Over the weekend, I saw a video from a session at Startup Grind Global Conference in which Eric Wu, the CEO and Co-Founder of Opendoor.com, was interviewed by Elad Gil a “serial entrepreneur, executive (Twitter, Google, Color) and investor at leading companies like Airbnb, Coinbase, Instacart, Pinterest, Stripe, Square, Wish and others.”
Inman ran a story about the interview, but really focused on the disruption-related stuff that Eric Wu talked about: automation, removing friction from the transaction, and how real estate agents will transform from project managers to advisors, etc. The reaction was predictable as Inman readers got their torches and pitchforks out, rhetorically speaking.
Lost in the mix was something incredibly important that Eric Wu said about scaling a company by 300% in about a year. And it’s a lesson that I think real estate brokerages, franchise companies, and REALTOR organizations might want to really think about in light of all that is going on.
Eric Wu says one of the lessons he learned was to “only hire missionaries.” This is an incredibly important lesson for all companies, all organizations, and one that real estate really struggles with.
What Eric Wu Says
First of all, here’s the video of the session:
The relevant section starts at 10:52 and goes through 12:25 or so.
The third thing I would tell myself is to only hire missionaries; I think that’s really really important.
They’re not really there for the mission or to solve the hard consumer problems. Greatness comes late at night when no one’s looking, willing to do the hard work in service of the mission of the consumer.
It’s really important, especially in the early stage, to try and hire as many missionaries as possible who really care deeply about the problem.
Elad Gil then asks how he identifies missionaries. Eric’s response:
One of the things… how much time do we spend talking about title, level, reporting structure, org structure… versus impact, and the core problems and the things that can be built to really build greatness. So it’s really just like, what is the mindset of the individual? And then the classic stuff like trying to figure out what motivates them.
If they’re joining because they’re so excited to solve the hard problems in the space, then you know they’re going to be there for the long haul. Whereas, you know, there are a lot of people who care deeply about title and comp [compensation] and their career.
I think Eric Wu is 110% correct when it comes to Silicon Valley. As he mentions, there are a lot of people in tech who want to get into a startup early, experience the growth, the early excitement, and then leave after success (“Series A to Series D” as he puts it) but aren’t necessarily missionaries. They’re at the company for their own purposes, rather than for the mission itself.
But that issue isn’t limited to startups. Every company, every organization, has to think carefully about whether their people are missionaries in it for the mission, or mercenaries in it for themselves. The difference in outcome is dramatic. As Eric puts it, greatness comes come at night when no one’s looking, when the person is willing to do the hard work in service of the mission of the customer.
Real Estate and Mission
Which brings us to the whole idea of mission. We know what Opendoor’s mission is: to remove all friction from the home buying and home selling processes so that it is as easy to move from one city to another as it is to take an Uber from one neighborhood to another. Whether that’s realistic or not is a separate question; what is clear is that Opendoor has a clear mission and a bunch of people who are missionaries.
What about real estate companies? What about REALTOR organizations? What is the mission?
The first issue is that there is no clarity of mission. It depends on who you ask.
Brokerage might say their mission is to help consumers with the most important purchase (or sale) of their lives. They might also say, as Compass does, that their mission is to help agents achieve success. Those are two different missions.
Franchises might say their mission is to help their franchisee brokers be more successful. They might also say that their mission is to help their agents be more successful, as KW and REMAX and Realogy franchises do. In some cases, franchises also say their mission is to help families achieve the American Dream or some such consumer-oriented mission. Those are three different missions.
REALTOR organizations, whether MLS or Associations, also have all kinds of different missions. NAR used to be the National Association OF REALTORS, with a mission that began, “Under all is the land.” In more recent years, it has said that it is the National Association FOR REALTORS, with a mission to keep the REALTOR at the center of the transaction and to help members be more successful. I’ve written in the past about this “OF vs. FOR” distinction, and will reiterate that those are two different missions.
I’ve done quite a few strat planning sessions over the years, particularly for MLS and REALTOR Associations, and something I always find amazing is a lack of unity even amongst leadership as to what the mission of the organization is or ought to be. It is often the case of, “Well, the mission is member success, and consumer protection, and high technology, and low cost, and this and that and that other thing as well.” If your mission is to be all things to all people, then you don’t have a mission. You just have a Mission Statement that nobody takes seriously, including the people who wrote the Mission Statement.
But let’s say that you have actually articulated a clear mission for your company, or organization.
The next step, then, is to focus as Eric Wu does on hiring missionaries.
As he puts it, lots of people care deeply about things like title, compensation, and their careers. There’s nothing wrong with that. The world would be a better place if more people cared deeply about title, compensation and their careers. But those people are not missionaries. They’re not the ones who are going to be staying up late at night while no one is watching to come up with some new way to fulfill the mission that drives them. They’re not the people whose spare moments are taken up with thinking about, studying, and working on the mission. Those people are mercenaries, and speaking as the ultimate mercenary (a consultant, a hired gun), I can say with confidence that mercenaries can do great work, can be amazing employees, and be wonderful (and good looking!) people. But they’re not missionaries.
I think mission is about spare time — that is, what do you think about, what do you do, in your spare time? That’s your mission.
Say you’re a brokerage with a clear mission of helping your agents be more successful. A missionary who works at your company would spend a good deal of her spare time constantly thinking about ways to make your agents more successful. She would be reading business books, listening to business podcasts, attending events, checking out blogs, talking to other people over drinks or dinner, constantly looking for ways to help agents be more successful. Because it isn’t a job for her, but a mission.
And late at night, when no one is watching and no one is expecting, she will come up with some idea for a new kind of training, a new partnership, a new piece of technology that will help your agents be more successful. Greatness is built on those moments.
If you’re the leader/owner of an agent team, and your mission is to help buyers and sellers, you might take a moment to identify the people on your team as missionaries or mercenaries. Do they care more about compensation, split, title, hours, who reports to whom? Or do they care more about how to know everything there is to know about housing, methods of construction, local zoning laws, regulations and ordinances, about pricing, about negotiation tactics, about project management, about the mortgage process, about title insurance, about appraisals, etc. etc. and so on?
During the interview, does the agent spend most of his time asking about leads and splits? Or does he ask about how you could help him deliver better, faster, and more satisfying service to his clients?
We can go on and on, but the point, I think, is pretty obvious.
Be Honest About the Mission
I ain’t gonna lie — it helps if your mission has some aspect of social good to it. It’s a lot easier to get excited and emotionally involved with a mission of saving orphans than it is to help banks get bigger. But every one of us and every organization has to be honest about the mission.
My mission, as a mercenary hired gun, is to work on interesting projects that could impact the industry with people I genuinely like spending time with. There’s no social good in that mission. It’s always a bonus if the work I’m doing happens to generate some social good as a result, like greater fairness, more professionalism, or whatever. But those things are not my mission, if I’m being honest about it. Interesting, impact, cool people — that’s my mission as a consultant. Perhaps one day, I’ll discover a new mission to solve homelessness in America or something; then I’ll get to work on that.
Helping real estate agents make more money sounds far less noble than helping sub-Saharan Africa get drinking water. But if your mission is to help real estate agent make more money, embrace it! No one is going to do more than you will to achieve that mission. And what’s wrong with that? The agents you’ve helped be more successful will pay taxes, raise their families, and be contributing members of society because of you. That’s a fine day’s work, as far as I’m concerned.
My point is that every leader and every organization should be honest about her and their actual mission, as opposed to what she and they want the mission to sound like for PR purposes. The only thing worse than not having a mission at all is to have a fake mission for public consumption only, while the real mission is something you want to hide from view.
True Faith Starts at the Top
The last point I want to make here is to point to Eric Wu himself. Is there any doubt that he’s a true believer? That the mission is his mission? The guy had already successfully sold one company to Trulia; he didn’t need to do another startup. He could have had a very nice, very pleasant life working at Trulia and then at Zillow (when Trulia was acquired), caring deeply about his title, comp, lifestyle and career. Instead, he chose to take the risk and sign up for 100-hour workweeks in startup world (albeit, well-financed startup world, but still…) because he’s a true believer.
In our industry, I look at Gary Keller as a great example. I realize some folks think I’ve been bashing Gary or some such, but fact is that I have great admiration for the man. He didn’t need to step back into the CEO role. He already accomplished so much; he’s a first-ballot Hall of Famer. Why does he need the aggravation of managing a giant national company?
Gary Keller did it because he’s a true believer. I think the mission to help agents be successful, more satisfied with their lives, more fulfilled in their careers, is his mission. I can differ with the man on tactics and strategy, but I won’t deny that he’s a true believer.
When the leader is a true believer, a missionary, it is more likely that the top executives will also be missionaries. Missionaries get along very well with other missionaries; it’s harder for them to get along with mercenaries. So when the senior staff are missionaries, the midlevel and junior executives are more likely to be missionaries, and so on down the corporate structure. The more missionaries a company or an organization has, more greatness it can achieve.
When people talk about company culture, I like to think that it’s about this true faith at the very top of the organization. If that true faith does not exist, then the organization will be filled with mercenaries, because the head is also a mercenary. If it does exist, then the organization will be filled with missionaries, because the head is also a missionary.
If you’re the CEO of a company or an organization, and you’re wondering about the culture… spend a few minutes being honest with yourself about your personal mission. See if you can articulate it clearly as Eric Wu did on the video above. If you can, then ask whether your top lieutenants are missionaries or mercenaries. That will go a long way towards helping you figure out your company culture.
OK, back to my mission of interesting, impact with cool people.
16 thoughts on “Important Lesson for Brokerages from Opendoor’s Eric Wu”
Great article Rob. Very timely and so needed.
No doubt . “Missions are critical” when they are focused on making a difference in the lives of those you serve first, not in the lives of those who serve you and then expect they will best serve the consumer.
Yes, your staff is important in carrying out your mission, but if the focus of that effort is not absolutely fixated on your customer, the consumer of something, your company will miss the target even with happy people that work for you.
How many brokerages have a consumer advocate on staff? Sears did. there was a dedicated chair in the company’s boardroom that had a sign that simply ready – The Customer. Arguable that was years ago, and equally arguable I doubt the chair remained much past the 1990’s as is evident by the ultimate demise of the retailer.
The NAR is a prime example of how to fall short on the mission of the industry, all the while keeping the industry participants happy. I get that its mission is Realtor-centric but when that mission fails to provide leadership for the future of a Realtor what value does that Realtor-centric mission ultimately have to an NAR member?
Realtor-centric is not going to cut it in an industry that has been under attack by the consumer for decades.
The issue involves the lack of willing listeners for the few missionaries that exist. This industry is almost totally void of any evidence of a mission that is targeted at improving the consumer experience. Yet ironically, that is the absolute critical mission we need to define and execute on the most now in order to survive.
Absent change on the part of the participants of any industry, change is a certainty. It cannot be stopped. And it will happen with or without the endorsement of the industry.
Now it gets interesting.
How many true believers can you actually have for this business model. After all, it’s not Apple, or even Compass for that matter. Those companies have culture. Opendoor is more pie in the sky if you look at real-world.
And I have to say, Wu has a set of brass balls for this statement. “Our vision longterm, is to build a product that everyone uses when they’re buying and selling real estate. And that really…it could take 20 years, 40 years 50 years. But we want to win the market.” — Everyone?? Come on Eric.
I posted this on Inman’s Facebook group questioning the viability of iBuyer being the majority of the market at some point.
Eric Wu is obviously a smart guy, no doubt. However, even smart guys can make boneheaded remarks. Some people say that iBuyer transactions will make up 50 to 60 percent of the market. Okay.
Wu says he envisions a day where EVERYONE will use OpenDoor. Regardless of the percentage for market penetration, I have never seen this question answer or addressed for that matter. Who will be financing the $6 Trillion dollars for this theoretical 100% market capture.
It’s one thing to throw around a billion or so dollars in a few markets. But EVERY home in America. Come on now! This guy has some stones on him to believe his own BS.
I have yet to see anyone give a logical reckoning of how this is all financed. The total U.S. market sales for residential real estate is around $6 Trillion. Who is financing even half of that? Would love to see the answer to that. Everything looks rosy in good market. What happens to funding when you start throwing market fluctuations into the mix. I think investors start rethink funding.
But hey, I’m not an economics major like AOC. 😉 Okay, I know, cheap shot.
I have a few bets outstanding that iBuyer will be 60% of all transactions by 2024. So um, I guess I’m one of those people?
It is the same bet of those who predicted 15 years ago that real estate agents will become obsolete.
Fair enough. Definitely would love to see how that ends up being financed. Not sure the math or funds are really there. The rosy iBuyer outlook into the future reminds me the Stallone move “Demolition Man” (which I worked on), where in the future “everything is Taco Bell now”.
But the more important question, I suppose, is how many true believers do YOU have in YOUR business for YOUR business model?
LOL, a lot! Many looking over their shoulder as they say it. 😉
Can some please explain to me, what is this business model differ from “we buy homes for cash” we buy ugly houses”.
Just because you have a website that asks the seller to answer some questions to get a cash offer and AVM , the process of selling and buying this way is a pain in the ass.
I have spoke with three sellers who choose to go this way selling their homes and none of them did not completed the transaction, because of the ridiculous low ball offers they received.
This business model is not an innovation. It is just a company who is loaded with cash to buy homes offering ridicules low prices to sellers. I can give you a long list of companies who buy homes for cash.
The dream that this man has to occupied the industry with this business model, reminds me of what my client once told me , “Love is a sweet dream but marriage life is a wake up call to reality”
Totally agree. There’s something missing there, and it’s execution. Redfin has how many 10s of millions of visitors a month but has captured ~1% of the market share (per something I read in RIS Media I believe yesterday). That points to a massive gap between “tech as a great idea and innovation” and conversion through execution. It speaks to the importance of the agent as being still-centric, the lack of importance of shiny objects in this space, and/or the fact that convenience isn’t worth the fee to the iBuyer. It’s still too early to call but I tend to agree with your comment, Bert.
I am not a real estate agent, I am a real estate attorney for 35 years.I have presented many real estate investors, home sellers and home buyers. zillow, Opendoor did not invent a new wheel.
Zillow got their vast exposure thanks to real estate agents who choose to have their listings on Zillow portal.
Opendoor is a company who is heavily funded by a Japanese bank.The bottom line is, both Zillow and Opendoor became real estate investors, who are buying homes.
zillow is also using its iBuyer business model, for selling leads to real estate agents.
So Zillow basically wants to enjoy from both worlds.
1: As a media company
2: As a real estate investor
Opendoor now have their own program for real estate agents and also wants to enjoy from both worlds.
I am not a Zillow hater or Opendoor as Mr Rob Hahn might think. I am for more options for the consumer to have, in any industry. But to come and to say out loud that these two iBuyer companies invented something new that will become the industry standard, makes me laugh and wonder, why the media thinks that people are stupid.And my father used to answer, because people are stupid.
They want to believe in miracles and the media can make anyone GOD that makes miracles.It depends on how much you really afford to pay.
I’ve been a “We Buy Houses” guy since 2008 and have built a substantial real estate portfolio. Having experience as a broker and a We Buy Houses guy…and after researching this IBuyer thing…IBuyer and the We Buy Houses model are two totally different models attacking 2 totally separate markets…in 2 totally separate ways! I’m telling you right now that the IBuyer thing is just getting started. Just wait until they find ways to add profit centers such as mortgage, title, insurance, mass material discounts from Companies like Home Depot, and the list goes on. Think about all the homes they don’t buy that will be SOLD to hungry Realtors as listing leads. IBuyers won’t be offering pennies on the dollar like the We Buy Houses guys. Do more research. This model is viable and it solves a major consumer headache. It’s a massive numbers game.
“Do more research” I did a research and now I understand why Yelp erased all consumer reviews on this business model from their platform. I was lucky to read all those reviews before Yelp erased them. Any investor in Opendoor, would not want to have 300 bad reviews and 10 good reviews on their investment. These are the facts and even if you choose to ignore it, it is still there. Many entrepreneurs fall in love with their innovation. The consumer is the last judge and not your future predictions.
I’ve worked with Homevestors franchise owners. They aren’t buying homes with the goal of making $1700.
They don’t offer their buyers mortgage products and title companies.
Many (though not all) have no way of monetizing leads that are not fits for their business.
There is possibly a massive underserved sector of homeowner who is willing to pay for the convenience of an investor-sale with a discount that is a fraction of what We Buy Ugly Houses investors offer.
I have to agree the guys over at opendoor really are moving the fastest out of any other traditional online real estate marketplace type services. I do wonder if they will gain traction and normalize the idea before some of the bigger better funded competitors will actually be the companies that capitalize on it.
I LOVED the very last thing he said.
We take for granted that moving sucks and most people only move a few times a lifetime. NAR tries to increase transaction volume by encouraging mobility, but can only do so much.
But if you actually making buying and selling easier, there will be more transactions. People will still spend the same amount on transactions because they will have more mobility. That is great for homeowners. Absolutely fantastic.
It’s the, N-O, T-O, R-I, O-U-S, you just, lay down, slow
Recognize a real Don when you see one
Sipping on booze in the House of Blues…
Thanks R-O-B. Great stuff
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