Opendoor to Raise $200 Million at $3.7 Billion Valuation

It was announced Friday that real estate startup Opendoor filed paperwork in the state of Delaware indicating its intent to raise $200 million in funding at a $3.7 billion valuation. 

A Huge New Round of Funding

According to the paperwork, the shares are described as ‘Series E-2’, which according to reports, likely means the latest round will be an extension of the company’s latest existing round of funding. That round - which closed in September of last year - initially closed for $400 million and was led by SoftBank’s Vision Fund. The new round will likely be added to that. To date, Opendoor has raised more than $1 billion after six rounds of funding. The announcement comes just months after one of Opendoor's main competitors - Knock - announced it had raised $400 million in its own round of Series B funding.

A New Way of Home-Buying

Opendoor aims to streamline the home-buying process. In order to do this, Opendoor plays the middle-man between buyers and sellers. As the company explains their role, “If you’re selling, sell your home to us to eliminate the hassles of showings and months of uncertainty. If you’re buying, we make it incredibly easy to tour hundreds of Opendoor homes so you can find the perfect one.” This model is similar to Knock, which purchases the house from the seller outright then collects a fee. 

A Company on the Rise

According to reports, more than 800,000 people toured an Opendoor home in 2018. Of those 800,000, Opendoor claims it has served over 30,000 customers. These customers are distributed across 19 metro regions in 20 cities. The company also states it currently has more than 2,000 monthly customers. To date, Opendoor has managed to attract more than 36 investors, including Andreessen Horowitz, SoftBank, GV, and others.

The Future Of Retail

Experience + Revenue Per Sq. Ft.= Future of Retail

Amazon and online retail are changing the way we shop. Brick and mortar stores that do not offer a positive consumer experience are shuttering at what feels like an alarming rate. Shopping malls around the country are being torn down, repurposed and left behind.

In order to survive retail stores must adapt to create a consumer experience that is better than buying online

Here is a short list of businesses that are filing bankruptcy or shutting down many of their physical stores. The links below tell some of the story of each business's store closings.

-Radio Shack
-Bebe Stores
-Payless Shoes
-Limited Stores
-HHGregg Inc
-Gander Mountain
- Rue 21
-JC Penney
-American Apparel
-Wet Seal
-K Mart
This year the WSJ estimates that over 8000 Retail stores will be closing their doors this year. Yet, not all retail is failing.

Why Apple is Winning in Retail

Apple is an exceptional example of the power of a quality retail experience. Across the brand at almost any Apple store you are greeted by employees who are passionate, knowledgeable and help you with your overall consumer experience.

Apple has a great return policy, provides in store classes for consumers of many skill levels, and keeps their stores clean, efficient and organized.

Have a problem with your Apple product? Set a time online and they will help you troubleshoot it for free.

The result is that Apple is one of the most valuable companies in the world, and has the highest revenue per square foot of any retail chain (over $4,000 per square foot).

Premium Products Not Required

Brands like Costco, Victoria Secret, and Dicks Sporting Goods provide consumers with experiences that you can't get online.

Costco may be known for the ability to buy in bulk, but the in store consumer experience is surprisingly good. From free samples, to happy employees, to well put together product demonstrations Costco blends value with experience.

Engaging Communities

As human beings we desire to be a part of a group or tribe. Despite advances in technology human nature values face to face interactions and being part of a group.

Stores like Lululemon (an athletic clothing company) & Whole Foods do an outstanding job of engaging and supporting the local communities. Walk into a Lululemon and you will find pictures of local fitness instructors, yoga classes and passionate employees.

The grass roots approach to experience combined with a great product allows Lulu the ability to succeed in the current markets.

Whole Foods supports community events, and spends 5% of their days helping in communities.

Crafting a real sense of community and reaching out to influencers in local communities takes time, effort, knowledge and passion. It is a dynamic change from simply offering goods.

Surviving Future Retail

By having an experience and a product people want to buy, brick and mortar retail will move forward. The change is that offering a product alone is likely not enough to offset the costs of brick and mortar stores. By providing consumers with a memorable positive experience retail stores will continue to grow their brands.