Open Door Technologies. And this is a story 00:02:24.259 --> 00:02:26.099 that has absolutely everything. I mean, it has 00:02:26.099 --> 00:02:29.159 the hubris of Silicon Valley. It has billions 00:02:29.159 --> 00:02:31.340 and billions of dollars in venture capital. It 00:02:31.340 --> 00:02:35.580 has a spectacular, truly epic crash. Oh, yeah. 00:02:35.719 --> 00:02:39.810 And now. Here in 2026, it has this fascinating, 00:02:40.090 --> 00:02:43.650 gritty, maybe even surprising attempt at a comeback. 00:02:43.889 --> 00:02:45.969 We have a massive stack of research here today. 00:02:46.030 --> 00:02:47.870 We've got the 10K filings, which are, you know, 00:02:47.909 --> 00:02:49.310 the official financial reports. We've got the 00:02:49.310 --> 00:02:51.389 FTC complaints. And we are definitely going to 00:02:51.389 --> 00:02:53.090 read from those because they are spicy. They 00:02:53.090 --> 00:02:54.590 are very spicy. And we've got the whole history 00:02:54.590 --> 00:02:57.090 of the iBuyer movement. Our mission today isn't 00:02:57.090 --> 00:02:58.969 just to look at a tech stock. It's to figure 00:02:58.969 --> 00:03:01.319 out. can you actually turn a house into a commodity? 00:03:01.780 --> 00:03:05.199 Or is real estate just too messy, too emotional, 00:03:05.300 --> 00:03:08.580 and too physical for an algorithm to truly understand? 00:03:08.939 --> 00:03:11.699 And we have to ask the big question that goes 00:03:11.699 --> 00:03:14.080 with that. When an algorithm buys your house, 00:03:14.280 --> 00:03:17.500 who is actually taking on the risk? Because as 00:03:17.500 --> 00:03:19.979 Opendoor found out the hard way, when you own 00:03:19.979 --> 00:03:23.659 the asset, you also own the disaster. So let's 00:03:23.659 --> 00:03:25.979 rewind. We need to go back to a time when... 00:03:26.139 --> 00:03:28.740 Interest rates were basically zero. Hope was 00:03:28.740 --> 00:03:31.039 incredibly high. And disruption was the only 00:03:31.039 --> 00:03:34.819 word that mattered. The before times. 2014. San 00:03:34.819 --> 00:03:37.139 Francisco. Exactly. The golden age of the unicorn. 00:03:37.360 --> 00:03:39.680 When every startup was going to change the world. 00:03:39.840 --> 00:03:41.680 And get a billion dollar valuation for doing 00:03:41.680 --> 00:03:44.669 it. Right. So Opendoor was founded in 2014, and 00:03:44.669 --> 00:03:47.090 the founding team isn't just some random group 00:03:47.090 --> 00:03:49.389 of college dropouts with a good idea. This was 00:03:49.389 --> 00:03:51.750 a super group, a tech all -star team. It really 00:03:51.750 --> 00:03:54.729 was. You had Keith Robois, Eric Wu, Ian Wong, 00:03:54.990 --> 00:03:57.870 and J .D. Ross. Now, if you follow tech Twitter 00:03:57.870 --> 00:04:00.009 or Silicon Valley lore, you know some of these 00:04:00.009 --> 00:04:02.590 names. Keith Robois is a heavy hitter. He's part 00:04:02.590 --> 00:04:04.889 of the original PayPal mafia, you know, that 00:04:04.889 --> 00:04:07.490 group that includes Elon Musk, Peter Thiel, Reid 00:04:07.490 --> 00:04:10.169 Hoffman. He has this very aggressive, very distinct 00:04:10.169 --> 00:04:14.330 sort of libertarian world. And Eric Wu, he was 00:04:14.330 --> 00:04:16.329 the real estate guy, right? Eric was the domain 00:04:16.329 --> 00:04:18.870 expert. He was crucial. He had already built 00:04:18.870 --> 00:04:21.930 and sold a real estate data startup called Movedi 00:04:21.930 --> 00:04:24.949 to Trulia. So he understood the data side of 00:04:24.949 --> 00:04:27.009 housing, which was, you know, the secret sauce 00:04:27.009 --> 00:04:29.009 they were promising. Okay, so you have the big 00:04:29.009 --> 00:04:31.509 picture visionary and the industry expert. And 00:04:31.509 --> 00:04:34.649 their pitch was simple, but incredibly audacious. 00:04:35.089 --> 00:04:37.870 They basically said, real estate is the last 00:04:37.870 --> 00:04:40.110 major asset class in the world that hasn't been 00:04:40.110 --> 00:04:42.949 truly digitized. You can buy stocks instantly. 00:04:43.089 --> 00:04:45.089 You can buy crypto instantly. You can buy a car 00:04:45.089 --> 00:04:48.209 instantly. Why does it still take 90 days, an 00:04:48.209 --> 00:04:50.170 army of middlemen and a mountain of paperwork 00:04:50.170 --> 00:04:52.529 to sell a house? It's a great question. And the 00:04:52.529 --> 00:04:54.389 money loved this pitch. Oh, they couldn't get 00:04:54.389 --> 00:04:56.259 enough of it. They raised nearly $10 million, 00:04:56.740 --> 00:04:59.800 $9 .95 million to be exact, right out of the 00:04:59.800 --> 00:05:02.379 gate in a seed round led by Coastal Ventures, 00:05:02.480 --> 00:05:05.620 which for 2014 was a massive seed round. I want 00:05:05.620 --> 00:05:07.379 to pause on the actual mechanism here, though, 00:05:07.439 --> 00:05:09.600 because iBuyer is a buzzword that gets thrown 00:05:09.600 --> 00:05:11.199 around, but we need to unpack how it actually 00:05:11.199 --> 00:05:13.620 works. How is this fundamentally different from, 00:05:13.680 --> 00:05:16.379 say, Zillow? This is the most important distinction 00:05:16.379 --> 00:05:18.779 to understand about this whole story. Yeah. And 00:05:18.779 --> 00:05:21.000 it's where all the risk comes from. Traditionally, 00:05:21.120 --> 00:05:25.360 a company like Zillow or Redfin, they're marketplaces. 00:05:25.540 --> 00:05:28.839 Right. They're like eBay or a classified ad page. 00:05:29.100 --> 00:05:32.180 They introduce a buyer to a seller and they take 00:05:32.180 --> 00:05:34.740 a little fee, usually ad revenue from agents 00:05:34.740 --> 00:05:37.000 or a referral fee for making that introduction. 00:05:37.480 --> 00:05:40.639 They are what we call asset light. Zillow doesn't 00:05:40.639 --> 00:05:42.660 care if my house has termites. Zillow does not 00:05:42.660 --> 00:05:44.519 care at all if your house has termites because 00:05:44.519 --> 00:05:47.639 Zillow never, ever owns your house. They're just 00:05:47.639 --> 00:05:50.689 the billboard. Okay. If I sell my house on Zillow, 00:05:50.730 --> 00:05:52.930 Zillow never writes me a check. Someone else 00:05:52.930 --> 00:05:57.170 does. Exactly. Opendoor is an iBuyer, an instant 00:05:57.170 --> 00:06:00.189 buyer. They are a market maker. And this is the 00:06:00.189 --> 00:06:02.560 key. Think of them like the... currency exchange 00:06:02.560 --> 00:06:05.199 booth at the airport. They have a massive pile 00:06:05.199 --> 00:06:07.800 of cash. You come to their window, you give them 00:06:07.800 --> 00:06:10.180 your asset, in this case your house, and they 00:06:10.180 --> 00:06:12.800 give you cash instantly. At that moment, they 00:06:12.800 --> 00:06:14.120 take the house onto their own balance sheet. 00:06:14.160 --> 00:06:15.860 They own it. They own it. So they are paying 00:06:15.860 --> 00:06:18.100 the taxes. They are paying the insurance, the 00:06:18.100 --> 00:06:20.759 electricity bill. They are fixing the leaky faucet. 00:06:20.779 --> 00:06:23.839 They're mowing the lawn. And then, and this is 00:06:23.839 --> 00:06:25.879 the business, they try to sell it to someone 00:06:25.879 --> 00:06:28.560 else for a small profit. So in plain English, 00:06:28.680 --> 00:06:30.839 they are house flippers. They are house flippers. 00:06:31.560 --> 00:06:34.579 But there's a huge difference in scale. A typical 00:06:34.579 --> 00:06:36.600 house flipper is, you know, a guy named Dave 00:06:36.600 --> 00:06:38.439 with a pickup truck who does maybe two, three 00:06:38.439 --> 00:06:41.639 houses a year. Opendoor wanted to be a robot 00:06:41.639 --> 00:06:44.240 named Dave that flips 50 ,000 houses a year. 00:06:44.339 --> 00:06:47.060 And that scales the risk enormously. I mean, 00:06:47.079 --> 00:06:49.439 if Dave the flipper buys one bad house in a bad 00:06:49.439 --> 00:06:51.399 neighborhood, Dave loses money on that one deal. 00:06:51.620 --> 00:06:53.639 It's a bad year for Dave. It's a bad year for 00:06:53.639 --> 00:06:56.600 Dave. But if Opendoor's algorithm misprices an 00:06:56.600 --> 00:07:00.139 entire zip code and they buy 10 ,000 bad houses 00:07:00.139 --> 00:07:02.699 at once. Then you lose hundreds of millions of 00:07:02.699 --> 00:07:04.819 dollars in a single quarter. And we saw that 00:07:04.819 --> 00:07:07.100 happen. The core of their business model was 00:07:07.100 --> 00:07:09.459 the fee. They charged the seller a service fee, 00:07:09.560 --> 00:07:11.439 which they argued was roughly the same as the 00:07:11.439 --> 00:07:13.899 5 or 6 percent you'd pay a traditional real estate 00:07:13.899 --> 00:07:17.019 agent. And then on top of that, they deduct the 00:07:17.019 --> 00:07:19.600 estimated cost of repairs. Okay, let's talk about 00:07:19.600 --> 00:07:21.920 those repairs for a second. Because anyone who 00:07:21.920 --> 00:07:24.680 has ever owned a home knows that the word repairs 00:07:24.680 --> 00:07:28.060 is a financial black hole. You think it's a $500 00:07:28.060 --> 00:07:30.420 patch on the roof and suddenly you're replacing 00:07:30.420 --> 00:07:34.300 the entire decking for $10 ,000. How does an 00:07:34.300 --> 00:07:36.420 algorithm looking at photos online know that 00:07:36.420 --> 00:07:38.620 the basement smells a little bit like mildew 00:07:38.620 --> 00:07:41.720 when it rains? It doesn't. And that is a classic 00:07:41.720 --> 00:07:44.100 economic problem called adverse selection. Right. 00:07:44.480 --> 00:07:46.160 The people most likely to want to sell their 00:07:46.160 --> 00:07:48.959 house instantly for cash with no questions asked 00:07:48.959 --> 00:07:50.920 are often the people who know their house has 00:07:50.920 --> 00:07:53.759 issues that would scare away a regular family 00:07:53.759 --> 00:07:56.040 doing a thorough inspection. The person with 00:07:56.040 --> 00:07:58.139 the crack in the foundation that they've cleverly 00:07:58.139 --> 00:08:00.300 hidden behind a bookshelf. Exactly that person. 00:08:00.720 --> 00:08:03.120 Opendoor tried to solve this with video walkthroughs 00:08:03.120 --> 00:08:05.379 and hiring local inspectors, but you can't code. 00:08:05.879 --> 00:08:08.420 creaky floorboards or that weird neighbor with 00:08:08.420 --> 00:08:11.160 the loud dog into a spreadsheet very easily. 00:08:11.360 --> 00:08:13.879 So they are taking on massive, massive capital 00:08:13.879 --> 00:08:17.060 risk. But in the late 2010s, risk was in fashion. 00:08:17.379 --> 00:08:20.259 Risk was cheap. This is so important. Interest 00:08:20.259 --> 00:08:22.740 rates were historically low, meaning Opendoor 00:08:22.740 --> 00:08:25.339 could go to big banks and get credit lines for 00:08:25.339 --> 00:08:27.980 billions of dollars at very, very low rates to 00:08:27.980 --> 00:08:30.300 buy these houses. It was almost free money for 00:08:30.300 --> 00:08:33.740 them. And speaking of basically free money, enter 00:08:33.740 --> 00:08:36.730 SoftBank. The Vision Fund. the ultimate kingmaker 00:08:36.730 --> 00:08:40.409 of that era. In 2018, Masayoshi Sun SoftBank 00:08:40.409 --> 00:08:44.769 dropped $400 million into Opendoor. This was 00:08:44.769 --> 00:08:46.570 the moment the company went from being an interesting 00:08:46.570 --> 00:08:49.190 startup to, wait, are they going to own every 00:08:49.190 --> 00:08:51.990 house in America? A $400 million check. They 00:08:51.990 --> 00:08:55.009 have a huge validation. By 2019, they were privately 00:08:55.009 --> 00:08:58.129 valued at nearly $4 billion. They were a certified 00:08:58.129 --> 00:09:00.399 unicorn. And they weren't just content with the 00:09:00.399 --> 00:09:02.379 buying and selling part of the transaction, right? 00:09:02.480 --> 00:09:04.340 They wanted the whole pie. They wanted the full 00:09:04.340 --> 00:09:06.919 stack. This is a classic Silicon Valley strategy. 00:09:07.299 --> 00:09:09.600 Uber doesn't just want to be your taxi. They 00:09:09.600 --> 00:09:11.519 want to deliver your food with Uber Eats and 00:09:11.519 --> 00:09:13.600 your packages with Uber Freight. Own the whole 00:09:13.600 --> 00:09:16.039 customer relationship. Right. Opendoor acquired 00:09:16.039 --> 00:09:18.500 a title and escrow company called OS National. 00:09:18.860 --> 00:09:21.919 Then they launched Opendoor Home Loans. The logic 00:09:21.919 --> 00:09:24.779 was, if we're already controlling the transaction, 00:09:25.360 --> 00:09:27.200 Why are we letting some bank get the interest 00:09:27.200 --> 00:09:29.340 payments on the mortgage? Why are we letting 00:09:29.340 --> 00:09:31.320 a separate title company get the closing fees? 00:09:31.519 --> 00:09:33.879 We should keep every single dollar associated 00:09:33.879 --> 00:09:36.440 with this house changing hands. It makes perfect 00:09:36.440 --> 00:09:38.240 sense on a whiteboard. It's a closed loop, a 00:09:38.240 --> 00:09:40.639 flywheel. You buy the house, you provide the 00:09:40.639 --> 00:09:42.259 loan to the next buyer, you handle the title. 00:09:42.399 --> 00:09:44.759 More revenue at every step. It is a beautiful 00:09:44.759 --> 00:09:48.000 flywheel. Until that flywheel hits a brick wall 00:09:48.000 --> 00:09:51.299 at 100 miles an hour. March 2020. The COVID shock. 00:09:51.679 --> 00:09:54.740 The day. The world stopped turning. Take us back 00:09:54.740 --> 00:09:57.120 to that moment inside a company like Opendoor, 00:09:57.220 --> 00:09:59.399 because for a business that relies entirely on 00:09:59.399 --> 00:10:02.419 liquidity, on being able to buy and sell houses 00:10:02.419 --> 00:10:05.820 fast, a global lockdown must have been an absolutely 00:10:05.820 --> 00:10:09.059 terrifying prospect. It was an existential cardiac 00:10:09.059 --> 00:10:11.919 arrest. Think about it. In March 2020, the entire 00:10:11.919 --> 00:10:14.919 world stopped. Opendoor was sitting on hundreds 00:10:14.919 --> 00:10:16.860 of million, if not billions of dollars worth 00:10:16.860 --> 00:10:18.919 of houses on their balance sheet that nobody 00:10:18.919 --> 00:10:20.940 was legally allowed to visit. Their liquidity. 00:10:21.450 --> 00:10:23.870 The ability to turn those houses back into cash 00:10:23.870 --> 00:10:27.289 dried up instantly. On March 20th, they suspended 00:10:27.289 --> 00:10:29.769 all home buying across the country. Cold turkey. 00:10:29.929 --> 00:10:32.250 Flip the switch. Cold turkey. The machine just 00:10:32.250 --> 00:10:34.490 stopped. We're not buying your house today. Sorry. 00:10:34.950 --> 00:10:37.769 And they also laid off 600 people, which was 00:10:37.769 --> 00:10:41.690 35 % of their entire staff, in a single Zoom 00:10:41.690 --> 00:10:44.990 call, effectively. It was brutal. At that specific 00:10:44.990 --> 00:10:47.250 moment, it looked like the iBuyer experiment 00:10:47.250 --> 00:10:50.190 and over. It looked like a fatal business model 00:10:50.190 --> 00:10:53.210 flaw had been exposed. But then one of the weirdest 00:10:53.210 --> 00:10:55.649 things in modern economic history happened. We 00:10:55.649 --> 00:10:58.269 didn't go into a deep, prolonged housing depression. 00:10:58.610 --> 00:11:01.470 We went into a housing mania. The V -shaped recovery. 00:11:01.809 --> 00:11:04.690 It was completely unexpected. Everyone was stuck 00:11:04.690 --> 00:11:06.470 in their tiny apartment staring at the same four 00:11:06.470 --> 00:11:08.690 walls, realizing they hated their roommate so 00:11:08.690 --> 00:11:10.490 they desperately needed a home office. And the 00:11:10.490 --> 00:11:12.929 government, the Fed. Slashed interest rates to 00:11:12.929 --> 00:11:15.950 zero. Making money free again. Suddenly, demand 00:11:15.950 --> 00:11:18.269 for single -family homes with a yard went vertical. 00:11:18.470 --> 00:11:21.389 It was a buying frenzy. An open door, to their 00:11:21.389 --> 00:11:25.070 credit, pivoted fast. They did. By May 2020, 00:11:25.429 --> 00:11:27.830 just a couple of months later... They were back 00:11:27.830 --> 00:11:29.929 in the market and they had a brand new pitch, 00:11:30.029 --> 00:11:32.409 which was perfectly timed. It was the contact 00:11:32.409 --> 00:11:35.690 -free home sale. Ah, clear. You don't want strangers 00:11:35.690 --> 00:11:37.870 breeding in your house during a global pandemic. 00:11:38.169 --> 00:11:40.269 You don't want to deal with open houses. Sell 00:11:40.269 --> 00:11:42.509 to us. We'll do the whole thing digitally. It 00:11:42.509 --> 00:11:45.070 was the perfect product for that very specific, 00:11:45.289 --> 00:11:48.889 very strange moment in time. And this incredible 00:11:48.889 --> 00:11:51.830 turnaround, this recovery, brings us to the next 00:11:51.830 --> 00:11:54.610 chapter of the story. The SPAC. We need to really 00:11:54.610 --> 00:11:56.950 unpack this because looking back now from 2026, 00:11:57.190 --> 00:12:01.750 the SPAC boom of 2020 and 2021, it feels like 00:12:01.750 --> 00:12:04.490 a collective fever dream. It was financial hysteria 00:12:04.490 --> 00:12:06.909 on a scale we haven't seen in a long time. So 00:12:06.909 --> 00:12:08.850 a SPAC stands for a special purpose acquisition 00:12:08.850 --> 00:12:10.809 company. And it's basically what it sounds like. 00:12:10.850 --> 00:12:13.490 A blank check company. A shell company. A total 00:12:13.490 --> 00:12:16.990 shell company. A celebrity investor or a well 00:12:16.990 --> 00:12:19.669 -known financier raises a bunch of money from 00:12:19.669 --> 00:12:22.600 the public markets. lists this empty shell company 00:12:22.600 --> 00:12:24.840 on the stock market that has no business, no 00:12:24.840 --> 00:12:27.500 product, no employees, nothing but a pile of 00:12:27.500 --> 00:12:30.500 cash. And they basically say to investors, trust 00:12:30.500 --> 00:12:32.679 me, I'm going to go find a cool private company 00:12:32.679 --> 00:12:34.539 to buy with your money. It's like giving your 00:12:34.539 --> 00:12:37.120 friend $20 and saying, go into that store and 00:12:37.120 --> 00:12:38.980 come out with something cool for me. Exactly. 00:12:39.340 --> 00:12:41.539 And the celebrity friend in this particular case 00:12:41.539 --> 00:12:44.570 was Chamath Palihapitiya. The SPAC king. He was 00:12:44.570 --> 00:12:46.730 the king. He was absolutely everywhere at that 00:12:46.730 --> 00:12:48.870 time. He was on CNBC every day. He was on the 00:12:48.870 --> 00:12:51.610 All In podcast. He was tweeting incessantly. 00:12:52.230 --> 00:12:54.409 And he positioned himself as the Warren Buffett 00:12:54.409 --> 00:12:56.490 for the new generation, for the tech generation. 00:12:56.830 --> 00:12:59.710 He found Opendoor and he said, this is it. This 00:12:59.710 --> 00:13:01.730 is the one. This is the Amazon of real estate. 00:13:01.909 --> 00:13:05.149 And because it was a SPAC merger, not a traditional 00:13:05.149 --> 00:13:08.830 IPO, they could play by slightly looser rules 00:13:08.830 --> 00:13:10.990 when they were selling this story to the public, 00:13:11.110 --> 00:13:12.980 right? Yeah. This is a critical point that people 00:13:12.980 --> 00:13:15.820 miss. In a traditional initial public offering, 00:13:16.039 --> 00:13:19.539 the SEC is very, very strict about what you can 00:13:19.539 --> 00:13:21.600 say and what you can predict. You mostly have 00:13:21.600 --> 00:13:24.059 to talk about your past performance, your historical 00:13:24.059 --> 00:13:26.820 results. You can't just make up numbers for the 00:13:26.820 --> 00:13:30.059 future. You cannot. But in a SPAC merger, because 00:13:30.059 --> 00:13:32.820 it's technically a merger and not an IPO, you 00:13:32.820 --> 00:13:35.200 are allowed to publish forward -looking statements. 00:13:35.580 --> 00:13:37.620 You can show a chart that goes straight up and 00:13:37.620 --> 00:13:40.850 to the right for the next 10 years and say, This 00:13:40.850 --> 00:13:42.710 is what we think we will do. So they didn't just 00:13:42.710 --> 00:13:45.110 sell the past. They sold the dream. They sold 00:13:45.110 --> 00:13:47.590 the absolute dream. They put out these presentations 00:13:47.590 --> 00:13:50.690 projecting massive exponential revenue growth. 00:13:50.809 --> 00:13:53.269 They projected turning profitable in just a few 00:13:53.269 --> 00:13:56.049 years. And the market, which was hungry for anything 00:13:56.049 --> 00:13:58.429 tech related, just ate it up with a spoon. So 00:13:58.429 --> 00:14:01.009 the mergers announced in September 2020. It closes 00:14:01.009 --> 00:14:03.529 in December. Right. And it starts trading on 00:14:03.529 --> 00:14:05.429 the stock market under the ticker symbol open. 00:14:05.769 --> 00:14:08.879 And the valuation just skyrocketed. At its absolute 00:14:08.879 --> 00:14:12.419 peak in early 2021, Opendoor was valued at roughly 00:14:12.419 --> 00:14:18.480 $18 billion. $18 billion. For a company that, 00:14:18.500 --> 00:14:20.799 let's be honest, we just described as a pawn 00:14:20.799 --> 00:14:23.139 shop for houses. That's a harsh way to put it, 00:14:23.159 --> 00:14:25.659 but financially, it's not an inaccurate description 00:14:25.659 --> 00:14:28.620 of the risk profile. They are a capital -intensive, 00:14:28.700 --> 00:14:32.539 low -margin business. But at $18 billion, they 00:14:32.539 --> 00:14:34.759 were being valued like a pure software company, 00:14:34.899 --> 00:14:36.980 like Microsoft. And software companies have, 00:14:37.080 --> 00:14:39.980 what, 80 % margins? Exactly. When Microsoft sells 00:14:39.980 --> 00:14:42.320 another copy of Windows, the marginal cost is 00:14:42.320 --> 00:14:45.220 zero. It's pure profit. When Opendoor sells a 00:14:45.220 --> 00:14:47.059 house, they first have to pay for the house. 00:14:47.259 --> 00:14:50.019 Their gross margins are like 5 % or 6 % on a 00:14:50.019 --> 00:14:52.169 really good day. it's a completely different 00:14:52.169 --> 00:14:54.710 business but nobody cared about margins in 2021 00:14:54.710 --> 00:14:57.309 they just cared about one thing growth growth 00:14:57.309 --> 00:14:59.789 at any cost and opendoor gave them growth on 00:14:59.789 --> 00:15:02.350 a scale that is honestly hard to comprehend in 00:15:02.350 --> 00:15:04.590 the single year of 2021 they went on a buying 00:15:04.590 --> 00:15:08.399 spree They bought nearly 37 ,000 homes. 37 ,000 00:15:08.399 --> 00:15:10.139 homes. Just try to visualize that for a second. 00:15:10.299 --> 00:15:12.559 That is a medium -sized American city. That is 00:15:12.559 --> 00:15:15.080 every single house in a massive suburb. They 00:15:15.080 --> 00:15:16.899 owned it all. And this is where the inventory 00:15:16.899 --> 00:15:19.919 trap was set. They were aggressively buying these 00:15:19.919 --> 00:15:22.740 tens of thousands of homes at the absolute peak 00:15:22.740 --> 00:15:25.120 of the market frenzy. They were competing with 00:15:25.120 --> 00:15:27.480 regular families, sometimes bidding up prices 00:15:27.480 --> 00:15:29.919 against them, because their algorithm was programmed 00:15:29.919 --> 00:15:34.139 with one simple truth. Housing only goes up. 00:15:34.519 --> 00:15:37.059 Famous last words. And then the music stopped. 00:15:37.379 --> 00:15:40.840 2022. The Federal Reserve, led by Jerome Powell, 00:15:41.019 --> 00:15:43.179 looks at runaway inflation and says the party 00:15:43.179 --> 00:15:45.820 is over. They start hiking interest rates faster 00:15:45.820 --> 00:15:48.399 and more aggressively than they had in 40 years. 00:15:48.539 --> 00:15:50.720 So in the blink of an eye, mortgage rates go 00:15:50.720 --> 00:15:53.899 from a historic low of 3 % to over 7%. And what 00:15:53.899 --> 00:15:56.080 happens when mortgage rates double? A potential 00:15:56.080 --> 00:15:58.360 buyer's purchasing power gets cut in half almost 00:15:58.360 --> 00:16:00.639 overnight. A family that was pre -approved for 00:16:00.639 --> 00:16:04.279 a $500 ,000 house in January can now only afford 00:16:04.279 --> 00:16:07.759 a $350 ,000 house in July. Demand just vanished. 00:16:07.960 --> 00:16:09.679 But Opendoor was still sitting on a balance sheet 00:16:09.679 --> 00:16:12.440 with 37 ,000 houses that they had bought at peak 00:16:12.440 --> 00:16:15.440 2021 prices. This is the nightmare scenario. 00:16:15.980 --> 00:16:18.120 This is the exact reason Zillow had shut down 00:16:18.120 --> 00:16:20.700 their own iBuying business a year earlier. They 00:16:20.700 --> 00:16:23.580 saw this coming and got out. Opendoor drove right 00:16:23.580 --> 00:16:26.559 off the cliff. In the fourth quarter of 2022, 00:16:26.940 --> 00:16:29.360 the numbers that came out were absolutely horrific. 00:16:29.620 --> 00:16:32.600 They sold about 7 ,500 homes in that quarter. 00:16:33.360 --> 00:16:36.279 And on average, they lost $28 ,000 on each and 00:16:36.279 --> 00:16:38.139 every one. I want to just drill into that number. 00:16:38.340 --> 00:16:43.120 A $28 ,000 loss per house. That's not just, oh, 00:16:43.159 --> 00:16:45.360 we didn't make a profit. That is literally taking 00:16:45.360 --> 00:16:48.059 a brand new Toyota Camry, parking it in the driveway 00:16:48.059 --> 00:16:50.639 of every single house you sell, and setting it 00:16:50.639 --> 00:16:53.279 on fire. It's an unbelievable amount of value 00:16:53.279 --> 00:16:55.059 destruction. And it's even worse if you look 00:16:55.059 --> 00:16:57.259 at the aggregate numbers. For the full year of 00:16:57.259 --> 00:17:01.519 2022, Opendoor lost $1 .4 billion. A billion 00:17:01.519 --> 00:17:03.909 with a B. How does the math even work there? 00:17:03.970 --> 00:17:05.730 Can you walk me through the life cycle of one 00:17:05.730 --> 00:17:07.910 of those losing houses? Sure. It's a painful 00:17:07.910 --> 00:17:09.769 but simple story. Okay, let's say they bought 00:17:09.769 --> 00:17:12.349 a house in Phoenix for $500 ,000 in our March 00:17:12.349 --> 00:17:15.390 of 2022. Their algorithm, looking at past sales, 00:17:15.589 --> 00:17:18.349 projects they can sell for $540 ,000 in a couple 00:17:18.349 --> 00:17:21.069 of months. A nice 40K profit. On paper, yeah. 00:17:21.329 --> 00:17:24.450 But by June, rates have shot up, the market is 00:17:24.450 --> 00:17:27.009 frozen, and the actual market value of that house 00:17:27.009 --> 00:17:31.279 has dropped to, say, $460 ,000. So they are already 00:17:31.279 --> 00:17:34.579 down $40 ,000 just on the asset price. They're 00:17:34.579 --> 00:17:37.339 underwater. Deep underwater. But that's not all. 00:17:37.519 --> 00:17:40.859 They also spent $15 ,000 fixing the carpets and 00:17:40.859 --> 00:17:43.059 painting the walls. They also had to pay three 00:17:43.059 --> 00:17:46.319 months of property taxes, insurance, and... This 00:17:46.319 --> 00:17:48.599 is the crucial part. Interest on the massive 00:17:48.599 --> 00:17:50.200 loan they used to buy the house in the first 00:17:50.200 --> 00:17:52.819 place. Ah, the cost of capital, the carrying 00:17:52.819 --> 00:17:56.099 costs. Exactly. When the Fed raises rates, Opendoor's 00:17:56.099 --> 00:17:58.559 own borrowing costs go up, too. So they're getting 00:17:58.559 --> 00:18:01.200 squeezed from both sides. The asset they own 00:18:01.200 --> 00:18:03.480 is worth less and it costs them more money every 00:18:03.480 --> 00:18:05.960 single day to hold it. So they finally give up 00:18:05.960 --> 00:18:08.619 and they dump the house for $460 ,000 just to 00:18:08.619 --> 00:18:10.619 get the cash back and stop the bleeding. But 00:18:10.619 --> 00:18:12.710 when you add it all up. They're all in for maybe 00:18:12.710 --> 00:18:16.390 $530 ,000. That is a bloodbath on a single transaction. 00:18:16.750 --> 00:18:18.769 Multiply that by thousands. And it completely 00:18:18.769 --> 00:18:21.670 destroys this core argument that our algorithms 00:18:21.670 --> 00:18:23.670 are smarter than people. It really does. The 00:18:23.670 --> 00:18:25.609 algorithm is only as good as the data you feed 00:18:25.609 --> 00:18:28.549 it. And it relies on comps, comparable sales. 00:18:28.849 --> 00:18:32.150 But comps are, by definition, historical data. 00:18:32.509 --> 00:18:34.549 They tell you what a house down the street sold 00:18:34.549 --> 00:18:36.809 for last month. They don't tell you what a nervous 00:18:36.809 --> 00:18:39.150 buyer is willing to pay today when Jerome Powell 00:18:39.150 --> 00:18:41.529 just raised interest rates by 75 basis points 00:18:41.529 --> 00:18:43.789 for the third time. The algorithm was looking 00:18:43.789 --> 00:18:45.710 in the rearview mirror while the car was driving 00:18:45.710 --> 00:18:48.210 headfirst into a swamp. And while all of this 00:18:48.210 --> 00:18:50.349 financial disaster was unfolding, they were also 00:18:50.349 --> 00:18:54.849 losing something just as valuable. Trust. We 00:18:54.849 --> 00:18:57.910 have to talk about the FTC. Because this part 00:18:57.910 --> 00:19:00.369 of the story, for me, really rubs me the wrong 00:19:00.369 --> 00:19:02.480 way. The Federal Trade Commission settlement, 00:19:02.700 --> 00:19:06.380 this was announced on August 1st, 2022, and it 00:19:06.380 --> 00:19:08.480 was a bombshell. What exactly were they accused 00:19:08.480 --> 00:19:11.180 of? What was the charge? The charge was, in a 00:19:11.180 --> 00:19:13.779 nutshell, deceptive marketing. The FTC had gone 00:19:13.779 --> 00:19:16.420 back and analyzed Opendoor's own marketing materials, 00:19:16.599 --> 00:19:18.779 the charts and graphs and comparisons they showed 00:19:18.779 --> 00:19:20.759 to potential home sellers to convince them to 00:19:20.759 --> 00:19:22.920 take their offer. The sales pitch. The sales 00:19:22.920 --> 00:19:26.740 pitch. And Opendoor consistently claimed that 00:19:26.740 --> 00:19:29.750 by selling to them, you would actually make more 00:19:29.750 --> 00:19:32.569 net profit than by listing your home on the open 00:19:32.569 --> 00:19:34.730 market with a traditional agent. How did they 00:19:34.730 --> 00:19:36.950 argue that? They'd say, well, you save on repair 00:19:36.950 --> 00:19:39.470 costs, you save on aging commissions, you save 00:19:39.470 --> 00:19:42.369 on staging costs. They made it look like their 00:19:42.369 --> 00:19:44.829 offer was the financially superior choice. And 00:19:44.829 --> 00:19:48.829 was that true? The FTC said absolutely not. In 00:19:48.829 --> 00:19:51.130 fact, the FTC's investigation found that for 00:19:51.130 --> 00:19:54.190 the vast majority of consumers, selling to Opendoor 00:19:54.190 --> 00:19:56.990 cost them thousands of dollars more than a traditional 00:19:56.990 --> 00:19:59.700 sale would have. They found that Opendoor was 00:19:59.700 --> 00:20:02.539 bundling hidden fees into their offers and that 00:20:02.539 --> 00:20:04.660 their repair estimates were often inflated way 00:20:04.660 --> 00:20:06.599 above market rates. So they were telling people, 00:20:06.700 --> 00:20:08.759 look at all the money you're saving by using 00:20:08.759 --> 00:20:11.660 us while simultaneously reaching into their other 00:20:11.660 --> 00:20:14.019 pocket and taking their wallet. That is essentially 00:20:14.019 --> 00:20:17.039 what the FTC concluded. The headline was convenience 00:20:17.039 --> 00:20:20.019 and savings. But the fine print was, according 00:20:20.019 --> 00:20:23.200 to the government, exploitation. Opendoor had 00:20:23.200 --> 00:20:25.140 to settle the case. For how much? The settlement 00:20:25.140 --> 00:20:30.130 was for $62 million. $62 million. Now, is that 00:20:30.130 --> 00:20:33.289 a lot of money for a company this size? Financially. 00:20:33.410 --> 00:20:35.950 I mean, honestly, it's a drop in the bucket compared 00:20:35.950 --> 00:20:38.170 to the $1 .4 billion they lost in the market 00:20:38.170 --> 00:20:41.529 that year. It's a rounding error. But reputationally, 00:20:41.529 --> 00:20:44.309 it's pure poison. It's devastating. It confirms 00:20:44.309 --> 00:20:47.309 every skeptic's worst suspicion that this tech 00:20:47.309 --> 00:20:49.990 disruption is just a fancier, more sophisticated 00:20:49.990 --> 00:20:53.910 way to rip you off. It damages the brand. in 00:20:53.910 --> 00:20:55.869 a way that's really hard to repair. So let's 00:20:55.869 --> 00:20:58.470 recap where we are at the end of 2022. The stock 00:20:58.470 --> 00:21:00.549 price has completely collapsed. They've gone 00:21:00.549 --> 00:21:03.869 from an $18 billion market cap to barely $1 billion. 00:21:04.170 --> 00:21:07.849 That's a 94 % drawdown from the peak. Most companies 00:21:07.849 --> 00:21:09.869 die here. They go bankrupt. They get sold for 00:21:09.869 --> 00:21:11.910 parts to a private equity firm. They absolutely 00:21:11.910 --> 00:21:13.970 do. This is usually the end of the story. But 00:21:13.970 --> 00:21:16.170 Opendoor didn't die. And this is the part of 00:21:16.170 --> 00:21:18.150 the story where we have to give them some credit 00:21:18.150 --> 00:21:19.789 for, I don't know if it's resilience or just 00:21:19.789 --> 00:21:21.710 pure stubbornness. This brings us to Chapter 00:21:21.710 --> 00:21:24.250 4, Leadership Roulette and the Pivot. That's 00:21:24.250 --> 00:21:26.690 a good name for it. Because things started changing 00:21:26.690 --> 00:21:30.269 at the time. Eric Wu, the original founder, he 00:21:30.269 --> 00:21:32.950 stepped down as CEO. Carrie Wheeler, who was 00:21:32.950 --> 00:21:36.569 a CFO, took over in early 2023. She's a finance 00:21:36.569 --> 00:21:40.039 pro. Her job, very clearly, was to stop the bleeding. 00:21:40.220 --> 00:21:42.240 She was the turnaround specialist. She was there 00:21:42.240 --> 00:21:45.299 to slash costs, manage the inventory, and just 00:21:45.299 --> 00:21:47.559 stabilize the ship before it sank. And she did. 00:21:47.660 --> 00:21:50.380 She cut the workforce again. Another huge layoff, 00:21:50.460 --> 00:21:53.500 22 % of the company, in April 2023. It's just 00:21:53.500 --> 00:21:55.160 brutal. It seems like every time the algorithm 00:21:55.160 --> 00:21:58.359 gets the housing market wrong, 500 real human 00:21:58.359 --> 00:22:00.559 beings lose their jobs. That is the dark side 00:22:00.559 --> 00:22:03.539 of this business model. Labor is treated as a 00:22:03.539 --> 00:22:05.799 variable cost that you can turn on and off like 00:22:05.799 --> 00:22:08.279 a spigot. When inventory is high and you're buying 00:22:08.279 --> 00:22:10.500 a lot, you hire people to manage it. The second 00:22:10.500 --> 00:22:12.740 you stop buying, you fire them. It's an extremely 00:22:12.740 --> 00:22:14.700 volatile way to run a company for the employees. 00:22:14.960 --> 00:22:17.319 So Kerry Wheeler stabilizes the ship through 00:22:17.319 --> 00:22:20.319 23 and 24. But then let's jump forward to the 00:22:20.319 --> 00:22:23.140 really recent news. September 20, 2025, just 00:22:23.140 --> 00:22:25.700 a few months ago in our timeline, another massive 00:22:25.700 --> 00:22:28.119 leadership shakeup. This was a big one. This 00:22:28.119 --> 00:22:30.099 was the return of the founder energy, as they 00:22:30.099 --> 00:22:32.240 say in the Valley. What does that mean? It means 00:22:32.240 --> 00:22:34.960 Keith Rapois. Remember him from the very beginning, 00:22:35.099 --> 00:22:38.000 the PayPal mafia guy, the aggressive visionary. 00:22:38.259 --> 00:22:40.579 He comes back to the company as chairman of the 00:22:40.579 --> 00:22:44.720 board, and they appoint a brand -new CEO, a guy 00:22:44.720 --> 00:22:47.880 named Kaz Najation. And who is Kaz? What's his 00:22:47.880 --> 00:22:50.660 background? Kaz was the chief operating officer 00:22:50.660 --> 00:22:54.059 at Shopify, and he is known for being extremely 00:22:54.059 --> 00:22:57.029 operationally rigorous, a very... no -nonsense 00:22:57.029 --> 00:23:00.250 kind of executive. He famously canceled all recurring 00:23:00.250 --> 00:23:02.549 meetings at Shopify to train to increase productivity. 00:23:02.990 --> 00:23:07.250 He's a wartime general type of leader. Not a 00:23:07.250 --> 00:23:09.609 peacetime manager. Not at all. He's there to 00:23:09.609 --> 00:23:12.009 execute a turnaround. And the market loved this 00:23:12.009 --> 00:23:14.369 news. Oh, the stock popped 30 % on the day of 00:23:14.369 --> 00:23:16.809 the announcement. Investors looked at this combination 00:23:16.809 --> 00:23:20.069 of Rabois and Ejacian and said, OK, the defensive 00:23:20.069 --> 00:23:22.869 era under Kerry Wheeler is over. These guys aren't 00:23:22.869 --> 00:23:25.039 here to manage a slow decline. They are here 00:23:25.039 --> 00:23:27.380 to go on offense. But how can they go on offense? 00:23:27.500 --> 00:23:29.460 The housing market is still tough. Rates are 00:23:29.460 --> 00:23:31.880 still relatively high. What's the new strategy? 00:23:32.099 --> 00:23:33.839 What are they doing differently now? It seems 00:23:33.839 --> 00:23:37.500 to be a mix of renewed aggression and newfound 00:23:37.500 --> 00:23:39.720 partnership. First, they stopped trying to kill 00:23:39.720 --> 00:23:41.640 their competitors like Zillow and Redfin. They 00:23:41.640 --> 00:23:43.539 partnered with them. So if you can't beat them, 00:23:43.660 --> 00:23:47.160 join them. Basically. Now, if you are browsing 00:23:47.160 --> 00:23:50.019 on Zillow, you can see a button that says get 00:23:50.019 --> 00:23:53.299 an instant offer from Opendoor. They became the 00:23:53.299 --> 00:23:55.740 back -end liquidity provider for the whole real 00:23:55.740 --> 00:23:58.019 estate internet. They became frenemies. Exactly. 00:23:58.339 --> 00:24:00.619 Better to get a slice of Zillow's pie than no 00:24:00.619 --> 00:24:03.740 pie at all. Second, and this is a bit counterintuitive, 00:24:03.880 --> 00:24:05.940 they doubled down on some of the most expensive 00:24:05.940 --> 00:24:08.339 and high -value markets, like the Bay Area. Wait, 00:24:08.380 --> 00:24:10.299 why would they do that? That seems way riskier. 00:24:10.339 --> 00:24:12.579 A single house in San Francisco costs, what, 00:24:12.640 --> 00:24:15.299 $1 .5 million? Yeah. If you get that wrong, the 00:24:15.299 --> 00:24:18.039 loss is huge. It is much riskier, but the potential 00:24:18.039 --> 00:24:20.660 spread, the profit margin, is also much bigger. 00:24:20.960 --> 00:24:23.559 Think about it. If you charge a 5 % fee on a 00:24:23.559 --> 00:24:26.640 $200 ,000 house in Cleveland, you make $10 ,000. 00:24:27.039 --> 00:24:29.759 That barely covers your operational costs. But 00:24:29.759 --> 00:24:32.559 if you charge that same 5 % fee on a $2 million 00:24:32.559 --> 00:24:36.640 house in Palo Alto, you make $100 ,000. The paperwork 00:24:36.640 --> 00:24:39.079 cost is the same. The inspection cost is roughly 00:24:39.079 --> 00:24:41.980 the same. So the unit economics work much, much 00:24:41.980 --> 00:24:45.059 better on expensive homes if, and this is the 00:24:45.059 --> 00:24:47.640 giant if, you don't misprice the house. A very 00:24:47.640 --> 00:24:51.019 big if. A company -defining if. So that brings 00:24:51.019 --> 00:24:54.500 us to today, early 2026. Let's look at the scorecard. 00:24:54.779 --> 00:24:58.240 The 2024 annual report came out a few weeks ago. 00:24:58.619 --> 00:25:00.559 Give us the financial reality check. Are they 00:25:00.559 --> 00:25:02.579 healthy? Is this thing working? Healthy is a 00:25:02.579 --> 00:25:04.480 very strong word. I would call it stable but 00:25:04.480 --> 00:25:07.180 fragile. Let's look at the top line first. Revenue 00:25:07.180 --> 00:25:11.079 was $5 .15 billion for 2024. So they are still 00:25:11.079 --> 00:25:14.000 moving a lot of metal or wood and drywall in 00:25:14.000 --> 00:25:16.019 this case. It's a real business with real volume. 00:25:16.099 --> 00:25:17.619 But what about profit? Are they making money 00:25:17.619 --> 00:25:21.019 yet? No. Net income was negative $392 million. 00:25:21.400 --> 00:25:23.660 So they are still losing a ton of money. They 00:25:23.660 --> 00:25:26.799 are. But, and this is the bull case for the company, 00:25:26.960 --> 00:25:28.940 you have to compare that to the $1 .4 billion 00:25:28.940 --> 00:25:32.339 they lost back in 2022. They have successfully 00:25:32.339 --> 00:25:35.319 reduced their annual losses by about 70%. That 00:25:35.319 --> 00:25:38.660 is a massive operational improvement. But you 00:25:38.660 --> 00:25:41.400 cannot lose almost $400 million a year forever. 00:25:42.119 --> 00:25:44.940 The clock is ticking. I'm looking at their balance 00:25:44.940 --> 00:25:48.089 sheet from that report. Total assets. $3 .13 00:25:48.089 --> 00:25:52.410 billion total equity. $713 million. Can you translate 00:25:52.410 --> 00:25:55.190 that for us, non -CFOs? Sure. It means they are 00:25:55.190 --> 00:25:57.549 highly leveraged. Equity is the part of the company 00:25:57.549 --> 00:25:59.509 that the shareholders actually own, free and 00:25:59.509 --> 00:26:01.849 clear. The assets include all the homes they 00:26:01.849 --> 00:26:04.630 bought using borrowed money, using debt. A debt 00:26:04.630 --> 00:26:06.849 -to -equity ratio of roughly 4 to 1 isn't totally 00:26:06.849 --> 00:26:08.930 insane for a real estate company, but it leaves 00:26:08.930 --> 00:26:10.930 very, very little room for error. What do you 00:26:10.930 --> 00:26:13.009 mean by that? It means if the overall value of 00:26:13.009 --> 00:26:14.910 their assets, the thousands of homes they own, 00:26:14.970 --> 00:26:17.450 drops by just 20%, their entire equity position 00:26:17.450 --> 00:26:20.279 is wiped out. They're insolvent. So they're walking 00:26:20.279 --> 00:26:22.500 a very high tightrope. A very high tightrope 00:26:22.500 --> 00:26:24.799 in a very windy city. And they are doing it with 00:26:24.799 --> 00:26:27.599 a much smaller team. The employee count is down 00:26:27.599 --> 00:26:30.819 to 1 ,100 people now, down from thousands at 00:26:30.819 --> 00:26:33.279 the peak. And that's the tech part of their story 00:26:33.279 --> 00:26:35.460 finally kicking in. They're trying to automate 00:26:35.460 --> 00:26:38.079 everything they possibly can, automate the pricing 00:26:38.079 --> 00:26:39.940 offers, automate the scheduling of contractors, 00:26:40.240 --> 00:26:42.460 automate the title transfer process. They're 00:26:42.460 --> 00:26:44.720 trying to remove the expensive human from the 00:26:44.720 --> 00:26:47.500 loop wherever possible to lower their costs. 00:26:48.109 --> 00:26:50.150 One number that really jumped out at me from 00:26:50.150 --> 00:26:52.970 their recent report was the inventory hold time 00:26:52.970 --> 00:26:55.950 They said the average is now 90 days. That is 00:26:55.950 --> 00:26:58.269 the killer metric. That is the number that keeps 00:26:58.269 --> 00:27:01.690 their CEO up at night 90 days. Why is that one 00:27:01.690 --> 00:27:04.069 number so critically important? Because of the 00:27:04.069 --> 00:27:05.930 carrying costs we talked about earlier. Let's 00:27:05.930 --> 00:27:08.589 do some quick back of the napkin math. You buy 00:27:08.589 --> 00:27:11.329 a house for $500 ,000. You borrow that money 00:27:11.329 --> 00:27:13.490 from a bank at, let's say, 6 % interest today. 00:27:13.789 --> 00:27:17.549 That loan alone costs you roughly $82 every single 00:27:17.549 --> 00:27:19.910 day in just interest payments. Then add property 00:27:19.910 --> 00:27:23.809 taxes, maybe another $20 a day. Insurance, $5 00:27:23.809 --> 00:27:27.130 a day. utilities to keep the lights on, $10 a 00:27:27.130 --> 00:27:31.250 day. You are burning over $100, maybe $120, every 00:27:31.250 --> 00:27:33.250 single morning you wake up and still own that 00:27:33.250 --> 00:27:35.829 empty house. So every single day that house sits 00:27:35.829 --> 00:27:38.410 on the market, the potential profit margin shrinks. 00:27:38.569 --> 00:27:40.849 It just milks away like an ice cube on the sidewalk. 00:27:41.069 --> 00:27:43.589 If you can buy it and sell it in one day, you're 00:27:43.589 --> 00:27:46.609 a genius. If you sell it in 90 days, you've burned 00:27:46.609 --> 00:27:49.390 through more than $10 ,000 just in holding costs 00:27:49.390 --> 00:27:52.009 before you even account for repairs or fees. 00:27:52.490 --> 00:27:56.049 If it takes 180 days to sell, you are almost 00:27:56.049 --> 00:27:58.829 certainly taking a big loss. Speed is the only 00:27:58.829 --> 00:28:00.809 thing that matters in this business. And that, 00:28:00.869 --> 00:28:02.809 I guess, explains why they have to be so much 00:28:02.809 --> 00:28:04.809 more aggressive with their offers now. They can't 00:28:04.809 --> 00:28:06.630 afford to be generous with sellers anymore. They 00:28:06.630 --> 00:28:08.309 have to build in a bigger bucker for themselves. 00:28:08.650 --> 00:28:10.549 Right. And that brings us right back to the original 00:28:10.549 --> 00:28:13.390 value proposition for the consumer. If Opendoor 00:28:13.390 --> 00:28:15.809 has to offer you less money for your house to 00:28:15.809 --> 00:28:18.369 protect themselves from market risk, is the convenience 00:28:18.369 --> 00:28:21.009 factor still worth it? That is the ultimate question, 00:28:21.089 --> 00:28:23.480 isn't it? We started this whole deep dive talking 00:28:23.480 --> 00:28:26.740 about friction. Opendoor's entire premise is 00:28:26.740 --> 00:28:29.019 that they remove the friction of selling your 00:28:29.019 --> 00:28:33.019 home. But friction has a price. In 2021, when 00:28:33.019 --> 00:28:35.259 money was free and the market was screaming upwards, 00:28:35.680 --> 00:28:38.460 Opendoor and their venture capital backers subsidized 00:28:38.460 --> 00:28:41.680 that price. They deliberately overpaid for houses 00:28:41.680 --> 00:28:44.819 just to gain market share. Now, here in 2026, 00:28:45.079 --> 00:28:48.960 that subsidy is gone. The consumer The home seller 00:28:48.960 --> 00:28:52.180 has to pay the full true cost of that convenience. 00:28:52.480 --> 00:28:54.579 It's exactly like the Uber model. Remember when 00:28:54.579 --> 00:28:56.740 you could get an Uber ride across town for $6 00:28:56.740 --> 00:28:58.759 because investors were subsidizing it? Oh, yeah. 00:28:58.859 --> 00:29:02.480 And now that same ride is $45. Exactly. The investors 00:29:02.480 --> 00:29:04.200 stopped paying for part of our rides, and now 00:29:04.200 --> 00:29:05.980 Opendoor's investors have stopped paying for 00:29:05.980 --> 00:29:08.140 part of our home sales. So the question for you, 00:29:08.240 --> 00:29:11.200 the listener, is how much is your sanity worth? 00:29:11.680 --> 00:29:14.680 How much would you pay? to avoid those open houses 00:29:14.680 --> 00:29:18.220 and that uncertainty. Is it worth $20 ,000? Is 00:29:18.220 --> 00:29:20.559 it worth $50 ,000? Because that is the kind of 00:29:20.559 --> 00:29:22.880 spread Opendoor now needs to survive and eventually 00:29:22.880 --> 00:29:25.019 thrive. It's just fascinating because despite 00:29:25.019 --> 00:29:27.680 the spectacular crash, despite the billions in 00:29:27.680 --> 00:29:29.839 losses, despite the layoffs, despite the FTC 00:29:29.839 --> 00:29:34.210 settlement, the core vision hasn't died. The 00:29:34.210 --> 00:29:37.410 dream of push -button sell house is so powerful 00:29:37.410 --> 00:29:39.930 and so compelling that Wall Street keeps giving 00:29:39.930 --> 00:29:42.670 them chance after chance to get it right. It 00:29:42.670 --> 00:29:45.170 is the largest undisrupted market in the entire 00:29:45.170 --> 00:29:48.269 world. U .S. residential real estate is a $30 00:29:48.269 --> 00:29:52.309 trillion asset class. Trillion with a T. Even 00:29:52.309 --> 00:29:54.670 if Opendoor only ever sustainably captures 1 00:29:54.670 --> 00:29:57.509 % of that market, it is a massive, highly profitable 00:29:57.509 --> 00:29:59.980 company. That is the prize. That is why Keith 00:29:59.980 --> 00:30:02.259 Robbois came back. That is why SoftBank held 00:30:02.259 --> 00:30:04.279 on through all the pain. The potential reward 00:30:04.279 --> 00:30:06.140 is just too big to ignore. But getting there 00:30:06.140 --> 00:30:08.400 requires turning a home, a place with memories 00:30:08.400 --> 00:30:10.519 and quirks and emotional baggage for people, 00:30:10.579 --> 00:30:12.779 into just another data point on a server. And 00:30:12.779 --> 00:30:14.920 it requires building an algorithm that can predict 00:30:14.920 --> 00:30:17.099 the future of interest rates and market psychology 00:30:17.099 --> 00:30:19.940 better than the Federal Reserve can, which, as 00:30:19.940 --> 00:30:21.640 we've seen over the last few years, is a very, 00:30:21.680 --> 00:30:23.900 very tall order. I want to wrap up with a final 00:30:23.900 --> 00:30:25.859 thought for everyone listening to this. We often 00:30:25.859 --> 00:30:28.720 talk about big tech. watching us, our search 00:30:28.720 --> 00:30:31.339 history, our location data, our shopping habits. 00:30:31.859 --> 00:30:34.819 But Open Door represents a completely different 00:30:34.819 --> 00:30:37.680 kind of digitization. They are digitizing the 00:30:37.680 --> 00:30:40.220 physical world. They are turning your neighborhood, 00:30:40.400 --> 00:30:43.200 your block, your cul -de -sac into an Excel spreadsheet 00:30:43.200 --> 00:30:46.700 of assets to be traded. And when you do that, 00:30:46.880 --> 00:30:49.799 you introduce the volatility and the cold, hard 00:30:49.799 --> 00:30:52.380 math of the stock market into the place where 00:30:52.380 --> 00:30:54.859 you sleep at night. So if you are thinking of 00:30:54.859 --> 00:30:57.319 selling your house in 2026, you now have this 00:30:57.319 --> 00:31:00.200 very modern choice. You can call a local agent, 00:31:00.359 --> 00:31:02.319 bake some cookies for the open house, and deal 00:31:02.319 --> 00:31:05.220 with all that human friction. Or you can log 00:31:05.220 --> 00:31:07.000 in, get an instant offer from the algorithm, 00:31:07.079 --> 00:31:09.019 and see what the machine thinks your life is 00:31:09.019 --> 00:31:12.059 worth. Just maybe check the fine print this time. 00:31:12.180 --> 00:31:14.279 And I'd recommend not spending the money until 00:31:14.279 --> 00:31:17.190 the check fully clears. Wise words. Thanks for 00:31:17.190 --> 00:31:19.410 joining us on this deep dive into the rise, the 00:31:19.410 --> 00:31:21.930 fall, and the truly fascinating reinvention of 00:31:21.930 --> 00:31:24.730 Opendoor. It's a wild story, and I have a feeling 00:31:24.730 --> 00:31:27.230 it's not over yet. Not even close. This is just 00:31:27.230 --> 00:31:29.210 the beginning. We'll see you on the next one. 00:31:29.450 --> 00:31:30.309 Stay curious.