Building a $1.5B real estate empire

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Austin Allison: We grew from zero to billion and a half, was our series C valuation, which we did in the first 18 months. We were operating in 35, 40 markets. We had 3 to 400 people. We were growing fast, hundreds and hundreds of percent, year over year, and then the music stopped.

Jeff Berman: Austin Allison’s startup, Pacaso, lets people buy a fraction of a luxury vacation home. It boasted about being the fastest US company on record to reach unicorn status, but then mortgage rates started climbing, and fast. Fortunately, Austin’s co-founder is Spencer Rascoff, the co-founder of Zillow.

Spencer Rascoff: We started Zillow in 2005, moving into the 2007, 2008 global financial crisis, which was a real estate and mortgage meltdown. Then we managed to pull through. I’ve seen this movie before a couple times.

BERMAN: Spencer and Austin weathered the storm, and got Pacaso back on its hyper scaling path. It’s a stunning example of a startup bringing decades of experience to bear on clever market insight.

[THEME MUSIC]

BERMAN: This is Masters of Scale. I’m Jeff Berman, your host. This week on the show, Pacaso co-founders, Austin Allison, and Spencer Rascoff, share hard-won lessons from their real estate related businesses, DotLoop and Zillow. We talk about how those experiences now inform the meteoric rise of Pacaso, their new vacation home company.

Austin and Spencer, welcome to Masters of Scale.

ALLISON: Thank you. Good to be here.

Copy LinkUnderstanding Pacaso and its unique co-ownership model

BERMAN: I have been looking forward to this conversation ever since my friend, and I’m guessing yours, certainly your investor, Marcie Vu, told me about Pacaso. I was like, “Oh my God, this is genius. How has this not been done before?” Austin, we start with you. Just, what is Pacaso? What do you guys do?

ALLISON: Yeah. Pacaso is a global marketplace that enables people to co-own luxury vacation homes. The reason why we exist is because most people who own a vacation home only use it five or six weeks a year. Our model enables people to buy what they actually need, which for most people is about one-eighth of a home. Then we manage every part of the experience, everything from designing the home to paying the bills, to coordinating repairs, and maintenance so that as an owner, you get to just use the home without any of the headaches that are customary of traditional home ownership.

BERMAN: It sounds a lot like a timeshare, but what’s different about Pacaso from timeshare?

ALLISON: The biggest difference is that with Pacaso, you actually own an asset, whereas with a timeshare, you’re effectively prepaying for the right to use time in a hotel. It’s like comparing an asset to a liability.

The better analog for Pacaso would be buying a home with friends. If the three of us wanted to own a home in Mexico or wherever our dream destination is, the way that we would go about doing that is we’d form an LLC. The LLC would take ownership of the property, and then we would divvy up the calendar, and divvy up responsibilities. Pacaso’s ownership structure is exactly the same, except for you don’t have to know the other people. Pacaso manages all the details.

We’ve now been around for four and a half years, so we’ve sold well over a billion dollars of these Pacaso units. We have thousands of owners, and operate in about 40 destinations around the world. What usually happens is about half of the home is spoken for by the time we close. We then take temporary ownership of the other half of the home, and we have great financing partners that enable us to finance that. Then we sell through the remaining interest over a period of about 90 days thereafter. Once the home is fully subscribed by its owners, Pacaso retains no ownership in the real estate, so you as a Pacaso owner get all the upside in the capital appreciation that occurs in the home.

BERMAN: How do you guys make money then, if you’re not holding onto any share of the property? Where do you guys get paid?

ALLISON: We think about the business like a tech-enabled marketplace that offers lots of services within the marketplace. Many of those services produce revenue for us. The first service is organizing the group of co-owners, sourcing the property, and setting up the LLC that we monetize through a service fee that is baked into the share price. When you look at a property on our website, in that share price is a little fee for us, for all the work that we do on the front end.

Then once the home gets into our ecosystem, it stays in the Pacaso ecosystem, into perpetuity in most cases because once somebody buys a share of a home, if they decide to resell at a future date, they’re not triggering a whole home sale. They’re just selling their interest, whether it’s a fourth or an eighth. Therefore, all the other services that we provide from financing, to property management, to design and furnishing, to resell, are all revenue streams for us that are recurring in nature.

Copy LinkThe inspiration behind starting Pacaso

BERMAN: Where did the idea come from? How did this get started?

ALLISON: I grew up as a real estate agent. When I was 18 years old, I had to find a way to pay for college, so I started selling real estate, which led to, I know you went to law school as well, right?

BERMAN: I did, although my classmates would tell you I barely went, but yes.

ALLISON: Yeah, I went to law school as well, and ended up starting a real estate tech company in my first year of law school to digitize real estate transactions, which we ended up selling to Zillow. That’s how I got to know Spencer really well, which led to this company, which I’m sure we’ll talk about.

But along the way, that entrepreneurial journey led my wife and I to San Francisco. In 2013, my wife and I had an opportunity to buy a second home in Lake Tahoe. It just changed our lives for the better. If you’ve reached a point in your life where you have some discretionary income, and you have some savings, a second home is the ultimate privilege. Because it provides a separate space where you can be a better version of yourself, whether it’s a better partner, a better husband, a better hobbyist.

I used to always love mountain biking when I was growing up. But I never made time for it in my primary home in Cincinnati or San Francisco. It wasn’t until we had this home in Lake Tahoe where I rekindled my relationship with mountain biking. It’s now a really important part of my life. This Lake Tahoe home really became an important part of our lives. I wanted to find a way to make it possible for more people.

But the other thing that I learned about second home ownership is that it’s a huge hassle. We wanted to find a better way. We wanted to find a more efficient way, because when second homes are sitting empty 10 months a year, which is the norm, it creates all these other downstream problems for communities.

BERMAN: Spencer, when did Austin come bring you this idea?

RASCOFF: We both left about five and a half, six years ago. We both left Zillow at the same time.

BERMAN: After, we should say the tremendous run at Zillow, a lot of success there.

RASCOFF: Thank you. Yeah, about 15 years or so of running Zillow. It was a great run. I’m very proud of what we accomplished. When Austin and I both left years ago, we immediately started brainstorming startup ideas. I had another idea in the sharing economy space about something else that I was interested in, Austin improved upon that idea, and applied that concept to second home ownership. As soon as he said it, I said, “Yeah, that’s a good point. I have an empty second home that sits there, 92% of the year and drives me nuts. It’s the cost. It’s the hassle. It’s also the stress and sense of guilt.” I immediately realized it was a good idea.

It’s another good way to find startup ideas is to find things that people hack themselves in kind of an okay way. People have hacked this. Friends buy ski houses together, beach houses together, et cetera. It usually doesn’t work out. Usually, you argue over the furnishings. You have a hard time with the scheduling. You can’t get a mortgage. One of the big benefits of buying a Pacaso is you can get a mortgage on just your portion of the home, because Pacaso created that financing instrument.

You can’t get a mortgage, and you can’t really resell. If the three of us bought a home together, what happens when one of us wants to get out? Are the other two going to be saddled with a stranger, et cetera? Pacaso solves the resale model. We solve the storage issue as well, because you want to keep things at your home. We have owner closets in all of our homes. People keep their personal effects in our Pacaso. We thought this was something that’s already happening on a small scale, in a hacky way that we could democratize and standardize.

Copy LinkNavigating uncertainty during the pandemic

BERMAN: When was this conversation?

ALLISON: It was, I would say, early to mid 2019. We raised our seed round February 15th of 2020.

BERMAN: Okay, we’re a few weeks before the world shut down.

ALLISON: The world shut down. Yeah, very scary. But we just went after it. We were pretty scared at the beginning.

RASCOFF: I think we thought that this startup was DOA for the first couple months post-COVID starting. It turned out to be an incredible tailwind to the business, because people wanted a sanctuary. They wanted to get away from their primary home, away from the city, and have a place to feel safe and secure. The Pacasos that they purchased were able to provide that. But it was dark days at the very beginning.

BERMAN: I assume, also, just the move to remote and hybrid work gave opportunity there as well. That had to be part of the tailwind. But before we get to that growth part, those dark days, Zillow and DotLoop, you guys have done great. But still you’re a founder. You’re starting a company. Your heart, your soul, everything’s in it emotionally. What were those days like? How were you managing through that with each other?

ALLISON: The way that I’ve managed through challenging times, whether it was 2020 or 2009 when I started my first company, is to just stay focused on the mission. I’ve started two companies now where I was CEO. In both situations, I was incredibly passionate about the problem that we were solving.

If you believe deeply in the problem that you’re solving, it serves as a north star to help you navigate through whatever challenges you’re facing. Spencer may have thought we were DOA. I didn’t actually think we were DOA when COVID happened. I just wasn’t sure how we would have to evolve to find product market fit.

I knew there was a there, there. I knew that people aspired to own a second home. I knew that it was silly for people to own a 100% of something that they were only going to use 10% of the time. I just didn’t know how we were going to solve that problem.

BERMAN: Was there a point, Spencer, where you realized, “Oh, not only are we not DOA, we’re really onto something here?”

RASCOFF: Yeah. That happened very quickly. I’ve now been doing this for a long time, been doing this for almost 30 years. I’ve seen this a couple of times. We had this at hotwire.com, an online travel company after 9/11 in 2001 where it seemed like the company was on the ropes. We were an online travel company through September 11th. People didn’t want to travel.

Then through a lot of hard work, and focus on the mission, we were back on the upswing within a couple quarters, and then had a successful exit. We started Zillow in 2005, moving into the 2007, 2008 global financial crisis, which was a real estate and mortgage meltdown. It looked like Zillow was going to be on the ropes. We managed to pull through.

Then Pacaso, similar thing, started a home-sharing business, moving into a global pandemic. I’ve seen this movie before a couple times. Austin’s absolutely right, staying focused on the mission, staying focused on your team, controlling the things that you can control, caring deeply about your customers, and being nimble. They sound kind of trite, but if you follow that recipe, that’s how you manage through adversity. We’ve had our fair share at Pacaso.

Actually, frankly, the more almost existential challenge, more so than COVID, really, was the rise in mortgage rates. When mortgage rates started going up, that hit the brakes on, really, most real estate transactions. Whole home, partial home, everywhere in between. Managing through that set of challenges, I think, was even more difficult in a lot of ways than managing through early COVID.

BERMAN: What’d you do to manage through that?

ALLISON: Wow. It was a challenging time. We grew from zero to billion and a half was our series C valuation, which we did in the first 18 months. We were operating in 35, 40 markets. We had 3 to 400 people. We were growing fast, hundreds and hundreds of percent year over year. Then the music stopped.

Fortunately, we had raised a big series C just prior to this. Spencer and I had both gone through challenging economic cycles in the past. The last thing I or Spencer ever wanted to have to do as a founder was downsize the team. We tried to plan for that as we were growing. We expected that this growth would eventually slow down, but we didn’t expect that it would slow down as quickly or as dramatically as it did. We had to downsize the team.

We did it with class, I think, and took care of everybody. Many of those people, we’re now hiring back, which is really awesome. But that was hard. We had to cut our cost basis. That was number one. Number two, we had to focus in on the markets where we had the most scale, and the strongest product market fit.

Copy LinkAddressing regulatory and community challenges

BERMAN: Was there a concern with Pacaso now, given that you’re in higher end markets where there tend to be more restrictions on not just fractional ownership, but Airbnb has trouble operating a lot of these markets? Was there a concern that you’d be running a foul of local regulations, and you run into some trouble there?

ALLISON: I would say that the main thing that we’ve learned from it is that it’s really important to be proactive, and not reactive on this front. Anytime we’re entering a market, innovating on a product offering, or something like that, we’re two steps ahead in terms of talking to local electeds, making sure we understand the rules and regs in that market. We structured Pacaso now in such a way that it was compliant in the same way that our core ownership experiences.

BERMAN: This is really the opposite of the Uber, and Airbnb approach, which is like F it. YOLO, we’re coming in, we’re going to do it. We’ll pay a price later on. We’ll activate a user base to ride along.

RASCOFF: We had a little bit of that.

BERMAN: Yeah, learn the hard way.

RASCOFF: Bravado at the beginning.

ALLISON: People are very emotional for good reason about the composition of their neighborhoods. I think some of the public affairs issues that some other sharing economy businesses faced were more about disrupting legacy industries that had lobbyists and entrenched interests. Home ownership is really different. It’s quite emotional. People care a lot about who owns the house next door, what does that mean to the neighborhood, and are they emptying the trash cans? Is the house in good order, and these types of things just to change the character of the neighborhood.

We’ve gotten a lot smarter about where we operate, how we operate, the way we form relationships with the communities that we’re in. I’m quite proud of the impact that we’ve had on communities, but we also made mistakes along the way.

BERMAN: Pacaso has faced some resistance from neighbors and local officials, specifically in Northern California. Many of the critics are already frustrated by what happens in communities when guests come in on short-term rentals. They were worried that Pacaso’s fractional ownership model would degrade their neighborhoods.

ALLISON: When we first started getting feedback in Napa, is where it all started, or St. Helena, actually, I just ignored it. Because I’m like, “These people just don’t understand.” This is actually a great thing for them. These are not renters. These are owners who have invested millions of dollars, who care about the home. They care about the community. They’re supporting the local charities. It’s not changing the character of the neighborhood. I just ignored the noise thinking it would go away.

But what ended up happening was the noise didn’t go away. The noise built, and perception became reality. Before we knew it, many people in these communities thought that Pacaso was like a short-term rental, and that it was going to be this revolving door of renters.

BERMAN: Partyhouse.

ALLISON: Yeah, that owners were partying. That we were driving up home prices. None of that stuff was true.

BERMAN: Still ahead, why Spencer recently took on the role of CEO for dating app empire, Match Group.

[AD BREAK]

Welcome back to Masters of Scale. You can find this conversation, and even more on our YouTube channel. 

Copy LinkHarnessing entrepreneurial drive and leadership lessons

Spencer, you referenced Hotwire, Zillow, Pacaso. By the way, you’re also CEO of Match Group now. You run an investment fund. You teach at Harvard. It’s a little mind-boggling all that you do. But going way back, where did this entrepreneurial drive, this zeal come from?

RASCOFF: I grew up, I think sort of like Austin, always tinkering, and starting businesses. I would bake cookies, and sell them to my parents’ friends. I would trace drawings, and sell them to my parents’ friends. I was always trying to make money arbitraging comic books, doing whatever I can to start companies, and try to build things.

My dad was an entrepreneur in the music industry. That was very inspiring to me. I watched his career as an early tour producer and business manager of rock groups, and watched him pivot his career over many decades as the music industry changed. That was an inspiration for me.

Then my sense of drive and ambition, I think came from the fact that I lost my brother in high school. It’s the eve of his high school graduation. He was going to Princeton. He was going to have, I’m sure a very successful life, which was cut short. That motivated me to try to kick ass, and I’m still trying.

BERMAN: Yeah. What’s driving you to still innovate?

RASCOFF: Life is short. I think you should make a big impact in it. I’m not ready to just play golf. I don’t even like it that much. I like working with teams. I like coaching and mentoring. The role that I play at Pacaso, as Austin’s co-founder, is Austin runs it, and he’s the CEO. I’m just here to help. I really like that. I like coaching and mentoring, whether it’s a company that I’m running like Zillow as CEO, or now Match Group CEO, where I’m working with people, building camaraderie and teams as a CEO coach or if it’s a company that I’ve invested in, or a company that I co-founded, I just really connecting with people, and trying to help them succeed.

I left Zillow about five, six years ago. For those five years, what I did was I focused on incubating new startups mostly with former Zillow people. I started four or five companies. Pacaso is the largest of them, but there are several others that I’m co-founder, and chair of. Then I also did some angel investing. That was a period of my career where I was really focused on the zero to one stage of startups.

As part of that, I also started teaching this course on how to do startups at Harvard College, which I’ve been doing for five years. I decided to get back in the arena as a full-time CEO just a couple months ago, as CEO Match Group because I was so interested in the mission. Because Match Group owns Tinder, Hinge, and 20 consumer social and dating apps. For me, curing loneliness, sparking meaningful connections, helping people find a spouse, partner, friend, anywhere in between, that inspires me. I think that’s a really cool, exciting mission. I love the power of those brands. I connected enough with the mission to decide to put the cleats and jersey back on, and get back on the field as a full-time CEO.

I’m not angel investing anymore. I’m still working with folks like Austin whose companies I help start, but I’m not launching new initiatives. I’m a full-time CEO of a big publicly traded company now.

BERMAN: With Match, as someone who’s not in the dating market, how is it running a consumer company where you’re not actually a user of the products?

Copy LinkThe importance of using the product you’re building

RASCOFF: I am a user of the product now. I’m very happily married. I’ve been with my wife for more than 30 years. But I’m on all the apps. She’s a trooper. She’s a good sport. I get notifications all the time of, “This person just sent you a rose. This person is chatting with you. This person’s waiting for you to respond.”

BERMAN: Be careful which way you swipe.

ALLISON: That’s right.

RASCOFF: Yeah. She’s a good sport about it. I need to be on the apps. I said to her when I took the job, I was like, “Can you imagine if I was running Zillow, and I never used any real estate apps? I can’t do that.” You have to have consumer empathy that comes from using your own products, and spending a lot of time talking to your users. I do use the products. My profiles all say, “I’m the CEO of the company. I’m just here to learn, just here to research.” I disclose the fact that I’m not single.

But more to the point though, I think you can develop user empathy through research, and just spending a lot of time with the users. Actually, teaching my class is really helpful. Because that is our demo. Gen Z, 18 to 24 is the primary user of Tinder, Hinge, and our other apps. Spending a lot of time on college campuses, which I do, is really valuable. Having a 20-year-old in college, a 16, and 13-year-old is actually really useful because they’re the ones that are using consumer social apps like Snap. That’s also where I learned.

BERMAN: Before Austin and Spencer co-founded Pacaso, they worked together at Zillow. That’s thanks to a years-long professional courtship where Spencer, as CEO of Zillow eventually acquired Austin’s startup, DotLoop. Dotloop was a software tool to streamline the process of buying property.

I was curious to hear how that acquisition played out from both sides of the deal. Spencer, how do you find out about DotLoop?

RASCOFF: It had a great reputation in the industry. I would hear about it in conferences, and the mutual courtship between Austin and me was several years. It’s actually worth reflecting on that for a moment, for startup founders listening to this. Zillow bought 17 companies. I bought 17 companies when I was CEO. Dotloop was one of them. The median time from when I first shook hands with the founder of those 17 companies to when those 17 wires crossed, was about two years. I don’t remember what DotLoop was, probably longer, probably three years, I’m guessing, of how long we knew each other.

ALLISON: Yeah, at least.

Copy LinkStrategic acquisitions and the power of long-term relationships

RASCOFF: We’d see each other every couple of quarters. We’d catch up, and have a cup of coffee at a conference or an event. It’s really important for startup founders to remember that. Because companies don’t get sold, they get bought. I always advise startup founders to make a list, create a spreadsheet of every potential strategic acquirer of your company, 5, 10, 20, 50 companies ideally. Figure out who the CEO is, and the head of CorpDev, and be very intentional. Long before you want to sell, start building those relationships, and carve out time on your calendar. Literally, block an hour a month, call it M&A, planting seeds. During that hour, I’m going to pick up the phone, and reach out to two or three of these people.

You’re just calling, and say, “Hey, can we have coffee at the next conference? I want to tell you what we’re up to. We’re doing cool stuff, innovating.” When the company’s not for sale, “Let’s talk about potential partnership or ways to work together, just want to get to know you better, et cetera.” Then a couple of years later, that can become something.

BERMAN: I think this is a phenomenal advice. But for a lot of startup founders, they’re probably scared hearing this. They’re like, “But I’m going to go tell this behemoth, 800-pound gorilla what we’re doing? I’m going to inform their product roadmap?”

RASCOFF: It is a small risk. The potential upside far exceeds that potential downside. The chances of a competitor, whether it’s a big potential acquirer or even another startup, learning something from that conversation, going, and replicating it is very low. It’s not zero, but it’s quite low. The potential upside is really significant.

The truth is at Zillow, if we had really wanted to go knock off Dotloop, I didn’t really learn anything from those conversations with Austin, that would’ve made that more likely. Maybe it would’ve opened my eyes to the opportunity, and that might’ve caused me to go internally, and say, “Hey, let’s spin up a team, and try to do this.”

But, again, more likely it opened my eyes to the opportunity, and caused me to want to acquire the company, which is what happened. In this case, Dotloop had a really good brand, strong network effects, and important customer relationships. We could have built the product, perhaps the technology, but there was a lot more to it.

Obviously, founders are going to want to think this through themselves, but I always err on the side of over-communicating about your idea.

BERMAN: Yeah, I think it’s worth noting that there are a handful of companies out there where reputationally, they do this. It’s good to do a little bit of research ahead of time before you hit everyone on that list.

RASCOFF: Yeah. I was always very careful about that at Zillow. That I thought our reputation as an acquirer was very important. You probably did some references from some other companies that we had bought, I’m guessing, before you decided to sell. It was very important that we had a lot of founders whose companies we bought that stuck around for many years like Austin did, and the rest of his team did. Until most of that team that you brought into Zillow left to go, and start Pacaso. To the buyer, reputation is very important.

BERMAN: Why’d you sell to Zillow?

ALLISON: One of the things that I was thinking as Spencer was talking, is that I agree with everything you just said. I think it was hugely important that I had that relationship built. I would recommend the same. But at the time when I was building that relationship, I wasn’t thinking about it, as Zillow might be our acquirer. In fact, I was just absolutely adamant against the idea of selling. I viewed selling as a failure.

I’m like, “We’re building this company to take it public, and we’re going to do it.” Anything short of that is a failure. Selling never crossed my mind. I was only building the relationship with Zillow. There was one or two other companies like this that I was also building a relationship with, because I had admired the company.

I was thinking about it selfishly as like, “What can I learn from these guys because they’re doing really cool and interesting stuff?” I just want to position myself to succeed. Same thing that I was learning in law school, being around really smart, competitive, hardworking people elevates your game. That is what drove me to Zillow. That’s ultimately why we sold to them.

We were getting ready to raise our series B. It was like a moment in time, this opportunity, “Do we want to sign up for a series B, and go at it for another four or five years or do we want to join forces with this bigger company, and increase the probability of success in fulfilling on the mission?” That’s what I chose. I believe that being part of Zillow would enable DotLoop to achieve its fullest potential. I also believed that it would benefit me, and the team by being able to work closely with these other entrepreneurs and leaders who were further along in their career than I was.

Spencer’s maybe 10 years or so further along in his career than I am. There’s a lot that I can learn from that. Many founders leave after they sell to the company. I didn’t leave. It wasn’t because of money. The reason why I stayed is because I viewed it as an education. It was like three and a half years of incredible opportunity to up my game. I was in the room as an executive with all these smart people, and it led to other opportunities like co-founding Pacaso with Spencer. That would’ve never happened had I just jumped ship, and left it to everyone else to try to make this integration work.

Copy LinkInnovating with a Reg A offering

BERMAN: Let’s come back to Pacaso today. There are rumors of going public?

ALLISON: Definitely plan to go public when we’re ready, and when the market is ready. That’s our plan A. I have to disclaim that nothing’s guaranteed. But yeah, that is our preferred path.

RASCOFF: We’re in the midst of something right now, which is pretty innovative. We’re in the middle of a Reg A offering, which is a way to democratize access to individual investors to be able to buy shares in private venture funded companies. It’s very on message for what we are as a company. We’re trying to democratize access to second home ownership. We’re democratizing access to let individual people buy shares in the company.

We are quasi public. We file public financial documents with the SEC twice a year instead of four times a year. Individual investors can go to our website, and actually buy shares in the company. The shares don’t trade, but they’re purchasable from the company. It’s an interesting way to raise capital. It’s been great for us, actually. We love it. We think it’s the future of capital raising at this bridge moment, once you’re done raising venture capital from traditional Silicon Valley type investors, but before you’re publicly traded on the stock market.

BERMAN: Why don’t more companies do this?

RASCOFF: It’s relatively new. It just hasn’t been around that long. I don’t think a lot of companies know about it.

ALLISON: Yeah, I would say most importantly, nobody knows about it. I have a bunch of entrepreneur, and investor friends. Most of them had never heard of this thing. People understand crowdfunding, and they understand Reg D, which is the reg that we use to raise venture capital, but this is neither.

I guess you could think of it as like a giant crowdfunded route, but it’s much more analogous to going public except for you’re not traded on the other side of it. In fact, when you go down Reg A, you’re putting yourself and the company on a path to comply as a public company within a certain period of time.

BERMAN: Fast forward five years, aside from the prospect of going public, what’s different about Pacaso than today?

ALLISON: The long-term vision here is to create a new category of ownership that becomes as ubiquitous in the second home space as condominiums are in a big city. Just seems inevitable to us that co-ownership is going to prevail as the preferred way for most people to own a second home. I think we’re much bigger five years from now. But we have a feature called Global Swap, which is just a feature on one level, but it’s much more than a feature in terms of the value that it provides. It really provides our owners with a lot of flexibility around how they can derive value out of the Pacaso experience. I think as our portfolio grows, the value of the swap network grows exponentially.

Then the third theme is international. I think we’ll have a much larger international footprint, because we have made it so easy for people to buy a home, that previously thinking about buying a home abroad, like if you live in California, and you want to own a place in Paris, that is an overwhelming undertaking. With Pacaso, you can be an owner in Paris tomorrow.

BERMAN: Coincidentally, Swap is the next app that Match Group is launching, I heard.

ALLISON: Oh yeah, exactly. I love it.

BERMAN: Guys, thanks for being on Master of Scale.

ALLISON: Thank you.

RASCOFF: Thank you so much.

BERMAN: It’s incredibly impressive and so exciting to watch how Spencer and Austin are leveraging all they’ve learned about real estate in their earlier work into the Pacaso business model. I’m also still struck by Spencer’s advice for startup founders to be intentional about building relationships with the bigger fish in your particular pond.

Even if you’re not sure whether or when you might want to sell your business, Zillow’s acquisition of Austin’s company is a great example of how successful exits require strong relationships. One thing AI can’t yet build for us.

I’m Jeff Berman. Thank you for listening.