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Tuesday
Sep022014

RFP (Request for Prototype): Brutal Real Estate Reviews

I’ve invested in 70 companies.

To do this I have a secret process that involves nine full-time staffers that I’m not going to reveal right now. Perhaps when I hit 250 investments and I’m “done” (as in, 50 years old) I’ll write a book about it.

Here’s a little peek into the process: I generally meet with 10 startups a week during lunch and for coffee. This is absurdly efficient, as I need to eat lunch, I like to drink coffee and I don’t like being alone.

Given that, I wind up investing in 30 of the 500+ companies I meet with per year -- however, those 500 meetings are chosen from a pool of literally 5,000+ possible startups.

My team and my network narrow the 5,000 to 500 and I narrow it to 30. That means 10% of folks my team look at get to meet me in person and ~5% of those get funded.

Or, about 1 in 200 startups my team looks at gets funded.

Wildly efficient, yet I still find that some markets are not being addressed.

[Click to tweet: http://ctt.ec/6puHP]

Given that, I’m going to start a new email feature: “RFP: Request for Prototype.”

The rules are simple: build a prototype based on a business we think should exist in the world and if it’s exceptional -- and you’re exceptional -- we fund it. *

* Exceptional as defined by me.

 

The Big Market the Crash Killed

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I’m shocked that more folks don’t want to take on one of the biggest markets in the world: real estate.

I hardly ever hear about anyone with an innovative idea these days. I guess the market was so hot, that after the RE bubble burst folks were scared to wade back in.

Zillow, Trulia and RedFin were awesome innovations and since then, well, the well is dry it seems.

However, having just moved this month to San Francisco, I’m in the middle of selling, as well as buying (renting), a home.

It’s brutal.

Los Angeles homes stay on the market for 3-6 months and San Francisco ones for 3-6 hours.

Literally, I called to make an offer on a house in Glen Park -- an up and coming neighborhood that is a full 7% as fancy and delightful as my current home in Brentwood -- an hour after seeing it on the first day it was being shown.

It was sold an hour earlier -- while we were touring the house!

So we tried to put an offer on a house BEFORE it went on the market and they wouldn’t take our money. The offer was all cash and 15% over the asking price (I feel like an absolute idiot for even sharing that).

Anyway, the market is red hot, but that’s not the point.

I can handle a hot market and frankly I don’t see a startup being able to change supply and demand (or maybe I do … but we’ll save that for another email).

 

My Big Aha! Moment:

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No one is fighting for the people buying houses. Everyone in the business is driven by one thing and one thing only: closing sales.

If houses get sold, brokers on both sides get paid and the world keeps spinning. Ads flow to listing sites, inspectors get paid, mortgage brokers get commissions and home improvements continue.

No one is incentivized to STOP you from buying a home.

No one is trying to PROTECT the buyer from making a bad decision (I know, brokers are supposed to … but they don’t get paid unless you buy!).

This becomes super apparent when you look at the descriptions of homes.

Everything is “charming” and a “compound” and “gorgeous” in the descriptions, but when you go see them they are “depressing” and “dark” and “small”!

So here’s a super simple idea: reviews that tell you, in brutally honest fashion, if you should move into this house or not.

If it’s a fair price.

If it’s a horrible block, if it has a bad landlord, or if the methadone clinic is hopping at 3pm when your daughter gets home from school!

 

But How Will it Make Money?!
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I honestly never worry about this. If a product solves a small problem for a large number of people, a major problem for a small number of people, or a medium-sized problem for a medium-to-large-sized audience it will make money.

As an angel, job one is just knowing that a product will be loved.

Well, this angel would have LOVED to get an honest review of a house I had looked at. In fact, I would have wanted this 10x in my life, long before I was an angel.

You’ve wanted it too, unless you haven’t moved out of your mom’s house (mom’s gets a great review, hands down).

In cities like New York, Los Angeles, or San Francisco these reviews would kill. The nastier and more bitter, the better. I want someone to just crush these shitty homes and bullshit artist realtors trying to sell them.

I want an angry journalist or reviewer to just take these places out, because if there were checks and balances two things would happen:

1. the listings would get cleaned up because people would fear getting ripped to shreds in my new app
2. some listings wouldn’t get cleaned up and we would protect those buyers

A huge win on both fronts.

 

Who Wants to Build this?
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I tweeted about this last week and got some folks putting up designs, and some of them are a solid start. Most are coming at it from a bells and whistles format, which is kind of a mistake when building a product.

The first thing you want to do is to perfect one simple function. In Uber’s case, that was getting a car to you fast. In Thumbtack.com’s case, it’s getting you a really detailed quote from a high-quality service provider. In the case of Calm.com, it’s getting you to meditate and reduce stress.

Simple.

Here, we simply want to review a home for people.

You hire someone to review homes and let folks comment on those reviews.

If you want to do this business and you build a sick prototype I will invest in it. If you are a writer who wants to start it here in San Francisco but you don’t have technical chops, well, just write me a couple of samples and I’ll try and find you a technical co-founder.

Basically, look at this as an RFP: “request for prototype.”

You build it and if it’s awesome I’ll put in the first $25-100k.

If it is really awesome I will syndicate it to AngelList and get you another $200-500k.

Couple of notes:

1. this is not a contest

2. since this is a not a contest there are no rules

3. if you make something awesome you’re under no obligation to have me fund it -- go ahead and steal this idea

4. if you make something awesome and tweet it and someone else does your idea and I fund them, well, tough luck. Ideas are not important, execution is. If you don’t want to respond to my “RFP” then don’t.

Bottom line: it’s a free-for-all. This is some Lord of the Flies, Battle Royale gauntlet I’m throwing down (the movie The Hunger Games was stolen from).

best @jason

P.S. - The LAUNCH Scale event is coming up [http://events.launch.co/scale] and we are giving 10% of the tickets to women and minorities so we can help change the ratio in the industry. My team is awesome that way. Apply here for a scholarship: [http://events.launch.co/scalescholarship]

P.P.S. - LAUNCH Festival is March 2-4 in San Francisco: [http://festival.launch.co]

P.P.P.S. - This Week in Startups is on fire. Recent fan and statistical favorites include Eric Hippeau, former HuffPo CEO and media mastermind [http://goo.gl/xSiLxs]; Daniel Kim, Lit Motors CEO and inventor of a new class of vehicle that is part car, motorcycle, and spacecraft [http://goo.gl/bCG0WV]; and Kathryn Minshew, CEO of The Muse, who gives job seekers behind-the-scenes access to companies and their cultures, and shares her experiences as a female founder and entrepreneur. [http://goo.gl/l2fc4q] Subscribe in iTunes here [http://bit.ly/TwiStA] for Audio and here [http://bit.ly/TwiStV] for Video.