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It’s a beautiful thing when some of our favorite businesses and venture capitalists/entrepreneurs team-up. This is precisely what has happened with Opendoor and Chamath Palihapitiya.
Chamath is a venture capitalist and investor (Canadian/American) with a historical track record of success and is rapidly expanding his company Social Capital with SPAC’s. He was an executive at Facebook, early investor in Slack and Virgin Galactic, now a co-owner of Golden State Warriors, and sits on the board of Virgin Galactic. He has access to enormous amounts of capital, which is definitely what Opendoor will need to compete with their strongest competitor, Zillow.
Opendoor is the leading iBuyer in the United States. If you’d like to read a bit more about iBuyers, read this. In 2019, they sold 18,799 homes, which is 4.4x more than the largest competitor. They amassed 4.7B in revenue and were operating in 21 markets nationwide. The largest market they dominate is in Phoenix (approximately $1B a year in revenue), which is currently double the second-place market, Atlanta. To truly reach a $50B valuation, they would need to have 50 Phoenix markets or 100 Atlanta markets. Check out this video of Mike DelPrete explaining it. This is a BHAG, but with Social Capital behind them, they are in a strong position.
With Opendoor going public, the investor deck has been published, and it’s worth reviewing for anyone who finds this attractive. Here are a few screenshots you may find interesting.
During a global pandemic, Opendoor is showing growth.
The ability to digitally buy and sell real estate is the future, as we have seen with so many disrupted industries, Amazon, Uber, Carvana, etc.
Today, they are only in 21 markets!
They believe they can dominate the market.
It is tough to overlook Zillow when reviewing that last slide. Rich Barton came back to the company last year because of iBuying. The best article I’ve read on this is from Rob Hahn. Zillow is the dominant real estate platform, they have access to significant amounts of capital, and if focusing on iBuying, Opendoor cannot overlook them.
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