EP4: Brian Ma, founder Divvy ($2b), on his early startups, building and scaling Divvy into a real estate unicorn, and investing in Southeast Asia

Conversation with Brian Ma - who interned at Zillow when it was 15 people, joined as employee #32, and went on to become a prolific serial entrepreneur. We talk about his entrepreneurial journey founding Decide.com, Weave, Divvy Homes ($2b unicorn), and most recently, a SE Asia focused Seed fund and accelerator.

Some highlights from the conversation include how he skipped high school, why he joined Zillow, his first few companies, going on a "vision quest", his approach to exploring new ideas, the early days at Divvy Homes, and his recent fund and why he is excited about investing in South East Asia.

Episode Highlights:

1. Brian's life mission and how it led him into startups
2. Skipping high school and doing early-entry and Univ of Washington
3. Interning at Zillow when it was 15 people and being an early employee
4. First company: Decide.com
5. Moving to Silicon Valley, starting Weave, and YC experience
6. Going on a vision quest
7. Approach to exploring new ideas
8. Working with Max Levchin to incubate Divvy Homes
9. Early days and finding PMF at Divvy Homes (now $2b unicorn)
10. Why he started Iterative.VC and is excited to invest in SE Asia

Links:

• Follow Brian on Twitter at @zealoustiger
• Read more about Divvy Homes and how rent-to-own works
• If you're a startup in South East Asia, apply to the next cohort of Iterative.VC

Hit subscribe to keep up with new episodes!

Follow Ashish and Zane on Twitter for summaries

Click here to give feedback — it only takes a minute.

Transcript

0:04  
Hello, hello,

0:05  
you're listening to paradigm shift, a podcast about turning points in careers, companies and lives. I'm Ashish, and I'm joined by my co host Zane. And we're super excited to speak with Brian ma today, who is a prolific investor, founder of Divvy homes in serial entrepreneur to talk about his startup journey and many other things. Brian was early that Zillow and later went on to co found Divvy homes, which was recently valued at $2 billion in a funding round led by Tiger global and caffeinated capital. Brian also co founded and runs iterative, in early stage fund an accelerator focused on Southeast Asia. Thanks, Brian, for being here. Yeah, it's great to be here. So maybe we'll start with a background. Do you mind telling us how you got into software and startups?

0:52  
Yeah, I was one of those weird kids in the very beginning. And I think I just really wanted to sounds really cheesy. I felt like I had a life mission. So I really wanted to figure out how to make like a really big impact on the world. I skipped High School. So this is during like Middle School. And so I really want to figure out how to build a company when I was like, 16. And so the first thing I did was I was like, Okay, cool. Let me get into college, get it over with so that I can go start a company. I think that's how it all started. I remember going through the course syllabus, I went to University of Washington. So because they had this like early entrance program, going through the course syllabus, I was like, Okay, what is the one thing that's going to help me make the biggest impact on the world and it was clearly like doing computer science. And so did that. And then afterwards, I found the best route to starting company, which was joining Zillow, Zillow at that time was 15 people. It was still called home auction web. We didn't actually know we're doing we hadn't launched a site. And so that was kind of like, my foray into startups.

1:52  
line back a minute. You skipped high school?

1:55  
Yeah. Yeah,

1:58  
Indian parents would like not stop talking about that their kids will be like, 70. There'll be like my son skipped High School.

2:04  
How about you?

2:05  
It sounds more impressive than I think it really is. When you're 16, you have no clue what you're doing. And honestly, high school felt like the worst thing in the world. Because I would have to like go socialize with people to like, make friends and hang out. It's like, I don't care about that. I just want to build companies college was also really, really weird, right? Because you're like 15, or 16. Everyone else is drinking. And so you literally cannot it gave me so much focus, because you literally cannot do anything. Like, study, do your homework and like finish your degree.

2:36  
Wow. That's amazing. So I know you went to Microsoft for a couple of summers. And then you you end up doing Zillow, what made you join this 15 person, random team. I mean, now we look back and Zillow is this, this monster and rich Barton is this legend, but how did you think about it back then?

2:49  
It literally was riches legend, right after college. I mean, I just had to like really high grades, right? So like on paper, I look really good. But like, I don't know, as a person. I'm probably like, not that mature. And so I got like the Microsoft offers. Google offers Google just IPO at this point, right? The the Facebook offers etc. And now it's like, That just sounds like a retirement job. I started looking around for startups. And I had no clue what these people do. And then when I met rich and Lloyd, who were starting Zillow, or home auction web at that point, I was like, these guys know what they're doing. Like, I don't care what they work on. I just want to be here. So that was how it started.

3:26  
Amazing. So we could talk a bunch about Zillow, but I think it'd be great to hear about your startup story. So you did a couple of startups before, of course, like baby homes, which is like a hugely successful company today. So tell us about those early days, like what were the what was the first venture You did? What were some key lessons and how did you evolve as an entrepreneur and a builder

3:44  
for a lot of early founders? I think the advantage I had two advantages. The first one was I was really young, right? So I could take a lot of risks. And I think the second one was actually learned a ton at Zillow. So watching the company just like it was ridiculous, right? Zillow is burning on the two or $3 million a month or something at one point, I was like, What is happening? Is this how you build a company and watching rich lean, fast forward right, three and a half years that Zillow Zillow was like 12 people to maybe like 300 people so I have learned a lot done a lot of initiatives, all that kind of stuff. And it's like great, now is the time for me to like go leave and like start my own company. I clearly know how to do this. So I believe I start my own company and like literally within like two weeks I was like I have no fucking clue how to do this. It's like, I don't know what it takes to like find product market fit problem I can say it wasn't even like a word back that I shake. And so I was like, I don't know it's just like completely lost. So my first company we didn't want big name change but people know it as decide calm that website cost us so much and eventually fell to eBay five years later, but I would categorize like most of that company's journey as kind of like wandering, right? We were trying to figure out what would fit what would not fit what customers like or not the eventual product was, we were able to predict prices of products online. So this is around the same year that Amazon started using algorithms to price things, right. So if you go to Amazon and you would look for a laptop, or a TV or whatever, it wasn't like a person in the back being like, Oh, we should discount it $200 it literally was an algorithm. And so I think the thing that made me kind of like curious and a little bit angry is like, you could check the site The next day, and you could say, 200 bucks, right on something you want to buy, and the regular consumer didn't know. And so we wrote the reverse algorithm to be like, hey, come to our site, check it out. And you should wait two days, and you can save 200 bucks, I was a very early use of like AI when like AI and wasn't even like a term that people use. It was called, like big data at that point. So we built this, like, really big data science team to do it. I didn't know this back in the time, but like, eventually turned out to be a really data science for strength was one of the reasons eBay acquired the company. And so ended up being kind of like, a good move in hindsight, but like during the journey, you would you would like never know,

6:05  
it sounds like you didn't stay. I don't know, if there's a distinct story there.

6:09  
When a company acquires a company, you want it to turn out really good. And so I stayed, there's a period of time there, we wanted to, like integrate it really well. But at the end day, I think for young, I don't know, still have energy entrepreneurs, like big companies, a lot of times, they're not the right fit, right. And so ended up leaving, I was in Seattle, at that point, I moved down to San Francisco, where I was like, I have to build a tech company in tech Mecca. And so when I came down to the Bay, I was like, I know nobody here like absolutely zero. And so I was like, I'm just gonna build shit, right? So like, like the people. And so ended up building what the easiest way to explain it is like Tinder for professional networking, you swipe left or right, you chat with each other people started meeting, we launched it, and it kind of blew up. So I think within the first week, we probably got maybe like 20 or 30,000 users, I think it hit this pain point where a lot of people in San Francisco come to San Francisco, right, because they want the network. And so it just took off at that point. I think I hadn't really super heard of yc before. But then people were like, hey, it's taking off, it's really early, maybe you should consider yc. So I ended up going through the whole yc journey through that company. And then kind of like, it was a three year journey. We tried a lot of different things. And we all eventually sold it kind of like as a assets sale. I think what was interesting in the early days was just how quickly it grew with absolutely nothing, right. Like, we're not like spending dollars on it. We're not doing anything crazy. And I think the thing that I learned from that experience is builds other people what, right and like spreading around and do stuff. The bigger learning, I think from that experience is your company hits these saturation points. And the saturation point I think for weave was the hypothesis was people moved to San Francisco because they want to meet locally, right? Like I spend so much dollars like go to San Francisco and like networking. And it's like I don't I don't want to meet someone online. Like I want to be there. I want to have coffee with them. It's kind of stuff. And so we ended up running into like just stupid issues to enable this, right? It's like coffee shops were closed, people can find each other people would like, I don't know about the last minute not because it's their fault, but because their Uber was late and all this stuff that was kind of like tangential to the actual like meeting. So 2017 or 18. And we decided to stop because I was like, Okay, cool. It's not gonna be bigger than my first company. And that was basically it. Now, in hindsight, I'm like, this could totally work, right? Because like, everyone's really got vibe. So

8:36  
I remember using me, but I think I was one of the users on the later iteration where you like matched people and set them up in the coffee shop to me that and so on. Yeah, man. It was great. I really enjoyed meeting people. I would do like one every couple of weeks, I think. And it was awesome. Then you guys shut down. And I was like, wait, what happened? And I still wanted it. And I've heard that from a number of people, actually. So you definitely were onto something. But I hear you on like, there was enough friction in the experience that it was, yeah, it had a bit of a wall.

9:04  
Thank you. I still get emails now from people that are like, ah, I wish I had the guy just with right. I like I wish I had this right here. It was a great experience, I think,

9:13  
what was yc? Like, so that was sort of like your immersion into the valley to some extent. So yeah, we'd love to hear about that.

9:20  
Yeah, yeah. why she's fantastic. Right. I think there's no other way to get such a broad network of people who are just really smart. And I think the thing that yc brought that maybe I'll start with, like yc gave me exactly what I wanted, right? Which is like, I come here and no nobody. And all of a sudden, I have like a really close group of friends and classmates who were exactly struggling with probably similar problems that I have, in this like whole slew of alumni that I can tap in any points. And so I think the network itself is really great. I was kind of like in this weird position right where I had like, sold the company before and then I know came in with more set like best practices for what I wanted to do. And so I didn't find the Group office hours except rexha route to be as useful for me personally. That's then I think what yc did really well was it just gave, it gives you a lot of focus, right? It's kind of like a pressure cooker thing where it's like, you have to grow a ton. And then there's Demo Day, and then you start to meet a bunch of people. So, but I would like 110% recommend any Thunder go through yc

10:21  
unless they're in Southeast Asia. Yeah. Yeah, good luck. With that sounds like you had a number of these pivot or persevere kind of moments. Or maybe you hit a wall, and you had to figure it out whether to keep going or pivot, and ultimately, you decide to sell it. How did you deal with those moments? I think a lot of entrepreneurs face those. What were some of your learnings,

10:41  
I think I'll start off with saying it wasn't just wave, right? Like every company, literally the first, I don't know, six months to maybe a year to maybe like forever, right? You're dealing with these is what I'm building? Do people actually want this? And so I think at weave, I basically was like, you have to create a framework for making these decisions, or else you'll second guess yourself too much. And so the easiest thing for me to do was just the time boxset. Right. So I thought about everything as experiments. And so every time we did something we're like, okay, is this a two week experiment? We tried to put everything into like a two week experiment timeframe, or is it a four week experiment? Or is it anything more than four weeks? It's like too long? And so you're like, Okay, cool. give myself two weeks, what am I trying to prove? And there's literally you have to get yourself down to like one question. It's funny, because I feel like at least like half of the planning meeting that you have on these is like, what question, is it that you're trying to answer and arguing about that? And then at the end, it's like, what outcome Do I need to see for this to be a success? And both of those questions are actually very, very hard to answer. If you see a 50% conversion rate versus 70. Is that good or bad? Who knows? Right? But I think deciding ahead of time is really important. And so the framework and discipline of I'm running two week experiments, I want to try to answer this question. Here's the success metric I'm looking for. If I see it, we move on. If I don't see it, we do this. I think that's the thing that helps me the most,

12:06  
it's totally the scientific process. Right? Very hypothesis driven. What led to dv? And what were some of your early experiments.

12:12  
Yeah. So most entrepreneurs, when they basically shut down a company are in this kind of, like, very fragile, vulnerable moments, right? Where they're like, okay, I don't know if I like, I don't know, if we're gonna make it. I don't know. I don't know if I've like, Am I just kidding myself that I've like atterbury. And I, maybe I should go back to Microsoft or Google, right. And so I think I had this moment when I was like, Okay, cool. If I were going to spend energy doing another company, because it's so difficult. I have to have 110% conviction to do it. And so my criteria for myself is like, if I'm going to spend the next 10 years of my life building something, it has to be at least a billion dollar company before the two companies before we're like, oh, what are Brian's problems? And how do I solve Brian's problems? And this one was more kind of like, Okay, what does the world need and have a go about doing it? In the process of kind of like doing that? I also added another criteria for myself, which I thought was really important, which is, what do I specifically what am I specifically good at that no one else can do. And that led me back to kind of like the real estate early days, just because we did so many different interesting things adds up. So that was kind of the genesis of giving. After I did this thing, I now call it a vision quest, I did a vision quest, which to me is finding a one way ticket to nowhere. For me it was Asia, and then just absolutely doing nothing. And then you just see where your mind wanders, you're kind of like, Okay, what am I curious about all this kind of stuff, right? And then you kind of like doing research. For me, it was really, I did a lot of eating a lot of traveling a lot of like, meeting people and all that kind of stuff. But what was interesting that I found was I went to open houses in all these places that I was going to on my journey and now it's like, okay, maybe like I am a kind of like, interested in this stuff. And, and so I got like, much deeper. I was like, I looked at housing reports, I started looking at construction, I started looking at all these different things. And then I think there was I lived there was a turning point, I started really getting interested in mortgages, specifically because since I was an I bought my first house when I was 19. And it was just the shittiest process, especially the part where you're getting a loan and especially when you have like really really unstable income being like a founder and entrepreneur and this problem have never left me right. So I sold that house bought another house, another house by now that has helped other people buy houses and like this is just the mass problem. As I think at this point, I just had more time to think kind of like first principles. I was like what is wrong with mortgages? Like why is this so hard? And so I think one of the biggest signals for me in the early days was literally every day instead of going out and like in Thailand, getting new food, right or like meeting new people. I just thought At home, I started researching, like every day. And so I know that that was kind of like a point when I was like, okay, maybe maybe this is like the thing I

15:08  
want to start. I love how you call it envision quest. I think that's so awesome. Because entrepreneurs and I think even non entrepreneurs, maybe people switching jobs, you go through this moment where you're like, you're kind of not sure what to do next. And it's important to kind of like, give yourself the space to breathe and organically sort of like figure out what you're curious about. So one question that How long did you take off? What How long was your vision quest? Because you seem like someone who's like, who skipped High School. And it's like, all of a sudden, like, how long could you go without having something concrete to do?

15:38  
The most important parts of me was when you first start, it should be indefinite. Your brain reacts by being like, Oh my gosh, that's like impossible, blah, blah, but it's like don't don't care about it. Right? You will find it when you want to jump back in much later. And so it was indefinite. It ended up being I think all it like three months or three and a half months before I was like, Okay, I feel like I need to get back to work. And so that was the timeframe for me. I feel like it'll be different for everyone.

16:05  
You went back to real estate routes, which clearly has been kind of a passion for you over the years and it's very clear you've invested throughout your life in real estate and had something yet space and somehow you managed to go from mortgages are broken to the rent to home marketplace with Debian. I'm sure that was a windy road there to figure that out. Because it's very non obvious inside of some of the experiments you're in

16:25  
the fund super fun again, in hindsight, right? while you're doing it, you're like shit Sure, we're never gonna figure this out. So I did the same thing I said I was gonna do before right so every single two weeks were like running these experiments. The hypothesis here is like, mortgages were kind of broken because you had to go through all this like underwriting stuff, right? And all the underwriting was designed for someone who was buying a house 50 years ago, right? Like 50 years ago, you would buy a house you basically stayed in it forever, you don't move you don't change jobs, right, etc, etc. So they're kind of like broken and then I don't know if you guys remember like the IPO kind of crypto phase. The I don't know if this is when everything was Ico ng right? And everything was rationalizing, etc, etc. I was like, Okay, cool. mortgages are broken, because the underwriting and fractionalization has a ton of benefits to lending in general, could we apply some of these interesting concepts to the mortgage market, I did a bunch more research. I was also working with Max at this point, Max Levchin, founder of PayPal was max like to work with and the easiest way for me to explain it is like, I feel like I do hours and hours and hours of research, right? And then every single week, I would go back to max and be like, okay, here's what I think here's, here's kind of like, where I'm headed. And the matches, say, like, one line, like one sentence, and then the feeling I would have is like, why am I so dumb? Right? Like, why did I? Why did I overlook this like one very obvious thing? election, many examples. The clearest example I can remember was max had me go look at mortgage securitizations. The one thing he said was mortgages is just like a very efficient machine. And so that led me down this path of like, okay, who are the agencies? Why are the agencies doing what they're doing? Like? What was the history behind the government basically, like taking them into conservatorship? Right? And then how did the banks actually like, move mortgages around? I think that was one of the main reasons were end up going the siding that you just cannot disrupt mortgages, there are too many players, it's like you can't like inject yourself into a system that's like already efficient, because you would have to take over too many things at the same time. Fast forward the story a little bit and right, it turns out that there's this very interesting concept called a rent to own contract, the rent to own contract is incredibly predatory. Because these kind of like, early days, single landlords have been taught from these like books, right, that they buy from the library that that's how you should basically screw your tenants. And so I don't know, I feel like a lot of technology is these things where it's like, the fundamentals of the actual tool is actually quite useful. But because people are using it in like a weird or like, wrong way, it turns out that everyone like shies away from it, what clicked for me is you can kind of proxy a mortgage with these kind of like interesting contracts, and you can start innovating, kind of like outside of the traditional mortgage market. So anyway, that's that was kind of like, in hindsight, that was the thought process. Going back to your question, like, during the early days, that was clearly not the thought process, right? I was like, okay, maybe Icos is a thing, right? So maybe we should like Ico or fractionalized house, maybe we should. I looked in the ground leases, right? I was like, why are we buying like both the land and the building? Like maybe we can someone can buy the land or someone can buy the building? And maybe that's the thing. We started looking at development. So we're like, Okay, cool. Are there ways to just start from scratch and then give different pieces of the property to different people. We looked at a lot at the if you're from San Francisco, tenancy in common, right, so those are like actual ownership homes, but like four people own the home in the same land, we'd looked at vacation properties. I mean, every Every month if you were like, oh, what if you buy a piece of like a Airbnb or what have you, I don't know can like rent it out and share at the same time? And so yeah, all in all, I kind of feel like there were 12 ish concepts that we went through before landing on rent to own.

20:15  
I know, that was like a lot of research in these sprints. So once you got to rent to own I think you got excited about it. You were like, okay, it's basically a mortgage. How did you then think about? Do people want this? What's the demand? What's the market buys? What's the mechanics? How did you work through some of those questions?

20:29  
My philosophy is the easiest way to tell if someone wants it is if they pay for it. Right? So the early days was literally just like going out and talking to everyone I knew to be like, I'm gonna buy you a house. And you're gonna find this like, weird wretch out contract that I made for you. Would you do it right? And so it's all kind of like early days, scrappy stuff. It's like, we went to Craigslist, I asked my friends, friends, we tested, I don't know how many iterations, at least 20, right, different iterations of like these landing pages, where it's not just like, come to my site. It's like, I bring the landing page to you. And then I'm like, we did a lot of remote. So I show it to you on the screen. I'm like, this is the web page that I've I haven't built before. But it's like live, would you buy this product, I want to say I've probably talked to 300. I am the team, right? Talk to maybe like 300 people before we got one person to give us their financials. Right. So they're like big statements, their paychecks, all that kind of stuff. And that was like the success metric, when someone gives me their financial information to underwrite so that I can buy them this house.

21:34  
And that's not very high converting, assuming those 300 had some intent to them, if you buy it.

21:39  
Yeah, it was extremely, extremely low conversion. But it was also I mean, the thing to think about is it's also house right? And so it's like someone has to be at this like perfect moment when they are wanting to buy a house. And during this like life change.

21:52  
So long sales cycle, I would imagine like someone would have to consider this tool in reality for a while. Maybe you see this Debbie homes currently that someone cares about.

22:00  
And now it feels like a long sales cycle. But the trick is just talking to more people, right? So it's like someone's going to be at this moment in time when they are moving around and in trying to purchase the house.

22:11  
And so when did you know that you had something like you went through all these ideas? And you decided on this one? And how did you get from zero to you know, one and then two, and then three, then four?

22:20  
Yeah, so zero to maybe like 10 homes was just absolute insanity, meaning like, it was pulling teeth, right? It was pulling, I don't know, it was pulling, like the entire set of teeth from someone. It was just really difficult. And then from 12, to maybe like, even from 12 to like 40 homes, right? It was still it still felt that way, when I was like you had to go and you had to convince people that this was the thing that they would want it all that kind of stuff. And like, I don't know, if people understand the scale here, right? 40 Homes is a lot of money already. So it's like, probably Series B maybe suited like shortly before series being each home is like I don't know, in the early days, we're buying million dollar homes. Now we're buying on a 300k homes. And so a lot of money has been spent during these early days. The inflection point, I think, for us was for at least for me, I don't know whether it's for everyone is it just felt like things got much easier. Like you're not injecting yourself into the process as much. And your numbers continued to organically grow. And I felt like we saw that flip around the like 50 home Mark around maybe like slightly raise Series B. But yeah, everything before that was just like

23:36  
crazy crazy. And I'm trying to think back, I remember talking to you back then and using the product. And I know you had this nice website with a bunch of homes listed and you were pulling just MLS inventory. And there's like, you know, you just bought this foam on a rental and it would be X dollars a month, this would be the terms, which I thought was really clever. And you I think you ran some Facebook ads, or at least I remember seeing some which probably got a bunch of email addresses for email marketing and so on. And I think you were able to get brokers to use this as a way to close more sales. Right? I think you could go to brokers and all of that. It sounds like it started to click once you had about 50 sales and you saw signs of it. And it wasn't all kind of working together to you got to

24:17  
Yeah, I'm jealous of other people who like feel like there's like one moment in time, right? where like, something clicked and then something took off. I don't feel like there was anything like that for us. Right? It was like, we work really, really hard on the broker channel. We work really hard on trying to like sell people we work really hard on even like home inspections, right? We're like, we can't buy like that house. We worked really hard and like at least five or six different vectors where it's like, it's not clear that these are the right things to do or the right processes or whatever. And then again, like Series B ish, I kind of feel like it all came together and none of us realized this right? It was just kind of like numbers kept getting better and every every single week you're like what happened? Like, how did the numbers go off then you're just like debate with like, the bad

25:02  
tend to be it sounds like it was a little bit like touch and go. So what was your framework sounds like you've you've been a very structured sort of person in how you get a lot of these things. So are your operating framework and how you structured that? Yeah.

25:15  
Yeah, I think maybe the thing that was interesting about Divvy and maybe it's different for other people, right? It's like, actually, maybe it's a maybe it's applicable to a lot of FinTech is everyone wants a house, and everyone comes in. And I think one of the things that was non obvious to me was, they're willing to go through whatever it takes to get a house. And so initially, I was like, Oh, we need to like optimize our application funnel, right? We need to, like do all this, like standard and under product stuff that you would do as like a SaaS company, nobody cares, your application can be really, really crappy. And they would still go through and they would tell you, they're like, I really want this house. And so our biggest problem was basically, how do you find qualified people to buy a house for not so much kind of like, do people want a house, I feel like the early days, we saw a lot of people come in, so the volumes were really high, and they kept on increasing. And then things were breaking at the funnel, every part of the funnel, right? So it's kind of like initially it was the top of the funnel was broken, then it was kind of like the middle of funnel meeting, like we have to call people with explain it, we have to be like, what is this actual program, and it was really hard for us, to me, no one understands rent to own when we hire employees, like barely anyone understands on its own. So we have to teach ourselves, teach them teach the customer, etc. So to solve that problem, and then if you map out kind of like Debbie's history, I feel like you can progressively follow the stages of the funnel that were broken. And then we just systematically went down and fixed each one, right? So like Home Inspections was broken at one point, then sales is broken, then ops was broken, then etc.

26:44  
You knew there was demand, a lot of people wanted it. And then you had to systematically make the entire Yeah, for some reason. I remember you guys having a big focus in the Midwest at some point. Did you? Midwest was that where you were buying your first few $1 million homes?

26:56  
Yeah, so really new mistake, right? In the early days, no one other than open door no one else is buying homes all cash like we do. And so because I was from Seattle, I was like, and I had a broker's license in Seattle, I was like, we're gonna sign Seattle, Seattle homes are red hot. And right there about a million dollars each. We thought we're gonna buy a million dollar homes. And then we started like, getting out priced. And so we ended up buying a couple homes, not actually in Seattle outskirts. And so at one point, we were like, Is this just like a really bad play? Like, does this look very different than open door? The answer was obviously, yes. Right. So did this like huge study on what metro areas would work? It turns out, we looked at a bunch of different factors. It turns out the thing that's most important for our model is rental yields, right? You can think about us as my minds. And so the best places for rental yields is not San Francisco, New York, Seattle. It's in these like, third tier cities. So Ohio is really good. Now we're in 16 markets. But yeah, I think that was one of the points when we're like, okay, now we need to go, the demand is kind of there. And now we need to go figure out how to get the unit economics to work. So that was the that was the play there.

28:04  
And I know real estate prices have risen a lot in the Midwest, and I mean, everywhere, right, in the last few years, how has that affected what you guys do I have you been able to borrow at lower rates and offset that or what's sort of been your approach to that?

28:16  
Yeah, I think the biggest thing is our homeowners, they're really happy. So they're the ones that are like buying up the houses. And so yeah, we, we share an equity, they get a bunch of equity on the interest rate part, I think I didn't understand this in the when we first started. But when you operate at scale, you can get these kind of like interest rates, gains optimizations, when you're a small startup like us, your rates suck, nobody's gonna give you that money for that low rate anyway. And so now it matters because we are much bigger, but in the early days, it was like any improvement is a good improvement on the rates side.

28:51  
So one more question about Divvy and then I think I'd love to talk about slide. Yeah, I know, raising debt was a big obstacle for you to go from 10 to 40. And then 40 to like the hundreds of homes. Yeah, and I know today, you're probably buying hundreds of homes a week or a month or whatever. And you guys really successful company, how did you raise debt when you first started out? And we'd love to hear about some of the war stories there.

29:12  
Okay, two things raising, just like raising equity, right? where it's like, you got two people and you ask for money, and then they say no, and 90 95% of time. And then I think the difference that I didn't fully appreciate is raising equity is all about vision mission, like life changing disruption, how does how is this gonna be really big, raising debt is all about we're not doing anything new. This is very safe record. We're gonna get you back your buddy. Here's how the money works. I didn't fully appreciate that. So I think early days failed a lot. I also had an amazing co founder, Edina, who is now CEO of the company, and she was one of the early people that raised at Foursquare rights already kind of like had a superpower kind of like in house for fundraising. The short story is it's like every fundraise story, right? Like you got to remember People out and 95% of them say no. And in the early days, no bank is going to give you money. Right? So it's like Max and friends. It's like, go to all the rich people, you know, and they gave us our first I don't know, two $3 million line. I think one advantage we had was, these are houses. And so even though the lines are really large, it's like, you probably won't lose money on a house because you can go sell the house, etc. And so I think we had a semi unfair advantage. At the start.

30:28  
You recently left Divvy homes, and now you're exploring your next chapter. Maybe you can talk a bit about iterative and how you arrived at it.

30:36  
For context. It's been about a year I'm on the board of Divvy, so two important but not day to day stuff. I think the biggest thing for me was, it was kind of wish I had a co coach, right when I was growing the company, by the way, loves to coaches, they just add so much to helping you kind of like grow the company, one of the things that I think entrepreneurs don't appreciate enough is like your company's only going to grow at the pace that you are growing. And so I don't know, I just feel like for for someone going through the kind of like hyper growth stage, being very self aware of like, your weaknesses and strengths are really important. And then CEO coaches kind of like help with this. One thing that my co coach said that like really resonated with me, she was like, hey, Brian, do you realize that you spend all of your Saturdays investing and helping entrepreneurs, and why do you do this? And I was like, Oh, I mean, I clearly knew I was doing this, right. But it didn't like have a second thought about it. And it was because one, I've just found it really fulfilling. And two, I use it as like my reset button, right? Because it's like the running the server was really hard. And then doing it my weekend was by reset, like, I don't know, some people go to the gym, some people like I'm gonna run with our dogs. And we'll do something I like invest in, in founders and try to help them out. And so my thought here was like, why don't I do this? Seven days. So that was how it started, and then led me down to this kind of like, Okay, cool. What would it take to be like a professional investor, because I just invested in angel investor before, and I decided to make the switch to professional investing. The story here is last year started interactive, which was my pilot fund, that go invest in founders in Southeast Asia, Southeast Asia is just really, really interesting. Because I feel like it's at this inflection point, where there's so much opportunity just to give people some context, the middle class is growing like gangbusters, like people have never had money before in their lives, right. Nobody knows how to use a desktop, but they're on their phones, they're having a bank account for the first time in their lives. They are like getting auto loans for the first time in life, they click a button and then groceries come to them. It's like mind blowing, right your first time, like getting online and the internet like comes to you. They are learning stuff from like YouTube. And the thing that occurs to me is like tons of opportunity, but not enough founders to go after them. And so we thought the best kind of like product market fit. The thing here to do was take me and my co founders and my first companies to Ken is doing this to take our skills, building companies and being like, Hey, cool, can we apply ourselves and help other founders do the same there? Lots of stuff we can go into. But I feel like this is the right time to build, like the support network that we all love in the Bay Area that doesn't exist really anywhere else.

33:20  
And how did you think about approaching investing in Southeast Asia? Why did you decide to start a fund? And with this, you can maybe talk you can talk more about the program you're doing it's kind of yc? Like, how do you choose that approach versus like traditional venture versus Angel versus, you know, incubation or something else?

33:36  
Yeah. I mean, it's you can we're just like, we're just operators, right? It's like, I don't know how to be a good investor. But we definitely know how to operate right? What can we do that applies our kind of like skill set to helping other founders and being like an accelerator was just so obvious. So I think right now, I feel like they'll maybe like 65% of my job is operating. It just feels like running, I don't know, 20 ish companies. We've invested now in 4045 companies is built like helping 20 companies at the same time versus doing one. And so my job hasn't shifted that much. I feel like I've learned a lot in the last year just ramping up on like, what does it mean to run a fun? How do you go race mlps, all

34:15  
that kind of stuff. Some of these growth markets like India, Southeast Asia, China, less so now. But five years ago, just so interesting, just bursting at the seams, right? And I'm almost like surprised there isn't more of a focus there. Like I invest in yc companies. And we've done some together, right, Brian? And I'm always like, most excited about these emerging market companies because they're growing the fastest. Exactly. So So why Southeast Asia? Do you have a personal connection to that market? Because sometimes that helps, was that part of it?

34:42  
So I was one of these were kids where my dad and my dad's side family is still in Hong Kong, right? So we'd go back to Hong Kong around every year, and then it gets boring after a while because you're always going the same place. And so we started traveling more, right? So it's kind of like Malaysia, Thailand, all that kind of stuff. So my main connection is food not like signups so you can live there full time. And so we have been doing angel investing together. So that was a good market for us. The other thing is like if you're starting an accelerator in the US, it's like who wants to go to Brad's dinky like little accelerator? Right? Like versus go to all these certain places? So there was just like no need in the USO. It just made sense.

35:21  
How did you so how did you raise your fund it? Did you put up your own capital initially? Like, how do you put together a pool of capital is actually a foreign market? Right? And some would say, a small market, both Southeast Asia collectively polybag. But depending on the country and the language, how did you purchase that? How was that process

35:39  
process sucks. But how I approach it was just, it's interesting, because I was doing a podcast on fundraising last week, and I didn't realize this, but I've been for like, 15 years of my life, I've been fundraising every, like 18 months, right. And so I just did exactly what I do. I just go at it and talk to a million people right, and try to get money from them. The one thing that maybe most founders don't run into because they're not raising funds is when you're fundraising, if our company you need one person to come in, that's kind of like your lead investor. When you're fundraising for a fund, you need like 10 people that come in, because no person will be a significant part of your fund. And so that combined with a lot of LPs don't actually have timelines for deploying their money. Just makes it incredibly difficult to raise the fund. There's no secret sauce, right? It's just work really hard to talk to a lot of people and try to convince them that it's the thing.

36:29  
Yeah, you've raised VC, right. Venture Capital, a few companies, you've raised debt capital early on, and I think it was like, not a lot of people raised that. But a lot, lot harder. I think when you did it, like five years ago, and you've now raised a fund. I've heard people say, like, one is harder than the other. Have you had an experience that's led you to believe like, maybe like, is raising a fund harder? Because you know, first time we see in a sense, do you think about that,

36:51  
I feel like the skill set is pretty similar, right? So it's maybe like 80% 85%, somewhere between those three things. I do think raising a fund is much harder than raising for a company, most leap because for a company, I feel like you have your traction to lean on a little bit, right. And then you have your friends to lean on for kind of like warm intros, all this kind of stuff, or a fund, it literally is like yourself, you're just kind of like telling stories. You're like, you're like telling, you're telling stories, and you have this thing where you have to convince way where people it's like 10 people instead of one person. So I do think it's slightly harder. That said to being an entrepreneur is like 100 times harder than being a fund manager. And so it's a pros and cons. Right, harder to fundraise, but like much easier job. I think

37:39  
I've one last question on this. Do you mind walking us through a success scenario, when you're starting to build homes, you're really conscious about market size, and you want to start a billion dollar company? I'm sure your ambitions have not gotten smaller. In 10 years, what would you like get rid of to become with everything I

37:54  
started, I try to do like mission vision values or whatever, right? The vision is we want to substantially move Southeast Asia's GDP. So it literally is I think it just goes back to like impact. And so I don't know what it's going to turn out right. But I do think kind of like capital allocation, helping founders, all that kind of stuff gives you significant impact. And so I know a quantitative way to think about this as maybe like jobs created or something like that. And I think I don't know what the moves are going to be like, but we just want to be able to support the ecosystem in whatever ways possible, what it may look like, right is raising successive funds that are much larger, and we'll start kind of like at the seed level will help Montreal scale that and maybe we'll start doing a starting bees, maybe we'll start doing that maybe you'll start doing more programs on what its gonna look like I still have this kind of like weird fascination with 1000 Icos and crypto right. And so I don't know, maybe some of that will creep in. But at the end of day, it's gonna be all about impact.

38:52  
So clearly, you did yc. And you've learned a bunch of things there. How do you think this compares? So a couple things that come to mind for me are yc, until a couple years ago, was very us focused right now, a global program, most of the companies build products that cater to people speaking in English and so on. How's your approach to Southeast Asia have been given it's a more sort of like regional approach, how do you think about the different countries and languages? And how is it compared to your yc experience,

39:20  
I think maybe back up a little bit and be like, what should it accelerate do really well, when a founder leaves the accelerator? I think they should have some inflection point turned around learning story. That's why I think accelerator success looks like I feel like in the early days of yc, and I still now you get some of these things, right? You someone will come into like yc have a business might not be going well. And then all of a sudden they're like another business on Demo Day and the Dutch takes off. Like those stories are gold, then so I feel like a lot of it for an accelerator is kind of like how much do we help? And so what I don't know if it differentiates what, what we try to do is we just specialize in Southeast Asia. Right. And then so the network is from Southeast Asia, the mentors, the experts, the like VCs that you work with, etc, all Southeast Asia. And so what that does is it creates this kind of like, you build this knowledge base or or knowledge network of like, How do you do? How do you expand to markets? What happens with different languages, Southeast Asia has the interesting thing, because it's like $1 million goes really far. Right? So all of a sudden, you're managing, like 30 or 40 people. So how do you scale kind of like organizations? Now the weird thing is like products look really different to right than the ones we're familiar with us. So how do you do products in Southeast Asia? And so the answer to all those things is you have to build this kind of like expert network of people that know all these things. I was clearly not an expert. A year ago, I wasn't still not an expert. And so the strategy is to lean on founders and to lean on the people we build relationships with to provide that expertise. And then in the meantime, I'm trying to learn as fast as I can to do all these things. So even stupid stuff, like people have to set up like multiple business entities in like different regions and get like I don't know, regulated differently and do payroll differently. It's like a major problem in these regions. And so, yeah, I think it's kind of like specialized help for founder's.

41:14  
That's amazing, I definitely see the need for that. And some of the interactions I've had with founders from other regions, I definitely can see really growing the GDP in the region. So congrats on that really exciting.

41:23  
We'd love to switch gears to hear a bit about your superpowers that you've noticed about yourself or things that when you go into a situation, you think like, Oh, this is the thing I'm gonna lean on, and maybe the inverse of that, which is like the things that you maybe delegate, or you try not to do, because I'm guessing you've used this to be successful in your journey?

41:43  
That's a great question. I feel like I'm going back to my co coaching sessions. I can get myself really excited after I like, go really deep into something. And it's very natural for me to get other people excited about the same thing. That turns out to be a really interesting and useful skill for fundraising, and for recruiting and for hiring. And so that's the superpower I can like lean on the most probably, the reverse of it, the thing that I'm like, really not good at is it feels dumb, but I get really bored of repetitive tasks, right. And the repetitive tasks aren't even I mean, most people get bored of repetitive tasks, but it's like optimizing processes is actually quite creative. By like, I don't know, I just can't, I just can't like stand it up for the life of me. And so stuff that's kind of like optimizations or maybe sales or whatever, I don't know it when my leftover like financial projections, I like glaze over. And these are like really important things, right? Like, really important things for the company, but like, clearly not sticking to mine. And so those are things that it's not even delegation, it's like, I need to find people who do those things really well to support me, because they're clearly weak, weak areas mine,

42:50  
that's great. Yeah, and I don't want to put words in your mouth. But it sounds like you really love the idea of like creation and going creating something from nothing, zero to one. And then once it's got legs in the one to two and figured out the financial models and stuff, maybe that's something at some point, your life you're really passionate about, but now less so then maybe that's like what you're doing with accelerate, you're doing lots of zero to ones. And then obviously, you're starting to companies, you know, get the team and infrastructure in place. And they'll they'll take care of those other things. Another question is, were there any people that along your career that you feel gave you a breaks or moments which were key where someone kind of came and helped you out?

43:27  
I mean, Max is a very clear example. So hvf wasn't like actually really structured. I don't know what max on me. But I was like, the only entrepreneur working with Max at that point, got to sit next to him, right had kind of like these weekly defining moments. So obviously, you have to give Pat tips to every venture fund that bet on me that early days, I mean, I still go back to my series A and like decide, right, or like series a madrona did our series A or series A in like, we've and I'm like, what I have invested in myself back then. And it's not clear, right. So kind of like, I don't know, I'm very appreciative of the investors back in those times. So for Divvy it was Max and then ventry. So and helped out a bunch in the early days there were very, very defining kind of, like, near death experience moments, right where the company could have just like gone to zero. And Andreessen came through and Max came through Ray Thompson came through and so yeah, very appreciative, very grateful.

44:28  
It's amazing. And last question, are there any books that have been lastingly impactful for you personally, or professionally?

44:35  
I feel like this is one of my weaknesses. I've mostly read like blogs now and like sub stacks and not books and so I've like my book reading has curtailed when I was doing decide and wave I think there was this one moment and when I was like, I really doubt and I was like do I really want to like do a start up again. And I think the two that really helped me personally was the Zappos book, right on culture. some reason it really resonated with me that like culture is like the most simple Wanting to build a business or like a large kind of like monitoring business. And then when I read Steve Jobs book when it first came out, I think that was also enlightening. Mostly because I felt like I didn't have the bad stories, right of like how hard it was in the early days. And that was one of the first books that I mean, now you have Ben's book. I think the hard things right before the one that any book that was like, it was so hard in the beginning. And so yeah, the jobs book resonated for me. That was really great.

45:31  
Yeah, Brian, your background is fascinating. And I love how you've worked across so many different worlds. But at the same time, there's all these threads kind of interconnecting, like you went to Zillow, and then you did a bunch of startups and you came back to real estate and you traveled to Southeast Asia to find your passion in real estate. And then later on, ended up leaving a real estate company and started that that done really well to go back to investing in Southeast Asia. So thanks for sharing your story with us. And it's really fascinating.

45:59  
No problem. It's honor to be here. This is super fun, because I appreciate it. Thank you.

Transcribed by https://otter.ai