Team - In the Shopify memo, Bessemer summed up three trips to Ottawa to get to know Tobi Lutke by saying, “We have been impressed by Tobi.” Chamath is even more succinct - there is no mention of the team at all! Interestingly, however, the slide deck starts with a team page highlighting the team’s experiences at a bunch of brand name companies.
Eric Wu (Founder, CEO) - Head of Product, Trulia
Carrie Wheeler (CFO) - Partner, TPG
Julie Todaro (President) - VP Operations, Amazon
Ian Wong (Founder, CTO) - Head of Data Science, Square
Tom Willerer (CPO) - VP Product, Netflix
Trends / Why Now - Instead of talking about team, Chamath uses almost half of the memo to describe the numerous market trends driving this opportunity, and why now is a great time to invest in these trends.
All forms of buying/selling are moving online, accelerated by the need for convenience, speed, trust, and safety. The Coronavirus pandemic has further highlighted this
There are five tailwinds in consumer real estate that we believe will cause Americans to move more often…
These tailwinds not only create demand but also create a margin of safety for the emergence of online buying/selling homes
Market - The Shopify memo pointed to related companies that had become big successes in order to demonstrate a big market. This memo takes a different approach by pointing to the $1.6T home buying market and then sizes the addressable opportunity by assuming Opendoor can continue expanding by running their playbook in new markets
Real estate is the large, undisrupted form of buying/selling in the US worth more than $1.6T
As Opendoor buys more homes in a market, they gain share and refine their playbook… They are in 21 markets now with plans for continued expansion…
This playbook, at 4% share, would create a company with more than $50B in revenue in as many as 100 markets
Metrics / Traction - The section on quantitative metrics is hilariously short, just a valuation, 2019 revenue, and 2023 expected revenue. The growth from $4.7B to $9.8B over four years doesn’t look great, and it’s surprising that he doesn’t mention margins or COVID-adjusted numbers here.
2019A Revenue: $4.7B
2023E Revenue: $9.8B
Enterprise Value of $4.8B
LMK what you think of the $4.8B valuation for Opendoor, and if this will be a good SPAC deal! BTW, if you enjoyed this memo, Institutional Investor wrote a fantastic profile on Chamath
that’s definitely worth reading.