Tag: startup

• Is San Francisco losing its openness?

  Sam Altman has an interesting post up on his blog talking about what he feels is a changing cultural environment in San Francisco (which is where he is based). His argument is that heresies are good for innovation and for moving the world forward. We need people to question established norms. But for that to happen we need environments and cities that encourage it, or at the very least allow it.

  Here’s an excerpt:

  Restricting speech leads to restricting ideas and therefore restricted innovation—the most successful societies have generally been the most open ones.  Usually mainstream ideas are right and heterodox ideas are wrong, but the true and unpopular ideas are what drive the world forward.  Also, smart people tend to have an allergic reaction to the restriction of ideas, and I’m now seeing many of the smartest people I know move elsewhere.

  In San Francisco he is starting to feel that it is becoming increasingly difficult to have wacky ideas and to work on wacky startups. And for this reason, people are starting to leave the city in search of more open cultures. Openness used to be a hallmark of San Francisco. It was once the epicenter of counterculture. Has that changed?

  Here is a final excerpt:

  I don’t know who Satoshi is, but I’m skeptical that he, she, or they would have been able to come up with the idea for bitcoin immersed in the current culture of San Francisco—it would have seemed too crazy and too dangerous, with too many ways to go wrong.  If SpaceX started in San Francisco in 2017, I assume they would have been attacked for focusing on problems of the 1%, or for doing something the government had already decided was too hard.  I can picture Galileo looking up at the sky and whispering “E pur si muove” here today.

  Click here to read the full post.

  2017.12.15

• Jeff Bezos’ regret minimization framework

  Who better to talk about on Black Friday than Amazon’s Jeff Bezos. Supposedly he’s now worth $100 billion.

  I just finished watching this short 60 Minutes clip about Amazon from 1999. If you can’t see it below, click here.

  [youtube https://www.youtube.com/watch?v=fjjUOemW-_Q?rel=0&w=560&h=315]

  Amazon was founded in 1994, so this was 5 years in. Already the company had gone public and had a market cap of somewhere around $30 billion.

  Now, keep in mind that this was right in the middle of the dot com bubble, but already Bezos was a billionaire on paper.

  What is clear from the above clip is just how obsessed Bezos was and is on the long game (”I don’t go in for carpe diem”) and on his customers. Here he is worth quite a bit, but driving around in a Honda Accord. 

  Bob Simons, the interviewer, pokes fun at him a few times for his reluctance to spend money. But Bezos says that it’s all about spending money on things that matter to customers and not spending money on the things that don’t.

  That’s customer obsession.

  P.S. The title of this post will make sense once you watch the video.

  2017.11.25

• Lease vs. Life

  

  When I was in graduate school in the U.S., I remember it being a pain having to always sign a 1 year lease. I only wanted 8 months so that I could take off during the summers. Too bad Flip wasn’t around back then.

  Flip is a startup that I just discovered, which is positioning itself as the “easiest way to sublet or get out of your lease.” It’s all about reconciling the conflict between lease and life, which don’t always match up.

  The platform is free to listers. So you don’t get charged to post a lease or to flip a lease. Renters get charged a service fee equal to 5% of one month’s rent.

  It’s interesting to think about the surge in short-term rentals and platforms such as Flip that are effectively helping to reduce lease terms by way of streamlining the “flipping” process. 

  Are millennials ushering in a new era of mobility and transience?

  One feature that I think is neat and that I would like to point out is “Bounties.” The platform allows listers to attach a bounty ($) to any listing. Users are then able to grab a unique URL that can be shared around online. If someone takes over a lease via one of your links, you get paid the bounty. Smart.

  In case you’re curious – I certainly was – here’s a ranking of all 50 U.S. states according to how friendly they are to subletters. It also summarizes how to legally sublet. On the friendly side is New York and on the less friendly side is Wyoming.

  Photo by Dan Gold on Unsplash

  2017.06.29

• The grocery wars: Why Amazon bought Whole Foods

  

  The big news on Friday was that Amazon has agreed to buy grocery chain Whole Foods for $13.4 billion.

  Some people – such as Bruce Berkowitz, who manages the $2.3 billion Fairholme Fund and who is the second largest shareholder of Sears Holdings Corp. – believe that this says to the market that “there is a need for physical space in retailing.” Everything can’t be online.

  I obviously agree that there’s value in real estate / physical locations, but I don’t see this as Amazon capitulating in any way. This is not Amazon saying to itself: “Well, AmazonFresh hasn’t grown as quickly as we’d like, so let’s forget this ecommerce thing.” No, Amazon is determined to win.

  Indeed, the fact that shares of supermarket operators tumbled across the U.S., Canada, and Europe, probably signals that the market is expecting something other than the status quo following this acquisition. 

  All of this is a big deal because grocery is a big deal. 

  There’s a reason Wal-Mart ramped up grocery (and now derives over half of its revenue from it). There’s a reason why drug stores are proliferating across our cities (and expanding their grocery offerings). In Toronto it’s Shoppers Drug Mart and Rexall. In New York it’s Duane Reade.

  We buy groceries frequently and we overwhelmingly still buy them in person. So online grocery is the holy grail of ecommerce of right now. Everyone wants to nail it first.

  How does this acquisition help Amazon do that? Here are two thoughts.

  1) The real estate still matters. 

  Even in a world where most groceries are purchased online, you need still need physical distribution centers in close proximity to lots of customers.

  Whole Foods has more than 460 stores across the U.S., Canada, and Britain. Their formatting would obviously evolve, but the bones are there for Amazon to leverage.

  Startups such as Instacart have tried to circumvent this requirement by fulfilling only the delivery portion. And arguably their pitch to other grocers may now be stronger: “You need to offer this to compete with Amazon/Whole Foods.” (Instacart currently provides this service Whole Foods.) But you can bet Amazon will want to squeeze/control this part of the supply chain.

  2) The data.

  Many analysts are already assuming that Amazon will work to automate away cashiers, similar to what it’s trying to do with its Amazon Go concept store. If you combine this with other offerings such as 15 minute pickup (Amazon Fresh PIckup), you can easily imagine a world where us customers get weaned off of in-person shopping.

  For example, if my regular grocery store made better use of its data, it would probably come to the conclusion that I generally buy things like orange juice, milk, and avocados (I’m a Millennial) every X days. I’m sure if you look at my shopping habits, I’m pretty predictable. Whenever I go to a new store it always takes me 100% longer to shop because I don’t generally wander. I target my stuff.

  Now if I could get somehow prompted to re-order my regular items every X – 1 days, chances are I would gladly tap order. And now I’m shopping for groceries online. Get ready for the grocery wars.

  2017.06.17

• Will Zillow’s new “Instant Offers” disrupt real estate agents?

  

  Last month Zillow.com launched a new feature called “Instant Offers.” Press real estate can be found here.

  It is:

  “…a way for homeowners to sell their homes quickly by providing them with offers from investors and a comparative market analysis (CMA) from a local real estate agent, as an estimate for what the home might fetch on the open market.

  Here is a bit more about how it works:

  “To participate in Zillow Instant Offers, verified homeowners interested in receiving investor offers confirm information about the home (number of bedrooms, square footage, etc.), highlight any updates and provide several photos of the home. From there, select investors who buy homes in the area can present their offers alongside the CMA from a local real estate agent. Any investor offers and the CMA will include an overview of fees associated with each option, to enable sellers to make an informed apples-to-apples comparison.”

  When I first saw the headline, I thought they were copying Opendoor. But it’s not the same model. They aren’t buying the homes, like Opendoor, they are simply working to coordinate an “instant” transaction. Still, I’m sure that Opendoor provided at least some of the impetus for this feature.

  Of course, the most interesting question with these online real estate platforms is: Will they disrupt real estate agents? Mike Delprete wrote a great post about this in the wake of Zillow’s announcement.

  But ultimately he concludes something that I have felt strongly for years:

  “So, while real estate sites are best positioned to disrupt the real estate industry by displacing agents, they’re also the least likely to do so, because agents are their biggest customers and source of revenue.”

  The irony.

  About 70% of Zillow’s revenue comes from real estate agents. So it seems unlikely that they – at least currently – will be the ones that turn the tables on agents. 

  Some real estate platforms have started diversifying their revenue streams for probably this exact reason. But who knows, it may be a new entrant, rather than an incumbent, who pulls this off. 

  2017.06.05

• Opendoor is now selling ~300 homes per month

  Farhad Manjoo of the New York Times published an article this morning about Opendoor – a startup that I have written about multiple times on this blog – called, The Rise of the Fat Start-Up. (His definition of “fat” is that the startup owns lots of hard assets, which considered atypical in tech.)

  Below are a couple of interesting tidbits from the article:

  • Opendoor has raised over $300 million in equity and over $500 million in debt since inception.

  • Opendoor plans to be in 10 cities by the end of this year.

  • Average commission charged on Opendoor is 7.5%, which is higher than a traditional real estate agent and higher than what was quoted before in the press. The higher % is because of certainty and convenience.

  • Opendoor offers a leaseback option if you’d like to stay in your house for a period of time after you’ve sold it.

  • Their conversion rate (offers made to closings) is about 30%.

  • Other startups are now in the market with similar models, including Offerpad and Knock. Zillow is working with Offerpad on a pilot. Someone is starting to feel threatened.

  The article also quotes a blogger and real estate analyst named Mike Delprete. Heads-up: His blog is called “Adventures in Real Estate Tech.” I’m sure this will appeal to many of you. I obviously just subscribed.

  Mike dug into MLS records in order to figure out Opendoor’s transaction volumes, since the company is not releasing this information. Here’s what he found (the chart is up to March 2017):

  

  The trend line is certainly moving in the right direction. But Mike also believes that Opendoor is only netting around $8,320 in profit per home and that much of it is driven by appreciation. There’s also substantial risk in owning so many homes – each one is usually held for a few months.

  But you can be sure they’re thinking well beyond where they are at today. Expect many more updates on this blog.

  2017.05.24

• Envelope Beta

  

  My friend Bruce of getrefm.com (real estate financial modeling) just introduced me to a new real estate startup called Envelope. Basically it’s 3D mapping software that allows you to quickly visualize the zoning envelope for a particular site. It’s similar to what Flux.io was initially trying to do.

  Now, I think this is very cool, but my first reaction was: What if the zoning is out of date? What if approvals/entitlements are done a site-specific basis? This isn’t the case in every city, but I’ve heard some people in Toronto argue that this city basically has no zoning code. (We can debate that one in the comments, I’m sure.)

  That being said, there are still many design guidelines in this city that shape built form and I could see a tool like this being incredibly useful. They’re still in private beta but I would like to try it out. Hopefully they’ll see this blog post and let me have an early peek.

  Image: envelope.city

  2017.04.26

• DroneBase — real estate aerials

  

  Real estate companies often have a need for aerial photography. Perhaps you want to showcase an existing building. Perhaps you want to capture the views from a future/proposed building. Or perhaps you’d like to document a building under construction.

  Usually in the latter case, you have to find a neighboring building and negotiate some sort of agreement so that you can place a camera on it and document your construction site. This is probably still the solution if you want a clean time lapse video.

  But drones have opened up a new world of possibility and today I thought I would share with you a company called DroneBase. They’ll probably hate that I’m making this reference, but one way to describe them is Uber for drones. They connect a “large network of drone pilots” to customers needing drone footage for commercial or creative purposes.

  If you take a look at their website, you’ll see that they cater a lot to the real estate and construction industries. I’m not sure how active they are in Toronto and Canada right now, but if they aren’t that active I’m sure it’s only a matter of time before they are. 

  And over time, I am sure that a network like this will only mean faster, better, and more affordable aerial footage.

  2017.03.16

• New York, San Francisco, Toronto

  Yesterday it was announced (here, here, and here) that Toronto-based Top Hat has raised $22.5 million (USD) in Series-C funding. The round was led by New York-based Union Square Ventures.

  I am always excited to see Toronto-based startups doing well and I am particularly excited by this remark in USV’s blog announcement:

  “Also worth noting is that Toronto continues to impress us with its quality and diversity of companies. We now have five investments there, placing Toronto third as a location in the USV portfolio after New York and San Francisco.”

  Here is another quote from Fred Wilson’s blog:

  “Toronto is a great place for startups. In addition to five investments of ours that are HQ’d there, I know of at least one other USV portfolio company that has much of their engineering team in Toronto. The talent, mindset, and quality of the people in the Toronto/Waterloo tech/startup community is really top notch and we love investing there.”

  Go Toronto. 

  (Of course, Toronto really means Toronto-Waterloo. That’s the geography of the ecosystem.)

  2017.02.17

• Move fast and…

  

  I like this article – called Speed as a Habit – by Dave Girouard, CEO of the personal finance startup Upstart. It’s all about the importance of speed in business. Speed wins.

  “When you think about it, all business activity really comes down to two simple things: Making decisions and executing on decisions. Your success depends on your ability to develop speed as a habit in both.”

  What makes this topic so interesting is that, for a number of reasons, speed has a tendency to get sacrificed. It might be because the plan isn’t yet perfect or because there’s a belief that Y can’t happen until X is complete. 

  Perhaps it’s because the value of speed is harder to measure than the value of “perfection.”

  I particularly like the notion that you know you’re going fast enough when there’s a bit of discomfort and you’re feeling stretched, but not overstretched in an unsustainable way. Here’s another excerpt from Dave’s article:

  “While I was at Google, Larry Page was extremely good at forcing decisions so fast that people were worried the team was about to drive the car off a cliff. He’d push it as far as he could go without people crossing that line of discomfort. It was just his fundamental nature to ask, “Why not? Why can’t we do it faster than this?” and then wait to see if people started screaming. He really rallied everyone around this theory that fast decisions, unless they’re fatal, are always better.”

  A big part of this, I find, is momentum. An object at rest stays at rest. But an object in motion stays in motion. Remember this law? In this context, it is decisions that power motion and help to build and sustain momentum.

  Of course, the ideal outcome is both lightning fast and high quality decisions.

  The title of this post is homage to Facebook’s original corporate motto: “Move fast and break things.” This slogan was later adjusted to “Move fast with stable infrastructure”, which I think demonstrates our constant struggle between speed and quality.

  2017.01.21