Opendoor Technologies Inc. ($OPEN)

All right. We're going to get started. I'm Dae Lee, JPMorgan's Internet analyst. And we're pleased to have here with us, Opendoor's CEO, Kaz Nejatian.

That was good. That was as good as anyone does that last name, man.

Okay. That's great. I practiced. Okay. So Opendoor is the leading digital platform for homes, buying and selling powered by AI-driven pricing and operations in 1Q Open had contracts to purchase over 5,000 homes which is a lot, probably the biggest home purchaser in the U.S. And it's the highest acquisition level since 2022. And Kaz became CEO in Fall 2025 after time as COO at Shopify and leadership positions at PayPal and LinkedIn. So a builder and a [indiscernible], and he is the architect behind Opendoor 2.0, a faster, volume-driven AI-powered model. And we'll dig into all of this today. So Kaz, thank you for coming.

Thanks for having me, man.

All right. Let's start with how you -- or the reason why you joined Opendoor as CEO last fall? Walk us through your decision to take this role? What did you see in platform, data or market positioning that convinced you this was a generation opportunity? And what was it that you felt like you could do for Opendoor?

Yes. I mean -- also I had been at Shopify for 6 years, and I never thought I would leave the company. Look, I thought Shopify was going to be my last job. And Opendoor felt like a flaw in the matrix, I could not believe that the whole world wasn't running towards this company because from what I was seeing from the outside, I'm like, okay, this is just there's something wrong about it. Let me talk through why I think that was. The first is -- look, let me just broadly talk about the mission, kids that grow up in homes that their parents own have better life outcomes. When people buy homes, crime goes down, like it is as close to [ panaceas ]we have in the world. Owning a home is incredibly important. The mission felt like one that I wanted to dedicate my life to and that could be a deeply meaningful one. And second, I am a start-up founder, like I'm a [indiscernible], I learned how to speak English by coding. And the thing you learn after you have a few startups is that nothing beats native intent and proprietary data. Native intent and proprietary data like that's 2/3 of the ball game. And Opendoor has had stupid native intent, like in core markets of open door, 1 in 5 Americans who sell a home, try to sell to Opendoor. It's just approximately a bajillion dollars worth of marketing spend wouldn't get you that. So it's a very real thing. And the data moat of Opendoor is one that nerds love. Like it's a single largest asset class in the world and Opendoor has like proprietary data on it that no one else does and can't get. So that's the second thing. And the third thing that just like drove me nuts was, look, I think there's a lot -- a lot of people say a lot of words about AI, but like a lot of it's become like buzzword bingo for CEOs. And this is deeply boring. But the cost of a transaction in real estate is a single highest human labor cost per transaction in the world. Like there's no transaction that cost this much in the world. So if you think of like the companies that AI should be helpful to their native mission on, the mission is important, there's proprietary data native intent and the company seems to have been built perfectly expecting that AI would fall from heaven. So I think those 3 things have just been like, I just couldn't get out of my head. I also look -- I think it's well leaked that I consider [indiscernible] company private. People talked about it. But I'm genuinely like very, very excited about this, and I never thought I would leave Shopify.

Yes, I agree. So the data and the tech foundation, I may agree that those are all important things for Opendoor. And I felt like real estate industry, covering it from outside in, there's an industry where the -- like tech disruption just has not worked like it has in other industries. And I felt like Opendoor is in that position as all of the building blocks. So like what are you, I guess, with that said, like what -- like coming in, like what were the 2 or 3 most impactful changes that you've made? So those building blocks can start clicking together and propel Opendoor in a newer direction.

Yes. Look, can you just -- that you know me a bit, so you know I tend to go on a rant. So stop me if you want me to stop. But I want to actually talk about the first thing first, which is in the history of the internet every asset class that has gone online has gone through the same progression. Like first internet solved discovery, then internet solved trust, then internet solved underwriting. The best way to think about it is actually is e-commerce, eBay self-discovery, PayPal soft trust, Amazon [indiscernible], like short-term home rentals, Craiglist solved discovery, Airbnb solved discovery, trust, underwrite, like this has been the pattern. But basically, all that's happened in real estate is the flyers that used to exist in offices of real estate agents have now been jammed into a browser, everyone was like cool we are done. That's just not how the Internet works. Like someone is going to solve all 3 of these things. I think it will be Opendoor. And it's very clear like we are value crews. But like -- I don't -- like I'm not a guy that talks like this, but it's like been clear. But the single biggest change we have made at Opendoor has not really been like a change in pixels or underwriting, although we've made lots of changes in pixel underwriting. There's been a change in the company's stats. I think this is why the market appropriately valued Opendoor a year ago, which is Opendoor's key decision -- Opendoor was trying to answer a year ago, was what will home prices be a year from now? Like the company was basically a prop desk buying homes and predicting what home prices will be a year from now is about a fruitful endeavor as predicting what the lottery will be a year from now. Like it is just a dumb thing trying to answer. You think like it's just not a useful value. We can't get value out of it in a real way at the company like ours. What we have changed is we no longer try to be good about predicting asset prices a year from now. We try to be good about predicting when will this home sell [indiscernible] right about time, not right about value. We're like much more of a market maker than a prop desk. And when -- just this imagine -- when -- if the market -- I mean, a bunch of folks here run hedge funds, if the market is going down and you are a long-only hedge fund, what do you do? You just like withdraw from the market, right? But if you're a market maker, what do you do? Just turn faster. If the market is going down, just turn faster, and you'll be fine. And that has been the key underlying fact about Opendoor. Like if you look at Opendoor, 6 months ago, or I guess, 2 quarters ago, over 50% of our homes have been sitting in a market for more than 120 days. We talked last quarter, that number is less than 10% now or 10% now. So that's -- we have significantly decreased the amount of time we hold the home for. And that has allowed us just buy a lot more homes and this is what you're seeing. We publish our numbers every week. We are the only company in an open market that does that. [indiscernible] opendoor.com and see our markets. And you see that our acquisitions have year-over-year like beating seasonality right now. So that's been the biggest change.

Okay. That's good to hear. I guess there's a disconnect -- or there could be a disconnect from what you're seeing from within. And I guess what the market is seeing from outside. So where do you think the biggest disconnect is right now? And where do you -- I guess, is there like a timeline or time frame in which we might be able to see what you're seeing from within? There's clearly positive changes in terms of volume, acquisition, but I think people value seeing that in the P&L -- investors. So just curious how you're thinking about that.

I mean, look, I'm not a good investor. I should not have your job. I've bought 2 stocks in my life, Shopify and Opendoor. So like not -- I'm not that guy, but I do think there's a very real thing, which -- let me tell you the thing we have said publicly, so like we -- I came in and I said our goal was adjusted income breakeven on a forward 12-month basis end of this year, right? We announced last earnings that Opendoor is now adjusted EBITDA breakeven even on a 12-month go-forward basis. Like that's what we're working towards and the -- you have seen margin improve every single month since I took over. October was better than September. November was better than October, December like every single month. And we said we're -- we guided that our margin will be between 5% and 7%, which is what we thought we said it should be in order for the company to work. So all the external metrics are like doing what we said they would do. But Opendoor is a cohort business. Like the way to value open door is to look at the cohort of home we buy and what those cohorts do. And if -- and we published a cohort in the last earnings. If you look at the cohorts, they look fundamentally different than they used to do. Opendoor's cohorts used to start and then just have this massive collapse down as they sold through. We published October, November, December, January cohort, and they're basically flat lines. They're selling faster, margin degradation is lower, margin maintenance is higher. So I think if you're just waiting for those cohorts today, you should -- those cohort will bake on the time frame we've told you they bake, like 120 days [indiscernible] when they bake. And you can see like literally, it flow through. But it's not magic that our margin is higher. We're buying better homes, selling them faster, that tends to increase margin. So I don't -- I actually don't know when the P&L will show the things that people wanted to show. But I can tell you, there is a very real thing that if you assume Opendoor is a company it was a year ago, your models are wrong. And the company is a fundamentally different in nature.

Okay. All right. Well, hopefully, my models are right than wrong at this point, but we'll see.

I mean I think you follow the company more closely with the average investor.

We'll let the numbers do the talking in due time. Okay. I guess moving on. So I think a critique that Opendoor has faced before was that. It is highly dependent on the housing and the macro environment. Do you feel like you've made the changes? Or has there been enough changes where you feel like you've kind of disconnected the 2 where you should be able to drive in current environment?

Look, I mean, I think it is -- like it is fowly to say macro doesn't impact Opendoor. It's just like dumb, right? Just like macro impacts everyone in retail and everyone thought we'd like sort Shopify, [indiscernible] what macro does. And we help assets. So macro has a real impact. The question is, is Opendoor defined by macro or impacted by macro? That's a real thing. And Opendoor is not defined by macro anymore. You can actually literally see it. We published October cohort, and you can actually see all that cohorts we published. Home prices have gone down about 3.5% since we bought them in October. Our margins have gone up and stay steady, right? We are less than 1% of homes in the U.S. today, I mean, we're about 5x bigger than we were last year, this time last year, but we're still less than 1%. So we're not capped by clearance. We'll have 4 million homes traded this year. 4 million homes is plenty of homes for Opendoor to do what it needs to do. We're not assuming macro will rescue us. But you can see, we've bucked seasonality like we publish our numbers every week. Our margins have bucked macro and TAM is not constrained. So I don't -- I mean, are we impacted? Yes. But the very real thing, most CEOs would sit here and tell you that like you want where macro will help, but we're waiting for macro to recover. I am actually saying the opposite. I like the fact that we're running this company and turning it around in tough macros. We actually really like this about the company because what I saw happen in [indiscernible] era was everyone was hitting singles, pretending they were hitting home runs. And like when the water went out, no one was wearing shorts. And it's like that really happened. Like we're building the company and proving steady and increasing margins in the toughest macro. And I have -- I like this environment. Like this is where we build our muscle. And if you look at the homes we're buying, dispersion is up, dip is down, the days in possession is down. So like I think we're building the right muscle and I like this environment. I don't -- I think it's odd to hope for macro do anything. But it's hard -- like if you look at the -- sorry, I'm just going to go around for a second here, just because I haven't ranted enough today. If you look at world defining companies, almost all of them were built in tough macros, almost all of them. Like let's go back in time, [ Carnegie ] steel, Standard Oil, like more recently, Amazon, Uber, Airbnb, like tough macros are what allow you to build the muscle you require and the shape that you require such that you don't allow yourself to think you're winning when you're losing. Like this is -- Amazon has such a clear example of this. Like Amazon that exist today got built in 2001. And that's -- so I like the macro we have right now.

Okay. Yes. Certainly, challenge bills character. So I agree with that. Let's talk about AI a bit in that like there's been a lot of talks about how AI is impacting the industry. How do you feel like AI will, one, affect the real estate industry broadly? And two, how are you better utilizing or incorporating AI into how you guys operate at Opendoor?

I think there's like the bingo card AI CEO thing I have to do, which is like, I think if we don't do it, they will take your CEO card away. But I think that's just a very like an odd boring thing. So let me just answer in the non-boring answer. Look, AI is a piece [indiscernible] for us, but there's a reason why it is. If you think of old SaaS software, like what was SaaS. SaaS was a discovery that you could build UX on top of a [indiscernible] database that enforces business logic, and you could increase productivity while lowering the cost of software, that was the SaaS like revolution. And if you are AI, if you -- with AI, like that becomes deeply odd because the business logic is no longer useful to enforce because you can literally have AI enforce it, you don't need software to enforce it and the [indiscernible] database is less useful. So this is what happened to like SaaS. Like point solution SaaS is like a very odd in this day and age. And this has been what we've proven, so it's like a long answer, so let me gear up. This is what we've proved, we launched a mortgage product in 6 weeks. Like we launched a mortgage park in 6 weeks with 3 engineers. We couldn't done that with AI. That's a very real thing. I would put the penetration of AI at Opendoor against any company, not any company, any company in tech, like we're relatively AI-pilled. But structurally, for like what the industry is [indiscernible]. If you think what AI will do, it will take human labor and make it far more efficient. And the structural knock against what we do was that it took too much human labor. That was a structural knock. The structural knock is you require too many people to do this well. Opendoor's doors head count has gone down. That's public. I'm sure every hedge fund in this room [indiscernible] in. But our acquisitions have gone up. We used to have 11 people review every home. We now have one and dispersion has gone up. Margin has gone up. Like you can build machine exoskeleton around a person such that our underwriters can review an order of magnitude more homes than they used to and be better at it. So I think AI is for housing and for clearance to this market, like structurally a different thing. It's like trying to pretend you are in transportation before railroads existed. These are different markets and it will have different clearance. And last, promise, this is last. If you look at the talent coming into Opendoor today, the ML talent and engineering talent and [indiscernible] talent, I would put it up against any company, not any company in real estate, any company in tech. And you will find that the quality that we are hiring, the work we're getting done is just insane. I think that has been like -- now look, our sales AI [indiscernible], supported the AI [indiscernible], all the AI stuff that other people say is also true here. It's just that we're not like buying off the shelf randomness and pretending we're good at this.

Yes. All right. So you got the talent. Let's talk about the data advantage that Opendoor has. Like what do you feel like you -- what's most unique about what you guys see from a data perspective?

We're the single largest buyer and seller of homes in the U.S. We buy more homes than anyone else. And we see more homes than anyone else. We have pictures of more homes than anyone else. We looked at more foundations than anyone else. Are -- like you can build a really good dispersion model based on quality of roofs, like the umbilical dispersion model and foundations and clearance and demand, the slope of the driveway, like we just have data on our servers, you could scrape MLS from now to like end of time and not get relatively useful data to build a real model with. What happens is not only do we have proprietary data, we also -- so what you need is proprietary data and a right eval model, right? You can't build a good eval model without real-time signal, right? Whether we buy a home or not buy a home, we see what happened to that home and we see that 120 days before everyone else is it. So like the guy who leads our -- we actually have a bunch of new people in our data team. One of them came from building data models for one of the largest market makers of the world in commodities. And one of them is a former Signal intelligence officers, they used to track where [indiscernible] would land. And like these guys are just like having -- like just cannot believe the amount of proprietary data on our servers. So we're just -- like we have now -- I think it's a fair thing to say. And before I arrived, Opendoor had not run a model in shadow mode for some time. We now have multiple models running in shadow mode this week which means you get to have this amazing thing where AI competes with AI for best vision of the world. It can back test it, which no one else can.

Okay. That's interesting. Okay. So it kind of feels like, again, you guys have all of the building blocks. And I think you said earlier, was it 1 in 5...

In our core markets, 1 in 5 sellers that sell a home come to Opendoor to sell it.

Right. So if that's the case, what do you think is preventing more sellers from selling to you guys?

Look, we are far from great at doing our job. Like we're less bad than we used to be, to be clear. Like we're just -- like we're better than we used to be, but we're very ordinary about ourselves and our opportunity. Look, if -- let's just go back 6 months because I think it's important to talk about it. Let's say, 100,000 people came that month to sell a home to Opendoor. Half of them would come to door, we'd say, sorry, not available where you want to sell the home. Great. Then we'd say, oh, your home outside our buybox, please go away, lost another half. So I'm now down to 25%. And then we said, okay, this 25%. I will buy your home at a 20% discount to its value. I am -- everyone else who was saying would tell us to please go away. And if people would sell us the home or people who know something about their home that we didn't know. We're paying for negative feedback loops. It was like amazing. What did we do? We launched nationally. Why did we launched nationally? Because it's a really dumb idea when someone comes to you says, I would like to deal with you for you to say, no, it's like free [indiscernible] especially more efficient. Like our marketing spend has gone down, our acquisitions have gone up. There's like no magic here. We just improved the funnel. We expanded our buybox. So we basically can now buy almost every home in the U.S. in the lower [indiscernible]. We expand our partnership networks. We can actually renovate almost every home in the U.S. now. Now we shipped a product 4 weeks ago, 4 weeks ago. That tells you more information about your home that you can discover otherwise. So you can decide if it's a good deal or not, to improve conversion by double-digit percentage. So we don't need to spend a significant amount of money telling people Opendoor exists. We don't. We just need to be better at converting the volume that's already coming to opendoor.com and what you have seen this significant increase in our contract, we're like up 5x, 6x, whatever, we have like 550 contracts last week. In a worst housing market, isn't caused by us spending money on brand. We actually literally took our ads off TV for a while. It is -- we seem to be better at converting it, and we're getting better at it every single day. Generally every single day, we're getting better at this.

Okay. All right. So the opportunity is already knocking on your door, you just got to open the door and let them in.

I would have killed for this [indiscernible] Shopify man. I would have killed to have 1 in 5 -- like my biggest problem at Shopify was going to entrepreneurs or potential entrepreneurs, and they would say, what is a Shopify? That was like my biggest problem. Like Shopify was a default for choice at the time. I am shocked but a volume of people who come to Opendoor try and sell us their home. We just need to do a better job buying these things.

Okay. That makes sense. All right. We talked a lot about the opportunity. So let's talk about some of the risk a little bit. So I mean, what are the biggest risks that you see as you go down this mission path, I guess, put differently, like what keeps you up at night? Are there any...

I have 4 kids, the youngest one of them is 2. So like kids keep me up at night.

I feel that.

I used to joke around that I sleep like a baby, I wake up every 2 hours. But I think the responsible answer to this question is this. Opendoor takes assets on this class as balance sheet. Those assets have 4 distinct risk periods. The way we're dealing with those risk periods is by shortening the number of days we're in each risk period. Like why do you have a mortgage product? Because if you come to Opendoor with the Wells Fargo mortgage, that house takes 45 days to close. If you come to Opendoor with an Opendoor mortgage, that house takes 14 days to close. There's a difference between 14 days of risk and 35 or 45 days of risk. Why do we buy the homes we do? Because on average, we start renovations on day one right now rather than day 45, like why do you buy this [indiscernible] because we've shortened -- like that, the responsible answer, like we're taking risk and there is shorten time, we're in each risk for a while, so we can calculate better. But more importantly, cash now more later, allows us to share that risk with the customer. So a significant portion of our asset book is now asset lighter. And you can imagine how we launch an asset like product eventually. Those are the real assets. That's honestly not what keeps me up at night. That's what keeps [indiscernible] up at night. What keeps me up at night is this? I feel that the responsibility to the world because the worst thing you can do is take a $1 trillion opportunity and build a $1 billion business out of it and pretend you were smart. It's offensive. And lots of people go around wearing fancy watches and flying private jets, who have done that. And I judge myself not against that, but against the history of people who have solved large problems for the world. And I don't want I don't want to wake up and have to tell my kids that story. Like I had a great job at Shopify. It was just like a dream job. I was clearly winning. And I didn't leave it to build a small but successful business. Like we're on a mission here, and it's not like a random thing, I literally like on my first day at Opendoor, actually, that's not true, it was Saturday so it was before my first day at Opendoor. The first thing I changed was Opendoor's career page, they logged in, get pushed, change the career page. The career page used to say some [indiscernible] corporate word about like, I don't know, [indiscernible] used to say. But it now says this is hard, valuable and fun, and we're on a mission to tilt the world in favor of homeowners, and it tries to convince you very hard to not come work at Opendoor. Like that's what keeps me up at night, is waking up. Look, I think there's -- there are people who question who have your job and [indiscernible] hedge fund world, whose job it is a reasonable one, which is like will Opendoor survive. That's a reasonable question for people to ask. That question has been answered in my mind, like we've answered that question. I know where it's going. The question is will Opendoor be the default in the world for this problem because defaults matter on the internet. That's what keeps me up -- as I'm answering this, I'm seeing our CFO at the eye of my corner and she's like really [indiscernible] this answer. So -- but it's true. It's -- like that's what keeps me up at night.

That's fair. Yes. I mean housing is consumers' biggest asset that they purchase. So solving that challenge of ownership, I think, is an important one, too. Okay. So like based on everything we talked about, it feels like velocity at which you're purchasing as something as home, how long you're holding those homes for are the 2 most important KPIs that you might be tracking? Is there anything else that you are looking...

If I were outside Opendoor, I would track the following things to know if Opendoor was failing. Like this is -- we publish what we need to do to get to ANI breakeven. We're succeeding, right? Like if we are not buying the number of homes we say we should get to ANI breakeven like we're failing. I think it's important to tell people -- like it's important to tell people to know how you're failing because then you can hold yourself accountable to it. Part of it is accountable [indiscernible] opendoor.com was to hold ourselves to account. So if we buy a fewer homes and we say we need to buy to get to ANI breakeven, we're failing. If our average days on market goes back to where it was in Q4, we're failing. If the cohort curve start collapsing, we're failing. But if we continue to buy the homes, number of homes that we need to buy, if the average [indiscernible] market continues to be low and if our cohort curves continue to be flat, then this is a fundamentally different company than it used to be. And I think that's how you can judge us or you can just wait for the quarter release also come on, you can judge that also. But in the toughest housing market in a while, we've had our margins go up, like our margins are going up as the industry's margins are collapsing. Our listings are clearing fast as delisting is going up. Like delistings went up, our listings cleared faster. Like we are bucking the market bucking seasonality and bucking history. And I don't know how long we need to do that for other people to say, oh, there's something different here. But internally, because we see further than folks externally see we are all incredibly bullish about the mission.

Okay. All right. We'll hold you accountable for that. Last question. Let's talk -- we talked a lot about your core product. Let's talk about what you're doing outside of the core. So we talked about cash, the mortgage. Like how are you envisioning like Opendoor, let's say, like 3 to 5 years? What is Opendoor down the line?

I think there's a very odd thing that happens in the world, where people try to think of companies as verticalized things. That's not how you build software. You do not build software by verticals. Like if you do that, you will fail. Like the way you build great software companies is you build a very thick platform upon which you build the same verticals, right? Whether we buy a home or not, whether we give a mortgage [indiscernible] or not and whether we eventually give insurance for that or not. Those are exact same decisions. They are the same decision, like the price of the home, the mortgage issued on home and the insurance at the home are highly correlated things. So we will build a very thick underlying model to value those things in a very [indiscernible]. Let me give you actually an example, but I launched Shopify Capital, which was a lending product, in the United Kingdom in 11 days in a country where we didn't have a bank account or an entity or employees. It took 11 days. Why were we able to do that? Because we built a very thick platform. So mortgage is just our first attempted this at Opendoor, and we are proven by the way, like -- there are ways from the outside, we can cover this figure this out. But our mortgage attach is much higher than I thought it would be in Colorado. And the people who are buying home from us and taking mortgage from us often tell us that they have to home to sell to close that mortgage. And guess what, we're buying that home. So the loop is closing, and I think the attach opportunity is larger than I thought it would be.

Okay. All right. All right. That wraps up.

Thanks, Dae.

Thanks for coming.

I appreciate you giving me a chance to rant. I know this is usually different to these conversations go. But thanks, man.

Thanks for coming.

Thank you.