I meet a lot of aspiring founders who want to be founders just to be founders – they want freedom, want to build wealth or whatever the case may be. In my experience, however, it’s far better not to become a founder until there’s a big problem that you really care about and you have a burning desire in your stomach and heart to solve it.
The realization for my first business, Dotloop, started with a problem I had as a real estate agent. I drove around town chasing buyers and sellers to get documents signed on the hood of my car. Not only was it costing me and my clients a lot of time and energy, but it didn’t seem safe to just 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 over half of our real estate transactions in the United States.
Similarly, Pacaso 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 when my wife and I were lucky enough to become second home owners in Lake Tahoe ten years ago, our lives changed for the better. We’ve made new friends, found our favorite hikes and bike trails, local restaurants, family run cafes, etc. and felt a deep sense of connection with the community. 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 the year trying to better understand this issue. 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 it.” Thinking about solutions.” I approached my year off through that lens. When I researched, the scope and complexity was greater than I initially anticipated.
I initially only saw the problem from the perspective of an owner, where the financial burden and time commitment associated with owning a second home are significant. When I discovered that the average second home is vacant for 10 to 11 months every year, it was like going out a lightbulb. There are 10 million second homes in the United States, many of which are concentrated in the same destination communities and suffer from low inventories and high home prices. What if we could enable a better way that makes second home ownership more sustainable for owners and communities?
Pacaso was launched in late 2020 to offer a new category of real estate ownership called co-ownership. Through this approach, we make second homes more accessible to owners by lowering the cost of ownership and reducing hassle through a fully managed ownership experience. For communities, we consolidate demand for second homes by accommodating up to eight buyers in one luxury property. According to economists who studied our model, this means less competition for mid-priced homes, which are most in demand by local workers, more spending by local businesses, and more tax revenue. We developed this model because we deeply understood the problem. Today, the traditional second home is seeing unprecedented demand due to the pandemic and remote working, and many communities are in a full-blown housing crisis. Pacaso and co-ownership can help and that makes me happy to wake up every day and go to work bringing value to more owners and communities.
My tips for new founders on what to do and consider before starting your business are:
- Find a problem you care about. Don’t start a business just to start a business. It has to be a problem that you are passionate about and that you are committed to solving.
- Take the time to understand this issue. If you can afford it, try to take some time off before starting your business to spend time understanding this issue with a clear mind and free of distractions.
- As you think about the problem and the business you want to start, imagine a Venn diagram with 3 circles, where one circle is what you love and are passionate about, the second is what you know (i.e. where do you have an advantage compared to other founders). ) and third, what offers consumers a lot of value and makes the world a better place. If you could find the intersection of these things – what you love, where you have benefits, and what provides great value to consumers, then that is the magic formula for creating a great company with great impact.
This is a playbook that I recently got the chance to implement with our team at Pacaso and it’s paying off. In just a few years, we are now 300 in our crew, serving 40 destinations with nearly $1B worth of real estate for communities. However, it’s important to remember that these things don’t happen overnight. It comes from passion, time and energy mixed with more than a decade of relationship building, knowledge from previous companies, a whole year free that I dedicated to understanding the problem and much more. There is no better time to start than today.