In a December 2014 interview with Semil Shah, Keith Rabois discusses Opendoor's recent launch in Phoenix and outlines the company's strategy for selecting expansion cities. He explains why the Bay Area was deliberately avoided, emphasizing the need for markets with median home values around $250k, year‑round transaction activity, and longer time‑on‑market periods that reveal inefficiencies. Phoenix fits these criteria, with 90‑day average sale cycles and a 20‑plus percent inventory of homes that never sell. Opendoor plans to roll out next to Portland and Dallas, with further U.S. expansion pending. Rabois reflects on lessons learned so far, highlighting the importance of building an exceptional founding team, the unexpected challenge of securing office space in San Francisco, and the financial implications of long‑term leases. He notes that while Opendoor benefits from his experience as an investor in on‑demand companies like Instacart, DoorDash, and Lyft, the business model differs—offering instant home purchase liquidity rather than rapid service delivery. International markets are not a focus yet due to legal and data complexities. Overall, the conversation reveals Opendoor's market‑centric launch approach, early operational hurdles, and the founder’s perspective on scaling a real‑estate tech startup.
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Okay, so congrats on launching Opendoor Family. You launched in Phoenix. So two questions. Tell us a little bit about the launch. What cities should consumers expect you guys to roll out? And then what's the biggest or toughest lesson you've learned in the time of starting with the founding team and now getting to launch that you were surprised by?
So let's see. So we launched a couple days ago in Phoenix. We're really excited about that. Phoenix is a pretty big market. Last year 82,000 people sold their home in Phoenix, even with all the friction and expense. So hopefully we'll unlock even greater sales. We've also announced that we're going to be going to Portland and Dallas soon and then we'll roll out from there. We haven't committed yet to which cities.
Beyond that, how did you guys think about cities? I know following companies like Doordash and Instacart and Lyft, there's all this fun analysis of thinking through where do you go next? How do you guys think about that?
Well, we wanted to avoid the Bay Area, which would be the natural place to start. As I talk about a lot, the median home in the United states is worth $250,000. The Bay Area is incredibly atypical and anomalous. Secondly, the Bay Area time on market is significantly less. Normally in the United States, believe it or not, if you list your home for sale, it takes 90 days from when you list to get an offer that you accept. In the Bay Area, it's very easy for sellers to list their home today and have offers tomorrow. It's a very, very weird environment here. We wanted to avoid that. Then the question is where? We wanted to pick a market that allows us to test out a lot of things. For example, if you go to Boston, nobody sells their homes in January and February because it's so cold. Phoenix is generally a year round market. Our CEO Eric is actually from Phoenix. Little things like that matter. I think Phoenix is a very good market for adding a seller value proposition. Right now it takes over 90 days to sell your home. On average in Phoenix, 19 to 23% of homes that are actually listed in Phoenix don't even ever sell. One of the other things that sometimes sellers forget about is just because you list it, it doesn't mean you're magically going to close. Where with Opendoor, we give you an offer right then and there and you're done. If you can find markets that are typical in terms of median home distribution, that have year round sales and where the market is obviously broken. So 90 days plus on market and 20% or so of people selling their homes can't even get a buyer. That's actually a great place for us to innovate.
Got it. Have you brought any of your learnings from being an investor in Instacart, DoorDash, Lyft and how these cities expand to what you've done at Opendoor and picking these new cities?
I wouldn't say that per se. Obviously we're incredibly excited to have Evan, who's co founder of DoorDash, join the OpenDoor team. There are some lessons from the on demand economy that can apply to some of the things we do and but we're not quite an immediate gratification in terms of instant liquidity that some of these services have to provide hot food in 30 minutes or as we talked about earlier, a car within three minutes. So it's not exactly apples to apples.
Right. But you will have a city launcher kind of team. Right. So if you're going to go into Portland, you're going to go into Dallas, you're going to need some kind of on the ground activity.
Sure, we'll probably need some, but I don't think that that's a problem because also our margins and just our structure are different. Like when we're hopefully at scale, we should be talking about thousands of dollars, not a dollar, trying to carve out a dollar here and there. The dynamics of our market and our product is very different. I think in startups this is globally true, which is taking a lesson from one company and applying it to another just doesn't work. You can take conceptual learnings and try to figure out how they apply to your problem, but just taking advice from one company and applying it to the next almost never works.
Have you guys thought about markets outside the United States?
Not for now. The United States alone is something like $100 trillion of sales and something like $70 billion last year of agent commissions. The availability of data, the legal process, the time, now market, who pays for what is all very different and culturally specific. You could build the largest company ever. If we did the U.S. well, we could build the largest company ever. So I'm not too worried about additional markets.
Good market. What's been the hardest lesson you've learned through the process?
I don't know if we've really had a great lesson yet. I know this is kind of a bad answer, but fundamentally we're just live, so I'm sure we'll learn a lot. We've been able to assemble an incredible team. So that reinforces some of my instincts. Vanode has this lesson and adage about the team you build is the company you build. And and so we have about 20 people full time employees now and they're extraordinary and I think that's become self fulfilling. So I think it's incrementally easier for us to recruit people because they see the quality of the team. So just confirming that bias of starting with the team and then building a company that way. So it's not a surprise. We'll probably find some data that's anomalous and that's a positive thing to find anomalies. But we haven't yet made enough transactions and had enough offers extended to really abstract out anomalous behavior yet.
Got it. What should people look for from Opendoor in 2015? These two additional markets on top of Phoenix.
Hopefully we'll expand beyond there. One of the learnings and this sounds mundane but I'm sure entrepreneurs this will resonate with is we ready to run out of office space? We need a new office. We just launched the company in March and April of the start, started the company and we're already way out of space and struggling with what to do in San Francisco. Maybe we'll go to Daly City. I'm just kidding. It's a very difficult problem and the costs and the consequences of making a mistake in real estate are pretty significant.
Are you finding it difficult to find space suitable space in San Francisco?
It's very expensive with longer term commitments and how that affects our financials and when do we raise money? So this stuff is actually more important than people realize.
This is going back to Bill's post about the 10 year lease lock in.
Exactly. A lot of companies in the 90s and the bubble failed because they had these commitments and they're all self fulfilling. They felt safe because someone could sublease but if the market changes, there's no one to sublease and you're on the hook, you're going to be bankrupt. The consequences of making a mistake in an office space, both culturally, which we've talked about before as well as financially, are really material. I think that's a surprise that I'm already encountering this with a company that we really founded in April and that we're already going through a lot of permutations and thinking about how to play out the office space world.
And do you see that maybe not open door but other companies moving to other areas because of that or is it not?
They're certainly exploring that. I mean it does affect recruiting and the talent's the most important thing to some extent. Your derivative to where do the best people really want to work? Depending on what kind of company you're building, whether it's hardware or software or design oriented or more deep infrastructure, there's different talent pools that you're tapping into and prioritizing, but really everybody's competing for talent right now, and I don't know that it's possible to make a sub optimal decision from a talent perspective and still be super successful.
