Knock Knock. Who's There? Opendoor.

Opendoor faces opposition from the realtors who still control the vast majority of the housing market and competition from Zillow, a company I respect tremendously that has a massive demand generation advantage.

Opendoor closes with the seller quickly, makes repairs, and sells the home. Originally, it did this through agent partners, and increasingly, it’s bringing that process in-house.

Opendoor sends an inspector to confirm the condition and price repairs (and collect data to feed back into the model), before settling on a final price.

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

No one has taken the vertically integrated approach and long view that Opendoor has. Opendoor built the world’s most accurate home pricing model, operates a distributed network of thousands of inspectors and contractors, regularly accesses both the debt and equity capital markets, takes inventory risk, and coordinates among the many parties involve... See more

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

Fair, Opendoor has yet to face a real downturn, but it’s actually better positioned than competitors or individual home sellers if it does, for a few reasons:

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.

Zillow uses agents and Opendoor sells homes itself. Because of that, Zillow has structurally higher costs, and it can’t collect the kind of data that Opendoor can, like how many visits it takes to sell a house in a particular microneighborhood.