Opendoor co-founder Keith Rabois returned to the iBuyer’s board last week in conjunction with Kaz Nejatian’s appointment as CEO, and he already has some big ideas for what needs to be done at the company. 

In an interview with CNBC’s “Squawk on the Street” on Friday, Rabois said he has a “high level view of the strategy” that he feels is needed to get Opendoor back on track. Notably, Rabois, does not feel that the company’s iBuyer value proposition is something that needs to go.

“iBuying was never out of vogue,” Rabois said, addressing comments about Redfin’s and Zillow’s exits from the space. “It was out of vogue because Redfin and Zillow didn’t know how to do it. We were always successful. We minted free cash flow every year I was involved in the company. However, it’s very complicated and very difficult to do iBuying well, but the value proposition of certainty, transactional speed is incredibly compelling to Americans.” 

What were the problems?

Thanks to his confidence in this value proposition, Rabois feels like the main hurdle is increasing awareness of the value working with an iBuyer provides. He also addressed claims that Opendoor has struggled due to the rapid cooling of the housing market in 2022, leaving it with over priced inventory. 

“The Federal Reserve raised interest rates six times with unprecedented speed and that did create a cohort — like one month, maybe one quarter — of mispriced homes,” he said. “However, every cohort thereafter was actually priced correctly.” 

As Rabois sees it, the company’s main issue was its “bloated” general and administrative expenses.

“In real estate there are cycles, and you need a resilient cost structure that doesn’t depend on selling 6 million homes a year because that can come down to 4 million,” he said. “The bloated G&A was a real problem because as people stopped transacting as interest rates went through the roof, the company’s burn rate made no sense.”

To get back on track, Rabois feels a necessary step is cutting the firm’s headcount. 

“There [are] 1,400 employees at Opendoor. I don’t know what most of them do. We don’t need more than 200 of them,” he said. 

According to Rabois, the rapid growth of AI technology will make it easier to replace many of these employees. 

Rabois added that he feels the culture of the company was broken, blaming remote work for many of the issues. 

“That doesn’t work,” he said. “This company was founded on the principle of innovation and working together in person. We’re going to return to our roots.”

Additionally, Rabois feels Opendoor made a mistake going down what he calls a “DEI (diversity, equity and inclusion) path. 

“The company was still promoting certain things on its website when I got reinvolved,” he said. “We’re going to fix all that. We’re going back to merit and excellence.”

The turmoil that led to Rabois’ return to Opendoor began in mid-July when activist retail investor Eric Jackson posted on a thread on social media platform X, outlining his thesis for the possible resurgence of Opendoor. This prompted Opendoor’s stock to take off, but it hasn’t been smooth sailing.

In mid-August, Opendoor CEO Carrie Wheeler resigned due to pressure from retail investors. As the firm hunted for a new CEO, Jackson was pushing for Rabois’ return advocating for him to be named CEO. Despite this, Jackson has shared on his social media channels that he is excited for Nejatian to take over the firm and feels that his choice to leave a top leadership role at Shopify for Opendoor is a sign that he believes in  the company’s potential.  

More: