$OPEN a short thread.
In anticipation of $RDFN 's earnings this week, I thought I would expand my knowledge of some of the main competitors. Here's what I learned on $OPEN...
*Full overview to come after March 4th (Earnings)*
a thread 👇👇👇
In anticipation of $RDFN 's earnings this week, I thought I would expand my knowledge of some of the main competitors. Here's what I learned on $OPEN...
*Full overview to come after March 4th (Earnings)*
a thread 👇👇👇
1) Who are $OPEN?
Leaning on the shift in consumer behaviour towards ‘digital’, OpenDoor provides a completely online, contactless option to buy and sell a home.
Leaning on the shift in consumer behaviour towards ‘digital’, OpenDoor provides a completely online, contactless option to buy and sell a home.
The current model of buying and selling your home is dated and filled with inefficiencies that lose YOU money. $OPEN aim to solve this by becoming a digital one-stop shop to move.
2) What do they do?
$OPEN have three distinguishing aspects to their business model...
🔹Digital user experience
🔹Instant cash offering
🔹Lower fees
Overall, they centralize the home buying journey which offers customers convenience, certainty and efficiency.
$OPEN have three distinguishing aspects to their business model...
🔹Digital user experience
🔹Instant cash offering
🔹Lower fees
Overall, they centralize the home buying journey which offers customers convenience, certainty and efficiency.
3) How does it work?
To sell, you submit your house to $OPEN, who assess it using various Machine Learning algorithms alongside crowdsourcing tech (such as Re-Captcha) which take into account various factors like…
To sell, you submit your house to $OPEN, who assess it using various Machine Learning algorithms alongside crowdsourcing tech (such as Re-Captcha) which take into account various factors like…
🔹The quality of the home
🔹The neighbourhood
🔹Price of neighbouring homes
🔹Features of the house
Data gathered from this loops back into the algorithm to improve accuracy in the future.
🔹The neighbourhood
🔹Price of neighbouring homes
🔹Features of the house
Data gathered from this loops back into the algorithm to improve accuracy in the future.
Listing with $OPEN
🔹Fees are low 5% (1% less than traditional)
🔹Get an instant cash offer or help with listing
🔹Cost efficiencies when supported by local industry experts
🔹Maximise sale price with $10k interest free advance for renovations
🔹Fees are low 5% (1% less than traditional)
🔹Get an instant cash offer or help with listing
🔹Cost efficiencies when supported by local industry experts
🔹Maximise sale price with $10k interest free advance for renovations
Buying from $OPEN
🔹Easy user interface to search homes within your desired area
🔹Explore homes from your phone with virtual tours
🔹Cost savings up to 1.5%
🔹Easy user interface to search homes within your desired area
🔹Explore homes from your phone with virtual tours
🔹Cost savings up to 1.5%
4) Management
Founder led.
Strong management is an often underrated aspect of a company’s ability to succeed long-term. As @BackpackerFI said earlier today “I’ll take a B company with A management over an A company with B management” which is a sentiment I can relate to.
Founder led.
Strong management is an often underrated aspect of a company’s ability to succeed long-term. As @BackpackerFI said earlier today “I’ll take a B company with A management over an A company with B management” which is a sentiment I can relate to.
Eric Wu is the Co-Founder and CEO
🔹Co-Founder of Rentadvisor.com
🔹Founder of Motivity.com
🔹Head of Geo/Social products at Trulia.com
In and around the real estate industry for the best part of a decade. Very capable.
🔹Co-Founder of Rentadvisor.com
🔹Founder of Motivity.com
🔹Head of Geo/Social products at Trulia.com
In and around the real estate industry for the best part of a decade. Very capable.
Ian Wong is the Co-Founder and CTO
🔹Stanford Graduate in Electrical Engineering + Statistics
🔹2.5 years spent at $SQ developing ML applications
🔹Time spent at Prismatic doing similar things
🔹Stanford Graduate in Electrical Engineering + Statistics
🔹2.5 years spent at $SQ developing ML applications
🔹Time spent at Prismatic doing similar things
Andrew Low Ah Kee is President
🔹~7 years as director at KKR Capstone
🔹~7 years at GoDaddy in growth roles and CRO + COO
🔹Experience in making growth happen
🔹~7 years as director at KKR Capstone
🔹~7 years at GoDaddy in growth roles and CRO + COO
🔹Experience in making growth happen
Carrie Wheeler is CFO
🔹Extensive experience within finance
🔹TPG Global for 21 years as partner and head of retail + consumer investing
🔹Sits on various boards (Glensons, J.Crew, API Group, Dollar Tree Stores…)
🔹Extensive experience within finance
🔹TPG Global for 21 years as partner and head of retail + consumer investing
🔹Sits on various boards (Glensons, J.Crew, API Group, Dollar Tree Stores…)
5) What is the Market Op?
TAM is huge ($1.6T) with majority of the market being made up of traditional models. The market has been stagnant for years, however we are beginning to see transformation.
TAM is huge ($1.6T) with majority of the market being made up of traditional models. The market has been stagnant for years, however we are beginning to see transformation.
🔹The market is fragmented and has low digital penetration.
🔹Total R-E service transactions up 23% y/y
🔹$7.2 billion run rate prediction for Q1 2020 with a 3.2% market share.
🔹Very early market in digital transformation for real-estate
🔹Total R-E service transactions up 23% y/y
🔹$7.2 billion run rate prediction for Q1 2020 with a 3.2% market share.
🔹Very early market in digital transformation for real-estate
6) Competition
I strongly believe we’re going to see more than one winner in this space. The competition is fierce, and there's plenty of market share to go around. $RDFN are my favorite at the time of writing.
I strongly believe we’re going to see more than one winner in this space. The competition is fierce, and there's plenty of market share to go around. $RDFN are my favorite at the time of writing.
7) Finances
Compared to the other companies operating in the ibuying space, the Financial performance of $OPEN over the first 9 months of 2020 is disappointing.
Whilst others are growing ($RDFN +17% y/y and $Z +41.8%), $OPEN is facing a shrinkage in revenues (-33%).
Compared to the other companies operating in the ibuying space, the Financial performance of $OPEN over the first 9 months of 2020 is disappointing.
Whilst others are growing ($RDFN +17% y/y and $Z +41.8%), $OPEN is facing a shrinkage in revenues (-33%).
Comparing margins within the industry is also an interesting exercise. There is evidently a disparity between these competing business models.
8) Challenges
Margins are likely to become tighter in the industry as competitors jostle for business with competing fees. $RDFN already offers a 2% discount for selling qualified homes. $OPEN ‘s model is low margin and highly capital intensive relative to $RDFN and $Z...
Margins are likely to become tighter in the industry as competitors jostle for business with competing fees. $RDFN already offers a 2% discount for selling qualified homes. $OPEN ‘s model is low margin and highly capital intensive relative to $RDFN and $Z...
...
The success of iBuying is largely driven by the state of the housing market. In a downturn, how will $OPEN deal with increased overheads compared to the traditional business models?
The success of iBuying is largely driven by the state of the housing market. In a downturn, how will $OPEN deal with increased overheads compared to the traditional business models?
9) Conclusion
Early days for this sector.
Low interest rates and high propensity to move in 2021/22 should drive record sale volumes. With consumers waking to the possibility of making this process digital – there is a long runway for $OPEN (and companies alike).
Early days for this sector.
Low interest rates and high propensity to move in 2021/22 should drive record sale volumes. With consumers waking to the possibility of making this process digital – there is a long runway for $OPEN (and companies alike).
Thanks for reading! Leave a like and a re-tweet if you find this useful. It really helps me out.
Check out my Substack for more deep-dives on growth companies like...
$RDFN
$NIO
$TTCF
$FVRR
$CURI
and many more.
innovestor.substack.com
Check out my Substack for more deep-dives on growth companies like...
$RDFN
$NIO
$TTCF
$FVRR
$CURI
and many more.
innovestor.substack.com
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