Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1114

Farhad Manjoo of the New York Times published an article this morning about Opendoor – a startup that I have written about multiple times on this blog – called, The Rise of the Fat Start-Up . (His definition of “fat” is that the startup owns lots of hard assets, which considered atypical in tech.)

Below are a couple of interesting tidbits from the article:

• Opendoor has raised over $300 million in equity and over $500 million in debt since inception.

• Opendoor plans to be in 10 cities by the end of this year.

• Average commission charged on Opendoor is 7.5%, which is higher than a traditional real estate agent and higher than what was quoted before in the press. The higher % is because of certainty and convenience.

• Opendoor offers a leaseback option if you’d like to stay in your house for a period of time after you’ve sold it.

• Their conversion rate (offers made to closings) is about 30%.

• Other startups are now in the market with similar models, including Offerpad and Knock. Zillow is working with Offerpad on a pilot. Someone is starting to feel threatened.
  

The article also quotes a blogger and real estate analyst named Mike Delprete. Heads-up: His blog is called “ Adventures in Real Estate Tech .” I’m sure this will appeal to many of you. I obviously just subscribed.

Mike dug into MLS records in order to figure out Opendoor’s transaction volumes , since the company is not releasing this information. Here’s what he found (the chart is up to March 2017):

The trend line is certainly moving in the right direction. But Mike also believes that Opendoor is only netting around $8,320 in profit per home and that much of it is driven by appreciation. There’s also substantial risk in owning so many homes – each one is usually held for a few months.

But you can be sure they’re thinking well beyond where they are at today. Expect many more updates on this blog.

I would like to do a follow-up to yesterday’s post about innovators and creators , because I recently stumbled up the following quote:

“We think of creative people in a heroic manner, and we celebrate them, but the thing we celebrate is the after-effect ,” says Barry Staw, a researcher at the University of California–Berkeley business school who specializes in creativity.

It is taken from a Slate article called: Inside the Box – People don’t actually like creativity . And it’s supported by a bunch of research, including a 2010 study conducted by professors at Cornell University, the University of Pennsylvania, and the University of North Carolina.

The key finding was that people generally hold a bias against creativity, and it’s activated when we become motivated to reduce uncertainty. This might be because we fear rejection or because we’ve come to learn that reducing uncertainty and promoting the status quo is often better for career advancement. 

There’s less perceived risk.

But here’s the thing: celebrating creativity after the fact is meaningless. There’s no genius in that. Everyone now knows this truth. The heroics come into play when you’re both willing to be misunderstood and willing to be dead wrong.

Of course, talk is cheap. 

Here are 5 suggestions for promoting greater creativity at your company taken from Tom Tunguz’s blog , who himself is borrowing from Barry Staw (author quoted above):

1. Hire people who’s skills aren’t precise matches for the needs of the company.
2. Encourage employees not to listen blindly to corporate policy and conventional wisdom; not all to speak with the same voice.
3. Those in power should go as far as possible to encourage active opposition to ideas. (Similar to Drucker’s obligation to dissent ).
4. Optimize for adaptiveness. Have extra labor capacity and explore side projects. (How many creative companies started or were reinvigorated by side projects? Twitter and Slack are two that immediately come to mind).
5. Lead rather than follow. Take risks.

My friend Dan just introduced me to a terrific podcast called, How I Built This . It’s all about “innovators, entrepreneurs, and idealists, and the stories behind the movements they built.” As soon as he told me about it I immediately pulled out my phone and hit subscribe.

You will recognize many of the brands and entrepreneurs featured on this podcast. The companies span everything from Whole Foods and the Corcoran Group (real estate) to Kate Spade and Instagram.

I’m not that up on podcasts. I think it’s because I don’t really drive that often and I don’t have much of a commute. Podcasts are great when you’re sitting in traffic, which is something people here in LA obviously do a lot of.

But I’m going to make time to listen to this one. I have so much respect for anyone who has built something from nothing. Building and creating is what moves us forward.