Travis Kalanick is back in full force after his Uber fiasco.
His creation kicked him to the curb preferring a more rigid approach to corporate governance as the 2019 IPO draws closer.
It didn't take much time for him to take stock of his piggy bank.
Yes, the $1.4 billion payout he received means he has nothing to do with Uber anymore.
Some piggy bank.
Travis intends to wield this wad aggressively using his new fund "10100" as his finance vehicle to pounce on hot, new tech names.
Travis doesn't know any other way, and investors should be alert to where he turns to find his new Uber and his new baby.
Future foes should understand Kalanick is one of the most feared disruptors on the face of the earth.
He co-founded Uber in 2009 growing it into the premier transportation platform.
The whirlwind few years launched him from a nobody to one of the premier tech names in Silicon Valley.
So, what's the deal?
What I can tell you is that house prices are about to get a whole lot pricier and there is nothing you can do about it.
Travis Kalanick's investment into house flipping app Opendoor will be the first stage of a torrential stampede of tech capital flowing into this sector.
More importantly, it's a sign of intent by Kalanick.
The real estate industry is the unequivocal prehistoric dinosaur that hasn't changed for decades.
It's almost a matter of time before the process of buying a house becomes digitized, either partially or fully.
Remember, Uber functions as a broker app matching drivers and passengers through a platform built on algorithmic software.
It would make logical sense for tech companies to attack the low-hanging fruit - meaning every industry that places brokers at the heart of business.
The broker app software is tried and tested with a gold stamp of approval. It works, and tech executives understand how to monetize the data.
Traditional brokers would get pummeled in this scenario, as the data applied to a new real estate broker app would eclipse anything a real human would be able to accomplish removing human error.
Real estate is next on disruption pecking order, and tech is coming for its bacon because of the huge sums of money associated with American real estate.
The real estate industry is not a scooter sharing business and requires boat loads of money to get ahead.
Tech has the cash but needs to figure out execution and its future road map.
The bulk of tech capital has been funneled into M&A that has seen tech companies pay multiples above what were guessed as fair value.
Share buybacks have been another hot source of investment.
Opendoor is a house-flipping firm intent on changing the status quo.
The business model entails snapping up distress properties, fixing them up, and selling them for a profit.
Opendoor receives a 6% commission for facilitating this whole process.
Opendoor has already served 20,000 customers saving more than 400,000 of prep time.
It is already on the hook for $1.5 billion in loans. SoftBank's vision fund is knocking on the door eager to become the next investor.
In 2016, this company was valued at $1 billion and after the latest round of financing giving Opendoor another $325 million, that number has crept up to $2 billion.
I have heard from solid sources that the SoftBank capital could be delivered in the next few months, likely paying another solid premium boosting tech valuations across the board.
Paying up has been a universal theme in 2018.
Microsoft's (MSFT) purchase of GitHub and Salesforce's (CRM) purchase of MuleSoft seem like overpaying but appear cheap in hindsight.
With the new cash ready to deploy, Opendoor seeks to expand to 50 cities by 2020, a swift upward jolt from its current 10 cities.
Not only will tier 1 cities feel the brunt of this new development, Opendoor plans to go into the lesser known cities and plans to double its staff from 650 to 1,300 in the upcoming year.
Kalanick caught onto this investment opportunity after one of his former Uber minions, Gautam Gupta, made the jump to Opendoor as COO and liaised CEO Eric Wu with Kalanick to hash out a deal.
It's nice to have friends in high places as Kalanick knows very well.
Even traditional home builders are getting in on the venture capitalist act.
Lennar was one of the investors in the latest round of Opendoor investment, underscoring the existential threat these traditional companies face.
It makes more sense to partner now and form a budding relationship than get utterly wiped out down the road.
Uber hopes to deploy this strategy with Waymo as Kalanick's former company knows it will never possess superior self-driving technology over Waymo.
The Lennar investment also gave Jon Jaffe, the COO of home builder Lennar, a seat on Opendoor's board.
Opendoor is the first serious tech foray into the housing business. It is initiating business on the periphery by focusing on fixer uppers.
This will allow Opendoor to cut its teeth and learn more about the industry before it migrates into higher margin business such as downtown condos that Millennials love.
A swift migration of other tech names will briskly follow into this undisrupted industry if Opendoor can pry open its floodgates.
Fixing up distressed houses is the gateway into brokering and the holy grail of constructing.
Tech could eventually wipe out everyone and control the whole process just like what investors have seen in the transportation industry.
I can imagine a future where tech companies will be the best firms to construct smart houses, which all houses will eventually become.
One massive aftereffect is that the average quality of housing will rise dramatically in all metropolitan areas.
Once the data amasses, Opendoor will be able to identify every property from where it can extract value allowing America to transform into a nation of pristine, smart houses.
Renovating a house and selling it will boost the prices of current houses.
Effectively, tech with gentrify housing creating higher quality but higher priced properties.
Millennials, who have had an awful time jumping on the property ladder, will have an even more difficult task finding a starter home if every starter house turns into a beautiful Tuscan-styled villa from a shabby shed.
Vice-versa, beautiful Tuscan-styled villas that cannot be "flipped" will become smart homes creating even more demand for IoT smart products and higher prices per square foot.
Andreessen Horowitz, a venture capitalist firm based in Menlo Park, California, has been one of the avant-garde tech investors seizing stakes in Twitter, Facebook, Skype, Coinbase, and Lyft.
And these were just some of its investments before 2014!
An industry where Travis Kalanick, SoftBank, and Andreesen Horowitz are piling in must have real estate agents shivering in their wake.
If the general trend keeps up, the Oracle of Omaha Warren Buffett could be next on this powerful list.
He usually likes to buy things he understands with healthy cash flow. I am sure he understands real estate more than Apple (AAPL), in which he had no problem investing.
Traditional home builders and real estate agents aren't the only players that could be left in the dust.
Zillow (Z), the online real estate database company, reacting from the Opendoor threat launched its new business to buy and sell homes.
It was only three years ago that Zillow CEO Spencer Rascoff determinedly hunkered down telling investors "we sell ads, not houses."
Innovation, tech disruption, and competition changes everything.
The stock sold off hard due to the exorbitant costs related to buying homes on the announcement of buying and selling houses.
Margins will get massacred in this scenario, but I applaud the decision to move up higher on the value chain diminishing the existential threat.
This whole industry is about to be flipped on its head, and the winners will be the most innovative companies that incorporate data best.
Rascoff further expanded saying, "I can say without exaggeration, that no company understands the American homebuyer and home seller better than Zillow Group."
Zillow is 12 years old and the12-year treasury trove of data will give it an optimal chance to pivot from selling ads to buying and selling houses.
Seattle-based Redfin (RDFN), Zillow's arch nemesis competitor founded in 2004, has an even larger treasure trove of data dating back 14-plus years and has moved in the same direction.
Redfin was anointed the top tech company to work for in Seattle in 2017 by Hired.com.
There is enormous potential to add another monstrous business to Redfin and Zillow's top line.
The real estate industry is next in line to be digitized, and the Mad Hedge Technology Letter will be the first to know when it's time to dip your toe in.
_________________________________________________________________________________________________
Quote of the Day
"As a tech entrepreneur, I try to push the limits. Pedal to the metal," - said former cofounder of Uber Travis Kalanick.
