Opendoor's new CEO, Kaz Nejatian, has initiated a sweeping overhaul of the struggling real estate technology company, aiming to achieve profitability by the end of next year. The strategy involves deep cost-cutting, a mandatory return to the office, and a fundamental shift in its business model away from holding assets toward high-volume transactions.
Facing persistent losses since its founding in 2014 and a stock price that recently flirted with delisting from the Nasdaq, Opendoor is betting on a new vision to navigate a challenging housing market shaped by high interest rates.
Key Takeaways
- New CEO Kaz Nejatian has implemented major changes, including a 20% workforce reduction and firing all external consultants.
- The company is shifting its focus from profiting on home value appreciation to earning from high-volume sales with tight margins.
- A full-time, in-office work policy has been mandated to foster a more aggressive and collaborative culture.
- Nejatian has directed the team to "default to AI" for problem-solving and is pushing for the future tokenization of real estate assets.
A Mandate for Change
After investors pressed for a leadership change in August, Kaz Nejatian, former COO of Shopify, took the helm at Opendoor. He inherited a company in a precarious position. Despite a temporary surge as a "meme stock" that saw its shares climb from $0.51 to as high as $10, the underlying business remained unprofitable.
The company's model of buying homes for cash and reselling them was severely impacted when rising interest rates in 2022 cooled the housing market, leaving Opendoor with significant losses on its inventory. The stock price had plummeted from a high of $34 in 2021, reflecting deep investor skepticism.
Nejatian's response has been swift and decisive. He has reduced the company's headcount by 20%, eliminated all spending on outside consultants, and called all employees back to the office full-time to reshape the company's culture.
The New Playbook: Volume Over Value
The core of Nejatian's strategy is a dramatic pivot in philosophy. He is steering the company away from what he described as a hedge fund mentality, where profits depend on macroeconomic trends and rising home values.
"Our job is not to run a fucking hedge fund that aims to own assets and make money off of macroeconomics," Nejatian stated. "Our job is to buy and sell lots and lots of homes at very tight spreads and make money off of transaction volume."
This approach aims to make Opendoor function more like a high-volume marketplace, similar to Amazon, rather than a real estate investment trust. The goal is to generate consistent revenue from service fees on a large number of transactions, regardless of the broader market's direction.
By the Numbers
As of September 30, Opendoor was in contract to purchase 526 homes, representing an aggregate price of $164 million, signaling its renewed focus on acquisitions to drive transaction volume.
To support this, the company is recommitting to its software roots, aiming to build a seamless end-to-end digital experience for buyers and sellers. An early example of this is a new service launched in Texas, allowing users to purchase a home entirely online and return it within seven days if they are not satisfied.
Technology at the Forefront
Central to the "Opendoor 2.0" vision is a heavy reliance on technology, particularly artificial intelligence. Nejatian has mandated that his team should "default to AI" when looking for solutions to business problems. This directive is intended to drive efficiency and empower the existing operations staff to handle a higher volume of work.
A Lesson from Shopify
Nejatian's experience at Shopify, where he helped steer the e-commerce giant from losses to profitability while fending off market skepticism, is seen as a key asset. Shopify also underwent a significant pivot, moving away from competing directly with Amazon's fulfillment network to focus on its core software platform for merchants.
Looking further ahead, Nejatian sees the tokenization of real estate—turning property ownership into tradable digital assets on a blockchain—as an essential evolution for the industry and for Opendoor's future.
"I can’t imagine a future where real estate is not tokenized," he said, adding, "Asset tokenization is not a sidequest for us."
While the company has not announced a specific token product, this long-term vision indicates a commitment to fundamentally disrupting how property is bought and sold.
An Uphill Battle
Nejatian's ambitious plan is not without significant challenges. The real estate market is notoriously complex, with local regulations and unique variables that make it difficult to standardize in the way e-commerce has been. Competitors like Zillow and Redfin have previously attempted and struggled to build similar end-to-end transaction businesses.
To demonstrate his personal commitment and align his interests with shareholders, Nejatian is taking an annual salary of just $1. His compensation is composed entirely of options tied to Opendoor's stock performance, making the company's turnaround a personal financial imperative.
He expressed a deep-seated motivation for taking on the challenge, linking the company's mission to a broader societal need.
"The fact that the average age of a person who buys their first home now is 40 is deeply depressing," he said. "If we can make buying, selling, and owning a home easier and less terrible, the world will be a better place. If we do that, we’ll make money along the way."
With a public accountability dashboard tracking the company's progress and a clear mandate for rapid product development, Nejatian is betting that a more aggressive, tech-focused Opendoor can succeed where others have failed.
