Can Kaz Nejatian Save Opendoor? Inside the $0.50/share Turnaround

25:48Kaz Nejatian:Has it been hard to maintain culture with that? If you're bringing in an entirely new culture to something that was...

25:55Molly O’Shea:I don't think Open Door had much of a culture. Transparently, I think what happens to companies when they're run by professional managers is culture atrophies. What happens, this is a real thing. People think, people have a caricature in mind of what leadership is. They think of a job of a leader is to stand in front of a room and be like mascot as CEO. Like, rah, rah, rah, we shall go over that hill. That's like, I guess not what the job is. The job is to hire great people, train them well, tell them what the priorities are and inspire them in that order. Right? That's the order of importance.

26:33Molly O’Shea:I think lots of people like pretend culture is like beer on tap in the office. That's just lazy. That's the abdication of your responsibility to people's careers. So like, I don't think Open Door had that much of a, I think it was like, I find the best thing for culture is this. Tell people who you are. Say things that people can reasonably disagree with. Because if you say a thing everyone agrees with, you've said nothing useful. Right? and then win together. Like the best thing for culture is doing hard things together in person. Like high school football teams have cultures because they do things together that are hard in person, right?

27:19Molly O’Shea:What isn't that much of a culture is like, you know, the Dunder Mifflin office in like the office. It's just not, it's not a culture, right? Like having Taco Tuesdays is not a culture. It's like a caricature of what other people should do.

27:35Kaz Nejatian:For you, it seems like you're entirely authentic to yourself. I listened to a couple of your interviews in the past. There's a really good one with Anthony Pompliano. And you were talking about how you sold a company, I think it was to Facebook, and you join and you're cursing around, you know, you're dropping F-bombs left and right. And you're hit with the reality that you can't talk like that in there. and it was a hindrance to you and your personality. So how do you carry that in this role?

28:07Molly O’Shea:It's generally hard. And like I talked to company transparently about this. I am not close to being well-rounded. I'm not a good approximation of an average human being. I'm just not. This is a very real thing. I'm edgy in basically every reason, the way one can be edgy. So I have two choices, right? choice one is i can go become well-rounded and become a pale pink imitation of myself uh or two i can be my like not become well-rounded become edgier and surround myself by people who are edgy in the opposite way i've chosen the second path because i don't want to pretend something i'm not i don't ask anyone to pretend something they're not but i think the best way to explain this is this.

28:54Molly O’Shea:If you go to an Italian restaurant and complain that the sushi is bad, that's your fault. That's just your fault. But if you go to a place labeled restaurant, where the menu includes literally everything on there that you can order, and you order something that's bad, that's their fault. Right? My job is to actually describe the type of place this is, and lots of people will not want to work here. In fact, less than one in a hundred people will ever want to work here. That's fine. Like we have a very high bar, like our career page tries to do a very good job repelling you and convincing you not to apply to come here.

29:37Molly O’Shea:But once you're here, we want you to be committed to the mission. My job is to accurately describe what it feels like to work here. I think people say I'm honest about it.

29:48Kaz Nejatian:Before we started and the cameras were on, we were talking about how important attention to detail is and staying true to your quality bar. And so with that and this aggressive personality, how much of that and that personality and maintaining a quality bar do you think is synonymous with success?

30:11Molly O’Shea:I don't know, honestly. I can tell you this. I try very hard to criticize things not the people who created those things i think it's kind of useless to hold your past self guilty so if you see me in a product review i frequently say this fucking sucks i very rarely say you fucking suck like the work is the work of open door so open door has failed when it produces something that is not good the individual people who worked on it may be excellent right so we just have to keep working at that and that's like a real thing i don't have another way of doing this for what it's worth i think there have been successful people who don't pay that much attention to details who are relatively macro driven they place good macro bets on what the economy is going to do and don't pay that much attention the details and that can be a very successful um or at least profitable career i'm not that guy i'm just not i care a lot about the pixels i care a lot about the api i care a lot about the database i care a lot about the words we say i call our customer service lines i talk to our sales people i care that this thing that we put out there is a reasonable representation of ourselves and every day we should wake up and be deeply ashamed of it and want to make it better.

31:46Molly O’Shea:So I don't know. I don't know. The answer to your question is I don't know how much of that is important for the average person's success. I can tell you that I don't know how else to do it. Like, if I can honestly, it's a very real thing. I grew up as an immigrant and I had a very hard time with cultural norms that were commonly understood if you grew up in North America.

32:12Molly O’Shea:So, there was a club I wanted to join. And I applied to join it when I was 18. I got rejected. I applied to join it when I was 22. I got rejected. I applied to join it when I was 25. I got rejected. I finally got accepted as a member of this club when my wife became the president of the club. like i'm just like not like i'm just not good at the type of things that the average CEO would be good at i'm terrible at glad handing i can't work a room but i can look at like you know i can look at dev docs and look at an api shape and look at the pennies that get spent adding product features and make them better.

33:08Kaz Nejatian:It's so interesting you say that because for this role, this role in particular in this moment of time, for any public company, being public facing is key to it. And having a presence online, you've had a tremendous presence on X. You're building out a community there. I know you're also doing a live stream on Robin Hood and throughout various chapters.

33:34Molly O’Shea:Our earnings was the most watched earnings in history. Really? The last National Open House we did broke records for how many people watched it. No. Yeah, by a lot. But not by a lot, by a lot. We should fact check this, but I think at one point we had 55 ,000 live viewers. Not like live viewers of the actual thing, which is like the average earnings call is watched by approximately 3.5 people. Like we had 50, like just lots of other people watching. We had 55 ,000 live viewers at one point.

34:02Kaz Nejatian:That's pretty cool.

34:03Molly O’Shea:Yeah.

34:04Kaz Nejatian:But it's okay. So how do you think about that? So you're very product driven, but this is also very marketing driven and being a public person. So, okay, how much of your role is the marketing part or the product part? Or is it both? And how do you do it all? I think there's a...

34:19Molly O’Shea:I am lucky that X and other tools allow me to talk directly to people. And long-form interviews are a thing today. I'm telling you, like, two decades ago, I would have been terrible. Because, like, when I can talk directly to people, I can look at someone in the eye, say, Hi, I'm Kaz, this is who I am. I think they can see me and see I'm being genuine and honest. And they're like, cool, let me give this person some rope. But when I talk to people through people and short form, like I end up always sounding like an idiot. Almost sounding like at least inauthentic. Like you have questions. Apparently you, like I had gotten some sense of like what this was supposed to be.

35:12Molly O’Shea:I didn't look at it because like having, if I had looked at it, I would have sounded fake.

35:19Kaz Nejatian:Yeah.

35:20Molly O’Shea:Right? So I don't prep for these conversations. If you, I came from there, sat here and we're talking. There's no like, we don't have a PR department. But if you email press at opendoor.com, get an email back saying, we don't have a PR department. If you want to talk to someone, DM Kaz on X. And then I usually respond. And I've gotten myself in trouble, I admit, because I respond on X to people who DM me and sometimes I don't realize they're reporters. Oh. And, like, that gets coded. And, like, so, anyway. But, yeah, I think, like, the modern communication methods allow me to be authentic in long form.

35:57Molly O’Shea:Which is, like, helpful. It helps a lot. It helps, like, fit me into this new world. Which, look, I wouldn't have had this job 10 years ago or 20 years ago. Just zero chance.

36:09Kaz Nejatian:Have you said anything on X you regret?

36:11Molly O’Shea:Oh, yeah, lots. Like what? Oh, no, no, like, lots. Like, I've said, like, so many things I regret. I tell you there was a thing I saw on X years ago that got taken out of context that I regret a little. I read a lot because I'm a nerd and I do. So there's a book called Protestant Work Ethic by Max Weber, which I think is insanely insightful about the modern world. so i i quoted it on like years ago uh talking about like the importance of protestant work ethic as a book not an idea like it was a capital p or like the book is called protestant ethic and like anyway it doesn't matter so i quoted this book i think people thought i was saying that like only protestants work hard which i thought was such an unreasonable take on like the post like you have to really twist yourself into a knot to believe that like i grew up muslim i've been to more mosques than the average person like and i thought it was like so that was like it was only annoying because i think like my colleagues had to defend me and i felt weird but no i don't like i don't i don't like i don't post things on x because i think there's zero chance of causing trouble i just don't um because if i did i would become like i'll be hiding in that corner crying that's just not what i do i don't know like i don't recommend that people adopt this method of running a company.

38:00Molly O’Shea:That's really weird. Like when you work like I do and have the job that I do, it is not, it's at times lonely. In fact, it's very frequently lonely. So I don't recommend doing it this way. If you can do it the way that it's traditionally done, I recommend you do it that way. But this is how I can do it. Why is it lonely? It's just like, look, it's a hard, it's a hard look i deeply admire my colleagues they're just wonderful just wonderful wonderful people but if you talk to like anyone who's a founder type like you're essentially at perpetual war and it isn't like it's not relaxing but there's a very real thing look i um it used to be true

38:53Molly O’Shea:that if you were a teacher, you could, on one salary, buy a home in Arkansas, raise your family, and be happy. That used to be true not that long ago in this country. And the fact that it used to be true that not long ago in this country is the main difference between America and the rest of the world. It is why America is a country it is, because people have owned the ground they stood on and raised their family there, and said, I belong here, you cannot tell me what to do. The fact that's no longer true is deeply saddening to me. So, like, I am only, like, I'm massively driven by the mission.

39:33Molly O’Shea:Like, we talk about that teacher in Kansas City, that plumber in Arkansas, and our job is to make it easier for them to own a piece of America. And so that makes it incredibly rewarding. It doesn't mean thought hard or lonely, but it is very rewarding. I think this mission matters so much. And that's what has kept me around so long. And what's kept the people who have been here for a while is recognizing how broken the existing process is. And the fact that we believe that our solution is not just important to our customers, but to America generally. And just having, again, another chance at, you know, kind of cracking that code is just something I'm really grateful for.

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41:32Kaz Nejatian:I love how much all that stuff enrages you. You're like, this is wrong. We need to redo it. And I don't know. I feel like some people would feel they would they would hesitate towards taking that action. but why do you think it's so important to take action?

41:48Molly O’Shea:I don't know. Look, I think there's, first of all, this is how I am. I've always been like this. The time between decision and action has been always short in my life. Like we've moved across country in one day's notice. Like I took this job within like the entire negotiation for this job was like 10 days or something. Like, so I've always been that person. But I also think that, like, people misprice risk in their head, and they think weighting reduces risk. And in my experience, it just fucking doesn't. Like, it doesn't, right? All it does is take time away from time you could be spending doing other things.

42:33Molly O’Shea:Like, what's the worst that could happen? We'll just paint over that wall again. Like, let's just go do that thing, then move on to the next thing, you know?

42:41Kaz Nejatian:And that's core to your whole, I don't know, what is it? It's not like a catchphrase, but I guess ethos or something like that. But it seems like it's entirely core to your whole faster.

42:53Molly O’Shea:The faster is not like a new line. I've been saying this my entire career. Like I value speed above everything else. Like everything else. My job is to learn more. Like all companies are, literally all companies are, are a collective effort to learn. And if we learn faster, we do more. That's all that matters, right? Now, like if we do things faster, we'll also be wrong more frequently. But we would have been wrong that frequently just over a more stretched out amount of time. Let's just learn faster.

43:27Kaz Nejatian:So who's on the board? I've looked at the list. It's an incredible list of names.

43:31Molly O’Shea:Look, our board, look, I think there's a kind of two ways to build a board. for a company. The first is you build a board such that people who are on the board get out of your way and show up to meeting once a quarter, have some shrimp cocktail, put up their hand, and then get back on the Pevajuts and go away. Like the most common way American boards are built, right? Like find people who sound impressive, like whoever had Korea, but who've usually been retired for many years. so therefore they don't have any recent experience, put them on a board and just optimize for them saying yes over and over again.

44:17Molly O’Shea:That's one way of doing this. That feels like an obscene waste of time and money to me. Imagine having to do a song and dance in front of people where you know the answer will be yes. Like, what is the point of that? That's just deeply useless. The second thing you can do is just say, hey, who are the people where I would pay money to have dinner with them? Who are the people that I would pay money to have dinner with such that they can talk about my job? So I talked to one of our board members this morning. Actually, I talked to one more than yesterday. So my frequency of communication with the board is way higher than the average CEOs.

45:01Molly O’Shea:But we also understand that their job is to give advice and my job is to do things. And like, I ask them for advice all the time. Like, I think they thought I was kidding when I was sitting. We get texts from me almost every day, but they do. And they're excellent. Just generally, I would put up our board against any other board. Like, we have people who... Who's on it. So our lead independent director is Eric Federer, who is from Lenar, one of the greatest companies in the history of America. the largest builder in America. Keith and Adam, who are like probably two of the best investors in Silicon Valley.

45:42Molly O’Shea:Eric, who founded this place and is just genuinely wonderful. And Dana, who has a very long history in residential real space, real estate understands it deeply. and David, who was an interim CEO of Fannie, understands mortgage financing, understands the space, is deeply in tune with a part of my job where I am objectively less good, which is understanding why stocks do what they do. And he's just an excellent board.

46:15Kaz Nejatian:What have they been measuring you on?

46:20Molly O’Shea:So look, actually, I had a very good conversation with our board members before I joined. And I talked to all of them before I joined. And I got, I was lucky in that it was a double opt-in system for me and the board. I'm like, cool, we're like in this together. And I remember having conversations with one of them, like 3 a.m. one night where I'm like, hey, I will do this, but you have to commit to also do this for the next three years. You and I are doing this together. And I said, I had a similar conversation with a few of them. and the conversation with all of them was this I will optimize my day-to-day work for what it is and not what it looks like like there will times where it will look weird and my ask of you is always ask is this actually weird or does it look weird if it looks weird please give me a rope if it is weird push back ask me questions so that's been like primary back and forth and so what we have is a more involved um conversation where like we don't go from like three months without talking like i think for my first month on a job i talked to one board member at least every day um because like we were like look when i got here the company the company's balance sheet had like a ticking time bomb on it like it wasn't obvious how the company was going to survive that taking tomba now luckily we've cleaned it up the balance sheet is incredibly healthy but for the first like 10 days it was

47:59Kaz Nejatian:just not that obvious what's the weirdest thing you've done for what's with i don't recognize it

48:04Molly O’Shea:when i do weird things like people after afterwards tell me that was weird but they didn't they don't feel weird to me otherwise i probably wouldn't do them i don't know um i mean i look i i think people would say we went back to office in an odd way like i showed up on a monday my first monday at work and i said hey everyone by next monday we're back in offices at that point we didn't have offices like we didn't know where people were gonna go so we had to like like the team had to go sign leases open up offices get badges and like people have to pick where they were going to move to, like, relatively quickly.

48:51Molly O’Shea:I think that was unusual. It didn't feel weird to me, but I agree it was unusual. Is that weird?

49:00Kaz Nejatian:It could be weirder, if I want to be honest. Good. Yeah.

49:03Molly O’Shea:I'm for this.

49:04Kaz Nejatian:Yeah. You should do weirder things, honestly.

49:06Molly O’Shea:I'm going to try very hard not to optimize for that. Don't hold back. I'm not. In case it's not obvious. Even if I wanted to hold back, I wouldn't know how to.

49:19Kaz Nejatian:When I prepared, I re-listened to the conversation we had with Keith, and he said some really lovely things about you. This was right at the courtship. It was a beautiful moment. But he said, well, one, he said 99 % of everything matters. Everything that matters is the CEO. So picking you and having you join, that's a big deal. he said in describing you, he's both bold and ambitious, but very disciplined and rigorous and analytical. And that's a rare combination. A company like Opendoor needs to be rigorous and analytical, but it can't sacrifice the ambition and the boldness and the willingness to do things and push the envelope to create and innovate.

50:04It's kind.

50:05Molly O’Shea:I mean, I think there's a very, I think if I were like going back in time, there is a very, there are some things that are odd about me. I was in high school I was both a rugby player and a mathlete I did math competitions on the weekends and I played rugby so I have like a nerd's mind but a relatively high pain tolerance for like outcomes and that I think has been helpful to me in my career and that I can understand risk better than most people can, but I'm not afraid of it. And so that has been genuinely helpful. And I'm glad Keith agrees.

50:53Kaz Nejatian:From your time at Shopify, what were the biggest lessons you learned there from Toby?

50:59Molly O’Shea:First of all, Toby is one of one. There's a reason why everyone says he is the founder other founders like. He's one of one. I think there's no... It's hard to exaggerate that. The thing I deeply appreciated about Toby is he had found words for ideas that are hard to describe. Let me give you the one that I think is incredibly important. There is an idea in finance called a discount rate. I went to business school and they said there's only three rules you learn in business school. money is good more money is better money now is better than money later those are the three rules of business school um so everyone has this intuition about discount rates i.e if you give me a hundred dollars today that's better than a hundred dollars tomorrow but unfortunately everyone has a wrong intuition about it people apply too large a discount rate to future so So what ends up happening is people very frequently sell future growth at a massive discount for today's stock price.

52:09Molly O’Shea:And the result of that, by the way, very objectively is PayPal. Like over and over again, that company made all the wrong decisions because they cared more about today than 10 years from now. And guess what? It is now 10 years from now. And the company is in deep trouble. I realize that most public company CEOs also don't talk this openly about other public companies. but it's true so but toby had this very wonderful mentality of um applying essentially a zero discount rate to future growth he was just like it's a cool growth tomorrow or growth today i'm indifferent i will never sacrifice growth tomorrow for growth today and if you do that in your head what actually ends up happening is because human beings always misunderstand compounding growth is you end up getting way higher growth later on you end up being right so i think it was it's a very hard thing to do in practice because you have to look at a chart and say, nah, I'll take some of it later.

53:06Molly O’Shea:That's very hard, but it is why Shopify is just... I think there's like two SaaS companies that stand differently than the rest. It's like Palantir and Shopify. There was up to two. I think it's partially because they do things that are just so different than every other company.

53:23Kaz Nejatian:As we wrap up, talking about the future, we could model this out over 10 years but i also know you work weekly yeah so what are you looking

53:35Molly O’Shea:forward to next week oh it's gonna be great i'm actually really excited about this so by the time when will this release monday okay by the time this releases our mortgage product will be out in beta i won't tell you where uh i'm really really excited about it um i think it would be it's early it's very early we haven't launched it but like it is going to be very good um so i'm gonna spend i'm actually gonna spend some next week doing personal customer support on the product fun like if you call the phone number that appears on page it'll go to my cell phone do you know what the number is i do but i'm not gonna say it oh because we don't want to ruin the test okay um but one um i'm really excited about that we have our pm off site next week so all the so all the product managers at open door report directly to me they're all ics they all report to me uh so we have our product manager off site next week where we're going to go through every project in the company i review every project we have every single week so we're going to do that next week um we're shipping a new underwriting model we're shipping a new uh offer model we're shipping uh we're shipping a lot next week i'm really excited about it and this by the way this is like the most i'm good this part of my job like shipping product is what I'm good at and it's where I get my energy from.

54:50Molly O’Shea:Today just happens to be earnings day, which is not where I get my energy from. But next week is going to be amazing.

54:56Kaz Nejatian:Amazing. I'm glad I asked that question then.

54:58Molly O’Shea:Thanks.

54:59Kaz Nejatian:Well, thank you, Kaz.

55:00Molly O’Shea:Thanks for coming by. I appreciate it.

55:02Kaz Nejatian:Can you, Ajin, can you show me the shots of each, what it looks like when we're sitting? Just so I can see the lighting. This is Ajin and that's Brett.

55:12Molly O’Shea:Hey guys. Thanks for coming down, man. How long have we been doing this for?

55:15Kaz Nejatian:not that long how long is that that long um with this whole production situation probably last may i got my breck sponsorship which i know keith has some yeah it's fine he's hilarious like it's great he's hilarious um that started last may and then like and i'm sure you're similar but like every week i put something out we have to increase the quality like 10 times

55:51Molly O’Shea:so it's just constantly iterating it's the very the red queen's race of giving a fuck about the quality bar is very painful but necessary it's so painful yeah i literally try not to have an

56:08Kaz Nejatian:aneurysm every week when i'm like why is the audio fucked like no we've been doing this so many times

56:12Molly O’Shea:like why is the audio bad no you should see me review like products it's like very like um the problem the problem is this right like the advice you get from people is that you need to like be okay with more things but the people who give you advice all of them are not inspiring yeah like like like it is very um it's very real like like it's like especially if it's your own thing like you need to give a fuck about every little bit of it like i like this is very like i used to when i was at shopfly one of the things i used to do is like um walk into conference rooms and test the markers the whiteboard markers and like anytime there was one that wasn't working i would send a message to our facility and hey like because I thought was such a perfect example of giving a fuck about like the detail of the thing yeah so there we all think all right so we're gonna you probably saw

57:21Kaz Nejatian:the sheet but you probably don't even need to see a sheet we're just we're gonna go through

57:25Molly O’Shea:I haven't seen the sheet it's better you haven't seen the sheet no oh my god it's okay I trust you we're gonna go through the last six months metrics performance high measuring things

57:36Kaz Nejatian:macro it would be really good even in the beginning to like set the backdrop of the macro situation of housing market in america and um your positioning and um that we'll go into the product we'll go into the major changes i want to go deeper into the board i just feel like the board has been a major major part of all this true and then um i have some fun quotes from keith oh cool from our conversation in september yeah that's good let's talk roll hey it's molly if you enjoy our interviews check out our newsletter sorcery.bc where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews subscribe to sorcery today and don't forget to subscribe to the podcast on youtube spotify apple or wherever you listen link in description to sign up