Judd Schoenholtz loved his job as a designer. He had been working at Huge, an agency based in New York, for nine years, leading a team in Los Angeles while building and designing products for big companies like Target, JetBlue, and Fox.
Yet, in 2014, Judd was at a crucial fork in his life, looking down two incredibly different paths. One led towards a comfortable and enjoyable life in his current job. The other was not so certain. But he took the leap. That mysterious path was known as entrepreneurship, and he knew that if he wasn’t going to try it now, he wasn’t going to do it ever.
Two decades before, there were no signs that Judd was going suddenly change the direction of his life. He had normal jobs as a teen, working at the grocery store and the now defunct Toys R Us. He went to Columbia University, graduated, and got a job as a software developer for a year before switching over to doing design at Huge. When Judd joined as the fifteenth employee, the agency—which now has thousands of employees—was tiny. Given a large slate of duties, he had to tackle some tough design problems, doing business consulting through product design.
When Target wanted to move off the Amazon platform and do their own ecommerce, he had to figure out how to communicate their brand through online shopping. On a project for JetBlue, he helped design their online booking service when booking plane tickets looked quite different. Towards the end of his time at Huge, he designed video apps for streaming services like Fox and FX, answering questions like “How does the cable subscription experience translate across different platforms”?
These numerous, almost overlapping threads in his work experience taught him how to deal with complicated user problems. Many also involved modernizing an old process with a new, sleek design. For these nine years, he had conditioned his mind to see how different things could be solved in a user friendly way.
Around 2011, Judd moved to LA to open an office there for Huge. As he searched for homes, he noticed multiple issues in the real estate process that could be fixed; his design oriented mind quickly sketched out solutions each time he encountered something he didn’t like.
For starters, the home buying market moves incredibly fast, but every real estate experience is map based. Judd pointed out:
You open up the experience, and you get a list of all the homes on the market based on their location, represented by a map pin. You as a user are saying what’s different, what’s new, or what’s happened since the last time I opened this app. You don’t really have a sense of what’s changing over time or what’s new, and you have no sense of urgency.Judd Schoenholtz
A fan of feed based products like Instagram, he saw that users could get a better idea of homes on the market with a time-based interface.
Another problem was the lack of a buy button to purchase a house. Instead, the process was manual, slow, and agent-driven. He thought that there must be a way to move the whole thing online and make the offer process streamlined and self-service.
Of course there were other small problems: data on homes, on-demand touring, and getting answers to questions without an agent. But what he had already experienced was enough. As a designer accustomed to building on-demand, self service tools, the real estate market was ripe for innovation.
The road to his life split into two distinct directions, now all he had to do was choose. We know that Judd took the stranger and more obscured path of entrepreneurship, but at the time, he was still unsure.
“As a first-time founder, it was something that I’ve read about forever and obviously wanted to do, but I think it was an incredibly scary transition to go from a job that I liked and had been doing for 9 or 10 years to start over with no money, no salary, no office, and no co-workers. That’s crazy,” Judd said.
Despite the fear, there was something that tugged Judd forward. He felt that if he didn’t take advantage of this great business idea, he would regret it. And so began the process of leaving behind his old job, rallying together cofounders, and building a minimum viable product.
Judd aimed to change the entire experience of homebuying by making it self-serviced and on demand instead of agent-driven. Their closest competitor Redfin, had also moved real estate online, but they were still an agent-driven service. Open Listings wanted to limit the influence of agents and connect the customer directly to the home of their dreams. The agent would, instead, act as a tool rather than an integral component. In the end, Judd hoped to productize homebuying and introduce aspects of ecommerce.
In the first year, 2014, he focused on building the product and understanding the market. He obtained a real estate license, closed the first twenty deals on his own, and discovered several pain points for homebuyers. When Judd returned to the office he and his co-founders would continue building their minimum viable product with the newfound information that he had gained.
During those first few months, Judd also realized that he needed strong business connections to actually be viable. But without prior experience in the startup ecosystem, the team felt lost, so they decided to get into an incubator. The famed startup accelerator, Y Combinator (YC), rejected their first application; their product just wasn’t well defined enough. The second time, they tried something different. They wrote a blogpost about their experience getting rejected and reapplying, made significant progress on product efficiency, acquired customers, and further defined their vision.
“Going through the application process is really valuable,” Judd said. “You’re forced to answer these questions and really define your business and be brief. They ask the hardest questions on purpose because those are the questions you should be thinking about as an entrepreneur.”
YC opened plenty of doors for the company. And when they graduated in 2015, they were well on track to obtaining VC funding, getting their first employees, and relocating. The next step? To further grow the company and expand the product, Judd searched for funding. He met with anyone who was open, asked friends for referrals, and persisted to set up meetings with many potential investors. It turns out that going from meetings to cash infusements was easier than he expected for one reason: the real estate market. The market was huge. Trillions of dollars worth of homes were sold every year and the commission rates racked up to $70 billion annually. With Open Listing’s easy, on-demand service, they could eat up quite a bit of market share.
Judd’s persistence paid off. Y Combinator and an influx of funding kickstarted Open Listing’s growth. In 2016 they sold over 100 homes, and rapidly acquired new customers. In a market where the costs are high and there is a potentially large risk to using a new product, users had the right to be wary. So Judd changed his approach.
He dropped the idea of making an immediate sale and simply asked for feedback. Like his strategy for investors, he aimed to talk to as many people as he could. He said, laughing
You have to be willing to be annoying, bother people, follow-up, and talk to people who you don’t really know. You just have to hound them. Show it to a wide variety of people. We were showing it to real estate agents to tell us why it didn’t work. If you know one person, then that one person can introduce you to a second person, and then at some point you can get that to be a hundred users of anything. But it’s hard, and it’s manual.
That strategy worked. The next year they grew their user base by 500% and had fully integrated all their features, affectionately called “magic moments”.
Say you’re looking to buy a home in California. The typical process would take a few weeks. Your agent would show you several houses, and you’d fill out a lot of paperwork. Let’s say, one Sunday night you go on this amazing tour and fall in love with the house. The asking price is modest, it has four bedrooms, and it’s located in a nice neighborhood near a top school. You want to move forward, but it’s a popular home, and your agent is off work today with her family at a nice sushi restaurant.
How do you get an offer on this perfect house?
This is the thought process that Judd and his co-founders went through to figure out what to automate and make easier: their “magic moments”. They added instant offer creation. You could pair with an agent in less than 15 minutes, finalize, and submit your offer with any questions. Within minutes, you had your foot in the door. If the asking price went up the next day, you could void, change your offer price, and send it in again. In less than a minute. No paperwork would need to be redone.
Open Listings was proud of its automation. Even then, they couldn’t make everything self-service. Housing market norms meant they had to insert agents at some places. For example, sending in an offer and going on a tour still needed a third party involved. Still, they tried to make everything else highly on-demand. One unique selling advantage that arose out of their product development lab was a commission refund. Buyers who normally paid 5-6% to agents, saved money because the commission rate was dramatically lower.
This all happened in 2016. The next year wasn’t any smaller. They expanded to more states and got $6.5 million for their series A round. With a full featured product, they shifted considerable energy to marketing and PR. “What we’ve found is some of those press pieces drove our best customers,” Judd observed. “Some of our most effective advertising has been boosting and promoting organic press and PR.”
It all goes back to building trust and credibility in a market where the transactions are paramount and people are making a serious investment into their future and taking out hundreds of thousands of dollars to finance it. Through building backlinks and getting good PR, they have been able to vastly expand their reach and customer base.
For four years, Judd has sat on top of this steady growth. From their first hired employee to their latest, from product-centric management to sales, and from rejection to success, he’s grown too as a person. He’s gone from chief teammate to chief executor, created better management processes, and focused on recruiting the best people to the team.
As for the market, it’s slowly moving online, not at the glacial pace we might think is happening. Like many other traditional things that have become digitized, real estate is moving in that direction. Right now 89% of homes are being sold with the assistance of a real estate agent, but the process has gotten easier to do alone in recent years, and Judd Schoenholtz wants to be ahead of the curve.
To learn more about Open Listings, visit them here. To see our interview with Pathrise click here. If you’re interested in the most recent business secrets, check out our Business Knowledge page. If you want to stay up to date with the most recent BWS news, follow us on Instagram and Twitter!