New Opendoor CEO Kaz Nejatian: 'We ship every week' — AI, 50-year mortgages, and fixing homeownership

Speaker 7: Thanks for having me, guys. I I wanna go on the record as being pro kayak.

Speaker 1: Pro kayak. But kayaking in the workplace. Yes, man.

Speaker 2: What point? At what point? In at at at noon on a Tuesday, you want your whole workforce going into the frigid ice cold sea with a four millimeter wetsuit and coming back cold and spending the rest of the day warming up?

Speaker 7: First of all, I grew up in Canada, so we don't wear wetsuits. We just go kayaking. I don't

Speaker 2: know what

Speaker 1: you guys do. Okay. Okay. What's the biggest fish you've ever caught? What's the biggest fish you've ever caught?

Speaker 7: I am I I honestly, man, this is like my my brother-in-law goes fishing off the coast of British Columbia and catches these massive salmons.

Speaker 2: Woah.

Speaker 7: I am a I'm terrible. Okay. I'm objectively the worst guy to go out fishing with.

Speaker 2: That's Like, I will lose

Speaker 7: your luck. I will not catch you anything. It'll be terrible.

Speaker 1: Oh, wow.

Speaker 7: I'll fix your Wi Fi.

Speaker 1: Okay. There you go.

Speaker 2: Okay. There

Speaker 1: you go. That's helpful.

Speaker 2: Well, caught a big fish with OpenDoor. Congratulations on the new gig. I don't know if you remember, but we've actually, emailed very briefly while you were at, at Shopify. You saved my entire company in, like, the in, like, the, in the span of, like, two email exchanges. So I've always been extremely thankful to you and just Shopify general generally. But, can you since this is the first time on the show, can you give us a little bit of backstory on how you wound up at Opendoor, what the, what the vision was? Just, like, kind of how this all came together because it's such a fascinating story to me.

Speaker 7: I mean, I I I think this story has now been fully leaked. I would not have told it if it just had not been, like, fully told by other people. But look, I've been I I loved my job at Shopify. I genuinely honestly thought it was gonna be my forever job.

Speaker 1: Mhmm.

Speaker 7: And I just I was not planning on leaving. But I became a little obsessed with Opendoor maybe February. Mhmm. Where like I as a kid, I grew up my mom had a corner store and I would grow up I grew up with like a stopwatch timing the cashiers. Oh. So like, I have this very odd obsession with like operationally well run places.

Speaker 2: Uh-huh.

Speaker 7: And from the outside open door looked like a great opportunity being poorly run.

Speaker 2: Mhmm.

Speaker 7: So, like, sometime in February, almost as a joke that just ought and would just not leave my brain, I texted Keith to a boy saying, hey. I'm thinking of just buying OpenDoor and taking it private because it just needs to be run better. Then my my secure. Just, like, thought this was, like, an interesting hobby for me to figure out how I could just, at the side of my desk, fix this company that I wasn't running. And I became more and more obsessed with it because there's a very real thing that matters, man. Like, most of us that work in software don't get the opportunity to say, hey. The thing we do has a real world impact on actual families. Right? And the very real thing that happens if you grow up in a home that your parents owned. Like, your educational outcomes are better. There's less crime in your neighborhood. Like, same same family, same type of thing. If they own a home, things turn out better. So I became just obsessed with this company whose job it was to make buying and selling a home easier. And like most other things in the world, when you reduce friction, you get more of the thing. So if you think homeownership is good, reducing friction at will lead to more of it. But I just kinda like given up on this idea of taking the company private because the company had this significant run and well, I didn't have enough money to take it private anymore. Mhmm. So

Speaker 1: There was a brief window. You were daydreaming about it. That was the Yeah.

Speaker 7: So and then it was on on it was a Sunday, like, in I wanna say mid August, like, August, my wife and I were on our way to church. I got a call from Paul DiVersa, who's a exec recruiter, I picked up the call and I said, it's a true story. And Paul and I had Paul had been trying to get me to go go to a couple other places, and I picked up the call. I'm like, Paul, I'm on my way to on my way to church. I don't have time. I appreciate it. Like, I'm not interested in whatever it is you're about to pitch me. Maybe if it's open door, let's talk.

Speaker 1: And

Speaker 7: then he said, it's open door. How soon can you be on a plane?

Speaker 1: Wow. Wow.

Speaker 7: And we went to church, came back, I got on a plane. Yeah. And the whole thing, the whole process took maybe two weeks Wow. From like that call to me starting.

Speaker 1: How much did you, like, how much did you rely on your network to help you make that decision? Maybe some trusted advisers. Because I imagine there when when I when I saw that you that you were announced that you took the job, my immediate thought is like, you know, going from Shopify, which is this, like, beloved, you know, incredibly well run company that you can have so much impact on because it's it's, like, one of the one of the few platforms in the world that is just, like, so undeniably pro entrepreneurship, and entrepreneurship is so life changing. And if you care about impact, you know, it's it's hard to kinda meet your bar. Not to mention that jumping in at Opendoor would go from probably like a relatively calm work environment to one of the most, like, crazy intensive, high pressure environment where, you know, I'm sure from, like, a the amount of inbound messages that you get running Opendoor is probably, like, a 100 times the messages that that, like, a company, like, a 100 times your size gets. You know? And so, like, it it it is wildly different kind of, life. I

Speaker 7: don't know. I mean, look. I think Shopify is a relatively intense place to work for all the good reasons, and you kinda wanna work at intense places because you only get one career. But I remember, like, when I was thinking of leaving Facebook to go to Shopify, literally everyone I I talked to said don't do it. Like, single person I talked to about leaving Facebook, going to Shopify said don't do it. It's a terrible company. It's among the most shorted companies in history. Like, it was exceedingly shorted. It had a really bad it was a churning, like, I had like I had like lots of like the day I joined Citron, put out a, like, a big research report saying Shopify will go bankrupt in, like, twelve months.

Speaker 2: Woah.

Speaker 7: So I remember, like, So everyone, like, talked to back then in 2019 told me, don't join Shopify. Terrible idea.

Speaker 1: And what was what it like, what did you what did you see that that other people missed?

Speaker 7: Look, I thought the mission was a worthwhile mission and that it was very clear to me that I was the type of person who could help. Like, I thought the mission was important, the company had done a lot of good, and I could help. I like, I couldn't see myself at a bunch of other companies, but I could see myself helping Shopify. And I, like, I became the merchant services guy at Shopify. Right? I ran the second half of the business. So Shopify has two parts, SaaS and services. I ran services for nearly my entire time there, and then Toby asked me to become the COO, and I ran a bunch of other things. But I remember when I was thinking about going to Shopify, like, basically, only two things that convinced me to do it were I prayed and I thought it was the right decision. And then I sat down with wife and I said, hey. This is almost certainly a bad idea. Like, we're gonna move to like, we're gonna move. We had a kid who was less than one, and this probably won't work out, but I think this is a worthwhile mission. And I think I can help. And then she said, look. It's our job to spend our marriage doing things that will make the world a better place. Right? We call it leaving a dent in the world. So when it came time to the open door one, I didn't, like, I gen I talked to Keith because I've known Keith Raboy for a while. But I was I was just I talked to my wife. I prayed, and I'm I and I thought I could, like, have an outsized impact on the company just because the type of thing I tend to be good at is a type of thing that a company seems to need. I'm not look. I'm no one's idea of a corporate executive. I cuss a lot. I grew up as a nerd. Like, I didn't do all that well in my finance undergrad courses. Like, I'm I'm like, I'm a product manager. Right? I'm like, so this is I don't like, this is how I dress. So I felt like it was a very real thing. But at Open Door, it felt like I could do well given the what the company's mission was.

Speaker 2: Mhmm.

Speaker 7: And I thought if we could do our job, it just would be good for the world. So

Speaker 2: So we yeah. What what what's the how how do you think about the opportunity? How do you think about the shape of the business in are you thinking in a a decade? Are you thinking in thirty year time frame? Like, how do you think about the long term strategy, what the opportunity is, what you wanna fix in the short term, medium term, long term? How you

Speaker 7: Dude, we like, every ship every week. Like, we ship every week. Fuck fuck ten years. We ship every single week. Like, our job is to ship product every single week to tilt the world in favor of homeowners and people working hard to become homeowners. We ship every week. Mhmm. Something changes every single week. We measure ourselves on a weekly basis. We now have a public dashboard that we use internally. We just publish it to the world.

Speaker 2: Mhmm.

Speaker 7: So you can see our internal dashboards externally.

Speaker 2: Yeah. So what are the levers that you can pull on a week to week basis? Like, what's an example of something that you can you can roll out that actually improves the experience?

Speaker 7: I mean, I can tell you I can tell you a product that took us Yeah. Almost exactly one week to launch. Yeah. We launched this thing we call peace of mind guarantee.

Speaker 2: Okay.

Speaker 7: So if you ever bought a house Yeah. I remember the first house I bought Yeah. And the first night I slept there after we had closed, I'm like, shit, bought the wrong house.

Speaker 2: After the

Speaker 7: first time, like, that's a very real thing that happens because Totally. In a typical real estate transaction, the deck is stacked against buyers and sellers. Like everyone involved has a conflict with the with the two principles. Mhmm. There's like a real agency problem. So if you're buying your first home, like the the thing that makes you most nervous is missing something. Right? So I think we launched at Opendoor is this buy a peace of mind guarantee where you can buy a house from Opendoor, move in, and if you don't like in the first seven days, just give the house back. We'll take it back.

Speaker 2: Wow.

Speaker 7: And the look, if I think it's one of those things where like, if you buy something on Amazon and you don't like it, you return it. But for some reason, if you're buying something that's hundreds of thousands of dollars, you can get duped and there's no one to return it to.

Speaker 1: I remember I I think I was I I must have been like some somewhat of a younger teenager when I when I figured out, okay. You make the most important purchase, biggest purchase of your life buying a first home, and you don't really get, like, a like, you don't even get to, like, try it out for a couple nights and because I it's just one of those things. As soon as you actually own something and you occupy it, you start you start know you I know that, you know, I bought a house last year and I the things I know I I I missed so many thing. Like, you know, I ended up getting like lucky. Right? It wasn't like I wanna return the house. But there are so many just small things that I noticed immediately from moving in that I completely missed. And I was like, wow. Thank God. I didn't that that is not that big of a deal or it's like a nice to have, whatever.

Speaker 7: Dude, there there there is a word for people who try to make money off you and then dodge town. We call them carnies.

Speaker 2: Carnies. Like like

Speaker 7: and we have turned like the entire real estate industry essentially into people whose job it is to like kind of hope you don't notice problems. It's very weird. Like, we stand by every single home on opendoor.com.

Speaker 2: Yeah.

Speaker 7: You buy it from us, you don't like it, that's fine.

Speaker 2: Yeah.

Speaker 7: First seven days, we'll take it back.

Speaker 2: Yep.

Speaker 7: And I thought this was this was a good I didn't think By the way, you know what happened? From a second we thought we should do this to time it was live was about seven days

Speaker 1: Mhmm.

Speaker 7: Genuinely. And the reason that was true is because there's a bunch of people in the path of doing this whose job it is at any big company to go, but actually

Speaker 2: Sure.

Speaker 7: Experts say this.

Speaker 2: There's risk or something.

Speaker 7: Don't think. Like, as a buyer, are you more likely to buy a home from opendoor.com if I tell you if you don't like it, you can return it? Yes or no? Yes? Of course. Great. Let's go. Yeah. Do we stand by our homes?

Speaker 2: So so it's a little bit of an actuarial puzzle that you have to figure out, okay, what is the cost for that and then distribute that over the over the buyers of that product. Mhmm. That seems like something a technologist, a product manager, somebody who's a little bit more forward thinking is completely set up for. That makes a ton of sense. What what else is changing in the market? I I'd love to get your thoughts on the fifty year mortgage that was proposed. Is that good for America? Is that good for Opendoor? Is that something we should be supporting?

Speaker 1: People have been comping it to what happened with Japan's market after they introduced fifty year

Speaker 2: Yeah. I I did see some people say, oh, it might be bad, but what what break it down for me.

Speaker 7: Look. I I let me, do the thing that I'm not supposed to do and answer the question honestly. I I I I think that people who compare this to Japan are just deeply misunderstanding a bunch of things about the American economy. Like, let's just be clear. Like, the American and Western economies are just fundamentally different because culture is fundamentally different and the economy is downstream from culture. Like, it's a very real thing. That that that matters. But secondarily, like, let's go back. Democracy in America, Tocqueville, in it, talks about how the main difference between America and every other country is that Americans own the ground they stand on. It has been historically true that Americans have had a higher ownership of the land that they live on than any other nation. Mhmm. And this has been basically the main difference between the American, I own this land, I'm part of this community, and the transient European and Eastern lifestyles. Right? Mhmm. If you divide the worlds into people who are from somewhere and people who are from anywhere, America is full of people who are from somewhere. This makes a difference. This makes a real difference to how people are raised, how kids are raised, the economy, the come the country overall. Now, why is a fifty year mortgage incredibly important? You would not have needed a fifty year mortgage twenty years ago. You just wouldn't have needed. In fact, when the thirty year mortgage came in in 1931, wanna say, everyone literally said all the things they're saying about the fifty year mortgage. This won't work. It's too long. How can people pay it off? But the thing fifty year mortgage does is this. The thirty year mortgage was designed for a time when people didn't have student debt, where the average life expectancy was about fifteen years shorter. The average work time was about fifteen years shorter. Like, there's a very real thing where people are buying homes later and later. We just crossed the average homeowner buying their first home at 40 because student debt is crushing American debt to income ratios. What the fifty year mortgage allows you to do is to get into the market, which is the best market Americans have historically gone to. It's the main source of leverage Americans get access to without being a big company and being a fancy person. Right? Mhmm. You get access to that leverage. You can do it while paying down your student debt. And once you pay on your student debt, there's nothing that says you can't refi and pay it down faster. But if fifty year does fix what's called a debt to debt to income ratio for folks while they're getting started.

Speaker 2: Mhmm.

Speaker 7: And like, I think it is incomplete. There's another thing that's important like, the people who are against the fifty year mortgage are coming out. You don't no one's forcing you to take a fifty year mortgage.

Speaker 1: You can still take

Speaker 7: the thirty or the fifteen. Yeah. But what you're saying is I wouldn't need it, therefore, no one can have it. Well, guess what, buddy? Not everyone lives in Palo Alto.

Speaker 1: Yeah. It's interesting. You know, the the one one thing that came to mind for me was, you know, what you've seen in the automotive industry where typically sixty month is maybe like the I imagine that's the most popular. Right? Yeah. And then there's seventy two month. And if you look on sites like DuPont Registry, John, you'll appreciate this. They have like a two hundred month, you know Oh, yeah. Yeah. Yeah. Auto loan for for For supercars. And it's interesting that, you know, that those have been getting pushed out. But the issue with cars is that their assets that historic almost always depreciate massively. And even on faster and faster

Speaker 7: times zero.

Speaker 1: Yeah. And even if you look at EVs now, they they depreciate at at, you know, levels that you haven't seen with Yeah. Ice, you know, cars. So yeah. It's a I guess I guess that, you know, I think part of the part of maybe the frustration and the reaction was, you know, this is a way to increase demand, but it doesn't fix the supply side. And so Yeah. Maybe it's focused on kind of the wrong

Speaker 7: We should fix the supply side too. Look. I think we should take we should understand what the government's saying. And they literally said this. They said this is one of the things we're doing, not the last thing we're doing. And by the way, in the last four weeks, they've also done a bunch of other things. Mhmm. They just changed the requirement on credit ratings. They just changed the requirement. They just announced that they're gonna have new FICO score in there. They've look. Do I think they should do things to make supply more readily available? Yes. I think they've talked about making one time assumable mortgages more available that will also change the supply, obviously. Mhmm. I think we should basically force cities to just stop being so anti builder. Mhmm. Like, the builders are desperate to build, let them build. I think there's a bunch of things we should do. Like, this is not this is a problem that was created over a decade. We're not gonna solve it overnight. But one of the things we must do is fix this massive problems where American governments at the federal and state levels started subsidizing student debt to levels where everyone graduates with such a large debt, they could not buy a house if they wanted to even if they had a down payment. Yeah. Right? So, like, we must do something to solve that problem. Otherwise, what's gonna happen is people are never gonna buy a home, and very soon, America's gonna start looking like Portugal. Mhmm. And that's not what we want. Like, this is this is a like, we know how good homeownership is.

Speaker 2: Yeah. What are your thoughts on stock based comp? There was that Keith Ruboy was getting in the fight with somebody years ago about stock based comp. It feels like for some of these companies that are more mature, maybe you don't need to lean on it as much, but also there's certain accounting rules that make it maybe more advantageous to use it. Obviously, you know, from the start up world, it makes sense to incentivize your employees with stock based comp. But how are you thinking about it? Is there anything that that is changing?

Speaker 7: Look. My my salary is a dollar. Right? Okay. Like, I get paid $1. Yeah. My entire comp is stock based based on performance measures.

Speaker 1: You you hit John. We're hitting the size gong for one of the highest salaries we've

Speaker 2: infinitely more than $0 salary.

Speaker 1: That's right.

Speaker 7: Yeah. So I'm not I'm not I'm ideological on this issue, which I think for a very long time

Speaker 2: Mhmm.

Speaker 7: Corporate executives have gotten rich driving their companies down in valuation

Speaker 1: Mhmm.

Speaker 7: And essentially failing their way to becoming millionaires. Right? This is like a very weird world where we've created where you are incentivized to suck at your job

Speaker 2: Yeah.

Speaker 7: And do nothing unless you get noticed. If you don't get noticed, you're not gonna get fired. If you don't get fired, your RSUs vest and you become like rich. Like, this is like the story of like so many great companies. This is terrible. This is just terrible for capitalism because as the American people rightly recognize, this is a scam. Mhmm. A world in which corporate execs get rich, shareholders lose money. That's terrible. I think corporate executives basically should only get paid in options. Now, like, it's actually it's actually difficult to only get paid in options. I tried.

Speaker 2: Sure. Sure.

Speaker 7: But there's a very there's a way we've essentially, at OpenDoor, reconstructed options as RSUs. The PSUs, if the stock goes below what it was the day I joined, I'm I get paid actually zero.

Speaker 2: Wow.

Speaker 7: Like, actually zero nothing. And there's, like, cliffs So they take

Speaker 2: away your dollar, or or you get to keep it with a $1?

Speaker 7: Well, should know what the

Speaker 1: funny thing is? They they they should be able to claw back the dollar. They should claw back the dollar. Have to

Speaker 7: pay for benefits.

Speaker 2: Oh, sure. Actually. So

Speaker 7: so I pay Opendoor to work at Opendoor.

Speaker 2: Sure. Sure. Sure.

Speaker 7: Yeah. Which I think is perfectly fine, by the way.

Speaker 2: Wait. I mean, so so so this is sort of, like like, do do you feel like you're in the in the lineage of Elon Musk's newest newest pay package, like, heavily, comp aligned to market cap. Is that Yeah. Where this is all going?

Speaker 7: Yeah. I mean, I I I'm missing a couple of zeros.

Speaker 2: Okay. Yeah. Of course. But, but I I yeah. I I I can't find a problem with that package. I I love it. I I just think it's so it's so aligned.

Speaker 7: I think it's a very real I think very few traditional executives would take it. Mhmm. Like, very few traditional executives would take it. But I think what shareholders should want is none of those executives to be in charge of publicly traded companies.

Speaker 2: Sure. Sure.

Speaker 4: Sure. This is like

Speaker 7: like this is a very real thing. I think in the private world, a very good indicator that a startup is gonna fail is if the founder pays himself a very large salary.

Speaker 2: Sure.

Speaker 7: Like, mean, I I I do some angel investing

Speaker 2: Yeah.

Speaker 7: That my wife insists we list under charitable giving on our family's investing. Yeah. But in my experience, if the founders pay themselves a very large salary, the company's gonna go to zero relatively quickly.

Speaker 2: Yeah.

Speaker 7: Somehow corporate executives get paid like in cash, like $510,000,000 and RSUs another $510,000,000 to basically be as inoffensive as possible and listen to the consultants. Like, this is what happens. Right? Like, you have some

Speaker 1: Listening to the experts again.

Speaker 2: Trust me.

Speaker 7: Yeah. This is like a real man. Like, you pay a comp consultant Yeah. To come give you advice on compensation. Mhmm. Then you go to a management consultant to give you advice on management.

Speaker 1: Yeah. Then you go to

Speaker 7: a financial consultant to give you advice on finances. Then you go to a PR consultant. And before you know it, this is what happened. Like, I I came to Opendoor and I went through every bill the company had paid for the previous six months. Like, actually every bill line by line. I'm like, what was this for? What was the outcome? And the company, paid them millions of dollars. Million like, it was actually I think number three on the expense line item. Like, we paid more for consultancy, we paid for Snowflake, which is like

Speaker 2: That's it's nothing. Yeah. Wow.

Speaker 7: And like, for to what end, the company was basically going to zero.

Speaker 2: Yeah.

Speaker 7: And but you but corporate exec but the fancy types who got MBAs from fancy schools do that to avoid being noticed and getting fired. Right? That's the goal. And I think I think corporate executives should get paid only when they make shareholders money.

Speaker 2: Yep. I like that a lot. This was fantastic. The chat is absolutely loving this. I wish we could go longer. We'll have to have you back. You're welcome anytime there's news or anything. Georgia, do have one last question for you?

Speaker 1: Yeah. I have a lot more questions. Have a more it questions. Let's a regular thing.

Speaker 2: Someone in the restream waiting room. Thank you so much for taking the time. I'd love to go deeper. Also, I mean, I just feel like we can talk about, like, anything, really. Like, there's so much here. Yeah. We barely when I asked about strategy, we, you know, spent five minutes on one particular product, and we could do that probably every single week since you're shipping so Yeah.

Speaker 1: I would say as there's more news on on mortgage you know, mortgages, both the assumable side, the term Yeah. You should come back on.

Speaker 2: We'd love to have you back.

Speaker 7: I think it's thirty seconds to do something. I promise it'll be only thirty seconds.

Speaker 2: Please. Please.

Speaker 7: Or stuff. If you are watching this show and you're a founder type, the odds are you're an odd duck. You're swimming in the wrong sea. Find me on x. My DMs are open. We're hiring in offices. This is not a remote company. We're in offices with our colleagues working incredibly hard for a future that matters. So find me, and we'd love to have more folks join the mission.

Speaker 2: Yeah. We love that. Everyone's clapping here.

Speaker 1: I love I love your perspective and and how you're approaching this, and, I can't wait to see all the progress you and the team make.

Speaker 2: Yeah. Highly recognize it. It's a generating opportunity. Cheers. Cheers. Bye. Let me tell you about Adio, customer relationship magic. Adio is the AI native serum that builds, scales, and grows your company to the next level. Our next guest is already in the Restream waiting room. We got Paul Needham from the infatuation. Welcome to the show. Look at that

Speaker 1: background. That is Look at the setup.

Speaker 2: I love it.

Speaker 8: Thank

Speaker 2: What's you, fun brand exploration.