Lean start-ups were once all the rage in Silicon Valley. Now, here comes the fat start-up.
So writes Farhad Manjoo, the technology columnist for The New York Times.
First, a step back to explain. For many years, venture capitalists and entrepreneurs in Silicon Valley have congratulated themselves on how cheap it can be to create start-ups. Many of the enterprises need only a few computers and coders to invent the next big thing, they have said. These companies are lean — they don’t require much capital because they can theoretically operate on a shoestring.
Now, Silicon Valley is flush with cash. Entrepreneurs are tackling big — some would say crazy — ideas that require lots of money. Asteroid mining start-ups, for example. Companies that build rockets for space exploration or flying vehicles for zooming over lakes. And so on. These start-ups are fat with capital and ambition.
Opendoor, which essentially promises to buy your house on the spot and close the deal a few days later, is a model of a fat start-up, Farhad writes. The company wants to transform the home buying and selling process to make it as simple as a few clicks. It has raised $300 million in equity and $500 million in debt and plans to be in 10 markets by the end of the year.
“Everything about it is crazy,” Farhad says. “But that’s the tech business these days, and who knows? It could work.”
An earlier version of this article misstated Opendoor’s operating procedure. It will make an offer on your house sight unseen, but it will not close the deal without seeing it.