Attend Inman Connect New York in person or virtually, April 19-21, to join thousands of successful producers who know what it takes to reach the top of the real estate game. Reserve your spot now to gain insights, make new connections that generate more referrals, and learn from the sharpest minds in the industry.
Spencer Rascoff calls himself a serial entrepreneur and a quick look at his work history quickly shows why.
Co-founder of Hotwire.com. Co-founder and former CEO of Zillow. Co-founder of news site dot.LA. Co-founder of second home co-ownership company Pacaso.
While continuing to lead multiple organizations, Rascoff has enhanced his focus on investing in start-ups and taking companies public. He even helped to take the iBuying company Offerpad public while Zillow was competing for market share in the space.
He spoke with Inman this month about how to lead a team, why he’s “an iBuying bull” and the future of Pacaso.
What follows is a version of the conversation, edited for brevity and clarity.
Inman: You have an interesting story when it comes to iBuying. Former CEO and shareholder at Zillow (including when they were iBuying). Helped a competitor, Offerpad, go public via a SPAC. Tell me why you have been so focused on this concept.
Spencer Rascoff: I’m a believer that iBuying provides an excellent service to homesellers. Zillow helped prove just how beneficial iBuying is to homesellers. After all, Zillow was wildly successful at buying a huge number of homes from homesellers.
The open question on the industry is whether iBuying can be done profitably. And I believe that Offerpad and Opendoor have demonstrated that iBuying can be a profitable business. Call me an iBuying bull because today iBuying is only about 1 percent of the market, and I think it has the potential to be 5 or 10 percent of homes that are sold.
I heard you say you were an investor in what you called “DoorDash 25 years too early.” What’s the risk that it’s the same case with iBuying?
I don’t worry so much about that. The technology is there for iBuying to work. The consumer is ready to digitally transact or mostly digitally transact on the sell side or the buy side.
The software that allows for fast renovations exists.
The table is set for these companies to do very well from an operating standpoint and I think those business results will get reflected in the financial results, which then will be reflected in the stock market reaction to these companies.
They’re just currently caught up in an anti-growth stock market negative sentiment cycle where the market is favoring profitability over growth. These are companies that are pursuing such a large market opportunity that they are, in my view, rightly focused on inventing their future and achieving huge revenue growth. Small profits today will become big profits tomorrow.
Do you invest in Opendoor?
I was an investor in a company called Pro.com, which Opendoor bought. So I am a shareholder of Opendoor, which I have not sold. I’m not a seller of Opendoor at these prices. The answer is yes, I would be a buyer of Opendoor at these prices and I haven’t sold any of my Offerpad at these prices. I think these companies are both undervalued relative to their potential.
You have led and continue to lead public and private companies throughout your career. How hands-on are you with your teams, and how would you describe your leadership style?
When I run companies or invest in or advise companies, I focus significantly on employee engagement and culture building. I believe that great teams that are properly motivated build great products, solve problems, and generate revenue, profits and shareholder value. It all starts with the team.
For example at Pacaso, where I am chairman and co-founder, I aim to support Austin as CEO and his leadership team. I try to mentor and coach and counsel them. Help clear any roadblocks that they have to doing their job well. That’s a very different leadership style than many people employ. Most people employ a top-down leadership style where the superior employee directs the more junior employee.
People don’t typically quit companies. They quit managers. It’s worthwhile for companies to invest in management training and ensure that they have a world class HR function, which helps support managers and employees in their mutual success.
There are examples of where leadership has gotten in the way of companies’ success. I’m thinking of Better Mortgage. So many employees have been leaving, citing leadership, citing the CEO. What would you advise in that situation where a leadership team is causing these employees to quit management?
I don’t have specific insight into Better other than what I read in Inman and elsewhere. But good leadership, management and company culture is critical to employee retention and engagement.
When Zillow merged with Trulia, Pete Flint will tell you that he and I sat in a room at the very beginning of our negotiations. We sat together and looked at Glassdoor ratings side by side. We would pull up a Trulia Glassdoor rating and we’d talk about, ‘How come this employee seems unhappy in the Denver office?’ And he’d say, ‘How come this employee seems unhappy in the New York office?’ We’d talk about employee engagement and culture findings long before we got down to the brass tacks of what a merger would look like. The beginning of the merger dance began with, importantly, a discussion about our company cultures.
You’ve said Pacaso seeks to democratize access to second homeownership through co-ownership. How urgent is it — how urgent should it be — for the company to expand its price floor and offer lower-priced homes?
For the time being we’re focused on higher-end homes. Typically twice the median value of homes in a given community. But longer term we have the ambition of truly democratizing access to second homeownership by including homes at more accessible price points, and being in markets that are much broader than just the high-end, luxury resort markets that we’re focused on today.
If you ask anybody with a second home, usually their first complaint is its expense. And the second complaint is the complexity of owning a second home, especially if it’s not near their primary home. The third complaint is usually the guilt associated with not using it enough to justify its existence. Pacaso alleviates all three of those.