Knock Knock. Who's There? Opendoor.

Rising state taxes and elimination of SALT deductions are motivating people to move

Underbuilding since the financial crisis has led to a supply/demand imbalance

Sellers enter their address, answer some questions, and receive an offer instantly.

Here’s how it works:

Opendoor is executing impressively and intelligently on its original plan.

And yet… the more I dig into Opendoor, the more bullish I get.

Because Zillow’s main customers are agents, it can’t cut them out of the transaction, and ends up paying over 50% more than Opendoor on agent commissions. To lower this cost, it would have to risk pissing off the people who pay it the marketing fees that drive the majority of Zillow’s revenue and margin.

Opendoor is the most similar company to Amazon on the market. It is spinning a powerful flywheel and controls its own profitability vs. growth lever.

Customers are uncertain in a downturn. When customers are uncertain, they should be more willing to pay a premium for certainty.

The startup graveyard is filled with companies led by entrepreneurs who realized that the way we buy and sell homes sucks, but couldn’t ultimately figure out how to change it. They weren’t thinking big or long-term enough. The companies that have made the biggest impact, like Zillow and Redfin, make it easier to search for houses, but then kick buy... See more