Residential Real Estate | Real Estate Investing | Foreclosure
Spencer Rascoff is a serial entrepreneur and company leader who is now the chair and co-founder of Pacaso, dot.LA, and Supernova. He also is co-founder and general partner of 75 & Sunny, a VC firm that focuses on early-stage startups and he also serves on the board for Palantir. But most of us watching or listening to this show know Spencer from Zillow, which he co-founded in 2006, and served as CEO for a decade.
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00:00 The Data Driven Real Estate Podcast Welcomes Spencer Rascoff, Co-founder and former CEO of Zillow, Co-founder and Chairman of Pacaso, dot.la and Supernova, Co-founder and General Partner of 75 & Sunny and Board Member of Palantir
00:54 Briefly mentioning the state of DDRE
1:10 How did Spencer get involved in so many industries?
3:37 Spencer's wide breadth of investing and investing philosophy
8:55 What is Pacaso and how does it work?
20:00 Supernova, Offerpad, SPACs and iBuying
20:31 What excites Spencer about Offerpad?
31:00 Spencer's past, present and future with iBuying
34:00 Can Wall Street and property technology survive another downturn?
44:02 What data does Spencer wish he had and the future of real estate
49:45 Spencer's favorite software collaborators
51:53 What technologies could we see changing the state of real estate?
55:04 The current state of the DDRE Podcast and its future
Aaron Norris 0:02
Hey, welcome back to the Data Driven Real Estate podcast, very excited today to have a very special guest, Spencer Rascoff. He is a serial entrepreneur. He is the company leader who is now the chair and co founder of Pacasso, dot.la, supernova. He also is co founder and general partner of 75 & Sunny, a VC firm focused on early stage startups as well as he serves on the board of Palantir. Most of us watching or listening to this show know him from Zillow, which he co founded in 2006, and served as CEO for a decade. Spencer, I'm super excited to speak with you today. So than ks for joining us.
Spencer Rascoff 0:39
Thank you. I'm totally excited to be here and appreciate the warm introduction. And thank you.
Aaron Norris 0:45
So I only had about 48 hours to really dig into 75 & Sunny. And I
Sean O'Toole 0:52
Before you get started Aaron,
Aaron Norris 0:54
Oh, sure.
Sean O'Toole 0:55
I want to let folks know to hang on at the end. Because we've missed a few episodes, I want to let people know what's going on there. And Aaron and I are gonna have a conversation about that and what the future of the podcast is. S o with that, Aaron, I'll let you take it away.
Aaron Norris 1:09
Okay, cool. So 75 & Sunny. I hadn't really no idea. So from pizza to celebrity cameos to space travel. How on earth did this get started? And how, with all these industries is so fascinating.
Spencer Rascoff 1:25
Yeah, so I mean, I've been an angel investor in startups, really, for my whole career, I think my first angel investment I made in 1999, when I was 23. And, you know, a friend of mine pitched me a company called easy to get easy to win the number two and then get GT, and easy to get was basically doordash. But it was 25 years too early. There were no smartphones, there was really no internet. And you know, you could pick up a phone and call a number and then place a delivery order from any restaurant, and then they moved it to the web. But you know, it was you had dial up Internet access. And anyway, so I made a small angel investment in a company. And of course, it promptly failed about six months later. But over the next 20 something years, I had done a lot of personal angel investing. And so starting about a year ago, I sort of formalize that, and I call the firm, 75 & Sunny, which is a nod to the weather in Los Angeles, where I live, and where I'm from. And within 75 & Sunny, we make a couple dozen early stage investments a year. And you're right, the portfolio is really diverse everything from Mod Pizza to fly homes. And so there's a lot of real estate, there's some travel, there's just stuff from my personal network, just generally things I find interesting. And then 75 & Sunny Labs is my startup studio, which starts companies, which I'm sure we'll talk about as well.
Aaron Norris 2:52
No, absolutely. And you also 75 and sunny specializes in early stage startups. Is that is that rare? Because it's more often than not?
Sean O'Toole 3:02
Yeah. And so it tends to be the pre seed or seed stage sometimes series A. And yeah, it is it is risky, I have plenty of zeros in my portfolio starting with easy to get, you know, and there. And there are many others. You know, pocket list was a was a real estate one that folded just a couple of weeks ago. And that was one of my, you know, one of my investments from a year or two ago. So the thing about early stage investing is yet you have zeros, you know, and that is just kind of the name of the game. And hopefully you also have some homeruns in there. But you're right, it is risky.
Aaron Norris 3:38
How do you even go about selecting the companies that 75 & Sunny will even look at,
Sean O'Toole 3:44
I get a lot of inbound deal flow, just from my network just from, you know, people I've worked with in the past. And because I have a pretty accessible I have a high profile online, so I probably get, I don't know, at least 20 pitches a week. Just inbound. And I have a team that helps me assess them and evaluate them. And then, you know, my team and I also identify themes that we're interested in and that we think, you know, we think have potential. And so in some cases, we go out and find startups that are pursuing those themes. And then the last big area for deal sourcing is through the venture capital community. So in addition to being a direct investor through 75, and sunny and many, many startups, I'm also an investor in about 50 venture capital funds, things like NSX, which is Pete Flint, the you know, who would be well known to your listeners, the founder of Trulia, you know, his venture capital fund, I'm an investor in or benchmark capital, who was an early investor in Zillow and Twitter and Snapchat and Uber, etc. I'm an investor in their venture fund. And so a lot of those venture funds tend to show me deals that they're working on or evaluating and so I get a lot of deal flow from venture capital firms as well.
Aaron Norris 4:58
Well, it's been an exciting Think just a couple of weeks between space fly homes and arrived and I think it's relativity. I mean, there was over $500 million in capital raise for some of the ventures that you're behind. Yeah.
Spencer Rascoff 5:11
Yeah, it's true. It's I mean, it's an exciting time in tech. And there's a lot happening in my portfolio. So relativity, space is a super cool company, I've been an investor in that for years. They're 3d printing rockets. And sending, you know, or they hope to send things to Mars will, you know, we'll see, they haven't had a first launch yet. But it's a very promising technology, being able to 3d print a rocket. And their real goal, actually, is to send one of these 3d printers to Mars, to print rockets on Mars to send things back to Earth, which is just crazy enough that my work. So you know, that's, that's a an exciting company. And then there's always a lot of Prop tech activity in my, in my portfolio, including, you know, a couple of the companies that you mentioned,
Aaron Norris 5:58
I guess the only other question I would have with, you know, with such a variety of categories, and themes, as you say, is that you're investing in people and I read and I think, are listened to, in an interview with you that vertical integration is really important. Are there certain things that are really important to you? Because you can't get everything
Sean O'Toole 6:18
here? Right? No, that's certainly true. I mean, I'm certainly no expert in space, for example. So you know, something like that. I mean, I'm not diligence in the technology, right. I'm not I'm not a rocket scientist. And so for, for companies like that, I'm relying on others. In that case, you know, hi, top tier highly qualified venture capital firms that are doing proper due diligence, and are hiring experts, etc. In, you know, what I'm usually doing, as you point out, is evaluating the team as best I can, especially at the very early stage, you know, when it's one person with a deck, or, or two or three people with an idea, they don't even have a deck, you know, there's nothing to evaluate at that point, except the, you know, except the perceived quality of the team and the idea, but there's no data certainly to assess whether this startup will have product market fit. And what I look for, in a founder or founding team at that early stage, is some sort of chip on their shoulder, you know, sort of a me against the world mentality, a feeling that they have something to prove, you know, I want startup I recently invested in, for example, this person had been laid off from a company, and they were pissed off about it, and they, you know, they really wanted to show it to the, you know, to that company that they were going to make it and, you know, another another person had a small amount of success, like a small exit and another startup, but didn't own as much of the company as they wanted. And now they're going to kind of give it their second go and try to make it bigger on the second time. So something like that is really attractive to me as an angel investor, because the person has they've gotten a taste, but they haven't, you know, they haven't got to first base, but they haven't hit a homerun yet. And that's something I look for.
Aaron Norris 8:09
They're coachable, I heard is very important. Yeah,
Sean O'Toole 8:12
absolutely. All super important. I mean, that what I basically am doing now that I've not, you know, ever since I left Zillow full time, two years ago, is I'm coaching mentoring. And so that's, that's the game essentially, you know, I don't want to, like I so therefore, I need somebody to want that input and advice and mentorship and coaching. And that's pretty clear. Even in a pitch in a very first pitch meeting, whether that founder is coachable or not. You can you can suss out arrogance pretty quickly in somebody and you can also assess out humility, and coachability pretty quickly.
Aaron Norris 8:53
Very cool. Okay. Let's do 75 & Sunny Labs because you've got a lot of really exciting things happening. Let's start with Pacaso. Sure, yeah.
Spencer Rascoff 9:03
Yeah. Yeah. So I mean, 75 & Sunny Labs is trying to start like two or three companies a year and last year we launched Pacaso, which I co founded with an incredible entrepreneur, Austin Allison is probably known to some of your listeners. Austin started a company called dotLA. also started a company called dot.loop dot.loop. Not to be confused with dot.LA, dot.loop which Zillow acquired and then Austin and I worked together for four years at Zillow. And what Picasso aims to do is it aims to democratize access to second homeownership. So I've been lucky enough to own a second home and it's had an incredibly enriching impact on my life and my family's life. But second, homeownership shouldn't just be accessible to the, you know, to to a small category people, it can be accessible to a much broader category of people through co ownership. And so a Picasso does is it allows you to buy a portion Have a home, say an eighth of a home or a quarter of a home or half of the home and Tahoe or Napa Valley, or Malibu or Colorado. And you buy that home, as a co owner with other families that Picasso's sort of pairs you with. And you don't know those people, you don't need to know those people. But, but the home is yours. And you know, you own a portion of it. And you use the proposal app to schedule visits to your home, and we do all the property management for you, and handle all the particulars like repairs and maintenance and the creation of of the tax and, you know, the tax information and the LLC formation, etc. So that's what the cost is up to. And it's growing like a weed. I mean, it's growing faster than anything I've been a part of including Zillow. The company is less than a year old, and it's it's just on fire.
Aaron Norris 10:53
Am I did I read this correctly? That you have reached unicorn status faster than?
Spencer Rascoff 10:58
Yeah. Yeah, I mean, it's a weird statistic. Right. But we decided to, we decided to announce it because firstly, we were pretty proud of it. But But you know, secondly, I think it speaks to just the strength of the team and the strength of the idea. So yes, just six months after founding, we were we raised a Series B at over a billion dollars, which makes us the fastest company ever to reach unicorn status. And, you know, we've been lucky enough to have an extraordinary team, many of whom came from Zillow, many of them came from other great companies. And, you know, it just, it's, it's a great idea, especially in this environment, post COVID, where people have realized that they can now work remotely, and there's greater interest than ever in second home ownership. And you know, Pacasso is just a great way to achieve that dream that many people have of owning a vacation.
Sean O'Toole 11:52
What's there other than the technology side, and you know, the app to manage it and stuff? Is there any differences in like, the ownership structure versus like the traditional timeshare?
Spencer Rascoff 12:04
Yeah, so there there are, you know, timeshare is a dirty word for good reason. You know, timeshare is basically a liability, not an asset, when you buy a timeshare, you're sort of prepaying for the right to stay at essentially a hotel at a discounted rate. And what Picasso is, is because of his true homeownership of a single family home, like a vacation home, a four bedroom, four bath, you know, $4 million house, not an apartment in a high rise, and you actually own that particular piece of real estate. So a good way to think about it kind of a thought experiment is if, if you owned a Pacaso, you own, say, an eighth of a home in Tahoe and eighth of caso, and Pacaso, the company were to vanish for some reason, God forbid, you know, we went out of business or whatever, you still own that home, you'd still own that eighth of that house, like Pacaso doesn't need to exist for that you own real property. But if Mera Vacation Club goes out of business, and you know, and you own a Marriott, timeshare in Orlando, like you're, you're kind of hosed. Like, you know, it doesn't exist without the company. So because it basically facilitates the ownership of real property fractionally in a single family homes. And that makes it quite different from timeshare.
Sean O'Toole 13:20
And just because we have this technical audience, right, that's deep real estate investors, like, what is that? It's probably not tenants in common. The, you know,
Spencer Rascoff 13:29
it's an LLC, yeah, it's an LLC, it's exactly like when people self organize, to buy a second home, which happens. I mean, I talked to somebody today, who owns a home in Pebble Beach with three other friends, and the four of them have gone and they created an LLC, and they each own a quarter of the LLC, and then they pay a property manager. So that's the structure. And, you know, the problem, of course, is when friends do it together, it usually ends the friendship. Because it's hard to figure out who gets to use it when it's hard to make decisions on maintenance. It's there's just a lot of challenges of doing it yourself. And the Picasso platform solves all those problems at scale. And, and the biggest problem, of course, is making sure that you can find a home that you like, and that meets your needs. And you can do that through Pacaso without having to find other buyers for the rest of the home because that's what Pascaso does.
Sean O'Toole 14:28
And I imagine, you know, so I'm jumping in here I live in Tahoe right full time. timeshares, including a single family and actually met Austin at my next door neighbor's house in Tahoe, so in a place called Marty's Camp. And so but there are a lot of fractional ownerships here that are tenants in common often and but one of the problems is the marketability on the other side. So is part of that fundamental piece That ability to also sell and have that market. Yeah have buyers because that's a real problem right now that just Yes, the MLS, but realtors don't really want to bother with an eighth share of something.
Spencer Rascoff 15:12
Yeah, so that's another major difference versus timeshare, right the timeshares are sold in this kind of alternative marketplace that isn't the MLS and so resale ability of timeshare is is one of the main fatal flaws of the timeshare product. Because those are not like that because those are real property. It gets listed in the MLS. It's in the regular marketplace. So if you know if you'll see picassos on Redfin on realtor comm on Zillow, you'll see an eighth of a home in Toronto, that is a Pacasso listing in the MLS. And it'll Of course, also be on the casas website. But it's listed in the MLS, we're paying commissions. And it is in the regular real estate marketplace, which is a very important distinction.
Aaron Norris 16:01
The 3% Commission's are now playing around.
Spencer Rascoff 16:04
Yes, yeah, by design, I mean, we we partner with local agents, and then we pay, you know, we pay for commissions on both sides of the transaction. And the way we make money is by marking up the real estate when we fractionalize it, so we're not monkeying with commissions.
Aaron Norris 16:20
Got it. I was, uh, talking to Sean about this, I've been surprised some of the stories that have come out with some of the cities that are upset. And because of the ownership structure, I was thinking about places like Tahoe, where if a single owner lives there, and they're only there maybe a month out of the entire year, and now you've got eight owners, I know what I do when I go into a vacation rental and how much money I spend in the market and going out to restaurants, you would think a lot of these electeds. And city leadership's would be a little bit more excited about this model.
Spencer Rascoff 16:52
Yeah, so I mean, we saw we saw one of the big problems of these vacation communities, which is empty homes, and you know, a home that's empty and is only used six weeks a year. There's no there's no business coming into local community from that empty house. And our homes have 90 something percent utilization rate. So those people are going to the restaurants, they're buying lift tickets, the going to the wineries, they're, you know, using local services. Local officials do get that actually we have very strong support from from most local officials in the markets that we're in. However, we have encountered opposition and concern from some community members. And and it's usually because of misunderstanding of the model or you know, confusing us with short term rentals, like an Airbnb, which we very much are not because this is an owner only product. Once we get a chance to educate people about what we are and what we're not. We usually overcome objections. But like with any new innovation, whether it's ride sharing, or scooters in cities or short term rentals, you know, there's there's community concern and opposition, I think with with new models. And you know, I think as time passes and as we educate people about what we're up to, I think that will will lead
Aaron Norris 18:15
what the markets are you most excited about doing this in and at what price point
Spencer Rascoff 18:21
the markets that we've had the most success in so far have been Napa Valley, and Sonoma Valley. So one country taho the Southern California beaches from Malibu down to Orange County, San Diego and La Jolla. And some of the Colorado ski markets like Aspen Vail Park City, Breckenridge, telluride. We are we just launched South Florida, and are having great success there. And we are launching new markets all the time, including International, which is a major focus of ours. The price points are typically the whole home prices are in the four to $8 million range for the whole house. And so the Picasso shares are typically an eighth of that. So usually a couple $100,000 per share. And we hope over time to move to lower price points and make it even more accessible. But for now, that's the price point that we're in.
Sean O'Toole 19:23
And did you like you know, hold back one week and each of these houses for like you and your team?
Spencer Rascoff 19:30
know we alas we did not, although we do have a very innovative employee benefit, where employees can buy Picasso's at no markup. And they they there's kind of a vesting program where longer tenured employees can essentially earn into owning Picasso's, etc. So, you know, we do have a very nice employee benefit in that regard. But no, we're not keeping the best the best inventory for ourselves
Aaron Norris 19:58
Had to ask I think I want to skip to supernova and offerpad. I bind a hot topic. But I think we need to start with the SPAC. What is what is the SPAC
Yeah, so what is this back? It's a SPAC. The term spec stands for special purpose acquisition company. And a SPAC is a public company, that it's when you take public, a shell company that is publicly traded. And in my case, I have three of these, they're publicly traded on the New York Stock Exchange. One is called supernova one, the tickers SPN v. The other is called supernova to the ticker is sn, I and the other one is supernova three, and that that ticker is str, like, like supernova tray. So I take a shell company public, and it has no operating business, it only exists for one purpose, which is to find a private company to merge into it. And when that private company merges into that publicly traded shell company, then the public SPAC fades away, it changes its name to the private company. And like a supernova, which burns brightly for a period of time and then vanishes, it kind of collapses into a black hole. The SPAC disappears when the merger is complete, and the private company eclipses the public company. And the reason why these things exist, is there a number of advantages for a company to go public via a spec merger, rather than through a traditional IPO or direct listing. And just very briefly, cuz it's this gets kind of technical, but briefly, a couple of the benefits of going public through SPAC are, it's faster, it gets done in the matter of a couple months, rather than a process of upwards of a year for a traditional IPO. Number two, you get the sponsorship of the SPAC itself. So usually, these facts are run by people like me kind of people that have taken companies public before or have a particular area of expertise. And so the sponsorship means that when your private company merges into my public shell company, my team and I essentially help you with that transition from private to public. And then we support you in the public markets for a couple years afterwards. So that sponsorship can be pretty helpful for certain types of private companies as they go public. And number three, because it's a merger, not an IPO, these private companies are able to issue projections, financial projections, because there is a safe harbor protection of sharing financial predictions in a merger, which you can't do it through traditional IPO. So this is why you see a lot of spec, companies have spec mergers with electric vehicle companies or flying taxis or, you know, space companies kind of things that are very hockey stick ish, where if they can share long term projections with public investors, then they'll be properly understood by the public markets. But if they go public through regular IPO, they're not allowed to share projections. Those are a couple of reasons why companies go public through SPAC.
Sean O'Toole 23:16
So just to be clear, this has been around for a long time. Yes. Go on. I was 18. My partners in my first software company wanted to go I think was reverse IPO. Is that the right word they used to use? Yeah, but yeah,
Spencer Rascoff 23:29
I mean, they used to be called kind of blank check companies. Yeah, you're right. They've been around for many years for decades. And they were always kind of in the shadows. It was always sort of like a weird way to go public. Yeah, kind of a little bit shady, a little bit weird. And then a couple years ago, they started becoming a little bit more mainstream. And there were a couple of very high profile tech companies that went public this way. DraftKings was kind of the first one that really made a name for themselves and Virgin Galactic and then open door. And then now you have very high quality companies like so phi and grab and offerpad going choosing to go public in this way. And they could go public any which way? So it's it's no longer a you know, it's no longer a sketchy way to go public. It's now more mainstream.
Aaron Norris 24:20
It's supernova one that is working with offerpad. Right.
Spencer Rascoff 24:25
Yeah. And actually, I should point out to your listeners that it's quite interesting project has had many SPAC mergers. So let's see. Open Door of course, latch. Smart rent, offer pad. Oh, gosh. At least five other prop tech companies have gone public through spec mergers. The Hippo which is home insurance, states title, which is has been renamed DOMA is title insurance. So all of those are going public through spec mergers. Yeah. So Supernova one is merging with Offerpad. When the merger closes, hopefully in q3 then the ticker SPN V will switch to OPAD. and Supernova will cease to exist and it will switch its name to Offerpad and Offerpad will be public. And at that point you know, the the basically, the Supernova which you know, my team which took Supernova public will become shareholders and offerpad is the easiest way to think about it.
Sean O'Toole 25:30
Cool to the folks at Zillow still talk to you.
Spencer Rascoff 25:32
They do they do I mean, you know, ibuying is so small relative to the total addressable market. And it's still so new that I believe and I think Zillow believes that there is so much space for everybody. And the fact is, I'm still a large Zillow shareholder. And I still believe Zillow blue and I have many friends there and root for the company and as a shareholder, of the company. And I think that Offerpad can be very successful and Zillow can be very successful. And so yes, they still talk to me.
Aaron Norris 26:05
Hey, I enjoy you responding on Twitter to Zillow haters.
Spencer Rascoff 26:10
But yeah, I mean, it's still you know, look, I still, I still get people, you know, complaining about hotwire stuff. And I started Hotwire 2022 years ago, and I sold it 19 years ago, and people still, you know, talk to me on social, like, I didn't know my flight was canceled and Hotwire. And, you know, didn't they didn't refund their ticket, whatever. And I'm, like, apologizing for hot water. So, you know, the founders curse is I'll always be a part of the company when we're
Aaron Norris 26:40
now did you start Supernova one thinking? Were you eyeing? offerpad?
Spencer Rascoff 26:44
No, no, no. In fact, you're not even allowed to by law, you really cannot have that, like, yeah, you cannot have your target identified at all. So no, we had no, it's not none of my three stacks or prop tech stacks. It was not focused on overpass, we looked at hundreds and hundreds of companies. And but you know, I never thought it was going to be a prop tech company to be honest, and was surprised that it ended up being something as close to, you know, as close to a space that I knew well, but we met with hundreds of companies and Offerpad was the best. We looked at this and we're like, wow, this will make a great public company. This is a space we understand. And, you know, let's merge with them in order to take them public so that we chose the deal. But no, we didn't know who
Aaron Norris 27:32
what gets you so excited about offerpad in comparison with open door and Zillow, like how are they standing out and differentiating themselves for you.
Spencer Rascoff 27:39
The biggest point of differentiation is the real estate DNA and the real estate expertise, you know, Zillow and open door. And both amazing companies. They are tech and product companies at their core at the you know, in their DNA, they both hired for real estate expertise. But offerpad went the other direction, they started as a real estate company. And then they hired for a second product. So if you look at the renovations, for example of offerpad, or their ability to buy and sell homes quickly and on budget, like the performance in those particular areas, which are so critical to ibuying metrics. They're terrific. And offerpad is the profitable eye buyer, you know, Zillow and open door a lot bigger. But offerpad is more profitable, and I think has terrific real estate operations. So those are the the advantages that they have. But the fact the fact is that while the media likes to, you know, the media and and others, you know, like to ask that question, the fact is that it's like Zillow, and open door and our friend like they don't really compete with each other, what they're really competing with, is the selling your home the old way, which still has 99.5% market share. So only point 5% of people sell their home to one of those three eye buyers. So really offerpad is trying to convince people to sell their home, you know, in this way, and in that sense, offer pad benefits from Zillow and open door educating sellers that there's a better way to sell your home, then, you know, having a real estate agent walk around the house, point to all the things that you need to fix that didn't bother you enough when you lived in your house. But now all of a sudden, you have to spend 15,000 bucks to fix it for the next guy telling you good luck on you know, general contracting your own renovation to refurbish your home. And then you pay for that upfront and then putting the yard sign in your house and you have no idea whether the house is gonna sell in a day, in which case Oh my god, where do I go? Or is it gonna sell in six months? In which case I can't really start buying my next house. Like that's 99.5% market share that way. And I buying you know, or selling your home to an eye buyer is point 5% market share. And I firmly believe our customers. Yeah, I mean, I firmly believe that in the next five or 10 years. It's going to be Five or 10% of homes are going to sell to an eye buyer. And if you believe that, yeah, there's tone, then then Zillow will be $150 billion market cap company opener will be an $80 billion market cap company offer pad will be a $30 billion market cap company. And, you know, I'll do great, you know, in lots of different ways, you know, and like, there's just so much opportunity, as the share shifts from selling your home the old way to sell your home the new way. And you look at what's happened in other categories, right, like, you know, let's take carbine, for example, in car selling, where you have room and shift and carvana. All you know, all innovating on the car buying and selling experience and stealing share from buying and selling your car the old way.
Sean O'Toole 30:47
Or, you know, pieces of the market and lots of room.
Spencer Rascoff 30:50
Exactly, exactly. So that's why, you know, to me, this is just a way for me to magnify the size of my macro bet on iBuying. I already bet Zillow I bet the company of Zillow on the shift to ibuying when you know my team, and I pivoted the company to it, and I got I launched us into I think our 10th or 15th market. And I turned over a lot of the shareholder base and hired 1000s of employees to shift the company towards AI buying and then about two years ago, I was like, Okay, I did it like I I feel like I successfully migrated the company into this new space time to retire. But now I have a chance with offerpad to increase the size of my bet on iBuy.
Aaron Norris 31:32
I think you were really instrumental in vertical integration at Zillow though, as well, you know what the dot.loop and now we're looking at remote online notary. I mean, it's really ecosystems to where a consumer could touch an ecosystem and really never touch another real estate brand. Again. I interviewed Marnie Blonko, actually in in December, and we're talking about this and all the data that Zillow was able to garner throughout the transaction when everything's in house, the mortgage and the closing and whatnot, and how powerful that is. So that's fine.
Spencer Rascoff 32:01
Yeah, that's Yeah, so I mean, well, Marnie, obviously, was an executive dotloop and Zillow for many, many years. And now by the way, she is a Pacasso, so you'll have to have her back on and on. But Marnie is awesome. And I'm so excited to be working with her again it because so but yeah, look, I mean, again, think about the consumer in other categories, because people are not, home shoppers are home, home sellers in a vacuum. They're, they're using services like Uber and Grubhub, and Instacart, and DoorDash and TaskRabbit. Like, they're on their phones, they're pressing a button, and they're having some magic happen in their life. And so they're bringing that expectation into the real estate category. And, you know, they're like, Look, I can buy life insurance on my phone in like, you know, 60 seconds, I can buy a car on my phone in 60 seconds. Why can I, you know, why can't I see a house on my phone? Why can I sign a real estate purchase and sale agreement on my phone, like they bring that expectation. And so a lot of the hard work that we did at Zillow was your right around vertical integration around trying to bring that transaction transaction seamlessly into one ecosystem in a full stack way. And I'm as a venture investor, now it's 75 & Sunny, I'm investing behind that thesis in lots of places fly homes, for example, which is trying to do it on the buy side. Offerpad, obviously, which is really trying to do it on the sell side. So sell your home to offer pad seamlessly. And then buy a home from Offerpad seamlessly. So I'm a big believer in that vertical integration, and trying to build a full stack experience for the consumer.
Aaron Norris 33:39
Marnie, and I joke I said, if there's not, here's your first buying experience, it wasn't a real estate transaction. So
Spencer Rascoff 33:45
yeah, hopefully, it won't be that way. You know, hopefully, my kids when they buy their first home, someday, it will be as easy as you know, ordering an Uber or buying an airline ticket on their phone or some of these other transactions that were able to complete seamlessly.
Aaron Norris 34:01
Now, now, you started Zillow, during the Great Recession, great timing, but also gives you very unique insights into market cycles. So is Wall Street and prop tech position to survive a downturn if it happens?
Spencer Rascoff 34:17
Well, that's a tricky question. I mean, the, we sort of went through one with COVID. Briefly, it was, it was a mini one, like everyone freaked out for three months, and then we realized actually real estate's gonna be on fire, you know, through COVID and beyond. So, so, what tends to happen during downturns, whether it was the travel recession of 2001, after 911, which I lived through with hotwire and Expedia, or the real estate recession in 2008, which I lived through Zillow or the COVID recession, which was brief, but but you know, but Stark is disruptors tend to benefit and disruptors tend to benefit during those challenging times. Because Firstly, they tend to be more nimble, but more importantly, decision like everything, all the cards are thrown up in the air at those points of time. So like in 2008, in the case of Zillow, all the cards were thrown up in the air meaning meaning brokerages all of a sudden, were receptive to distributing their listings through Zillow because their homes weren't selling anyway, they're like, well, I don't know you're at your website with a lot of traffic. Sure, we'll give you listings. And MLS is more receptive to it, but for the same reason, because their agents and brokers are like, Hey, man, we got so many houses to sell. We just got to get them out there online. Here's a website that has traffic great. Sure, get more listings. So Zillow benefited undoubtedly from that and hotwire in 2001 benefited undoubtedly, because airlines and hotels had extra cars and, and started cars and hotels and airline tickets to sell and so they embraced online distribution. The disruptors of online travel through that as well. So what happens is your question, what happens in a hypothetical real estate downturn? Should there ever be one? I actually think I buying benefits, believe it or not, because the biggest reason why people don't sell their home to offer pad or Zillow or open door is because they think they can get a great price selling their home conventionally. Oh, it'll sell in a week anyway, for 20% above. So why should I? You know, why should I take a haircut from an eye buyer? So in a downturn, the certainty and speed that a ibuyer provides is even more advantageous to a seller. That is
Sean O'Toole 36:31
so capital, though, which could That's true.
Spencer Rascoff 36:35
That's true. And it also assumes that they can stay a step ahead of the market, because they do own a lot of houses now briefly, only on them for six weeks. But, you know, if there's a if there's a sharp decline in there, and they've got a lot of real estate, that could be a problem. You know, I, this is, I mean, this is why when I was CEO Zilla, we raised a lot of money, I think, you know, I don't know how many billions of dollars of cash Zillow has, but every time that this stock went to a certain price, we did more share offerings for exactly that reason to have a lot of capital. And this is one of the reasons offerpad is going public because they're gonna have 600 million of capital. You know, once the once the merger with supernova closes. And in their whole company's life, they only ever raise 200 million of total venture capital. So all of a sudden opera, Pat's gonna have a lot more money, and opendoor has tons of money, too. So. So these companies are trying to position themselves for that rainy day should ever come. And they're trying to make sure that they stay abreast to the market so that if the market starts to slow, they can adjust quickly, so they're not left holding the bag. And they did that really well. Through COVID, we saw a little mini version of that where all three of the buyers slammed on the brakes, they stopped buying new homes, and they were able to sell their existing inventory. And they all did great, actually through COVID. And they've you know, and now they've come out of it even stronger.
Sean O'Toole 37:52
That capital raised is that as a part, that's never been clear to me, that's, that's not really being that's being used to fund operations and the rest that's not being used as the capital to purchase
Spencer Rascoff 38:04
your right. Well, you're mostly right, you're right. They all have credit lines, kind of warehouse lines and other forms of debt. That is mostly buying the homes. But sometimes it takes a couple weeks for that. So sometimes they are using their own cash on the balance sheet.
Sean O'Toole 38:22
warehousing like the mortgage guys.
Spencer Rascoff 38:24
Exactly, exactly. But yeah, you are right. They're mostly they're mostly using debt to buy the house.
Aaron Norris 38:31
You at all concerned about a downturn in the next few years?
Spencer Rascoff 38:35
Well, next few years is a pretty long horizon. I guess in the next one or two years. I'm not I'm not concerned. And the reason is, even though we're way past peak value, we're way past the 2007 peak value of homes of home prices. The 2005 to 2007 bubble was created by easy credit, and people getting mortgages that they shouldn't have gotten. And as soon as that easy credit stopped in 2007 2008, then there was a foreclosure crisis. Obviously, we all know what happened. This period of home price appreciation is not due to easy credit, it is due to a supply demand imbalance. And the fact is that we are missing about 10 million homes from the housing stock somewhere between five and 10 million homes. And here's what the data says in each decade from the 70s 80s 90s and 2000s. We built about I think it was 26 between 25 and 28 million new homes each of those decades for four decades were in the 2000 10s. I'm gonna get my number wrong here, but I think we built about 10 or 12 million homes. I tweeted this somewhere if listeners want to try to track it down. But anyway, so there's about 10 ish million homes sort of missing that just didn't get built in the 2000 10s. And the reason for that was coming out of the 2008 recession. Home Builders pulled way back, they were building a million homes a year. And they were brought down to like two or 300,000. So there were like five years there, where we just didn't build enough houses. And now we're paying a price by having missing homes. So that is going to take many years to rectify. And, Go ahead,
Sean O'Toole 40:19
I agree with everything you just said. But you know, I think I could also say that, you know, the, the 2008 crisis was due to easy credit. Right. But I think some of home prices today are due to cheap credit, thanks to very low interest rates. Right. And a lot of people talking about inflation now, and I have my own take on that. But I'd love to hear your take on inflation rates. Because if if rates double, like these prices won't be sustainable.
Spencer Rascoff 40:48
Yeah. So So. Yeah, I mean, if yes, if rates double, then I agree. But at Zillow, we did a lot of research on what impact increases in interest rates have and mortgage rates, I should say, have on on home buying. And what we mostly found was that when rates are low, people trade up on price point, and when rates go up, they still buy, they just trade down a little bit on price. And so it doesn't really you know, this is within a band, like obviously, if mortgage rates go from 4% to 12%. Sure, fine. people stop buying houses. But when they go from 4% to 5%, people, you know, they, all of a sudden their mortgage, their monthly mortgage goes up. And so instead of buying a $300,000 house, they buy a $280,000 house to get the monthly back into their budget, but they still buy. And so I'm just I'm not that worried. I you know, the Fed is going to slowly increase rates over the next 234 years, and their mortgage rates are gonna go up 100 basis points over the last couple years. I don't think that's going to like cause the housing market to jam on the brakes. It may it what I think is happening instead, and we're already seeing this is first time homebuyers, are being priced out of the market, because they don't have the benefit of the appreciation. You know, if you're, if you bought a home 10 years ago for $300,000. And now it's worth $400,000, you can sell it into this hot market and buy a home for 500. But if you don't have a home to sell, you know, you're kind of screwed, because you don't you know, you can't bet the hot market. And so people are just going to keep renting longer. And that's what's going to get the demand and supply a little bit more imbalance while Home Builders scramble to buy more homes or build more homes. And hopefully that creates more of an equilibrium. But So the short answer is, I think home prices, the home values and the general heat in the real estate market is going to pretty much continue for the next two or three years. And I just don't see anything that that alarming on the horizon right now the way I did in 2007. And there's a great blog post out there somewhere still on Zillow blog, which I wrote in 2007. And this the subject or the title of my blog post was the tidal wave is coming. And it was, you know, I was just looking at the data, on delinquencies. And it was super obvious that a year later, there was going to be this foreclosure crisis. Now, of course, I wish I had put some money behind that bet. Instead, I just wrote a blog post that nobody read. But you know, but it was pretty obvious at the time. To me,
Sean O'Toole 43:22
that's actually the call Aaron is and his dad are famous for running around warning everybody in 2006 to get out. And I have a, you know, I launched a foreclosure service in early 2007. And I got out of the market at the end of Oh, five. So that's a lot of our listeners are here because of that. And you're wondering, when we're going to say get out again, and I share your outlook at this point. And so just for the folks here listening for that reason, because that is a big part of our audience is exactly that question.
Spencer Rascoff 43:57
Yeah, I mean, we'll see. But that's, that's how I see it from where I said,
Sean O'Toole 44:02
I agree.
Aaron Norris 44:03
What data do you wish you had access to that you don't?
Spencer Rascoff 44:07
Um, let's see. Well, for Picasso's purposes, I wish I could prove that vacant second homes, you know, are really bad for local communities, because that would help us win the argument with community members. And we're, of course trying to find that data to prove it. But I think more generally, what data do I wish I had? Oh, boy. I get asked a lot. The question about migration coming out of COVID. And I just haven't seen great data on that yet. Like we all know, friends that are moving, you know, the stories of like, Oh, these people left New York City and they would Florida or they moved to Westchester or you know, it feels that way. It feels like people are moving to Montana and Colorado but like, are they really or is it just a couple you know, everyone knows two people and like, but the, you know, the numbers don't really say it. I don't know. area, I don't really understand the terms of the data.
Sean O'Toole 45:02
Yeah. Especially for us being in California. Right. Like, we hear it, I think more than everybody else combined.
Spencer Rascoff 45:11
I yeah. I mean, I it's like, I mean, not, you know, obviously, there is some data that shows that home values in the city of San Francisco are declining, because, you know, people are moving. So I've seen some data on that. But like,
Sean O'Toole 45:24
the code, the number one zip code out of San Francisco, though, there was a study 96161 which is Truckee, California, right?
Spencer Rascoff 45:34
I believe it. Yeah. People are living. Yeah. I mean, yeah. So like, in where I live in LA, I, you know, there are a couple friends of mine that have moved to Dallas and Austin. And there's kind of this lore that like, oh, everyone's leaving California for Texas, because it's a better business, climate and taxes and whatever. But I'm like, I don't know. Cuz like, Yeah, I know, three families that moved there, you know, two or three families have moved to Texas. But you know, what, two or three families bought their houses. So somebody's moving here. I know, for every person that leaves like, their their housing stock isn't getting knocked down. And houses still seem really expensive. So I don't know. Like, I tend to think that the it's like the stories of the demise of the cities is probably premature.
Aaron Norris 46:15
I would agree that it seems like not only do we not build enough, but we also are on demographic trends. So you've got xennials and millennials finally getting off the house, my bench. And in my neighborhood. I live in Riverside, about 45 minutes away from downtown LA without traffic, you can all laugh, cuz that never happened. I was walking the neighborhood after my open heart surgery last month. And I ran into this guy. And he's like, I just bought the neighborhood. I'm like, Hey, welcome. You know, it's a great neighborhood. It's super diverse. You're gonna have a great time. What do you do for work? He's like, Oh, I work downtown LA. I'm like, oh, because you get to work from home, right? He's like, no, I go in every day I'm all, and you're crazy. That's at least three hours a day of his life gone. That's the only thing I don't like, but I don't think they're all moving out of California. But I do see a lot of it seems like I'm seeing a lot of people from LA and the coastal regions coming into the Inland Empire right now.
Spencer Rascoff 47:05
So well, that's, that's the other piece of data that I would like to have, which is nobody really knows what's going to happen with this work from home thing. Right? Like, I mean, my, I suspect that most people are not going to have to be in their office five days a week, then maybe there'll be there one day, a week, a couple days a month. Therefore, it's much more reasonable to live in Riverside and commute to Santa Monica or downtown LA than it used to be. Like, I mean, I've I have friends, for example, that have moved to Santa Barbara, but they still work in LA, because they only have to go to their la office, like a day a month. And so it's okay to live two hours away. But, you know, but is that? And nobody knows? The answer is it's not that it's not the data has been collected is that companies haven't even decided yet. What What is the world gonna look like? And, you know, it's because
Sean O'Toole 47:54
I'm sure it's completely their decision, either. Right? Well, that's true.
Spencer Rascoff 47:58
You're right, you're right,
Sean O'Toole 47:59
workers are gonna get a pretty big say here, just because of how hard it is to get in.
Spencer Rascoff 48:04
Totally. I mean, I talked to a startup today actually a prop tech startup based in Seattle, it's 10 to 10 to 15 employees. And I'm an investor in it. And he's like, yeah, we really just can't hire people. It's so hard. And I'm like, well, where, you know, tell me more. He's like, Well, you know, I'm trying to hire engineers and hear for our office in Seattle. And I'm like, What do you mean? It's like, well, I'm, they have to be in the office. Because, you know, we're a start up in the collaboration and the whiteboard, I'm like, well, that's a failing strategy. Because like, you know, everyone's moving remote. Like, first of all, the talent pool that you're looking in is just that one city of Seattle. Second of all, you're trying to steal people from you know, the Seattle tech companies that are all being more flexible. Now. You know, Microsoft, Zillow, Amazon, Expedia, these companies are either in the case of Zillow, allowing you to work from anywhere, or in the case of these other companies are allowing you to work from anywhere some of the year. And, you know, you're saying you got to be in the office all the time, like, what are you doing? So you're right, like employers have are going to adapt based on what workers tell them. Picasso decided pre COVID, when when Austin I started a company, we decided from the very beginning, this was pre COVID, to be totally remote, no office at all. And of course, that turned out to be depressions when COVID happen, but now we've decided to stick with it. We have 110 employees now I think, no office, no plans for any offices. And it's working great. It's been totally seamless. I feel like we've built strong company culture, we've got great innovation, collaboration, coordination, we're using a lot of software tools for those things. You know, it's not it's not all like rainbows and roses. Like there are some challenges, but overall, I think it's it'sgreat.
Sean O'Toole 49:46
Any favorite software collaboration tools, like not slack that we've not heard of, but they're really cool that you like, um, you know,
Spencer Rascoff 49:53
because I'm not an engineer. I don't I'm not really sure what's the state of the art for us on that. I mean, I I did in terms of software collaboration, I'm, I am investing a lot in companies in that space, though. So like, there's one that unfortunately, because it doesn't use at least not yet, which is called Kona, which is super cool. It's a, it's a slack plugin for coaching, emotional intelligence. So like, what happens is when if I'm slacking with you, it'll, it'll give me a message that says, like, Hey, you know, the person who you're talking to, they really prefer a much more direct communication style. And, you know, just tell them like exactly what you're trying to communicate, or, you know, it looks, it looks, you know, it looks like this person is having kind of a crappy day. And I can tell because their calendar is jam packed, and they've had a tough week. And every morning, by the way, you get prompted to like, post to basically tell Kona, like how you're feeling. And so it's the type of thing that if we were working in an office together, you can kind of tell like, you can sort of send someone's having a crappy day, and they kind of seem down in their body language. But if you're, if everyone's remote, you can't sense that. So this is like a software version of communicating body language to help people improve their their EQ. So, you know, that's the type of software that I think there's a place for in a remote world.
Sean O'Toole 51:15
I've loved that. I've always hated that, like, the sender gets to choose the method of communication, right? Whether that's text or a Facebook message, or email, or voicemail or whatever, right? It should be the recipient that always gets to choose, like, I want to have a router that routes the routes to my favorite platform, and lets me work there. But it's the same kind of idea, right? It's like, how do you take into account that other person's you know, needs?
Spencer Rascoff 51:45
Exactly. That's what this is trying to solve with software.
Aaron Norris 51:48
Gosh it's therapy at work all day, every day. I like it. We're at the end. Here you are. And I have a super important question, because I just think you're so well adept to answer this. What technologies do you see having the biggest impact on real estate that we might not be paying attention to? Because it's outside the realm of real estate?
Spencer Rascoff 52:08
Wow, interesting one. I mean, the easy one is AR but I'm not gonna but the fact is that I don't actually think augmented reality is gonna is gonna change real estate that much, so I'm gonna refrain from giving that answer. Oh, gosh,
Sean O'Toole 52:25
possible but not likely?
Spencer Rascoff 52:26
I don't know. Yeah, I mean,
Aaron Norris 52:30
cool stuff with AR it's cool.
Spencer Rascoff 52:32
Have it? I haven't. I haven't. I haven't seen that. I mean, I guess Um, I don't know. I guess I feel like payments and the FinTech. We're still so early that like, the whole kind of mortgage appraisal title, like that part of the funnel, kind of the last third of the transaction is still it's still really messy and antiquated, like the first third of the transaction, which is the search discovery thing like that's cracked, you know, Zillow, Trulia, Realtor.com. Redfin, like, they got that now that you can't start a new real estate search portal tomorrow, like that won't work. The middle third, which is like the coordination and communication with the real estate agents, and kind of giving the agent tools to the CRM and the same search notifications, and then even the writing of the offer and that kind of deal room coordination of, of all that sort of like the dot loop DocuSign type stuff, I think we're getting there. But that last third, which is like greasing the wheels of of the money flow, you're just starting to see that with fly homes and many others. But that's still really early like that those those innovations have, like 0% market share right now. So I think I think we'll see a lot happening there over the next 10 years.
Aaron Norris 53:49
Okay.
Sean O'Toole 53:51
Thank you, Spencer. I really appreciate
Spencer Rascoff 53:53
Thanks, guys. This is a fun discussion.
Sean O'Toole 53:55
Awesome show.
Spencer Rascoff 53:56
Thank you. Thanks very, very much for having me. It's a great honor. And I'll I'll drop off. I know you guys are gonna have another chat here. But thank you guys.
Sean O'Toole 54:06
Aaron. That was a pretty amazing show. Great job. Yeah, really? great guests. Super cool.
Aaron Norris 54:14
Oh, that was cool.
Sean O'Toole 54:17
What a way to come back after what we missed about eight weeks here, the data driven real estate podcast.
Aaron Norris 54:22
Yeah, it's been a crazy weeks.
Sean O'Toole 54:25
Crazy eight weeks.
Aaron Norris 54:27
All very unexpected, and lots of changed.
Sean O'Toole 54:30
Lots of things have changed. Um, so what? You know why, why have we missed the last eight weeks? I know you've let folks know on Facebook. And so this won't be news for everybody. But where are you been?
Aaron Norris 54:46
Yeah, I thought it would be fun to have open heart surgery. I had some pretty crazy symptoms a couple months ago. And you know, doctors were trying to say it's stress. Like Listen, I've been stressed since the fifth grade. I know my body This is not stress. My heart was racing out of my chest, but my blood pressure was good. I was getting blurry vision. And I wasn't able to breathe. It was the weirdest thing. I'd wake up at one in the morning and have five hours of hyperventilating. And you read things about panic attacks and I'm like, my brain is calm, but my body is freaking out. So I had two doctors that I was very lucky that listened to me that I had known for a long time. end up going to the cardiologist and during my echocardiogram, the technicians all holed up. The doctor came in, he's like, yeah, that's not supposed to be in there. I had an egg size tumor inside my left atrium. So think thinking it was benign. We had what's called an OOP surgery, where you they open you up and they take out the tumor. And that went very well. But 10 days after the surgery, it came back as as a sarcoma. So cancer 1% cancer, it's very rare. So we started that journey. So it's been a crazy couple months of trying to heal from open heart surgery. I had a memorial day incident that ended me up in the hospital for three days, and another something that I have to heal, and then I started chemo about three weeks ago. So next week, July 1 will be my second round. And I will be bald, as of this weekend, I'm looking very forward to a shiny head. So it is, it's been really crazy. Our community has been very cool. Property radar has been awesome. I've been overwhelmed. I can't take any more coloring books, or food delivery. It's been insane. But just going through it. It's just been a crazy experience. Two months, it's so hard to say those words associated with me. I'm 44. I'm a healthy guy as of two months ago. So not expected. This doesn't run in the family. And we don't know where this came from. So
Sean O'Toole 56:56
a big, big reminder. And I for you to be the reminder, but how quickly, life can change and how kind of pressure to precious it is and how important like every day is. And yeah, yeah, so I've really missed doing these podcasts with you the last eight weeks
Aaron Norris 57:20
of the week, I feel me. And then I go back under chemo. And I think I'm going to change my strategy, I just open heart surgery, one of the side effects is you don't sleep. So I was running on weeks of three and a half hours of sleep. And you're just really restless and you're so exhausted and you're in so much pain. And their answers just like takes take Norco. Like I'm not trying to get not trying to create that movie. I don't want to be part of that show. But yeah, I was just exhausted. So I'm finally getting back up to speed. I'm breathing, okay, for the first time
Sean O'Toole 57:55
a day like, you know, it's hard to know that all the stuff you've been through in the last eight weeks, and you sure pulled off a heck of a share today. So
Aaron Norris 58:04
well gave me something to look forward to being a doer, it is very hard to sit down and heal and to be quiet. That's not my style. So I'm learning a lot in this process. So one of my number one goals for 2021 was balance and joy. And like most things, they've been wrapped in poo sandwiches, all my goals that have come through in the last year has been wrapped in things that are unexpected, and you just have to run with it and make the best of it. So I got some things to learn apparently. Exactly how would it planning on competence, accomplishing balance, but here we go.
Sean O'Toole 58:44
What happens from here, and let's give folks an update on what we're gonna do with the podcast.
Aaron Norris 58:49
Because we're gonna put it on hold for a little bit I, the second round of chemo was a little bit important, we have to see the cancer spread. So this is News. Now a lot of people know that. It wasn't just in my heart, it's in multiple organs, muscle bone, unfortunately. So the second kind of round of chemo is really systematic, just trying to squash it. I'm very excited about some other things that we'll talk about maybe at another time. But we'll see after the second one, how I handle the chemo and how the cancers reacting to the chemo. But so far, I feel really good. I think part of it was just my strategy going into the last chemo and so much pain and no sleep and now that that's getting fixed, I feel like a different human being so I am silly and Goofy and Phil more like myself. So the next three weeks will be really important for me to find out how this how I'm responding, and then we'll go from there.
Sean O'Toole 59:42
No and my friend, you're an amazing one of a kind a unicorn. And if anybody can beat this thing it's you I look forward to beating it and for us coming back and continuing this. We've had some amazing guests, you've done an amazing job with this. And, you know, just appreciate all your help for the last year and so much in this and so many other things. And so, folks, this is it for a little while. And I hope you keep up Aaron and your thoughts and prayers, and, you know, send all your good Juju his way. And hopefully we'll be back.
Aaron Norris 1:00:28
But none of your remedies no more remedies. I'm full. Thanks. Thank you guys. I look forward to coming back now that we've had Spencer on who's gonna say no now?
Sean O'Toole 1:00:42
Yeah, exactly.
Aaron Norris 1:00:43
Hello. All right.
Sean O'Toole 1:00:46
Awesome. Bye.
