<story><title>Opendoor, a startup worth emulating</title><url>https://stratechery.com/2016/opendoor-a-startup-worth-emulating/</url></story><parent_chain><item><author>tommynicholas</author><text>One thing not mentioned: Opendoor absolutely does not have to carry the balance sheet risk of owning the homes forever. They can chop up those assets and sell them to anyone (hedge funds, banks, individual investors, etc) at any point. At scale, they&amp;#x27;d be able to do this and still maintain most of the upside.&lt;p&gt;At some point, Opendoor will be able to let businesses that simply manage financial risk for a living (i.e. banks) spread the downside risk out over the entire financial system, while Opendoor takes advantage of its customer acquisition and data advantages to capture the bulk upside. It&amp;#x27;s not a perpetually risk model if they don&amp;#x27;t want it to be.</text></item></parent_chain><comment><author>phire</author><text>Also, their position in the market gives them a very good insight into the likelihood of a crash. As demand for their services will increase whenever sellers are desperate to sell their houses.&lt;p&gt;If they track those indicators, they will be able to dynamically decrease their purchase price based on the likelihood of a crash and (in the worst case) limit their exposure to only the housing stock they had at the start.&lt;p&gt;In the best case, desperate sellers might accept the much lower price and Opendoor will make a profit off the crash.</text></comment>
<story><title>Opendoor, a startup worth emulating</title><url>https://stratechery.com/2016/opendoor-a-startup-worth-emulating/</url></story><parent_chain><item><author>tommynicholas</author><text>One thing not mentioned: Opendoor absolutely does not have to carry the balance sheet risk of owning the homes forever. They can chop up those assets and sell them to anyone (hedge funds, banks, individual investors, etc) at any point. At scale, they&amp;#x27;d be able to do this and still maintain most of the upside.&lt;p&gt;At some point, Opendoor will be able to let businesses that simply manage financial risk for a living (i.e. banks) spread the downside risk out over the entire financial system, while Opendoor takes advantage of its customer acquisition and data advantages to capture the bulk upside. It&amp;#x27;s not a perpetually risk model if they don&amp;#x27;t want it to be.</text></item></parent_chain><comment><author>hkmurakami</author><text>Blackstone will definitely be eager buyers at opportune times (I believe they are currently divesting their considerable stakes in low to mid market real estate that they&amp;#x27;d been accumulating since 2009).</text></comment>