Business Breakdowns
· Kaz Nejatian
[00:00:00] S1: Matt, I think you're just straight up wrong. I think there's a lot of FUD that comes from people who provide point solutions, who say their point solution is so complex that you could possibly never mix it with another one. Let me give you an example. We had two products at Shopify: Shopify Payments and Shopify Tax. Both had extremely high penetration rates and were used by basically everyone. If you happened to own a restaurant in New York and went to your payment provider and said, hey, I'm considering getting this tax — can you do tax for me? They'd say, oh no, you should stay with us, because it's so complicated. Are there complexities in the system? Of course there are. But for 80% of people, 100% of these services are relatively vanilla. 80% of the people are the margin opportunity that pays for 20% of complexity. It just seems terrible for those 80%. Do I think someone who wants to buy a $14 million mansion, who has no US residency, who has trusts all over the world and multiple cars should be able to use Opendoor home loans and Opendoor insurance and all the other services? No, I don't think they should use us. I don't think the average American living in South Dakota should pay for that subsidy. Our job is to make life easier for the average person — the school teacher, the plumber, the electrician. They should not have to pay more because complexity exists in the system. I say this as a guy who has complexity in his life: there's no reason why the average person should subsidize my life. That sounds insane. But that's the world we live in. My job is this at Opendoor. I want a teacher in Kansas City to have a one-click mortgage, title, escrow, homebuying experience and home-selling experience. That's what we're goingWe're going to solve this for a teacher in Kansas City. The dudes living where you live with their Maseratis can go to someone else.
· Matt Reustle
[00:00:00] S0: No Maseratis in the garage. In terms of the go-forward, you've brought up multiple times — you have this path to profitability, but also you're not afraid to invest in the business. I want to think about that philosophically, how you approach that. Sometimes you want to heavily invest when there's an opportunity to go after something. You've made it clear that there's a path to profitability at certain points in time, in terms of EBITDA-positive and adjusted-net-income-positive by year end. How are you balancing that with whatever need there is to reinvest back in the business?
· Kaz Nejatian
[00:00:00] S1: My wife wanted me to work out, so she bought me some weights and a bench. I totally ignored them and didn't work out. So she then put the bench at our bedroom door and the weights on it. I couldn't get out of the bedroom without actually seeing those things. Opendoor requires some of that energy. Opendoor has had too little discipline when it comes to being a for-profit business, because it has been able to reach for capital markets over and over again. That has actually been bad for Opendoor. So it's incredibly important for us to be incredibly disciplined. This will be painful as hell. It'll just be painful. This will hopefully be the last job I ever have, and I care about my job and the company I'm running a decade from now. The best thing I can do for that company is ensure this company is the most disciplined and most aggressive tech company in the market. That's the real answer. Am I forgoing areas of growth that I would not forgo if I had lots of profits? Yes, I am, for sure. But there's a very real thing where this is healthy discipline. I think it's healthy, and I think it's important that Opendoor be funded by its cash flow. It would actually surprise people to learn how few engineers work at Opendoor. Opendoor has fewer than 70 engineers. That would surprise most people. We're getting a crap ton done with those 70 engineers, but I promise you, I know what every single one of them is working on, because we don't have the luxury of waste.
· Matt Reustle
[00:00:00] S0: I heard you mention in another interview that you've had some people make some pretty powerful changes within the business along the lines of engineering changes, but they did it with AI systems. So it's actually a nice segue into that question. How much is your ability to operate with 70 engineers the power of both those engineers, and those without an engineering background being to do a lot more in that regard?
· Kaz Nejatian, Matt Reustle
[00:00:00] S1: Our engineers are just excellent — genuinely excellent. Our head of data is an ex-signals intelligence officer who used to run a very complicated system for one of the world's largest militaries. We have multiple YC founders in the building who have joined in the last few months. Two from my batch at YC alone. So we have genuinely excellent engineers here. But there's a division of labor between systems that create leverage for other people, and those front-ends. Our engineers spend their time creating systems that allow other people who are not engineers to create leverage for themselves. When I got here, we had an entire service whose job it was — it was maintained by engineer — to calculate RSU allocations for employees. I can't tell you how nutty a waste of time that is for an engineer. But basically all companies have this. Why is an engineer working on this? If you cannot, using Claude, ChatGPT, Codex, or Grok, write a SQL query — you should not be working at a tech company. This is a tech company. I can see our head of internal comms right there. Our PR consultants all-quit when I joined. And I can tell you — the head of internal comms who does this work for us, she spends most of her time on Claude. So does everyone else in the company. That's different from most other companies. [00:00:00] S0: Thank you very much for taking the time after that conference call you just had. I appreciate it. And I'll say the words that are always important after earnings — congrats on a great quarter. [00:00:00] S1: Have a great day, dude. [00:00:00] S0: Likewise.