Latest / Connected With Latham / Episode 120 – The Growth Rocketship: Modernizing Real Estate With Opendoor

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Episode 120 – The Growth Rocketship: Modernizing Real Estate With Opendoor · Connected With Latham

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Hello and welcome to Connect with Latham, where we discuss
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ideas, legal developments and business trends shaping the global economy.
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I'm Haim Zaltzman, Partner and Global Vice Chair of Latham's Emerging Companies
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and Growth practice.
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In this episode, I'm joined by Rishi Kotiya, Head of Legal and Corporate
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Secretary, and Christy Schwartz, Chief Financial Officer of Opendoor,
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a leading e-commerce platform for residential real estate transactions.
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Christy, Rishi, welcome to the episode.
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Thanks, Haim. Thanks, Haim. It's great to be here.
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Before we dive into Opendoor, the leading I buying site anywhere,
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I wanted the audience to get to know both of you, your backgrounds,
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your journeys and what makes Rishi and Kristi so exceptional.
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So I'll start with you.
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What led you to join Opendoor?
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Well, I love that question.
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I think for me it's the mission of the company.
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First and foremost,
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if you think about the traditional method of how people sell their homes,
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it really puts a customer in a passive position.
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You have a house, you need to sell it,
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you have to list it, and you have to wait for buyers to come.
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If they come at all to sell your house, you know how long it's going to take.
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You don't know if once you have a buyer, whether it's going to fall out of escrow,
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you'll have to start all over again.
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And as folks know, the longer a house sits on the market,
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the last bullet is so Opendoor flips that,
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and it just makes complete sense that it puts the seller in control.
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You get an offer from us, you decide whether you're going to accept it or not.
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You decide whether you're ready to sell it or not.
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And even when you're under contract or some flexibility of like
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when you're move out is going to be and that allows you to ideal situation,
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allows you to coordinate to the extent that you're buying your next house.
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So for me, it just makes perfect sense when you think about other industries.
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You think about Uber, right?
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Like that's taking and throwback industry and modernizing it.
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And we've just become so used to that convenience and not even just Uber.
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If you think of like Carvana you want to sell and buy a car.
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You also can do that with an app.
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So why not?
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Why not a house?
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So that challenge is really kind of what drew me to the company.
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And if you think about residential real estate, it's
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sort of one of the last big industries
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where we have the tools at our hands, at our fingertips
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to change the way we transact, and yet we still have not.
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It's I mean, it's shocking because it is.
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I think it is the largest industry in the United States.
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Maybe a little debate, whether it's healthcare or real estate,
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they're obviously both gigantic and it's amazing.
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We still sell houses like we did.
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You know that gaze.
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And again, it's amazing.
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Christy, how about you? I'll put the same question to you.
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What led you to join Opendoor? Yeah.
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And just one thing.
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Before I get in there, one of the things
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Rishi just said that I think is so interesting,
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or just about Opendoor’s position and navigating real estate,
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and it's one of the last industries to not be disrupted.
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I think the other thing people don't appreciate from the outside is
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that there's also a lot of players within the real estate industry
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that are still on, on ancient systems, right.
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And so,
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like all the utility providers that we have to partner with, the way
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property taxes work and various
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jurisdictions, there's like so much they're beyond just our product.
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And so it's such a huge problem and so much to solve there.
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To me, I joined in August 2016 and just backing up a little before that.
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So in 2015, I was the controller at Yodel and Redwood Shores,
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and we sold to Invest Net later that year.
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And that was kind of the moment where I was ready
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to start looking for something new, spend my whole career in Silicon Valley.
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But I had yet to really work at a startup.
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And so I really wanted to go work at a startup,
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and I had a short list of criteria that I looked for in my next job.
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I wanted to go to a true disruptor.
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So at that time, like Airbnb was young but really exciting.
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Stripe was young and exciting.
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Uber was new on the scene, relatively,
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and I just I wanted to go work for another company that had kind of
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that same potential to completely revolutionize an industry.
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And what Opendoor was trying to do, like really spoke to me.
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I was like,
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they are taking a really big swing for the fences,
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and if they can do what they're setting out to do,
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this is going to be huge. I wanted to go somewhere.
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I was excited about the product, something I could relate to.
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So I liked real estate as Rishi was kind of sharing.
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Like I had just bought my first condo and that process was relatively painful.
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I really liked the buyer side
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of our product where like, you can go visit a home on your own without an agent
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and you can go out on your way home from work on your lunch break or whatever.
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We when we bought our condo, we had like a toddler.
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And so we were going to all the open house showings, which are also right at peak
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nap time.
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So we would like take turns running in and out of the properties
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while like our toddler was asleep in the back seat.
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So like our condo,
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we actually never saw it together, my husband and I, until we were in contract.
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And then we like,
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got to go do a walk through on our own terms at our own timeline.
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So excited about the product, a true disruptor, the people.
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Like I really wanted to work somewhere
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where the people were physically close together.
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You maybe were in the same room and the same meetings as the founders.
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There's just kind of that energy and excitement
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that was shared by the group.
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I wanted to go somewhere where finance played a critical role.
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There's a lot of software companies, and finance is not always
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the most important function at a software company.
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But in real estate, we're moving a lot of money,
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and finance is a really important piece of that.
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As a transactional finance lawyer, I appreciate
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finance playing a huge role for you guys.
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It's keeping me in many, many a lawyer. Busy.
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Thank you for that.
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Yes, absolutely.
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And then enough stage,
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I wanted to feel like I could really make an impact as we're building.
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And then finally the commute, like I was really particular about my commute.
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I lived in the city and I wanted to work in the city,
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and I also had like parameters of how far south of market I would go.
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And so Opendoor at the time was 116 New Montgomery, and that was like
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right at the edge of my parameters.
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And so all those things brought me to Opendoor.
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That's amazing.
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I mean, I want to focus on one thing.
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You said you're clear about the disruptor.
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It's a theme we hear a lot in Silicon Valley.
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It's obviously consistent.
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But one thing that I found very interesting and what you said is that
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you're not only disrupt your main target, which is housing, it's
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everything that has to do with it.
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So I would love to hear is that part of the Opendoor strategy?
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Is that part of it?
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You think it's like, oh, I'm not only going to disrupt the actual home buying,
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but in order to do that effectively
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and be sticky and be successful, I have to touch utilities.
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I have to touch the underlying financing the mortgages of folks get.
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I have to touch the electric or I have to touch.
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Keep on going. Everything has to do with it.
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Is that a constant theme at Opendoor and a huge focus for you guys?
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Yeah, absolutely. And it has to be.
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And so yeah, like kind of what can we build in house or what
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do we need to like get through our partner network.
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So for example, one of the things we're doing right now is
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we have a third party that helps us do our inspections at all
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our homes, because we expanded back in at the end of Q4 ish
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into all zip codes in the lower 48, give or take.
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Is that right? Well, yeah. Congrats.
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That's that's amazing. Yeah.
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And we did that
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without having boots on the ground that can reach all of those zip codes.
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So part of the way you do that is through your partner network.
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And so we have a really strong partner that we work with on inspections
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who can get to a home relatively quickly and conduct the inspection for us.
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And so yeah, that is something in the real estate ecosystem.
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We are still cracking the code on utilities.
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I feel like there's it gets better and better, but there's still like,
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you know, a fair amount to navigate.
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And like there's still some utility providers where you have to show up with
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like a check in hand and like a power of attorney
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or a letter of authorization in order to open a utility bill
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at this home, you know, and so, like, we had it fixed that all the way.
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But like, we've definitely made a lot of strides. Yeah.
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As the corporate secretary, I mean, once a week
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I'm at the ups down the street from our office
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getting something notarized because a utility provider needs. Like
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the notary system still shocks me.
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I mean, it is much better here than in Europe, where it is
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still like just formal things on like final documentation.
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It's it's an unbelievable process
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in some of these places, you know, where it came from.
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You know, it wasn't original to us.
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Well, look,
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the raises, you know, one of the questions I have, I'll ask of each of you,
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Christy, is you're mentioning, obviously, the complexity of home buying,
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everything that has to do around it Opendoors, obviously what the public sees,
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their access to the website,
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things that they are very clear, but there's clearly a lot of technical,
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a lot of math, a lot of a lot of finance
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and how to hold inventory, how to sell it, the pricing, etc.
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which means obviously there's many, many a smart person at Opendoor
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that's helping you guys figure this out.
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So with that background in mind, who do you think is
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the biggest nerd at Opendoor?
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And I'll start with you, Rishi.
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Good question.
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We have many, many nerds. As you said, it's
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a very complicated business across many different disciplines.
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I'd say our chief nerd is is Kassar CEO.
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And it's great.
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It's great his ability to look at the big picture and then drill
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down into details, the ability to, like, respond to, like, slacks.
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Not just slacks, but like threads, like 20 messages deep and then dig into.
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That is a skill
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I do want to tell you, like being able to fall email and respond later on.
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That's a that's a huge skill.
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Says nothing like, I feel like you'll put something in a thread
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and then like the first person to like comment on it will be Kaz.
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Right.
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But yeah, we've got we've got people across pricing and data.
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I've always so impressed by folks ability to synthesize
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large data sets and draw conclusions from it.
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I don't know about you, Chris.
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Christy, who is who who in your account is the biggest nerd?
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I think it's Yang or head of pricing.
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He has done amazing things for the way we look at homes and how quickly
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we synthesize data and feedback and then iterate on it.
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And so he's he's really shined a, a big light on, on our pricing,
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how the results of our pricing work that down to the individual
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underwriter and how that individual underwriter is performing.
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And so the way he's measured things, the way he's rewarded things, the way he's
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iterated on things, and he just like he's so passionate about it.
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And then like the way he picks up on trends in the market and how
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and just how he thinks about things.
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And I think what what makes him like probably even more of a nerd
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is like how he geeks out with, like, his children.
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So yeah, I forget how old they are.
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They're young, they're like two and four.
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And you know, he super geeks out because his daughter like,
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is learning to play chess or she is starting to like demonstrate
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like a certain type of reasoning that now he can like push her to that next level.
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Like he's just it's in him
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and then he's like passing it through to his future generation.
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He, he is great.
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Yeah. One thing I'll add there.
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Yang is definitely a super nerd.
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But what kind of sets him apart and other people in the business
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is that it's not just the ability to merit out and get deep in the details,
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but you got to be able to explain it in like layman's terms
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and like from first principles and like that's the skill.
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That's not like not everyone has.
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And it's not tied necessarily to like, how well, you know, something.
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It's like how well can you kind of says why this is important to you?
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Because. I mean, I want to double click on that.
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I've heard it from others.
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The most effective I think people generally in business,
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but particularly in Silicon Valley, are ones
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who have that technical, scientific, whatever nerd skill is,
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but can actually have the EQ to communicate it outwardly.
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And so yeah, it's pretty amazing.
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But I do think that that's a skill set that does make you a super nerd.
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I'm going to have to use that. The super nerd is.
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Maybe that'll be a future iteration.
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Another podcast I'll have who's a nerd and who's a super nerd
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who can be able to get it. It's pretty cool.
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And I think one of the keys to is the objectivity of it, too,
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like being able to look at data and not take it personally like,
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and being able to learn from data and learn from things
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without it being a reflection of your failure.
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Like it's more just like, hey, this is what the data is telling you.
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I'm going to try it differently and see what what that produces,
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and then I'm going to learn from that and learn again and learn more.
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And there's no like ego involved.
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It's very like data driven. There's no bad data.
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You just got to take what it is and absorb it.
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Good for you guys.
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Super.
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I love it.
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So let's jump into the next kind of set of questions.
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So we move from the personal to more the Opendoor overview,
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which is where I want to take us now.
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And we shall start with you.
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You are a lawyer.
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I'm a lawyer.
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So I appreciate you lawyering as you do.
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You obviously have to balance a lot of things.
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So what's Opendoors approach to that balance and new projects.
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How do you and I'll add a little bit more here.
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How do you think of return versus liability.
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How do you think of mission versus short term tactics, i.e.
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speed, which I know is very important in Silicon Valley generally.
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I know from working with you guys is extremely important.
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An Opendoor.
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How do you balance that legal element, the liability of the risk mitigation
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with the commercial speed, the need to get things
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done, the execution, which I'm sure CAS and others focusing on.
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Yeah.
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Good question.
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I mean, I come back to that as a team.
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We tried to start with the mission.
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You know, our mission is to tilt the world in favor of home owners,
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make make the transaction fairer, more transparent, more efficient.
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We start there and then we think about the customer.
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So when we're thinking about like balancing risk
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versus speed or risk versus a business objective, ultimately,
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like we have a customer in mind and what is best for them
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because it informs like what kind of risk you want to take on a certain issue.
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Like ultimately, are we
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can we justify that this is like in the best interest of the customer?
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Then you work from there to figure out a creative way to kind of get to where
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the business wants to be without anything on the legal side.
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So that's where we start.
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And is it you tilt one way or the other?
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Do you allocate risk one way or the other?
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Is it more towards hey, let's move faster and I'll make sure the liability is there
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or is it let's make sure liability or is it just a combo
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depending on the situation.
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Well I think we we start with speed.
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We start with wise fast for the business and then we assess liability.
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So you guys are an open. Yeah.
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Opendoors.
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The F1 of of of real estate transaction.
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If you think about I mean the stuff that we've been talking about utilities is one.
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But then it kind of gets to your question earlier like we're not just
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trying to make the transaction better customers.
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So if you think about just put a finer point on that piece of it, transaction
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costs are like 6 to 10% of the real estate transaction on a median home.
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That could be anywhere between 18,000 and $30,000, right?
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So you start there, but then you look at,
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okay, what what are the different components of that?
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The transaction costs.
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It's you think about mortgage or title and escrow and title insurance.
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Those are all sort of pieces of this puzzle that have their own
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regulatory framework and their own customs to how things are done.
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And we are living in a world now with technology changing day.
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And so there's going to be in there.
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And part of that is being nimble.
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So you start with speed
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and then you'd look at the liability and what's rules on the books.
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What do other people do.
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And how can we kind of make sure that we're okay but still push the envelope.
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And you've got to be comfortable with a little bit of discomfort
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or a lot of discomfort. Really.
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Discomfort is is I always tell my kids if it was easy, somebody else would do it.
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So constant reminder.
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Well, speaking of discomfort or maybe journeys that are discomforting.
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Christy, it's been an incredible journey.
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I mean, the fact that you've been here
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since 2016 at Opendoor is pretty is pretty amazing.
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I'm not going to make you talk about all those years,
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but in the last 2 or 3 years, which is obviously been pretty monumental,
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both for Opendoor as well as for the global economy,
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the real estate market rates, AI, you name it.
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What's evolved for open to it the most in the last couple of years?
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I mean, a lot.
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I think part of the reason I'm still here after almost ten years,
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not quite, I guess a little over nine is because it's constantly evolving.
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Like every time I think, I think we have got it all figured out and we're like,
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it's just going to be smooth sailing.
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Something else is changing,
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either for us as a business and being a new public company
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a few years ago, or just the real estate market correction, or now
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with new leadership, all those things.
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So, you know, part of what keeps me going and keeps me here
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is the constant evolution of both the industry and the company.
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I've been with Opendoor through three really distinct phases,
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like when I first got here in 2016, it was absolutely a startup.
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Like tons of energy, people were all in.
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We ate breakfast, lunch and dinner at work.
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The founders were still in the building, and we were just moving fast
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and building the plane and flight and lots of swarm soccer.
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You know, something would go wrong and everyone would kind of run after that,
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and we fix it all together, and then the next thing would happen
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and we'd all fix it all together.
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But it was just like crazy energy, dedication, focus and a really, like,
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exciting time for the business as we were really growing fast and finding
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kind of finding our place in the world.
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And then we became a new public company that was a whole, you know, phase.
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And then but pretty quickly after that, the real estate market corrected.
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And so then we really reevaluated all of the processes
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we put in place when things were moving really quickly.
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And, you know, making things more efficient, right sizing costs,
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offshoring some costs, like just really kind of correcting
18:02
the overall cost structure of the business,
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which was like good, important work, but probably not like
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the funnest part of our journey, but that, you know, that was an important phase.
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And that was kind of the phase that we were in.
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When then retail investors came along and gave us like this new,
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refreshed view on the company and kind of gave us a second life.
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I mean, there was a little bit of self-fulfilling
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prophecy in there of there's all this energy behind the stock
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and that allows us to attract new talent and new voices and new visions.
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It allowed us to bring in cars.
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And so now we're in, like this
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really special phase of the company that I'm really excited about,
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where you kind of have the founder startup energy,
18:43
because Kaz is just so personally invested in the business,
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like both, you know, mentally and literally.
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And so you have this crazy, crazy energy
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and focus from him that then permeates to the whole business.
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But it is a public company with good resources,
19:00
really strong experience, talent and really good approaches to things
19:05
and how quickly we are able to like, iterate and learn from things.
19:09
And so that combination is really powerful.
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So the talent we're able to attract, the focus,
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the accountability and the dedication of the people that are coming in
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is enabling us to execute and iterate at incredible speed.
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And that's been the grace of your ability to do everything
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that you need to do at mock three, whatever is there now.
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I mean, yeah, there's times where like I feel behind or I'm like, oh,
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I didn't get this thing done.
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And then I'll go like meet with a board member
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or I'll talk to someone
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who's like a little bit removed and they'll like her mother like, no,
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but you guys just did this, this and this in one quarter.
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And I'm like, oh yeah, that was a lot hot.
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You know, like you're you're so in it that like you just go and like
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then you kind of have to step out and like
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take inventory of what you just did and you realize that it was a lot.
19:55
Yeah, I feel the same.
19:56
Yeah.
19:56
I have to remind
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my, the legal team of that too, where it's like, oh, we've forgotten what we did.
20:02
You don't have to remind Latham & Watkins our team.
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It's been one of the most amazing rides ever with
20:07
maybe any client that I've had the privilege of it.
20:11
So I appreciate you guys keeping us around for this process.
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But also it's it's been amazing seeing the evolution, the the the obstacles, right?
20:20
The market has been to stay crazy with obviously Covid hitting
20:23
and then the post Covid rate impacts and the inflation and but yeah,
20:27
you guys have been on a say the least an unbelievable trajectory.
20:30
It's cool. So we know where you've been.
20:33
Obviously the world is crazy now.
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Still I still
20:37
I want to remind people that it's still it was never it was never smooth or easy.
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This is just a relic of our imagination.
20:43
So, Rishi, what's the most challenging aspect
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now when you get a little bit more into the current trends,
20:49
is it tech company specific issues that you're having an Opendoor?
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Is it the broader macro level challenge?
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Is the economy inflation rates,
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is it the government regulatory regime changes from prior administration?
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What's keeping you up now on out of all of those things?
21:07
I think all those things are still on the table and important.
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There's one aspect to the job that is relatively new, and that is that
21:16
housing affordability has become a hot topic,
21:21
both at the federal level across party lines and in the states as well.
21:26
So there's now a new component to what legal does with regard
21:30
to the government relationships.
21:31
And so getting in front of that, making sure that our message is,
21:37
is heard loud and clear, that Opendoor is on the side of homeowners.
21:43
You look at like data.
21:44
In 2025, for example, 98, 99% of the customers
21:49
were buying from and selling to our individual homeowners.
21:53
So so basically, almost all of them, 98% of the individual.
21:56
Reset in recent times.
21:58
And we don't buy homes and convert them
22:01
to rentals or reselling them in the market.
22:05
So making clear to policymakers that we are
22:09
part of the solution for unblocked was stuck.
22:12
How is it work?
22:14
We're creating liquidity in the market.
22:16
We are bringing people into transactions that may otherwise
22:20
would have just stayed up the sideline.
22:22
So if you think of like what I said earlier about how you take a passive
22:27
transaction process and flip it, you put sellers and control, you can bring people
22:33
into a transaction that may otherwise have said, you know what?
22:36
Like, I don't want to waste a month of my time.
22:39
I don't want to have to.
22:40
I don't have the money or have the time to try to renovate or
22:44
not my house before putting on the market, things like that.
22:47
So we're just trying to get our message out there
22:49
and, you know, you think about where we are.
22:51
If you think of like real estate and technology compared to, say,
22:55
fintech, maybe ten, 15 years ago, there was a question,
22:58
I think, amongst lawmakers of like, what did all these different players do?
23:02
And no one asked that question anymore or they don't do it as much,
23:07
but in housing they do.
23:08
So we'll hear Opendoors like we still have a question of what do you do?
23:13
And we went to, you know, we did meetings on capital
23:16
L in March with staffs of various folks of Congress.
23:19
And I'd say like 50% of them are very familiar with the 50%,
23:24
very like kind of just like a general idea.
23:26
What I mean, that's that's an answer I haven't had,
23:29
is that the messaging has been the hardest thing is market.
23:31
It makes sense because there is obviously a lot of noise about the real estate
23:35
market generally.
23:36
Affordability is obviously the catch phrase
23:38
and maybe the award of the year, by the way,
23:40
if it does end up being the time of the year,
23:41
I want you guys to know I called it just FYI, but yeah, 100%.
23:46
It's super interesting.
23:46
Christy, I'm going to ask, slightly different from you, very small thing
23:51
called AI.
23:52
AI for, you know, AI, great AI industrialization is what I call it.
23:57
It's it's amongst us.
23:58
It's obviously taking up a lot of oxygen everywhere.
24:01
How is Opendoor position to navigate this
24:04
new AI, grade II?
24:07
What are you guys doing and what should we expect from Opendoor on the afloat?
24:11
Yeah, it's it's crazy how quickly
24:14
it is moving even just from when like in September
24:19
when cars joined to like where we are now and what I've seen the industry change,
24:23
you know, in the CFO communities, it went very quickly from like how are you
24:27
using AI or what are you guys doing or what ideas do you have to like?
24:32
How are you paying for AI? How are you budgeting AI?
24:34
How much?
24:35
How much money does your CTO want to spend on AI?
24:37
And so these conversations are evolving really rapidly.
24:42
We're all in on AI, and the way we think about it is very much
24:46
on like deliverables and impact and less like we don't celebrate like, oh,
24:50
this person use the most tokens this month, or this person ran up the bill
24:54
this much this month,
24:56
like it's very much like this group or this person delivered this thing,
24:59
and it allowed us to free up these three people to go do something else.
25:03
And so that's that's one way we've thought about it.
25:06
That's very cool.
25:07
It's also changed a little, like who we hire.
25:10
Like, I just recently hired an accountant that had no accounting experience.
25:14
They were really good with data
25:15
and like using large amounts of data and making sense of the data
25:20
and writing Python and SQL and using AI to analyze data and whatever.
25:25
And so they're going to do accounting for me.
25:27
But their background was not traditional accounting.
25:30
It's more
25:31
that they're going to be able
25:32
to like automate things that we've thought of as traditional accounting.
25:35
So it's influencing like who we hire and what the required skill sets are.
25:39
I mean, that's pretty amazing.
25:40
I want to double click on that because it comes up a lot.
25:43
You still need the function, but who you hire,
25:48
utilize, employ, whatever, whatever verb want to use for it
25:52
is now has changed dramatically because AI has now positioned
25:58
folks with different skill sets to do the substance of what you're doing.
26:02
That used to be a very limited pool, people, and therefore
26:06
you could get significantly better people and get them in their faster.
26:09
They could actually push the envelope on stuff because they're not, you know,
26:13
limited by the old school.
26:15
What we're doing is you guys do that by design or is that just more
26:18
you or is that the Opendoor thinking about it because it's free
26:21
revolutionary to hear that decoupling of,
26:24
you know, the substantive direct experience education with AI.
26:28
This person
26:28
now has the ability to use be basically be an AI warrior to do the work.
26:32
Yeah.
26:32
I mean, I think a few things there, like one is,
26:37
you know, when you ask by design, like we we did a big hiring blitz
26:41
in Toronto recently and the business was going there to hire multiple things.
26:44
But my team, we were looking for accountants.
26:47
And so that's kind of where this happened, where as you you started meeting people
26:51
and you realized, okay, well, these are the things that I need to get done.
26:55
And do. I
26:56
and you meet these really great candidates and they bring different backgrounds.
26:59
And they showed up for different reasons.
27:01
Like some of them follow Kaz on Twitter.
27:03
Some of them saw the post on LinkedIn, or they saw different things
27:06
and they showed up.
27:07
And you kind of yeah, I think because of AI, you almost had the opportunity.
27:12
AI and technology as it is now, you have the opportunity to hire a person
27:16
rather than a skill set.
27:17
Like you're not like, okay, I need someone who has done this
27:20
and has this degree and, you know, can check all these boxes.
27:24
And then hopefully I like them as a person and hopefully they're smart.
27:27
And then if they do all those things, then I'll hire them.
27:30
And it's almost like the inverse of like this person's really creative.
27:34
They're really smart and they know how to use technology and AI.
27:37
And because of all those things, they can now meet the skill set.
27:41
So so that's one thing. It wasn't necessarily by design.
27:43
It almost like happened to an answer to your earlier comment.
27:47
Like I think of it as you solve your subject matter experts
27:51
like we just had someone start who was at the big four.
27:54
He served in their national office.
27:56
He's like a really technical accountant, but I probably don't need a lot of him.
28:01
Like I need someone like that who can lead the technical accounting function.
28:06
But then he can be supplemented with AI, with people
28:09
who have less accounting background or less technical background, whatever.
28:13
But you still I still think you need those subject matter experts
28:16
to lead the function and make sure like ensure
28:19
overall compliance and that education is there and experience.
28:23
But you maybe don't need as many of that same skill set.
28:27
Obviously that will dovetail into we'll talk a little bit later
28:32
the value of education and the things that that it does,
28:35
but it sounds like there's still room for the educational to subset to substance,
28:39
but AI changes the ability to implement it significantly, which is really cool
28:43
because I'm going to stick with you since you're mentioning hiring,
28:46
because whenever I think of hiring, I think of dollars, costs, utilization.
28:52
What are you doing now as the CFO at Opendoor?
28:56
Where are you focusing your capital allocation?
28:59
Where are you focusing the dollars?
29:01
Yeah, and I think right now we're running a tight ship.
29:04
We need to make the most of the capital that we have,
29:07
and we are on a mission to return to just net income, profitability.
29:12
And so as we're navigating that, we're running a very tight ship on our costs.
29:16
And so that kind of that's a starting point, right.
29:20
Like if somebody wants to spend money, it's kind of like either on a,
29:24
on a person or on software or whatever on a new lease,
29:28
like whatever it is, you know, why is this necessary?
29:31
What does it add? Can this be done with AI?
29:34
Like is there a better, cheaper way to do this?
29:37
You know, if it's software, like
29:38
does it actually need to be this discrete bespoke software
29:42
or is it something that we can build with what we already have available to us?
29:46
I mean, right now a lot of our our attention for hiring
29:50
is on engineers and like continuing to build and automate.
29:54
I think we have a relatively lean engineering team, and we do want to grow
29:58
it, because I do believe at its heart, like Opendoor is a is a software company.
30:03
Like, you know, there's the the transaction is so complex
30:06
and there are still so many manual processes on so many manual players
30:10
that like the real way to solve all of this is with automation and software.
30:15
And so that's where that's you know, we talk about capital allocation.
30:18
That's probably we're really focused.
30:20
And then and then anything beyond that it's like okay why is this necessary.
30:25
Yeah I mean we shall swing with you just from there.
30:29
We kind of get the lay of the land and the strategy to call it where you guys
30:33
are doing anything but ambitious would be an understatement from basis, you guys.
30:36
I mean, we've repeated over and over again here, so I'll repeat it again.
30:39
The disruptor in the real estate industry, period,
30:43
China Channel changed the way homes are sold, both personally
30:47
and professionally. Think
30:48
to the huge advantage of the homeowner where there's lots of inefficiencies.
30:51
You guys mentioned them six, 10% of of of every home sales, a transaction costs.
30:56
That's egregious relative to other industries where you see these things.
31:01
Given that ambitious strategy, how do you focus your legal resources
31:07
and the collaborations that you help the partners, the partnerships to keep
31:11
that ambition going and not be not be so, so to speak, the brakes on it?
31:16
I was thinking about that earlier
31:18
with one of Christy's response to the evolution of Opendoor.
31:22
And you think about the legal team during these different phases
31:26
of of Opendoor gone from,
31:30
you know, startup to go and became an, a public company, growing a legal team.
31:35
And then when the market contracted
31:39
in 2022, we slowly kind of
31:43
brought down our headcount.
31:45
And and now we are we're kind of a small, lean team.
31:49
I think we're 13
31:52
people on the team, including myself or a company that has 800
31:57
plus employees, and it's and it's a complicated business.
32:01
But what I've found is that with a small, lean team
32:07
of highly engaged,
32:10
competent legal professionals, attorneys and non non attorneys,
32:16
we're able to plug in to the different collaborations
32:20
and different things that our business partners are doing and provide advice
32:25
very clearly, simply in case likes to say this too.
32:29
He's actually he's actually a lawyer.
32:31
You did remind me that as a lawyer I always think that CEOs are not lawyers,
32:35
but it's actually a great he's a great lawyer success story on that front.
32:38
Yeah.
32:38
So he his you know, his thing is and I agree with this,
32:41
is that the lawyers can involved a 20% mark of a product
32:47
development or collaboration and then come back in at the end.
32:51
Right?
32:51
I mean, that doesn't always hold true if you're working on a transaction, right?
32:54
Yeah, sure.
32:55
But but it does when you're thinking about a new product.
32:57
Yeah. I mean, it's a great way to think about it.
32:59
You're there to check in, give clear advice
33:02
and then checking at the end to make sure it worked
33:04
and not over micromanage all the way through the process.
33:07
Yeah. And I'm always impressed with.
33:09
I mean, our team is fantastic.
33:10
And I'll get a question like, is it okay to do X, Y, and Z.
33:15
And I can go to the team and usually I'll get a response in like five minutes.
33:21
Like, yes, but worry about these two things. Yes.
33:24
But worry about these things.
33:25
And that's the response. You need that 20% mark.
33:28
Hey, this is this is these are things to watch out for.
33:30
We'll come back in and we'll give you more.
33:33
You know, we can give you more advice as we go along.
33:36
But that's kind of how what we do to unblock teams is not like,
33:40
okay, I'm going to go back and write you a three page.
33:43
Now we're going to give you like three bullet points.
33:45
It's a very important thing for our younger
33:48
associates, young partners, to remember that that way of thinking
33:51
really drives a lot of companies to be efficient.
33:53
I mean, you guys take it to a next level, you're super tight and you're super,
33:57
super smart about it.
33:58
And you know what you need to do because you got to keep the train moving faster.
34:01
But it's a really important lesson to keep.
34:04
Speaking of lessons, one of the lessons is never have these podcasts lasts forever.
34:08
So I'm going to jump to my favorite part of the podcast.
34:12
At the finale section I called the Speed Broker section.
34:15
You guys get one answer.
34:16
You can go into details on the answer, but I don't want any hedging
34:20
on the actual answer.
34:21
Okay, so there's no way I want one answer.
34:24
Keep a crisp and then you can give me a little bit more on it if you want.
34:28
So I'll start with with you.
34:29
Christy, what's the biggest professional obstacle you've faced.
34:32
Video earnings calls.
34:34
You go that's amazing.
34:36
That's that was not what I was expecting. That was on my card.
34:39
But please explain.
34:41
Well, just like that's a new muscle, right?
34:43
Like it's very different.
34:44
Like, to be on video and have to really think about, like, how you present.
34:49
I mean, I watch myself and I think I look so serious, and I think, you know,
34:53
you guys are seeing me now and I'm like a relatively smiley, friendly person.
34:56
And all these calls, it's like as they're just a different it's a totally different
35:00
muscle from what you think of with like normal CFO roles.
35:04
Interesting, interesting. Rishi.
35:06
Because professional obstacle.
35:08
Mine is kind of swishing from the mindset of having a problem
35:12
to solve and sort of kind of changing what, like what is possible.
35:16
So as an example of that, I mean, go back to some of the work we're doing
35:20
in government relations, like this was something that I'm a corporate attorney.
35:24
By training, you give me a transaction, I can kind of help you structure it.
35:28
You get stuck with some kind of liability issue, find, create a solution.
35:33
But now the job is a bit more.
35:35
It's different. It's that. Plus it's okay.
35:39
Let's get the message of Opendoor out there.
35:41
Let's think about what is actually possible.
35:43
Ambitious mission.
35:45
And that involves us changing the way people think about what's possible
35:49
in real estate.
35:50
So I personally I personally love that, if I may, an obstacle
35:54
that a lot of people don't realize is they limit themselves to their actual
35:59
what they think is their task, rather than the ultimate goal and mission
36:04
of the organization that are with. Right.
36:06
So whatever you're doing a job, you have to remember you got to sell,
36:10
communicate, whatever, whatever word you want to use for verb,
36:14
you want to use for it the ultimate mission
36:16
and goal of the organization, because that's the hard part.
36:20
That's where you ultimately have to get to.
36:22
And I think many definitely lawyers, but I think a lot of business
36:25
professionals that lose that track, they don't constantly sell it.
36:29
They don't they don't have the EQ to take it in the next level.
36:31
So it's that's.
36:33
Cool, and it's good to kind of see that the sort of dividends I get paid from
36:37
doing those things, like when you're working
36:40
and you're solving a problem, we want to be efficient.
36:42
That's part of what we do is be us.
36:44
But there's certain other things that you don't think
36:48
are valuable in the moment, but they pay dividends later on.
36:52
And part of that is meeting.
36:54
Meeting people, like getting your message out there.
36:56
You may talk to someone three, four times, and then the fifth time
37:01
they know who you are.
37:02
And all of a sudden it clicks.
37:03
Like those things take they take time.
37:06
They take time away from day to day work, but they're more valuable.
37:10
Same.
37:10
So next question, one answer I'll start with you this time.
37:14
Rishi ideal teammate.
37:16
You get to pick one thing, one attribute education, experience or temperament.
37:22
Which one. Temperament for sure.
37:25
That is the most common. Why?
37:26
I mean way
37:27
it always hurts me because my parents spent so much damn money on my education.
37:32
Whenever almost no one says education, that kills me.
37:35
I actually don't think anyone said education, but temperament.
37:37
Was so temperament like low ego.
37:41
People who want to get to the right answer
37:45
and rather than be right is like, that's table six.
37:50
You know, like for us.
37:51
And it's, it's it's table stakes.
37:53
But it's hard it's hard to find people who can do that system late.
37:59
And it kind of goes back to what
38:00
you were saying about Yang and how you're going to be wrong.
38:03
The data might be wrong or something happens, but like,
38:06
even if you're super smart, are you kind of humble?
38:09
What you go enough to say, oh, I messed that up.
38:11
I'm going to let let's try something else.
38:13
And you need that in a company like ours and what we're trying to do,
38:16
you can't be worried about failure.
38:18
I think being low you go.
38:20
Can promote is for for Rishi. Christy? Yeah.
38:22
I mean I'm going to go with temperament as well because I think
38:26
education and experience got you to where you are now.
38:29
But like it's I'm working with who you are now.
38:32
And I think my temperament piece maybe more specifically to
38:37
is people who distinguish fact from opinion.
38:40
Like I think there's so many things that we treat as fact.
38:43
Like Kaz said, we need to do this thing or because of socks,
38:47
we have to do this thing or, you know, I can't get the vendor.
38:51
The vendor won't do this thing, you know?
38:53
And like, there's so much that that gets packaged up as fact
38:57
when it's really like opinion or a blocker or just like a mindset.
39:01
And so people who can think through that and be like, but why?
39:04
Like, why are we doing that thing and like and can challenge kind of the,
39:08
the commonly held beliefs or just like the things that we've labeled
39:11
as fact that are actually changeable. Interesting.
39:14
You guys are both both chose temperament, which is the most popular one
39:18
when asked this question for sure.
39:19
But you're both look at it slightly different for you its ability
39:22
to step back, be humble for you to ability to actually use it as a way
39:26
to basically fuel the intelligent answer, the ability to get to it.
39:30
So critical thinking. Cool.
39:33
So speaking of critical thinking, great segue.
39:36
I love poker.
39:37
Sometimes I do really well.
39:39
I, you know, usually my goal in every poker
39:41
that I play is not to win at all
39:43
is just to get to the final table, because that shows
39:45
your really good player, because it's really hard to win it all.
39:47
That's random, but being consistent.
39:49
So I love for you guys, you're sitting at Opendoor today.
39:52
You're at the table and you get the chance to change or adjust one thing,
39:56
only one thing is it the game itself, which is the broad economy.
40:01
The broader economy is at the table.
40:03
The real estate industry, is it the house, the regulatory regime, government
40:07
fiat regulations?
40:08
Is it
40:09
the stack of chips, how much cash you have and how you get to use it and pay it?
40:13
Or is it the other players or stern folks playing fair?
40:16
If they aren't, don't name them. But you can.
40:19
You can tell us generally, is it not coordinated enough?
40:22
Are folks
40:22
not communicating within the industry to get the end goals that we all want?
40:26
So I'll start with you, Christy,
40:29
which piece of the poker table do you want to change?
40:31
I'm going to go with the table itself or the real estate industry.
40:35
And by that
40:35
I mean kind of what we talked about earlier of
40:37
like I know other players is another option,
40:39
but the other players in the industry specifically, like if the utilities
40:43
were just like super easy to turn off and on and pay and like if property tax,
40:48
like if all those other components were super streamlined, that would be some.
40:54
And then I think our part in it too, like I want to just like fully have
40:58
a fully scaled mortgage product already, and I want to have
41:00
all the other things that come along with the home owning transaction.
41:04
I want them to all be at the table with me.
41:07
Interesting. Rishi?
41:08
What part?
41:09
Mine is the house.
41:10
Would a guess like regulatory regime?
41:13
You guys,
41:13
you guys are playing the role, I love it, I love the CFO and the like okay.
41:17
All right.
41:17
I mean like like the regulatory regime has not caught up
41:22
with where we are with regard to technology.
41:26
You look at disclosure obligations or they're different state.
41:31
Some states still don't permit remote notarization.
41:36
So if you're trying to like close on a house
41:40
and you can't have
41:42
someone come to your house to do a notary, you go to somewhere, to an office,
41:46
a physical space to notarize documents in order to finalize your mortgage.
41:50
And these imagine that's like that's just like waste of time.
41:53
So and then
41:54
when you look at title and escrow and there it's like, again, you've got
41:59
every state has a different regime in you think about like even title insurance.
42:04
And this is one that we actually are chipping away at.
42:08
So I'll insurance is it's an interesting thing
42:12
because you're not insuring for something that happens future.
42:15
You're trying about something
42:16
that might have happened in the past but like a title defect on property.
42:19
So like is insurance like the really the best answer here.
42:23
Like do people, do consumers really need to be paying hundreds
42:27
or thousands of dollars for an insurance policy, or can you
42:30
can you diligence that effectively with technology?
42:35
You can now, but there are still like title
42:38
recording offices are still state by state.
42:41
So faces county County.
42:43
That's right, that's right.
42:45
So if you can change that, if you can modernize like rules can,
42:49
can you create some kind of uniform standard at a federal level
42:52
for how mortgage should operate or title of us grow like that?
42:56
That would be incredibly impactful.
42:58
Well, if the policymakers are listening,
43:00
you guys have the answers for them with these two poker table situations.
43:04
So we just had a great lunch just for the audience.
43:07
I brought in some of my favorite Y sons bagels, as I always do.
43:11
I love my bagels.
43:13
What do you to eat at work or while playing poker?
43:18
Playing poker means outside, you know, have to take be at the poker table.
43:22
What do you do?
43:23
So, Rishi, what's your favorite food?
43:26
So at work, I feel like I'm subsist off of these,
43:31
like fruit snacks we have in the kitchen these Welch's fruit snacks.
43:35
I think as a parent, I want to tell you that it's not the healthiest answer.
43:40
But I can attest to that because Rishi often comes to meetings
43:43
with a bag of fruit snacks.
43:44
And then I look at him and I go, those look good.
43:47
Like I fruit snacks. Delicious. Yeah.
43:51
That's the.
43:52
Day and that's not to work.
43:54
What do you if your favorite food outside of work if it's root snacks?
43:57
Again I'm going to have some questions here. Definitely not.
44:00
Well I mean if I'm at the poker table, usually it's,
44:03
you know, like to have some samosa, some good Indian food.
44:08
I live in the East Bay and it's actually surprisingly hard.
44:11
Find good Indian food and like.
44:14
Yeah, you have to head down in the South Bay.
44:16
That's where that's where it's at in the Fremont, Santa Clara, San Jose area.
44:19
I was just there last, last week or two weeks ago and it was amazing.
44:24
That's cool.
44:24
Well, I'll tell you, it's it's hard to like
44:27
it's fine if you're playing Poker Lake, then you go to sleep.
44:30
But if you're doing in the middle of the day with a really good similar sense,
44:33
it's hard to recover.
44:34
Or maybe I just can't do it in my old age.
44:37
Christy, food.
44:38
What do you got?
44:39
So at work, I love ordering goop salads.
44:42
Goop is Gwyneth
44:43
Paltrow's company, so in the decision to acting and beauty products.
44:47
She also makes amazing salads.
44:49
So I eat when the salads and then I don't play poker, but I play mahjong.
44:54
We actually just played last night and we got takeout from
44:58
Chinese restaurants.
44:59
Cool.
45:00
Yeah. Chinese food is I love it.
45:02
I always spill for some reason.
45:05
I don't know why. It's like one of those things.
45:07
I know it's embarrassing
45:08
because I'm a fully grown adult male, but I for some reason I struggle anyways.
45:13
Well look, Rishi, Christy, thank you so much for being here.
45:16
Thank you for joining me on this Connected with Latham podcast.
45:20
Really appreciate you guys. Yeah. Thank you.
45:21
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45:23
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45:26
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