I meet a lot of aspiring founders who want to be founders just for the sake of it — they want freedom, they want to build wealth, or whatever the case may be. However, in my experience, it’s a much better idea to become a founder only when there’s a big problem that really excites you and you have a burning desire in your stomach and heart to solve it.
The insight for my first company, Dotloop, started with a problem I was experiencing as a real estate agent. I drove around town chasing down buyers and sellers to get papers signed on the hood of my car. Not only was this consuming a lot of time and energy for me and my clients, but it didn’t seem safe to send important documents by email or fax. I wanted to find a more efficient solution, so we created Dotloop to digitize real estate documents, which has grown into a market-leading company and now handles more than half of our real estate transactions in the United States.
Similarly, Pacasso solves a problem that was personal to me. I grew up in a modest household living paycheck to paycheck. Second homes were definitely not a luxury I had access to growing up. But ten years ago, when my wife and I were lucky enough to become second-hand owners of a house in Lake Tahoe, it changed our lives for the better. We made new friends, discovered our favorite hiking and biking trails, local restaurants, family cafes, etc. and we felt a deep sense of community connection. However, I saw many problems with the old model of owning an entire second home that called for a better way.
When I left Zillow in 2019, I spent most of that year searching for a better understanding of this problem. I remembered reading a quote from Einstein where he said, “If I had an hour to solve a problem, I would spend 55 minutes thinking about the problem and only 5 minutes thinking about solutions.” I approached my vacation through this lens. As I researched, the scale and complexity was greater than I had originally anticipated.
At first, I only saw the problem from an owner’s perspective, where the financial burden and time commitment associated with owning a second home was significant. After discovering that the average second home sits empty for ten to eleven months each year, it was like a light bulb went off. There are 10 million second homes in the United States, many of which are concentrated in the same destination communities suffering from low inventory and high home prices. What if we could enable a better way to make second home ownership more sustainable for owners and communities?
Pacaso launched in late 2020 to offer a new category of real estate ownership called co-ownership. Through this approach, we make second homes more affordable for owners by lowering the cost of ownership and reducing hassles through a fully managed owner experience. For communities, we consolidate the search for a second home by accommodating up to eight buyers in one luxury home. That means less competition for mid-priced housing, which is most in demand by the local workforce, more spending in local businesses and more tax revenue, according to the economists who studied our model. We developed this model because we deeply understood the problem. Today, the traditional second home is in unprecedented demand due to the pandemic and telecommuting, and many communities are in a full-blown housing crisis. Pacasso and co-ownership can help and that makes me excited to wake up and get to work every day and bring value to more owners and communities.
My advice to new founders on what to do and what to think about before starting your company is:
- Find an issue you care about. Don’t start a business just to start a business. It should be a problem that burns within you that you feel compelled to solve.
- Take the time to understand this problem. If you can afford it, try to take a break before starting your company to spend time understanding the problem with a clear state of mind and without distractions.
- As you think about the problem and the business you want to start, imagine a Venn diagram of 3 circles, with one circle being what you love and are passionate about, and the second with what you know (i.e. where you are in advantage compared to other founders ) and third is what delivers a lot of value to users and makes the world a better place. If you can find the intersection of these things – what you love, where you benefit, and what brings great value to consumers, that’s the magic formula for creating a great business that has a big impact.
It’s a playbook that I recently had the opportunity to implement with our team at Pacaso, and it’s paying off. In just a few years, we’re already 300 people on our team serving 40 destinations with nearly $1 billion of real estate in our market, and we’re just getting started in providing a better and more sustainable way to own a second home to buyers and communities. However, it is important to remember that these things do not happen overnight. It comes from passion, time and energy mixed with over a decade of relationship building, knowledge from previous companies, an entire vacation I dedicated to understanding the problem, and much more. There’s no better time to start than today.