Knock Knock. Who's There? Opendoor.

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.

Residential real estate is a massive market ($1.6 trillion annually) with low customer satisfaction and an inconsistent experience (28% of realtors do the job part time). Opendoor’s model has five tailwinds at its back:

75 million millennials entering the housing market who expect to transact online

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.

People grasp its downside much better than they grasp its upside. But grasping the upside is what we’re all about here at Not Boring, so here it is:

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.

Opendoor uses an Automated Valuation Model (AVM) to algorithmically price homes.

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.

It is capturing meaningful market share in one of the world’s largest markets -- residential real estate.