Opendoor lives by the "make it up in volume" motto that I've long been familiar with as a bond trader and has been popularized as "The Fat Startup". The encouraging part of this is that the market they're pursuing - residential real estate - has plenty of volume ($1.6 trillion / yr as they claim in their SPAC presentation). The conflict - and, ultimately, the opportunity - is that most of that market is slow, heavy, and messy.
The model for Opendoor has been to use data and technology to buy and sell homes more efficiently. They buy homes from owners nearly instantly in exchange a "seller fee", spend some money to rehab the home, and then resell it, potentially earning on the appreciation, as well.
As we'll confirm in a look at their unit economics and flywheels, there's reason to be encouraged about their success doing this so far. While it's currently a razor-thin margin business, we see growth potential in additional fee income in additional services like titles, insurance, loans, remodels, etc. Most excitingly, we think that Opendoor has secured the capital, management team, and market position to build out the infrastructure to turn cost centers into revenue generators in a massive market, achieving flywheel effects in a similar fashion to Amazon in its early stages.