A $13.5 Billion SPAC Sensation Will Buy Your House

Opendoor buys houses, refurbishes them and sells them a few months later. Essentially, it flips homes. The company rejects that description, however, and would prefer you called it an “iBuyer” — a technology-enabled, one-stop shop for homeowners who want to sell quickly with as little friction as possible. You enter your home address on the website, and some details about the state of the property and its features, and it makes you an offer.

In fairness, Opendoor makes most of its money from charging the seller a 6%-9% levy on the gross purchase price — not from buying low and selling high. (In the U.S. someone selling a house the old-fashioned way might pay 5%-6% in broker fees.) It sold almost 19,000 homes last year in 21 U.S. cities, although Phoenix, Dallas, Atlanta and Raleigh account for almost half of its revenue. Rival real-estate websites such as Zillow Group Inc. have also jumped aboard the iBuying bandwagon.

This is a very good moment to go public. America’s housing market is booming, thanks to rock-bottom interest rates and a pandemic-induced urge for more space and bigger gardens. Covid-19 infection concerns also validate Opendoor’s business model. Sellers who accept its algorithm-generated cash offer avoid human house-hunters traipsing through their living rooms. 

So far, investors have been willing to overlook Opendoor’s $900 million or so of losses since it was founded in 2014. They’ve also accepted that revenue may halve this year because the company paused the buying of properties during the pandemic and laid off a third of its staff. While it has restarted home purchases, revenue isn’t expected to recover until 2022. That’s an odd look for a high-growth company. 

When the Vision Fund last invested in 2019, it valued Opendoor at just $3.8 billion. This year, Social Capital Hedosophia Holdings Corp II, a SPAC created by former Facebook Inc. executive Chamath Palihapitiya, decided it was worth $4.8 billion (excluding its cash). Since announcing the merger with Opendoor in September, the price of shares in Palihapitiya’s SPAC has more than doubled. This means Opendoor’s enterprise value has risen to about $13.5 billion, even before the transaction is complete.(2)

A serial SPAC launcher, Palihapitiya thinks Opendoor’s valuation could rise tenfold. “This to me feels like Bitcoin in 2012, Amazon in 2015, Tesla in 2016, Virgin [Galactic] last year,” he said last month. Palihapitiya’s first SPAC took Richard Branson’s space-travel company public in 2019.

Palihapitiya and his investment partner Ian Osborne have put more of their own money — about $169 million — into Opendoor than is customary in a SPAC deal. At the current share price, they’re set to achieve a spectacular four-times return on that invested capital.(1)

It’s hard to see how the company’s fundamentals justify such returns. Opendoor said the SPAC transaction valued it at a 1x multiple of its revenue (the value of the houses it sells, plus any ancillary services). But once you deduct the cost of acquiring and renovating the houses, the company generated just $300 million

Read more

How 400-year-old Delft tiles became an interior design sensation

What is the item all the young, new-wave interior designers are trying to get their hands on at the moment? Not a limited-edition chair from Milan or a sculptural chandelier, but 400-year-old, hand-painted tiles hailing from the small Dutch city of Delft.

Delft tiles were first produced in the Dutch Golden Age as a response to Chinese blue-and-white glazed porcelain, and have since become instantly recognisable throughout the world for their cobalt blue and white-grey colour. They’ve been exported, replicated and collected by keen-eyed connoisseurs ever since production largely ceased in the 18th century, when cheaper British reproductions put Dutch potters out of business.

Recently, a new generation of makers have been turning their hand to the antiquated craft, with Instagram-savvy crafts people and young interior designers drawn to the pictorial designs.

Authentic antique tiles are identifiable by their greyish-white tin-lead glaze (which was found to be toxic for potters around 1900 and is no longer used) and fine, hand-painted illustrations in cobalt blue, which range from ornate depictions of Dutch life — canal barges or village fetes — to drawings of animals, fruits and, in rare instances, mythical creatures.

Delft tile with wild boar, c1650, from specialist Durk Regts
Delft tile with wild boar, c1650, from specialist Durk Regts
Delft tile with bird of prey, c1640, from specialist Durk Regts
Delft tile with bird of prey, c1640, from specialist Durk Regts

“The ones I love are those painted with little angels or sea monsters,” says Tony Niblock, co-founder of bespoke cupboard maker Plain English. He began collecting the tiles 30 years ago after viewing a Georgian house that had a Delft-clad fireplace and becoming obsessed. He also likes “the really simple drawings of children, and those with a couple of golfers, or missionaries holding crosses up and marching”.

A tracing technique allowed painters to reproduce the same image repeatedly with only very slight variations, creating a system of early mass production, says Niblock. “You can imagine some poor person sitting down and having to paint the same design over and over again.”

But it’s the slight variations that have drawn young designers to the tiles. “They have so much character to them,” says interior designer Emma Grant, who bought a bundle of 18th-century tiles at auction and has been experimenting with using them as splashbacks behind sinks.

Delft tiles in a room by interior designer Emma Grant
Delft tiles in a room by interior designer Emma Grant © Angus Grant

“They all look different, because the makers had to work quite quickly on the tin glaze, so although the designs are in motifs, they’re all in this quick impressionistic style.” Designs vary from classic to bizarre. “I’ve seen one design of some guy vomiting because he’s had too much to drink, another of a mermaid wearing a top hat.”

Why are these quaint, comical little ceramic artworks seeing a resurgence of popularity now? It’s all part of our current desire to be surrounded by handmade objects, says Tyler Hays, an artist and founder of the New York design brand BDDW. His

Read more