Would You Invest in the Future of Home Buying?

Plus, Jason Fried on why email (not this email obviously) sucks.

Heyyyo,

A quick refresher for those that are new; last week I hit the reset button on my weekly newsletter to do for startup investing what Snacks does for retail investing on Robinhood by featuring a company that I’m taking a hard look at — and, that you too can invest in via equity crowdfunding (if you don't know what that is, click here).

So, if you like what you see here and haven’t already subscribed, please do 👇👇👇

Side note: Zero inbox is a fools errand. It’s stupid. And, a total waste of time. Ironically, while rethinking my newsletter I realized just how much I dislike email. I’ve tried it all, from Airmail to Superhuman; it’s all the same bullshit, lipstick on a pig 🐷

So, I called the only person I know that can actually do something about it, Jason Fried the founder of Basecamp and Hey.com (email’s last bullet) and he explained to me exactly why I (you??) let Gmail and Outlook push us around and allow such misery into our lives. Here’s my podcast with Jason 👉 https://spoti.fi/3nemoES

Now, let’s dig into this week’s deal, shall we!

Register to invest here 👉 https://bit.ly/3oQYp03

Subscribe to my podcast 👉 https://spoti.fi/3kVHU0y

Text me questions about startups or investing here 👉 +1 312-847-4261

Scott

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Company Bio

Nada is transforming the complicated and disconnected real estate transaction into a complete homeowner service relationship by integrating realty, lending, insurance and guidance into a single digital solution.

Nada’s tagline is, “Buy and sell your home online, pay nada!” And, well, that about sums it up. If you’ve bought a home then you already know what a joke it is… $30k for realtor fees? For what??? Don’t get me wrong, I know many need a hand to hold cutting checks that big (we’ll dive more into that later) but there’s much more to the story — shopping lenders, getting insurance for a 100 year old house, inspections, fire damage, leaky pipes and weird wiring. To say nothing of the fact that when it’s all over, your trusted team of advisors disappear like a fart in a wind storm! Nada wants to change all of this by allowing you to buy and sell your home online, no broker. Help secure all the necessaries. Then, notify you when it’s time to refi or list your home.

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Meet the Founders

Watch my full interview with Nada Co-founder & CEO John Green here 👉 https://bit.ly/2IrBuI0

John Green is Nada's Co-founder and CEO. Prior to this, John led Strategy & Innovation for a top 10 mortgage lender. He served multiple lines of business as a strategy & implementation advisor focused on sales, risk, technology, growth, and go-to-market strategies. — before that he was a rockstar… literally!

Here’s what I’ll tell you about John. He has that “it” factor. Which makes sense, he used to be the front man of a rock band. Still, it’s a pretty important attribute for a startup founder/CEO to possess. One of my biggest fears about investing in people is that they won’t be able to handle the pressure cooker that is building a successful business from the ground up; and the idea that this dude could stand on stage, in front of thousands, and sing his ass off tells me everything I need to know about his confidence (there’s a reason pro athletes and veterans tend to make great entrepreneurs).

Mauricio Delgado is Nada's Co-founder and Chief Product & Strategy Officer. Prior to this, Mauricio spent 5 years leading a vertically integrated auto retail and finance company to more than $300m in revenue. Before that he was a VP at Lehman Brothers — Mauricio was not a rockstar 🎸.

Mauricio is a power founder. A serial entrepreneur with tons of experience in the right businesses — retail, lending and private equity. When I say I like to bet on people that have done it before (time spent close to the sun) this is what I’m talking about. Beyond that, there’s the unspoken part of startup life (well, it’s spoken about a lot, but usually inaccurately): the founder’s relationship to capital! To raise money from the right investors, you have to know how they make their money and why they might see the ability to continue doing that with you — that’s Mauricio in a nutshell. Beyond experience scaling big companies and building financial products regular people can use, he know how to “buy” time!

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Traction

• Raised $500K pre-seed capital from successful FinTech investors

• Backed by The University of Texas' Accelerator

• Founding team with 10+ years of industry and startup experience

• Business partnerships with Young Alfred & Aceable Agent

• Established product-market fit with strong unit economics & scalable growth

This is where rubber meets the road! The fragmented real estate (single family homes, in-particular) industry is the hottest industry on the planet — everyone has an app or piece of tech trying to hoard fractions of a percent. So, execution will be everything for Nada. Conventional wisdom says move fast as shit if you want any chance to gain market share. But, actually, the opposite is true here (well, sort of). Find markets you can win in first, then slowly move across the map with a core product people love… The Tortoise wins is what I’m saying. Nada has picked several key markets in Texas, Florida and Arizona to roll out their app for buyers and sellers before adding features and expanding onward. It’s smart. That said, they don’t have time to perfect everything — so they’ll need to perfect one thing (listing and transaction volume w/o the need of agents is my guess) then layer on functionality market-by-market.

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Market Opportunity

Nada joins a handful of other startups — NoBroker, Knock — trying to eliminate realtors (and their fees) from the home-buying process, in addition to OpenDoor, the most established startup in this group with more than $1.5 billion in funding.

The competition is fierce, but the market is large. The typical realtor commission on a home sale is 6% (split between the buying and selling brokers). Factor that into every real estate transaction, and you have an enormous opportunity. The real estate sale and brokerage market is estimated to be $163.7 billion this year, and that’s in an economy ravaged by a global pandemic.

Nada will also have to compete with dozens of other real estate platforms — such as startup RealScout, or well-known website RedFin — for home listings, so marketing Nada to consumers as a viable home marketplace will be a challenge.

Perhaps the biggest obstacle Nada will face is one of trust.

When Zillow, the wildly successful real estate platform, launched, it did so with the intent of disintermediating the real estate market, allowing people to buy and sell homes without the friction and costs of using real estate agents.

Zillow discovered people didn’t trust themselves to make such a big decision alone, however. Buying a house is often the biggest financial decision in a person’s life, and people prefer having the reassurance of a realtor when making it. There’s no price (yet) on peace of mind.

Nada’s success is predicated on building that trust with home sellers, which is no small task.

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Terms & Takeaway

Invest in Nada here 👉https://bit.ly/3pmMIOP

Security Type: Crowd Safe

Valuation Cap: $12,000,000

Discount: 20%

Investment Goal: $1,070,000

Raised (as of publishing): $440,343

Minimum Investment: $100

Here's what I like: Again, the market here is simply staggering. The founders have a lot of finance experience, and their platform does the one thing nobody else seems to offer — a winning nurture strategy! I guess the prevailing thought has been people’s lives are cyclical and there’s nothing we can do to increase transaction volume once they buy or sell their home. That thought is wrong btw. The difference between why people choose Nada vs whatever the agent says is intent — similar to why people have ditched financial advisors and car dealerships.

Here's what I don't love: There’s a reason Redfin still has some rando agent meet you at your showing — people still love to bullshit away their fears with a stranger. That barrier cannot be overstated. No brokers is still very much unproven. Additionally, how well do you think Nada will be embraced by Agents and people in the space that stand to lose their cut?? Not well, is my guess (which doesn’t really matter if Nada convinces its users they’re better off self-directed). Perhaps more concerning than behavioral trends, is that institutional investors are literally raising more money than any other time in history to chase down the housing market and they’re playing for keeps… so competition is going to be steEEEP!

Who should invest and why: At a $12m value cap Nada is not a bargain deal, 20% discount helps though. Similar companies in the space have commanded even richer terms with a lot less to offer (flooding markets with investor bucks tends to have that affect).

The math here is pretty straightforward. If you give buyers and sellers 6% of the deal back to spend on loans, insurance and helping them refi — all while scooping up fractional fees along the way; there’s an embarrassing amount of money sitting in front of you at the end of the customer life cycle.

But, if it turns out people can’t (won’t) buy and sell their homes without an agent, no amount of services revenue will make up that difference.

If you couldn't tell, I strongly believe people are going to embrace a broker-less experience (soon’ish), especially as home data becomes more reliable. So, for me — and investors like me — who believe investing in necessary, but antiquated markets like real estate is good business; this is a legit investment opportunity. The question is do you have the patience to wait it out? I view Nada as a long-term investment that will require a lot of funding to be successful. But, if it can navigate the next 18-24 months, the potential of a successful outcome for investors is higher than most!

As always, startup investing is super high risk, anything can happen. So, don't invest money you can't afford to toss into a wood chipper... Nada has loads of potential but as they say, potential doesn’t pay dividends... until it does 💰

Invest in Nada here 👉 https://bit.ly/3pmMIOP

Text me with any questions here 📲+1 312-847-4261

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Disclaimer: It goes without saying, but this information should not be constituted as financial advice, my investing opinions are my own and all diligence is the responsibility of each individual investor.