I have been writing about the startup Opendoor.com for over 2 years now. And I continue to believe that they are the most promising disruptor in the residential real estate space. 

Here is the first post that I wrote back in July 2014 after they raised their first round of funding. Here is the second post that I wrote after they launched in Phoenix. And here is another post that I wrote 6 months ago where I argued, once again, that they are doing something worth paying attention to. (This last post explains how the platform works.)

Well, about a week ago it was announced that they have raised another round of funding: a $210 million Series D. In all likelihood, the company’s valuation is now over $1 billion. Here’s the Techcrunch announcement where the message was: huge ass number; risky business model.

In response to this, Ben Thompson wrote a terrific and widely shared blog post called, Opendoor: A Startup Worth Emulating. I love his post because he says what I have firmly believed and argued for many years: Zillow and Redfin are not disruptive real estate startups.

This is what he says about Zillow:

“And yet, the most successful real estate startup, Zillow (which acquired its largest competitor Trulia a couple of years ago), is little more than a glorified marketing tool: the company makes most of its revenue by getting real estate agents — the ones collecting 6% of fees, split between the buying and selling agents — to pay to advertise their houses on the site. Certainly a free tool that makes it easier to find houses in a more intuitive way is valuable — Zillow has acquired the sort of userbase that allow it to build an advertising business for a reason — but at the end of the day the company is a tax on a system that hasn’t really changed in decades.”

And though very risky, he argues that Opendoor is far better positioned to shake up the status quo. 

Here are two of his key points:

“Sellers are uniquely disadvantaged under the current system, which is another way of saying they are an underserved market with unmet needs.” [Sellers are the side of the market that Opendoor is specifically targeting.]

“Opendoor has a new business model: taking advantage of a theoretical arbitrage opportunity (earning fees on houses sold at a slight mark-up) by leveraging technology in pursuit of previously impossible scale that should, in theory, ameliorate risk.”

And here’s what that could ultimately mean for the industry:

“Opendoor has many more reasons why it might fail than Zillow or Redfin, but its potential upside is far greater as a result. First is the immediate opportunity: sellers who can’t wait. However, as Opendoor grows its seller base, especially geographically, its risk will start to decrease thanks to diversification and sheer size; that will allow it to lower its “market risk” charge which will lead to more sellers. More sellers means both less risk and an increasingly compelling product for buyers to access, first with a real estate agent and eventually directly. More buyers will mean lower marketing costs and faster sell-through, which will lower risk further and thus lower prices, pushing the cycle forward. It’s even possible to envision a future where Opendoor actually does uproot the anachronistic real estate agent system that is a relic of the pre-Internet era, and they will have done so with realtors not only not fighting them but, on the buying side, helping them.”

I’m with Ben on this.

https://500px.com/embed.js

Chamath Palihapitiya is a Sri Lanka born, Canada educated, venture capitalist in Silicon Valley, who made a boatload of money as one of the early employees of Facebook. He now runs a VC firm called Social + Capital and owns part of the Golden State Warriors.

The other night he was interviewed at a StrictlyVC event in San Francisco and I think that many of his comments would also be of real interest to the Architect This City community. He’s super passionate in interviews and always fun to listen to.

Below is what he had to say about the San Francisco startup scene. It really speaks volumes about what people will put up with in order to live in an awesome place/city that they love. All of his responses below are from

Sunset in Toronto by Daniel Fernandes on 500px

https://500px.com/embed.js

If you’re a regular reader of Architect This City, you’ll know that I generally like to include at least one photo with every post. Sometimes I run out of time and I don’t always do that, but that is at least the intent.

You might have also noticed that my go-to for stock photography is 500px. That is the case for a few reasons. 

I find the photos to be of higher quality than any other service. I can easily “embed” them into my posts while giving appropriate credit to the author and linking back to 500px. The company was founded by a good friend of mine and snowboarding compadre. And the company is made in Toronto.

That’s why it’s exciting to report that

I have been writing about the startup Opendoor.com for over 2 years now. And I continue to believe that they are the most promising disruptor in the residential real estate space. 

Here is the first post that I wrote back in July 2014 after they raised their first round of funding. Here is the second post that I wrote after they launched in Phoenix. And here is another post that I wrote 6 months ago where I argued, once again, that they are doing something worth paying attention to. (This last post explains how the platform works.)

Well, about a week ago it was announced that they have raised another round of funding: a $210 million Series D. In all likelihood, the company’s valuation is now over $1 billion. Here’s the Techcrunch announcement where the message was: huge ass number; risky business model.

In response to this, Ben Thompson wrote a terrific and widely shared blog post called, Opendoor: A Startup Worth Emulating. I love his post because he says what I have firmly believed and argued for many years: Zillow and Redfin are not disruptive real estate startups.

This is what he says about Zillow:

“And yet, the most successful real estate startup, Zillow (which acquired its largest competitor Trulia a couple of years ago), is little more than a glorified marketing tool: the company makes most of its revenue by getting real estate agents — the ones collecting 6% of fees, split between the buying and selling agents — to pay to advertise their houses on the site. Certainly a free tool that makes it easier to find houses in a more intuitive way is valuable — Zillow has acquired the sort of userbase that allow it to build an advertising business for a reason — but at the end of the day the company is a tax on a system that hasn’t really changed in decades.”

And though very risky, he argues that Opendoor is far better positioned to shake up the status quo. 

Here are two of his key points:

“Sellers are uniquely disadvantaged under the current system, which is another way of saying they are an underserved market with unmet needs.” [Sellers are the side of the market that Opendoor is specifically targeting.]

“Opendoor has a new business model: taking advantage of a theoretical arbitrage opportunity (earning fees on houses sold at a slight mark-up) by leveraging technology in pursuit of previously impossible scale that should, in theory, ameliorate risk.”

And here’s what that could ultimately mean for the industry:

“Opendoor has many more reasons why it might fail than Zillow or Redfin, but its potential upside is far greater as a result. First is the immediate opportunity: sellers who can’t wait. However, as Opendoor grows its seller base, especially geographically, its risk will start to decrease thanks to diversification and sheer size; that will allow it to lower its “market risk” charge which will lead to more sellers. More sellers means both less risk and an increasingly compelling product for buyers to access, first with a real estate agent and eventually directly. More buyers will mean lower marketing costs and faster sell-through, which will lower risk further and thus lower prices, pushing the cycle forward. It’s even possible to envision a future where Opendoor actually does uproot the anachronistic real estate agent system that is a relic of the pre-Internet era, and they will have done so with realtors not only not fighting them but, on the buying side, helping them.”

I’m with Ben on this.

https://500px.com/embed.js

Chamath Palihapitiya is a Sri Lanka born, Canada educated, venture capitalist in Silicon Valley, who made a boatload of money as one of the early employees of Facebook. He now runs a VC firm called Social + Capital and owns part of the Golden State Warriors.

The other night he was interviewed at a StrictlyVC event in San Francisco and I think that many of his comments would also be of real interest to the Architect This City community. He’s super passionate in interviews and always fun to listen to.

Below is what he had to say about the San Francisco startup scene. It really speaks volumes about what people will put up with in order to live in an awesome place/city that they love. All of his responses below are from

Sunset in Toronto by Daniel Fernandes on 500px

https://500px.com/embed.js

If you’re a regular reader of Architect This City, you’ll know that I generally like to include at least one photo with every post. Sometimes I run out of time and I don’t always do that, but that is at least the intent.

You might have also noticed that my go-to for stock photography is 500px. That is the case for a few reasons. 

I find the photos to be of higher quality than any other service. I can easily “embed” them into my posts while giving appropriate credit to the author and linking back to 500px. The company was founded by a good friend of mine and snowboarding compadre. And the company is made in Toronto.

That’s why it’s exciting to report that