Changing the Way We Own Homes with Spencer Rascoff

0:01Boom! Shake the room, Fire Nation! JLD here and welcome to Entrepreneurs on Fire! Brought to you by the HubSpot podcast network, the audio destination for business professionals with great shows like inclusion and marketing. Today, we'll break down changing the way that we own homes. To drop these value bombs, I brought Spencer Raskoff and EO Fire Studios. Spencer is a serial entrepreneur who co-founded Zillow, Hotwire, Picasso, Dot LA, and 75 and Sunny Ventures. He served as Zillow's CEO for a decade and teaches entrepreneurship at Harvard. In today's foundation, we're going to talk about the creation of these entrepreneurial gems, these unicorns.

0:37We'll talk about a model that works. We'll talk about revolutionizing how startups raise capital and oh, so much more. And a big thank you for sponsoring today's episode goes to Spencer and our sponsors. Success Story, hosted by Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business, startups, and entrepreneurship. A recent episode discussing the billion-dollar health secret with the founder and CEO of Whoop is a must-listen.

1:12Listen to Success Story wherever you get your podcasts. Is this your year to grow a successful business? Attend the world's highest-rated business growth workshop taught personally by Clay Clark and now featuring Rich Dad, Poor Dad author Robert Kiyosaki and Eric Trump at thrivetimeshow.com slash EOfire. Again, request life-changing tickets today at thrivetimeshow.com slash EO Fire. Spencer, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. I have found that once I have achieved success in business, I have been able to redirect my interest and enthusiasm to other things.

2:00I think most people think that successful driven people are never satisfied. And in my case, I feel like I have achieved what I want to professionally. And so now I choose to mostly teach and mentor. So I'm doing a different thing with this chapter of my life. I don't feel the need to continue to strive to build or run large organizations. I feel I've already done that. And so I'm ready to move on to different chapters. Well, Fire Nation, you already know a little bit about Spencer from the intro. I mean, let's be real. Zillow, Hotwire, Picasso, that's just to name a few. And we're talking about changing the way we own homes today.

2:38But before we get to that, Spencer, I do want to get to this background of yours because it is pretty fascinating. So just give us a brief overview. Grew up in New York and then Los Angeles. I grew up pretty affluent, to be honest. And my parents looked for ways to introduce grit into my siblings in my lives, even though we wanted for nothing financially as a kid. And I ended up going to college and not really sure what to do, and so started in investment banking. Wasn't satisfied. Moved into private equity, wasn't satisfied. And I knew I wanted to do startups at that point. So started Hotwire.

3:18I'm delighted to talk about that if you want. Went through ups and downs at Hotwire, including running it through September 11th, which was incredibly difficult time to run an online travel company and eventually sold Hotwire and then moved up to Seattle to work at Expedia before starting Zillow. And this chapter of my life is a totally new chapter where I'm incubating new startups, mentoring, coaching, teaching, and advising other folks trying to find younger versions of me who are still at an earlier stage of their career where I can help them achieve success and learn from my experience. Well, I do want the theme right now of our conversation to be starting because a lot of my listeners, Fire Nation, are starting.

4:01They're starting something. They're starting a business. They're starting their entrepreneurial journey. They're starting a new chapter in their life, whatever that might be. So let's just take maybe, you know, a minute or less on each, but talk to us about starting Hotwire, then starting Zillow, then starting 75 and Sunny, just so we can kind of understand the similarities and differences of starting. When you're starting something, you need passion. You're going to encounter enormous challenges. And the only way to overcome those challenges is to run through walls and be super fired up about it.

4:34So at 23, when we started Hotwire, I was excited about providing the ability for people to travel and be able to save tons of money, get a four-star hotel for a two-star price. We started Hotwire originally with six airlines. So it was a consortium company and the original six airlines, American, United, Continental, Northwest, and others, they owned a big chunk of the company. And with their help, we were able to get started and build what became a leader in the online discount travel space. Should I move on to the early stage of Zillow now? Yeah, let's do it. Okay, so starting Zillow was a period of time where my co-founders and I sat in a conference room in Seattle.

5:16This is around 2005, trying to brainstorm a startup idea. And it was a lonely, difficult, challenging, sort of boring couple months as we were cycling through different ideas and things that we were passionate about, problems that we saw in the world. And then we decided to look inward at problems that we were experiencing in our own lives. That's always the best way, by the way, to find a great startup ideas to solve problems that you experience yourself and you have a connection to. And at the time, all three of us were buying homes. In my case, I was buying my first home. And I was really shocked at how weak and ineffective the tools that were available online to us were.

5:56I mean, the Internet was already almost 15 years old, and yet here we were. And there were really no leading real estate sites that empowered the consumer, that put the consumer first. There were plenty of real estate sites, but they all empowered the real estate agent, put the agent first and made the consumer really sit in the back seat. So that was the original idea for Zillow, build a consumer-facing, consumer-prioritized product. And the killer feature was the Zestimate, trying to figure out what everyone's home was worth and put a price on every rooftop. We thought that would have a lot of virality.

6:28And of course it did. We had the first month that we launched, we had on the first day we launched, we had over a million people use the website. The site crashed. Month one, we had four million people use the site. And so we started with a big bang because of that first feature of showing people what their house was worth and what their their ex-girlfriend's house was worth and what their parents' house was worth and what their boss's house was worth, etc. etc. More recently, starting 75 and sunny, that hatched when I left Zillow. So about five years ago, I retired from being CEO of Zillow after being there for 15 years.

7:00I had a great run, learned a lot, accomplished a lot, but I had already sort of achieved what I wanted to achieve from that chapter. And so I wasn't quite sure what to do next, to be honest. And what I did initially was I taught, I commuted from Los Angeles to Harvard Business School, and I taught a course called Managing Tech Ventures every week for a semester. And that course is basically about how to run a big tech company. And I used teaching for that semester as my palate cleanser to sort of clear my head and codify 20 years of my career into digestible lessons for students and also for myself to help me sort of piece together what I had learned so far.

7:40And it was after I was finished with that teaching experience in that first year that I decided to start 75 and Sunny, which today is a startup studio and incubator for startups and early stage investor in startups. Well, I can actually see on that website that one of the companies is Picasso. And that's kind of what we want to talk about next, because that is your latest creation. I can just kind of tell you, Fire Nation, as we kind of dive into this year, that when I talked to Spencer about this interview about a month or so ago, and I decided to check out the app for myself. There isn't many days that don't go by that I'm not like, Kate, you have to see this.

8:18And I show her one of the properties on Picasso and she's like, are you serious? That's possible? And I'm like, yeah, check it out. So I've kind of whet the appetite, but without really giving anything away. So talk about the origin story of Picasso. Yeah. So I've been lucky enough to have a second home and owning a second home is awesome. It allows you to be a better version of yourself, to be a better husband, a better friend, a better son, because it's where you exhale. You're like, you're not doing laundry. You're not running out to target or Costco. Like that's daily life where you're paying bills and dealing with all that normal stuff.

8:57But when you're in a vacation home, you can be a, be yourself and you do puzzles and you have new hobbies and you, You know, you form a connection with the community. However, owning a second home is really, really expensive and inaccessible and generally not available to most normal people. So what we endeavor to do at Picasso is democratize access to second home ownership. So more and more people can experience the benefits of owning a vacation home. And we do that through fractionalization. So we take a luxury vacation home and we sell it in eights to up to eight families. Now, in practice, it's usually four or five because usually people buy one or two or sometimes three of the eighths.

9:34And you co-own that home with other folks who you typically don't know. I have one in Malibu, for example. It's a$6 million house. I own one eighth of it. So I paid$600 ,000,$700 ,000 to own an eighth of it. I get it six weeks a year, which is an eighth. Picasso furnishes it. Picasso does the property management for it. There are owner closets at the house, so I keep my stuff there. I use the Picasso app to schedule visits to my house and Picasso handles everything. And so I own a luxury vacation home, but I only have to pay one eighth of the price. I basically right size my ownership for the house and I pay one eighth of the operating expenses.

10:13We've now sold over a billion dollars of these things in places like London, Paris, Cabo, Miami, Napa, Tahoe, Aspen, Vail, Kiowa, South Carolina and lots and lots of other places around the world. Um, we've raised over$200 million of venture capital. And, uh, you know, the, the, the idea is really resonating with our many thousands of owners that love their Picassos and have told many friends and family that they should buy their own. Now, when did you say to yourself, this might work? Like, this is an idea. Like you've obviously had a lot of great ideas with Hotwire, with Zillow and 75 and Sunny and what you do with that.

10:52But like, when did you actually step back and you're like, you know what? I think Picasso might work. I was very nervous at the beginning. I started this with a team of former Zillow folks, a great co-founder and CEO, Austin Allison, and others who we recruited from Zillow and elsewhere. And I thought it was going to be a great idea, but I wasn't sure about some of the logistics. I wasn't sure if the scheduling issue would be insurmountable, right? You might say to yourself, well, it seems like a great idea, but hold on, doesn't everybody want the house on New Year's Eve? And, you know, so that was a big open question.

11:23I wasn't sure if people were going to be willing to own a house with strangers. You might say to yourself, well, what if my co-owner wrecks the house? Like how do we handle situations like that? To answer your question of when did I know, just a couple months in when these things were flying off the shelf and we were selling them, we were selling pagasas all over the place, it became clear that those small details were things that we could handle, that with enough ingenuity and innovation, we could solve these things. And so it's been a roller coaster, as all startups are. I'm certainly not going to say it's been straight up and to the right.

11:59It never is. But we knew pretty quickly that we had something that was going to work. Fire Nation, we have a lot to talk about around revolutionizing how startups raise capital, the future of startups, IPO markets, and more when we get back from thanking our sponsors. If you're a marketer, then you know what it's like to feel like you're moving in a hundred different directions at any given time, like you're spread too thin. Between creating content, launching campaigns, generating and nurturing leads, and more, you barely have a moment to breathe, let alone do your best marketing. What if there was a better way?

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14:18I have a question for you, Fire Nation. Do you feel like your life is optimized or do you feel like you're leaving a lot on the table when it comes to health, wealth, and relationships? After interviewing over 4 ,500 successful entrepreneurs, I have found that every one of them have optimized their life to a high level. In over 12 years of running a multi seven figure a year business myself, while staying healthy and raising a wonderful family, I figured out how to optimize my life to an amazing level. It didn't happen automatically. There was a lot of struggles, but through mentorship from others and a lot of intentional work, I got there.

14:53And if you think you could use some personal guidance in optimizing your life, let me help. I've created a program called Optimize, where I will personally work with you one-on-one to get to know you, your life, your goals, and your dreams. Then over a three-month time frame, we will create a fully optimized life that will set you up for a lifetime of optimized health, wealth, and relationships based off your goals and your dreams. An optimized life does not happen automatically. It only happens through intentional work and guidance from someone who has reached that level that you are striving for.

15:26My goal is to turn you into a fully optimized human based off of your life goals. If you want to learn more about this program, visit eofire.com slash optimize. We'll jump on a call. We'll discuss the specifics of the program. And if we both feel to fit, we'll talk about next steps. eofire.com slash optimize. Spencer, we're back. And I mean, with 75 and Sunny, you've seen a lot, you do a lot. And you are revolutionizing how startups raise capital. How are you doing this? I've raised a lot of venture capital, a lot of capital, not just venture capital for many startups over my life. And, you know, there's kind of been this gap between private venture capital and public markets.

16:10So Picasso, for example, has raised$200 million of private venture capital from leading venture capital firms like SoftBank, Graycroft, Maveron, Crosscut, Dragoneer, and others. But we're not quite ready to be publicly traded. I took Zillow public. And when you're publicly traded, the company has to be at a slightly larger scale. It has to, you know, there are certain requirements to be public that, you know, that it takes companies a little bit while, a little while to mature and be ready to reach that. Fortunately, the government created something called under the JOBS Act called Reg A. And under Regulation A, companies can kind of live in this middle ground where they do sort of a quasi IPO.

16:52And what Reg A allows companies like Picasso, who's in the midst of a Reg A offering, What it allows companies to do is file audited financials with the SEC, the Securities Exchange Commission, twice a year rather than four times a year and sell shares to the public, which don't really actively trade the way the regular stock market does. And this is a way to democratize access to investing in this asset class of private venture backed companies. And as you've heard from this conversation, this is kind of my thing. Like what I do is I try to take things that are only accessible to a small portion of people and democratize them.

17:29So travel discounts were only accessible to a small amount of people. At Hot War, we put them on the Internet. They became accessible. Real estate data was only accessible to a small amount of people. Zillow put it on the Internet. We made it accessible to lots of people. Picasso looks at vacation homes in luxury destinations. They're generally only accessible to the 1%. And through fractionalization and co-ownership, we make it more possible for all to enjoy or many to enjoy. But that's what we're doing with this Reg A offering. It allows individual retail investors, regular people, not big, fancy venture capital firms, regular people to buy shares in these companies before they go public.

18:06And many companies have done this before over the last 10 years. Tens of billions of dollars have been raised to companies like this through Reg A. But we are sort of a trailblazer because it is on the newer side of things. It's only been around for about a decade or so. So Reg A allows companies to raise up to$75 million a year. And, you know, so that's the maximum out that Reg A permits. And Picasso launched this just a couple months ago or in the fall of 2024. And, you know, I think I'm not allowed to talk more specifically about how much we've raised, et cetera. And I don't know when this discussion will air per se, but, you know, that's how Reg A works.

18:46And I think it's a great way to democratize this asset class and let more people participate in the upside of companies. Spencer, in your experience, and you've had a lot of experience, what is the future of startups and IPO markets? There's a high bar for companies to get public. And part of that is good for investors because the government sort of protects them from companies that might not be ready to be public. Part of it is good for the companies themselves because it forces them to get their operation in shape. But there are certainly some burdensome regulations that make it more difficult for companies to be public than it needs to be.

19:27And what you've seen over the last 10 or 20 years is slowly those have been kind of ramping down. We've talked a little bit about Reg A that creates kind of this middle ground. Slowly some of those regulations have been reduced. And I think that's generally pretty valuable for companies and for the capital markets. You've also seen a growth in these secondary offerings where companies that choose to stay private for longer are providing their employees and their early investors with liquidity. So with a path to actually turn their shares in the company into real cash by having new investors come in and buy shares from existing owners.

20:05So SpaceX is a perfect example of this. SpaceX is privately held. You know, you and I can't buy shares in SpaceX, but every couple months they do a secondary offering basically where some investor comes in and buys shares. The company approves it and sort of facilitates all this, but investors come in and buy shares from existing investors. And that allows companies like SpaceX to stay private longer than they otherwise would. It's like a, you know, you can imagine a little safety valve that slowly lets air out of something rather than the balloon popping. And I think that's that's useful for those companies.

20:42It can also be frustrating for regular people like you and me that can't buy into these companies. If they were publicly traded on the stock market and we and we believe in their future, we can buy shares of them. And again, that's one thing that Reg A provides is it lets individual people get into these companies in a way they otherwise couldn't. Spencer, you shared a lot of exciting things today. I mean, your background, Hotwire, Zillow, 75 and Sunny, Picasso, obviously, and what you're doing with that. I mean, this is super cool. If you could just share with Fire Nation, our listeners, entrepreneurs, small business owners, one key takeaway, one thing that you really want to make sure that we get before we say goodbye.

21:16What is that? Surround yourself with people that are even better than you. that entrepreneurship is not a solo endeavor. The idea of a coder sitting with a hoodie, typing in his or her basement and creating a website and a company, that is not real life. Real life is teams and teams of teams and people attracting other people to your mission. And then those teams going and storming up a hill together. And so entrepreneurship is a team sport and make sure that you're surrounding yourself with great teams. Spencer, if Fire Nation wants to connect with you, wants to learn more about Picasso, what is your call to action for Fire Nation today?

21:57Well, you can learn more about Picasso at picasso.com slash invest. If you're interested in the reggae offering, you can learn more about me and my background and what I'm interested in at 75andsunny.vc. And of course, if you want to buy a Picasso or experience real estate porn, kind of 2.0. At Zillow, we sort of pioneered real estate porn 1.0 by putting beautiful pictures of houses on the web. But Picasso is a different type of maybe more accessible real estate listing information because of course, it's fractionalized. You can check that out at Picasso.com, P-A-C-A-S-O.com. Fire Nation, you're the average of the five people you spend the most time with.

22:36And you've been hanging out with SR and JLD today. So keep up that heat. For links to everything we talked about, visit eofire.com, type Spencer in the search bar, the show notes page will pop right up. And Spencer, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you, brother, and we'll catch you on the flip side. Thank you. Hey, Fire Nation, a huge thank you to our sponsors and Spencer for sponsoring today's episode. And Fire Nation, successful entrepreneurs are great at three things, productivity, discipline, and focus. That's why I created the Mastery Journal so that you can master productivity, discipline, and focus in 100 days, step-by-step.

23:12Visit themasteryjournal.com. I'll catch you there or on the flip side. Success Story, hosted by Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business, startups, and entrepreneurship. A recent episode discussing the billion-dollar health secret with the founder and CEO of Whoop. is a must listen. Listen to Success Story wherever you get your podcasts. Is this your year to grow a successful business?

23:48Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring Rich Dad Poor Dad author Robert Kiyosaki and Eric Trump at thrivetimeshow.com slash EO fire. Again, request life changing tickets today at Thrivetimeshow.com slash EO fire.