Zillow Co-Founder Spencer Rascoff on the New Proptech Wave, Democratizing Access with Housing Innovation, & LA Tech Ecosystem

Edward Cohen: And thanks for everything. Edward Cohen, to the tangent of our first ever face-to-face cast none other than Ruspooth. co-founded, and ran 0 for a decade as a CEO Spencer is also the co-founder of Pacasal. He's also a new time best selling author, and he has co-founded for other companies, and he's invested in 55

Edward Cohen: companies. Is that right? I think so. Yeah, and those count sometimes. But yeah, companies are in propag in the future of work and the Creator economy.

Edward Cohen: So, Spencer, this, let's jump right into it. Thank you.

Villo.

Edward Cohen: as we all know. You know, it's pretty much a verb poster child of propte one innovation right up there with with the rbmworks. Probably with a better future than one game. So I wanna ask you, in this new wave of propte 2 that we're seeing what companies have the potential to becoming. You know the prote gardens of this next wave of innovation?

Edward Cohen: Well. I mean, I guess I think of

Edward Cohen: propte one as about search and discovery kind of at the top of the funnel, and I think a propte as companies that are more transaction at the bottom of the funnel, and and Zillow, to be clear is trying to migrate right there deeper into the transaction, and they they tried it with eye buying. And now, of course, they're trying it through M and A.

Edward Cohen: and and just moving down the funnel in a variety of ways. But

Edward Cohen: The companies, I guess I mean a couple of the companies that come to mind

Edward Cohen: at the bottom of the funnel are ones that are trying to fundamentally change the transaction so easy. Knock, for example, I'm an investor in which has a sales back product or arrived homes which I'm also an investor in which lets investors, individual consumers

Edward Cohen: participate in real estate as an asset class. These are companies that are trying to democratize access to home ownership and innovate at the very bottom of the funnel with the transaction itself.

Edward Cohen: and they have extraordinary product market fit with consumers. So

Edward Cohen: II think those are the types of companies that will be winners of this stage of innovation in pro tech. Right? Yeah, it does make it does feel like in the first wave of innovation. A lot of potential consumers, potential investors where maybe either left out or we just didn't have the the tools there yet to include them in the, you know, investing in in these returns. For example, in in single family rentals the arrive is doing. And we're certainly gonna

Edward Cohen: touch on housing innovation soon. But it's you know, what are. What are some of the factors at play here in the new generation of startups, seeking to transform real estate and and how we build it. You know how we buy, sell, own, manage, and invest in it. I mean, you. Just you just mentioned

Edward Cohen: arrived democratizing access to single-family rental investing? Well, I think an important attribute is simplicity. So a lot of these startups that have pitched me over the years around

Edward Cohen: real estate 2 dotto

Edward Cohen: are very complicated business models trying to change the balance sheet of a home.

Edward Cohen: and I mean, I can. I can remember a dozen of them sitting in pitches and thinking like, I'm pretty sophisticated about all this stuff, and I'm super confused and like, how would I explain this to a regular consumer. I don't even know where to start. So

Edward Cohen: for me, maybe I'm sort of slow, but that's like my first screen. Is this something that's simple enough to be able to explain to to a novice and that's where a lot of these startups fall down. They they sound great. They make sense from like an Mba standpoint. But they just they're too complicated. I guess another common attribute is, have that the founder needs a real mission orientation. The founder needs to be so passionate about solving this particular problem.

Edward Cohen: and that that is true. In most the cases of the startups that we've named. It was certainly true in the case of the Zillow leadership team when when we were first getting started. But,

Edward Cohen: You know I'm always like, I always ask founders like, Why are you doing this right? And you can suss out pretty quickly if they're trying to do it

Edward Cohen: for monetary reasons or for mission oriented reasons. And I mean, I'm pretty allergic to people that are doing things just

Edward Cohen: besides passion. It has to be an an obsession right? And and that obsession has to have a personal meaning other than I. Wanna either get rich or I want my face and my company name, you know, shared across social media like it. It really needs to come from from this inner like drive. Yeah, really, you know, be aligned with the mission I mean. I remember I asked a founder of a company. This wasn't a prop tech company, but I asked the founder

Edward Cohen: what would you do if I told you you couldn't do this, you couldn't pursue this startup idea for whatever reason, and he just looked at me like I was crazy. He's like he's like II was put on earth to solve this problem. I wake up every morning thinking about this problem. I go to sleep every night thing on this problem like, I have to do this. I he's a yeah like, there is no world in which I don't pursue this.

Edward Cohen: And that was really, you know, that's yeah. Take, take, take, take, take, take my check. Take my, that's quite yeah. I think it really differentiates the the teams that are really in it, for for the long run

Edward Cohen: won't let a few setbacks put put them back.

Edward Cohen: Now, something that you spoke about simplicity. Now we've seen how startups have tried becoming monopolies in in a little piece of the puzzle.

Edward Cohen: May that be security deposits when you're renting an apartment? Or may that be, you know, a little piece you know, renters insurance like there's always a theory of you know, trying to become a monopoly, you know, very little niche piece, and then growing from there.

Edward Cohen: In the last few years we've seen now, actually, companies even like Pacaso, where you're not only the managers, and you're also offering governance for second home ownership, fractional second home ownership. But you're also providing finance. Right? That's that sounds. I'm I'm challenging your your take there. It sounds like it's actually a bit more, you know, holistic, the approach not as simple, however, more effective. Yeah, I mean, it's a it's a it's a great question.

Edward Cohen: companies that are providing like a full, stacked solution.

Edward Cohen: It creates a lot more complexity for them, and and higher degree of difficulty. If you think of like you know an Olympic gymnast, it's like, or an Olympic diver. They always they're judged on how well they perform that actual task. But then it's also it's sort of like multiplied by the degree of if you're doing something full stack, it's a higher degree of difficulty, but

Edward Cohen: if you can execute on it, then it can deliver a more beautiful, seamless experience. So Pacaso's a good example. We do our own property management on these hundreds, and someday thousands or tens of thousands of homes. It will be a lot easier to outsource property management. That would be a lot more scalable. We do our own mortgage resonation. It'd be a lot easier to outsource that, but that

Edward Cohen: keeping property management in-house and create doing our own mortgage. Origination allows us to create what we think is a more beautiful, seamless you know. Excellent, memorable experience for users. So it's a trade off. Yeah, and I think different startups have to approach it in different ways. And a big question mark

Edward Cohen: on this is the amount of resources that are available. So if Costa was able to raise a lot of venture capital, so we can try to create a full stack solution. If you didn't have a lot of venture capital, you'd have to smaller. And I actually do like I mean you, your experience operators, you you get, you know you have the trust of being able to raise more and having more bold visions off the path.

Edward Cohen: However, raising we've we've learned how raising mo funds as a moat is in the mouth. That's true, right? Like that doesn't mean that only because you're able to raise a bunch of capital that you're able to deploy it, execute it and build, you know, scale team. On the contrary, I think we've seen, you know, there are a lot of examples that

Edward Cohen: would have one believe that sometimes too much. Capital is a is a bug, not a feature, right? That it builds bad habits internally. Companies. They're wasteful. They're not

Edward Cohen: frugal, frugal. They're not. They don't focus. It's better. So yeah, it's a real, you know, it's a real issue

Edward Cohen: housing innovation, I mean. So within your role at 75 and sunny, your venture capital based out of Los Angeles. You do have a good focus on housing innovation.

Edward Cohen: You have fractional ownership. Companies like Arrive in Pakistan brokerage, you know, like radius like side and and service providers more specifically in in renovations and maintenance like less 10

Edward Cohen: like block. So what's your. You know. What's your take there in terms of housing innovation. What are you trying to achieve? What are you backing there? I'm trying to democratize things that

Edward Cohen: only a small number of people typically have access to. So in the case of hotwire, my first start up in the late nineties, it was trying to democratize access to staying in a great hotel. It's a 4 Star Hotel for a 2 star price, and we provided that value proposition to travelers in the case of Low, it was information transparency which only previously only practitioners only professionals had access to

Edward Cohen: in the case of some of these other startups, like Pacaso is trying to democratize access to second home ownership. In the case of these disruptive brokerage models like Si side radius radius agent Avenue 8. These are all cloud based brokerages that I'm involved in, which are trying to help. Individual agents

Edward Cohen: have keep more of their commission has sort of. They have have access to some of the same benefits, that

Edward Cohen: if they paid even more of their commission to brokerages, they might be able to have, but at a much lower fee. So this ongoing theme of democratization, the good stuff, you know, the stuff that only the people in the know or the stuff that only really wealthy people have, or only, you know, top performing people have access to.

Edward Cohen: That's generally what a theme that I invest. Very interesting. I mean, talk about Spencer Roscova on arsenal for democracy. Yeah, I mean, that's a little grandiose. But I'll take it too soon, too soon. But you know, Spencer. 2028 coming soon. Los Angeles prop in the tech ecosystem, I mean, if there's

Edward Cohen: II feel like Miami has taken the the headlines in in terms of where

Edward Cohen: some venture capitalists some founders are are relocating from the Bay area. However, I feel Los Angeles has probably gotten, you know, actual people relocating from the Bay area. Because it's much closer. They're familiar same time zone. And it still has a lot going for it. So

Edward Cohen: you and 75, and Sony are investing in incubating bold solutions to everyday problems.

Edward Cohen: Exactly what you're hinting at before. And that includes prop. The companies includes the future work and includes the Creator economy.

Edward Cohen: So what's your vision for investing in these 3? And and how does innovating in these 3 sectors make the sum of its parts larger. Well, I mean, firstly, just focusing on Los Angeles. La is having a moment, and it's

Edward Cohen: clearly become the third biggest tech ecosystem by behind the Bay Area and New York. By some measures it's the second largest tech ecosystem behind the Bay area, and there are a number of reasons for that. But and I'll just to elaborate on what they are, even before covid la, was the intersection of media entertainment pop culture. The creator economy, I mean, so much of

Edward Cohen: tech is now has become consumerized. It is grown through influencers and through social media, and a lot of that is based in Southern California. I mean the the 10,000 people that decide what's cool for all the rest of us in the world basically live in la the athletes, the celebrities, the influencers like they all choose to live in la, and so

Edward Cohen: and that is you know, that's a sea change. That's the customer acquisition channel, for certainly most consumer businesses, but even many B 2 B businesses. And then la also has this really rich history of defense, tech and space, both of which have been huge parts of the tech ecosystem in La for right 50 years. And then you layer on top of that

Edward Cohen: covid and the

Edward Cohen: diaspora of people from the Bay Area. And you're right. Some of them went to Miami. Some of them went to Austin, but a lot of them went Southern California. And so you know, la is just totally booming. And I one of the companies I started.la is a media company that covers la Tech. We're trying to be the, you know, the news and events business that focuses just on La Tech. And it's it's growing very, very quickly. And we've got a huge audience, because people are really paying attention to what's happening in La. Very cool. Yeah, I mean

Edward Cohen: Fyi for those who don't know. Spencer is also fellow. So you should check out office hours with Spencer Rascov, part of the.la network where you can listen to Spencer speak with Ceos founders and Vc. Investors about how to manage lead and winning business.

Edward Cohen: Spencer. Last, but not least, you've been too comfortable here we've been throwing you. You know, easy balls.

Edward Cohen: We want to put you in the discomfort zone challenge you. What's something that you've changed your mind about recently. How have you changed your opinion? Based on new information that was presented to you? Tell us?

Edward Cohen: Well.

Edward Cohen: I mean.

Edward Cohen: I guess

Edward Cohen: my opinion about Elon musk is sort of in flux. Let's just say so. I think most founders

Edward Cohen: have always put him on a pedestal up there with Steve Jobs and the Bill Gates, and a handful of other visionaries, which he clearly is.

Edward Cohen: But you know the way he's the way he manages companies is very unconventional, say the least. And so I can. I can still respect his his product vision, while also

Edward Cohen: yeah. Also, being, you know, skeptical and critical of of the way that he. He manages companies, and the way he comports himself. I think it takes a lot of courage

Edward Cohen: saying this especially. You know someone who's a, you know, in the similar adjacent Ecosy innovation, ecosystem, no doubt, that he's one of the, if not the innovators of our generation. Verse having said that no one over how smart, talented, successful you are

Edward Cohen: should be surrounded by by yes, people only, I think, in terms of his appeal is heel. He he has believed his own success. Now, which may you know it's it's one of our human flaws, however, in terms of you know, having people around you that you can rely that you also encourage to disagree with you. I think that's that's what he's missing. And that's what's making the brand. And maybe his companies be a little shaky. I mean, it's hard to argue with his overall success, of course, but

Edward Cohen: I think he could. He and his companies could be just as successful with a little bit more.

Edward Cohen: you know, maturity, and sometimes right, less less less tweeting. But Spencer, rascal

Edward Cohen: co-founder of Pakistan, co-founder of 75, and sunny. Thank you so much for coming to Tanya today. Thank you for having me.

Creators and Guests

Edward Cohen
Host
Edward Cohen
Host & Executive Producer at Tangent
Spencer Rascoff
Guest
Spencer Rascoff
Co-founder at Zillow & Pacaso
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