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Meet the world’s newest instant billionaire

At close of market in the US on Monday, Wu’s six per cent stake in Opendoor was worth US$1.01 billion


Eric Wu is the world’s latest billionaire after his startup Opendoor Labs listed as a public company on the Nasdaq.Opendoor Labs went public through a merger with Social Capital Hedosophia Holdings Corp II, the special purpose acquisition company founded by Chamath Palihapitiya and Ian Osborne.

At the close of the market on Monday, 38-year-old Wu’s six per cent stake in Opendoor was worth US$1.01 billion.

Wu published a blog post on Monday morning celebrating the deal.

“In 2014, a small group of us dreamt of a future where you could buy and sell a home at the tap of a button,” he wrote. “Like most startups, we’ve faced our fair share of hard problems, but we believed in the potential impact of what we were building and put in the hard work to tackle obstacle after obstacle.”

Opendoor is one of two major businesses in the US iBuying market, a relatively new industry that is gaining traction. Homeowners can quickly offload their houses to the iBuying company, which then lists them on its platform. Opendoor uses algorithms to determine how much it pays – too little and potential customers won’t want to sell; too high and the company could take a loss. Opendoor then gives the property a quick makeover and puts it back on the market.

Opendoor sold nearly 18,800 homes last year, generating US$4.7 billion in revenue. Sales dropped off dramatically due to the coronavirus pandemic this year.Through the end of September, revenue fell to US$2.3 billion (more than US$1 billion less than the same period in 2019), while losses amounted to US$199 million. As it goes public, Opendoor is battling Zillow for dominance in iBuying. The industry still comprises just 0.5 per cent of the US$1.6 trillion home-buying market in the US, according to The Real Deal.

Opendoor is the brainchild of PayPal alum Keith Rabois, who thought up the business in 2003. Co-Founder Wu came on board in 2013 before the company’s launch in 2014. In its filing, Opendoor said it did not expect to make a profit until 2023. Its aim is to move into new geographic areas and increase its service, such as originating mortgages.

Opendoor’s public offering, first announced in September, saw the company with an enterprise value of US$4.8 billion. By Monday morning, its market value stood at nearly US$18 billion.

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