SPEAKER_00: Hey, how's it going? This is Craig Cannon and you're listening to Y Combinator's podcast. Today's episode is with Locks Sreeni. Locks is the co-founder and CTO of ZeroDown. Before that, he was the co-founder and CTO of Zenefits. You can find him on Twitter at Locks underscore Sreeni. All right, here we go. Locks Sreeni, welcome to the podcast. Thanks. Thanks for having me here. So you are the CTO and the co-founder of ZeroDown. What does ZeroDown do?
SPEAKER_01: So we help people buy houses. We think even in a place like Bay Area, people with good jobs and healthy finances should be able to buy a home. It all started with my co-founder Abhijit. He was the COO at Zenefits. He was making a decent chunk of change, had a great job, healthy finances. But he'd moved to the Bay Area about five years ago. He had twins and he wanted to buy a house only to find out that you need to have $300,000, $400,000 to spare. Not all of your savings to spare to be able to buy a house. And this felt pretty shitty. Like even if you have a great job and making a lot of money and like what in any other place in the world would be considered rich. Yeah. Like you can't even think about buying a house here. Turns out a lot more people are in the same boat. A lot of our early tenured engineers were just getting married looking to settle down. And man, we can't buy a house. It's going to take us like four or five years to save. And we thought there has to be some way else to be able to have a path to home ownership.
SPEAKER_00: And so this company is super interesting. The structure is really interesting. But associated with it are massive costs. So this is not just prototyping an app and showing someone a Starbucks. How do you even start testing this idea?
SPEAKER_01: Well, we spoke about this for close to 18 months. We even did a side hobby project, which was like help Abhijit buy a house. And we tried to figure out like, OK, what would be the mechanics of it? What is the history of mortgages? What is the history of zero down mortgages? Why can't we do zero down mortgages to people in Facebook, Google, Apple, Airbnb? It kind of seems to make sense. Like these people are good risks. And we spoke to a whole bunch of companies that have started to be mortgage providers in the last few years, but died because we wanted to learn lessons from not the survival bias, but like people who actually did not succeed. And we spoke to a whole bunch of real estate investors. Like we learned about an entire class of assets called single family rentals that started from post financial crisis. Blackstone and Citibank and all these other funds, people who came out of these funds, like started companies where they just went and bought massive amounts of single family homes and rented it out. Their thesis was close to 11 million millennials are going to reach household formation age over the next decade. They're going to move from these small, tiny apartments to single family homes. They're shit out of luck. They're not going to be able to buy it. Mainly so many other factors like student debt, real wage stagnation and all these other things. So they're going to have to rent it. And the thesis was like, they're going to rent it. So might as well rent it from us. And we'll just raise rents every year and have a really good fund doing this. There's a company called Invitation Homes, which is public, which owns close to 100,000 homes. There are a few other big funds like that just do this. And it turns out there's a real asset class that people are investing in. So it just turned out to be a confluence of things that kind of came together that made Zero Down possible. OK. Yeah.
SPEAKER_00: And I think that's a really interesting point about survivorship bias. What did you learn from the companies that failed?
SPEAKER_01: So we actually learned a lot about mortgages themselves by actually talking to these companies. So mortgage, you can't really differentiate that much if you're selling a mortgage because Fannie Mae and Freddie Mac are these government agencies which define a box which are mortgages that are valid that can be sold in a securitization secondary market. If they're not a valid mortgage, you have to hold them on your books or you have to figure out some other way of like private label securitization and all this other fun stuff. So all the companies that started doing mortgages, like most of their thesis was like, hey, like if we have a better UX on top of mortgages, it would be great. Turns out like people didn't care that much about UX because it was a once in a lifetime transaction. In fact, they wanted it to take longer. Yeah. And turns out people can bore about like a 50 basis points difference rather than like, hey, like I have an app to do this stuff. It's OK. Like I'll go to my bank, like get a print out of my statement, like if I can save some money. So CAC was the problem. Like customer acquisition just became more and more expensive. When the rates were lower, people were doing a lot of refi's, refinancing of their homes. So they were able to kind of like survive. But once the rates started going up, refinances stopped and suddenly like every all of these companies were struggling to acquire customers. That was like a biggest lesson that we learned. And so the entire like trillions of dollars of the mortgage industry is controlled by the small box where you can't really differentiate that much. Gotcha. It's also for the good because like it's also consumer protection if you're allowed to do all sorts of things. I mean, people don't really understand how mortgage works. We've spoken to close to thousands of people, like at least 1000 to 3000 people.
SPEAKER_01: And not everybody understands how mortgage works. And these are really smart people who work in tech and like they understand math really well. And they have no idea how much principle they've paid down over five years. Everybody's really surprised when I say even with a 20 percent down, a 4 percent interest mortgage, you would have paid off only close to 8 percent of principle in five years. And people are like, wow, like I do not think that would be the case. So it is complicated and not everybody understands it and people just use it because that's their scope. So that was a lot of learning just by talking to people like in the who have started mortgage startups.
SPEAKER_00: And how did you go about testing buying your house, your co-founder's house? Like you helped him buy a house. What does that mean?
SPEAKER_01: No, I mean, the idea was to help him buy a house. We actually didn't succeed. Like we started Zero Down because we kind of like came upon. So essentially what we tell our customers is we'll buy the house that you want. You say I want that house. We'll buy it for you and give you the keys in seven days, like with a bottle of champagne and like no bank, no escrow, no 100 page documents and all that stuff. You move in and as you make monthly payments, you start like getting a portion of like the home every month in terms of like purchase credits. You can think of it almost as like vesting and cliff and stock options. How it happens at work. So you get 0.25 percent of the home every month. And over a five year period, you get 15 percent of the home. So it becomes easier to buy the home from us at any time you want after a two year period. Think of it as a cliff. Right. So anytime between two and five years, you can buy the home from Zero Down. Every year you get 3 percent of the home. So let's say you're three, you have 9 percent of the home, your company exited, you came into some money. You can just buy the home from us at that point.
SPEAKER_00: And then just create similar terms, similar mortgage terms. Then you hit a certain down payment.
SPEAKER_01: We are actually actively working on partnerships that like we can easily transition people over to a mortgage when the time comes.
SPEAKER_00: OK. And so break down the product from a founder perspective. Like what services you offer, how do you make money?
SPEAKER_01: Yeah. So we think of it as like this vertical full stack home buying company, which is what Zero Down is. So if you want to help people right from search, search mostly feels like a solved problem with Zillow and Redfin and everybody is looking at it. But everybody searches for price bed bath and maybe neighborhoods. But what we found out that people are really looking for is show me places 30 minutes commute from work that has a lot of natural light, that has a big backyard. And people often tend to collect all this data from different sources. Sure. Like I will let's take this for an example. I want a home that's about 30 minutes driving distance from San Francisco. That's close to good schools. Let's say I have a family and good schools are important to me. Now if I talk to a lot of friends and arrive at this conclusion that I should be looking for a home in the Millbrae, South San Francisco, San Bruno area because they tend to have good schools, then I'm going to search for only those places in Redfin and Zillow. With Zero Down, if you actually said show me all the places that's 30 minutes driving distance from the YCHQ where we are, you would actually see Albany and Millbrae light up. Albany is a little north of Berkeley. Turns out Albany, prices of homes in Albany are half that in Millbrae. And school ratings according to grade schools are actually better. So there is like some loss of information when you transfer this like external research into like these different tools which can be avoided. Like if you actually use like that one tool which does all of these things for you. Now we want to build a hyper localized search that like show me homes near farmers market. We just actually did a tag where like show me homes that are great for dogs. So we look at like close to dog parks, big outdoor space and stuff like that. And we try and like collate all these things. So that's search. And then the next big thing is like, OK, I want to buy a home. What real estate agent do I use? So we work with a lot of partner agents who are experts. So we have this curated list of agents. We have agents who are experts in San Francisco. We know agents who are experts in Oakland. We have agents who are experts in Peninsula and South Bay and so on. Because, again, like homes are like hyper local and you need to know the neighborhood really well to be able to help out. So we help with that. And then the financing itself with zero down payment. And that's like the biggest value proposition. Like $200,000 in the bank today is like way more valuable than $200,000 in the bank five years from now. Right. So being able to do that today is a huge, huge value. And then we actually do the deal execution. So we take care of inspection appraisals, like the walkthroughs, because we are buying 100 percent of the house up front. We want to make sure it's a really good house. And because it's your house, you want to make sure it's a really good house. That's where the search also comes in. Like to be able to eventually we want to add tags like, hey, show me neighborhoods that performed well during the 2001 crisis, 2008 crisis. It's almost like we are actually launching an ultimate home buying guide for engineers where we crunch like 50 different data sets and try to figure out like, OK, what are the things you should take into account as you consider where to buy a home? So speaking of engineers, so what kind of customers do you have right now?
SPEAKER_00: And how do you go about evaluating customers that would be a good fit?
SPEAKER_01: Yeah. So we have customers that are designers, product managers, engineers, like directors of emerging market directors, like investors, storage engineers. So we have like a fair variety of customers like in the Bay Area. We have a pastor as a customer. The biggest thing that we evaluate is like, is their income healthy? And do they have some savings? Because like we help them build the rest of the savings to be able to buy the house from us five years from now. So we are basically making a bet on five years from now customer. So we are saying the future you is going to be way more successful. The future you is going to have way more money. And is the future you is going to be way more all around awesome. And that's kind of like what we evaluate for. And it's a pretty fast like three to five minute like qualification flow. You just connect your bank accounts using Plaid. Like we look at an asset report. We look at your income. And we say like, Craig, you can go and buy a 1.4 million dollar house. Like and here's a great real estate agent. And once you say I want that house, the next thing you know is you get the keys in seven days and a bottle of champagne. It's wild.
SPEAKER_00: Now how does this work in a market that I don't know what the temperature of the market is right now in the Bay. But you hear about like all these all cash offers that happen immediately. Like how does Zero Down work? We actually give our customers the power of an all cash offer.
SPEAKER_01: So we basically arm our customers with all cash offers so that they have way more probability that they close the home of their dreams fast. When we started the company I thought like one of the things that's going to take longest is like people to go find homes and us actually like closing on it. But probably 75 percent of our customers so far have bought homes in two or three weeks. And they're in the home like in a month, month and a half.
SPEAKER_01: From the time they heard about Zero Down a month and a half they're in a home. Which is crazy. I can't even believe that. But it's amazing. Yeah.
SPEAKER_00: OK. Now how... Like I understand this in the context of like a high paid engineer or you know Bay Area folks. How does this go about expanding to other markets?
SPEAKER_01: So there are like a lot more cities. So I think one of the things that has become a characteristic of the unaffordability crisis in general in the country is the most desirable places where people want to live. The places where the most desirable jobs are, are the places where people have been priced out of the market. Seattle, Denver, Austin, Salt Lake, DC, New York, Boston. And all of these cities like are viable markets for us. And we are planning to be in Austin and Seattle in the next couple of months.
SPEAKER_00: How do you go about growing?
SPEAKER_01: Cities is one. And largely it's about education and like how do we how do we explain this to people? How do people understand this? Because it's a new way of doing things. Right. And if you actually look at the math at zero down like against rent, even though the monthly payment is higher than rent. But at the end you get purchase credits that's worth like 15 percent of the home. And if you take that into account, it actually ends up being cheaper than renting. So being able to like explain that really well is... This is the thing, right?
SPEAKER_00: Like I heard about zero down when you guys were in the batch. I was like, seems great. I imagine a lot of people who are not in the tech industry, especially those like not exposed to early startups all the time, hear this stuff and like, hmm, I don't know about this. Maybe they remember 2008. How do you communicate that to someone?
SPEAKER_01: I think I think part of it is just enough people having done it. OK. So you have a friend who's done it. Yeah. So we are doing about a dozen homes a month right now.
SPEAKER_01: And I was actually on Saturday with customers like doing video shoots of like, how do they think about zero down? How would they explain zero down to a friend? And all of that stuff helps.
SPEAKER_00: OK. Now, in terms of where the market's going, if there were to be a downturn in the housing market, how would you guys value it? So zero down is actually a long term holder of homes.
SPEAKER_01: So like our, the fund that we run is a five to seven year fund. And we... Can you talk about the fund really quick? Yeah. So zero down is actually two businesses. Like, so we have a tech company and what is called a prop core, a property company. So the property company is actually a fund that actually goes and buys houses and holds them. And the fund has a lot of infrastructure. It has like legal, audit, external fund administrator. It has backup services. So that's also part of the safety net because these are people's houses and we don't want to be blase about it. So we want to have protections even in case anything happens to us that like the contract can be honored. So the fund actually has a lot of like infrastructure around it. Now, the fund is a long term horizon. And we actually believe we are bullish on real estate, like in Bay Area, Seattle and all these different places over the long term. And the reason we are is also this is where the jobs are. If you look at the job growth in these markets, the wage growth in this market. And we believe that like these jobs are probably going to be the most evergreen jobs in the next few decades.
SPEAKER_01: How many people are you now? We are about 17.
SPEAKER_00: Okay. 17. Okay. So, yeah. Man. Okay. Not as big as I thought, given, yeah, how things are going. We'd like to be 25. I was going to say. Yeah, I was going to say. How do you go about hiring for all these diverse roles when essentially you have these like two structures in your company?
SPEAKER_01: Yeah. So we have a director of capital markets who used to work at Fortress Investment Group. We have RGC is like from YC Continuity. Our marketing person like used to be from YC as well. So we are also looking at like people who can straddle and play multiple roles, like from being an IC to like being a manager and building out an entire team. And not everybody can do that. So like we are trying to be selective about hiring those kind of people who can straddle that entire range. And we have our engineering team in Vancouver. We're going to be building our data science team in India because we're doing hyper local search for every city. So how do Google bus routes affect home prices? How do Facebook bus routes affect home prices? We just we're doing a blog post soon like about how does greenery and tree cover affect home prices? So these things kind of like help and matter. And to be able to do some of these things like fast and like for many cities. Yeah. We want to build the right team to be able to do that kind of stuff. And you're distributed. And we are distributed. We're not fully remotely distributed, but we have offices. We have an office in Vancouver. We have one person in India right now and like we'll maybe have an office there. And what led you to make those choices?
SPEAKER_00:
SPEAKER_01: I think at Zenefits I had built an engineering team that was like Vancouver, Bangalore, SF. OK. Like Vancouver is in the same time zone, two hours away, and you find some amazing talent there. We were also heavily influenced by the PG article about like 95 percent of talent is outside the U.S. So one of the ways we grew really quickly at Zenefits in terms of hiring was we were able to tap talent all over the world. It was just easier to bring them to Vancouver in terms of immigration than like the U.S. Right. OK. But now like we just know great people there. And so it's kind of in network at this point. Yeah. So it was all in network. Like we're not like trying out like completely new people.
SPEAKER_00: You know like optimizing for like lowest costs. Yeah. We know and trust the people.
SPEAKER_01: Like we want to build like I said like the right team, like the right person like who can straddle all the way from being an IC, like actually do the work, like to be able to like OK like switch gears, like build out a team. Yeah. To be able to do that.
SPEAKER_00: OK. And so all the remote folks are not well sort of kind of remote are on the tech side? Tech, Sharon's in Seattle.
SPEAKER_01: Sharon's in Seattle, of course. And for now I think like our design is remote, mostly on the tech side.
SPEAKER_00: OK. And on the tech side, what do you foresee being the hardest technical challenge?
SPEAKER_01: It's the entirety of the experience. Right. Like I mean like I use tech, I think about tech as a great enabler. OK. So when you're looking at homes, like how do we deliver the right homes to the right person at the right time? Right. Like what are you looking for? And just like being able to do that in itself like is not super easy when you want to do it at scale. And then there are aspects of like the asset management, like deal execution and like a whole bunch of stuff there. That's where like a lot of our like Zenefits, like automation and like those kind of capabilities come into play. On the asset management side, like a bunch of us from the team like have experience. Like I worked at DE Shaw, which was my first job out of college. And like a couple of our folks like on the engineering team, like we're all people I hired out of college at DE Shaw. They followed me to Zenefits, they followed me to Zero Dawn. So like there's a little bit of that there. So we're looking at it as like all these pieces, but like all of them need to connect and like have like a coherent single experience like across. Yeah. Search, agent, financing, deal execution and actually living in the home. Because these first time homeowners often have no idea of the things that could go wrong. We actually provide this concierge app where like people can text us like if like, hey, like my sink is broken and we'll connect them with like high quality service providers in their neighborhood. We actually give them a concierge service, which will come like every six months, like make sure they do preventative maintenance, change the light bulbs, like switch out the batteries, like clock the bathrooms kind of stuff. So just making the entire process of homeownership like easier. Yeah. We also have a rewards program where if they buy furniture like in the borough or like they use feather, they get some discounts. If they buy a ring doorbell, they get some discounts.
SPEAKER_00: The breadth is really wild for such an early company. Why did you choose to go that way?
SPEAKER_01: I think it was part of our DNA from being at Zenefits. So one of the biggest lessons there was this thing called the hub and spoke model. So Zenefits, like the software itself was the HR payroll benefits, but there were so many other spokes like time and attendance systems, 401K, commuter benefits, like health insurance. And all of that stuff was set up in a way that you can make so much money of all the spokes that you can give the hub away for free. That was the original Zenefits business model. But zero down, like we want to keep that we don't want to really make money of the financing and we want to keep that cost like as low as possible or at cost, like pass it on to the customers. So any savings we do as we become larger and have scale and our cost of capital goes down, we want to pass that on to the customer. Now, there are so many ancillary things around the home and a home buying transaction. Like there's search, brokerage, escrow, insurance. And while living in the home, all these different services and there's so many players that take a small transaction piece of the pie. Yeah. Like if we can put it all in like one great experience, one is like we can make money of other places. In fact, like we charge the customers a $10,000 upfront fee. Okay. That's how we make money. We split commissions with the buy side broker. And that's how like those are the two big things we make money. And then like we make money on the concierge. Like if people choose to buy furniture using rewards and get a discount, like we make a small percentage of that. Now, having all these together not only means that we can give the home at cost, but it also means that like we can build a single coherent experience for the customer. Right. Like we want people to have a jaw dropping experience, like when they buy a house, which is not something you associate with buying a house usually. And it's like one of the most painful processes like that you go through in life. Yeah. But so far, like we have 100 in PS. And people are, people, it's almost incredulous when you talk to people. So I'm like, I can't believe how fast this happened. Yeah. Like we wanted that house and in like 15 days, like we were in the house. Yeah. Which is extremely like gratifying. And that's why we do all these hard things. Yeah, it makes it exciting. But the biggest thing we want is like for consumers to have this amazing experience like across, like from the time they kind of start to search for homes. Yeah. To the time like that they're living in the home.
SPEAKER_00: I just find the product development method really interesting to just like go so broad from the beginning rather than like pick like one, like, you know, obviously maybe search was like figured out. I just think it's cool. And did you, who's PMing all these things?
SPEAKER_01: So it's almost all of us because we have folks who talk to customers all day long. So that needs to come back and like constant feedback in terms of what do people really want. Yeah. And we have again, like almost all of us like try and talk to customers in terms of like, hey, why did you do this thing? Why did you not end up going with zero down? Like what was your reasoning? Okay. And we try and just understand like why people, what objections people have. Was this like, how do people think about the process? Like, and that's how like we even came up with searches because when people are talking about a home, like one of the first questions we ask is like, okay, tell us more about like the kind of home you want. Like what are you looking for? And when you hear people talk, that's what you hear. You hear things like, hey, I want my commute to be efficient. Right. Right. If two people commute, it's a machine problem to optimize that commute. Right. Like machine can do a way better job in optimizing your commute location based on where homes are available. Yeah. Than like human strength to optimize. Definitely. Right. Machines can take your choice from 10,000 homes to 20 homes. Like 20 to one is a human problem. 10,000 to 20 is a machine problem. Right. So that's the whole point of building search. So we'll just by listening to people and hearing what they want. And it's, there's a lot of anxiety around homeownership, right? It's like, oh shit, like so far I was living in a rental. If there was any problems, I'll just call my landlord. Right. Now what happens like if something happens? Yeah. That's where the concierge comes. You always have help. It's like a support line for your home and it's 24 seven. You just text us and like, we'll take care of you. So that's the way that we think about the different stages. Okay. So let's, let's break down the customer conversations a little bit more then.
SPEAKER_00: So are you sending out every employee into the field to literally knock on doors of zero down customers? Like how, how does that process actually work? Yeah. So, so we do a lot of like customer interviews and we record them and, and we
SPEAKER_01: disseminate them. Everybody listens to it. Yeah. To continuously learn. We have, we have like folks that are talking to customers all day long, like trying to like explain how zero down works and we listen to the questions that people ask and we try and understand like, what are their concerns?
SPEAKER_01: Like, what is like good? What is bad about this? What are the barriers to them just like no brainer? Like, I'm just going to do this. So like we constantly try and iterate and learn from that. Okay. And I think that's, that's the way we do it. Okay. And I think that's, that's the thing that I love about like YC the most as well, because the effect of compounding on these learning is like huge. Yeah. The things that you learn week over week over week is just like compounding to have massive advantages. Right. I think because I just keep hearing it from you and so many times people are
SPEAKER_00: like, oh yeah, I talk to customers. And you're like, when was the last time you actually talked to a customer? And it's like usually a month ago, two months ago. And it doesn't sound like that's the case for you guys. Saturday. Saturday. Yeah.
SPEAKER_01: We drove over to customers houses, like to do a bunch of like customer videos and testimonials. Right. Yeah.
SPEAKER_00: Yeah. So where do you go from here?
SPEAKER_01: I think we want to make it possible for everybody to be able to own a house no matter where they live. And it's a path, it's a long process. But we want to help as many people as possible as quickly as possible. Which is why we're going to be in Seattle and Austin soon. Yeah. And we probably will be in like five or six more cities next year. Okay.
SPEAKER_00: Because core to your philosophy then is everyone should own a house?
SPEAKER_01: Yeah.
SPEAKER_00: Okay. But why? You know, like millennials move around? Like...
SPEAKER_01: Yeah. So wouldn't it be cool if you are living in a house like for five years, like you earn some ownership in that house, you should be able to take it with you. Why should everybody own 100% of every home? Wouldn't it be cool if you can take your like homeownership with you where you go like a 401k? Right. Like you can take your 401k around, like it's not tied to a company. Right. Like it should be like that. At any point you should be able to sell some part of the home like for money. It should be liquid. Home is a financial hub, right? Like, I mean, it's where most of your wealth for most people is trapped in this brick and mortar. Like how would that work? So those are the things we often think about as the future. Like how does homeownership look at least like for the generation of people that are growing up like five, 10, 15 years from now? Yeah. And what would be... What would make it really easy? What would make sense, honestly? This is what I'm wondering.
SPEAKER_00: Like do you sweat the details of what a house looks like? You say, you know, in a crazy world where everyone basically lives in like the pod hotel version of a house or a world where... I don't think that would be the case.
SPEAKER_01: But it doesn't even matter. I don't think everybody is going to live in a pod hotel because even today I think
SPEAKER_01: space is important to people. So people make all sorts of choices for space. I mean, people commute crazy amounts in the Bay Area. Like people commute from Antioch, Tracy in like three hours one way to go to a job because they get a larger space. It's close to schools. And these things are important. And I think these are like fundamental human things. I don't know if that will ever get replaced. There will be a class of people at different stages in life. Maybe there's a stage of life where you live in a pod hotel or a community building and then there's a different stage where you don't. So that's kind of how I think about the world.
SPEAKER_00: OK. And do you think autonomous cars affect your business in any way?
SPEAKER_01: I don't think so. I think autonomous cars are cool. Like it might enable people to live farther away. But I don't know, like just because the commute is easier, it still takes that much time. So I mean, there are places on the East Coast where there's like great public transit. People travel three hours on a train. Yeah. Maybe like those kind of things will become easier. But I don't know.
SPEAKER_01: I guess we would have to step into that world. I can't make the transition in my head to see myself living more than 10 minutes away from work.
SPEAKER_00: I'm in the same boat. Like I would never do that. And I guess the core of the question is like, it doesn't really matter for your business right now.
SPEAKER_01: It doesn't. I think people have to live somewhere. Yeah. As inherently human like that, you want to make the space your own. Yeah. If you really think about homeownership, the fundamental rights are ability to profit from sale. Right. When you own something, you can profit from sale. Ability to customize it, reshape it, remodel it, make it your own. If I gave you an iPhone and said like, you can't install any software in this. You can't like put a cover on it. Like then it's not your phone. Right. Like so that's what happens to a rental most of the times. So ability to reshape, remodel and make it your own. And finally, I think ability to have like a stable cost basis over a period of time. That's what mortgage really does. Like it locks in your payment for 30 years. Yeah. With zero down, you have five years of like stable payments. Nobody will raise the rents on you or kick you out. Right. You can remodel, reshape the home like to make it your own. And you have, you build these ownership. Like you build these credits in the home and you get to profit from like these credits because they're a percentage of home value. They increase with the value of the home. So that's how we think about zero down.
SPEAKER_00: I think it's great. So just kind of wrapping up for founders who are listening, who still haven't figured out what they want to build. You obviously spent a lot of time researching zero down and then you just executed. Did you go through other ideas?
SPEAKER_01: Oh, well, a lot. Okay. But I think at the end of the day, if you are not doing something that you truly believe should exist in the world or like be there, it's going to be very hard. Like there are going to be like deep, dark days and there are going to be really bad days. There will be great days, but there'll be really, really bad days. Yeah. And if it's not something that you're super committed to and you want to really see in the world, it's hard to stick with it. It's hard to just do a startup for startup's sake. Yeah. So I think this is the thing that spoke to us. So, okay. Walk me through that, though. So you basically hit a point where you were like trying one thing or thinking about one
SPEAKER_00: thing, thinking about the other thing, then you just felt the energy. It's like we just kept coming back to this.
SPEAKER_01: Like the biggest reason that we might not have done this is because it's really hard. There's like all these different aspects. There's capital markets. There's like educating consumers and basically making sure all of these things work together. And again, like it's a broad play. So that was the biggest reason we were like, huh, is that like can we do some enterprise hitchhiking? That's easy. Money just comes in every month. It's beautiful. Yeah. But it didn't quite excite all the three founders as much as like, hey, this is a real problem. There are people in the Bay Area today making more than $200,000 household income, but they can't even think about buying a house. So like how do we go about solving that? Like homeownership is part of the American dream and we want to kind of revive it and bring it back.
SPEAKER_00: And did you feel that same kind of enthusiasm about your co-founders? Like was it, were you shopping around?
SPEAKER_01: For the company or the idea itself, like I think I had made up my mind that if I were to do another company, it was going to be with Abhijit and Hagi. And that was the most important thing for me. Like, so because again, like it is like startups are hard. You're going to be like spending a lot of time together. Might as well like have fun while doing it and do it with people who you like, as people. So that was the most important consideration. And then this idea just spoke to us, like because it was a problem that Abhijit was facing himself and turns out like a lot more people were facing the same problem. Yeah. At one point I thought like our marketing strategy will be I'll just standing in front of University Avenue holding a board saying like, buy a home with no down payment. Let me explain how. Yeah. But it definitely feels like that. That so many people with really good jobs and healthy finances are just stuck in this loop of trying to save up enough for a down payment.
SPEAKER_01: Like cost of living is high. That's why people leave the bay. Yeah. So we want to save the bay area.
SPEAKER_00: All right, man. Thanks so much for coming in. No, thank you.
SPEAKER_01: Thank you for having us.
SPEAKER_00: All right. Thanks for listening. So as always, you can find the transcript and the video at blog.yacombinator.com. And if you have a second, it would be awesome to give us a rating and review wherever you find your podcast. See you next time.
