Homie: What Does It Take To Transform An Industry?
“Trillions of dollars of real estate transactions happen every year, and hundreds of billions of dollars in commissions are paid to real estate agents. It’s such a giant market that if we can capture 1% of it, we’re a billion dollar company. If we can capture 10% of it, the sky’s the limit.”
Imagine yourself in any one of these positions: president of Property Solutions (now Entrata), attorney with Holland & Hart, associate with Mercato Partners, CTO with Payvio. You have job security. You have a constant, reliable paycheck. You’re free from endless nights of tossing and turning, dreaming of ways to get your early-stage startup off the ground. Your nights consist of going home to your family, relaxing, casually flipping through the pages of Forbes, and watching Steph Curry light the basketball world on fire. Life is good.
What would it take to make you leave that position, kiss goodbye to stability, and set sail towards something new?
If you’re one of the four co-founders of Homie, this isn’t a hypothetical situation. These are the actual positions that Johnny Hanna, Matt Thorne, Mike Peregrina, and Mike Trionfo abandoned to concentrate on a business they believe offers that rare, mystical, forbidden fruit of startuphood: the opportunity to transform an industry.
“I had a great career, great paycheck, and it was very stable,” Thorne said. “I didn’t leave kicking and screaming, but it took a lot of thought to jump off that cliff without a parachute. We all signed on before we had any funding, we self-funded this for a couple of months until we closed our seed round, didn’t take salaries, and that’s a scary prospect. Johnny left a huge opportunity at Property Solutions, I left a great legal career, Mike Peregrina was on his way up through the venture capital ranks, and Mike Trionfo was working on his own project that had a lot of promise. But we saw this as being a bigger opportunity.”
Homie represents that opportunity, a chance to change the real estate market in a similar way to Uber and transportation. Four years ago, Thorne was ready to buy a home. He found out a neighbor was preparing to sell and, before the home had even been listed, approached the owner about buying. As a contract attorney, Thorne felt comfortable doing the contract himself — he advised the seller to hire a contract attorney to review everything and take care of their best interests, which they did. Less than a month later, the transaction was complete, free of the customary dabblings of real estate agents.
“It was so easy that I thought, why doesn’t everybody do this?” Thorne said. “So this idea started percolating around, I did some research on my own about what kinds of companies were doing this and, surprisingly, I didn’t find any that were trying to automate this process for people that didn’t feel comfortable listing their home, advertising their home, showing their home, or doing the paperwork. There weren’t really any solutions for the do-it-yourselfer.”
Fast-forward to the beginning of this year. Thorne spoke with Mike Peregrina, both deciding that this was a venture worth pursuing full-time. Hanna and Trionfo came aboard, they split equity four ways, and Homie was off and running. A seed round secured from Peak Ventures and angel investor Mike Levinthal provided the necessary runway and a product began to take shape.
“If you think about our software, it’s a lot like TurboTax,” Thorne said. “Before, people would have to hire a CPA to file their taxes if they weren’t going to do it themselves. That CPA had to be licensed and operate within CPA framework. But TurboTax comes along and provides a software that provides a lot of functions that a CPA would do — it learns the tax code, helps you understand what your exemptions are, etc, then it puts that into a document so you can file yourself. That’s very similar to what Homie is going to do for the buyer and the seller.”
If there’s been one universally-accepted truth in regards to the real estate industry, it’s this: real estate agents are required for a transaction to take place. This service is typically rendered at a 6% rate, meaning a $200,000 home costs $12,000 in additional fees, a $300,000 home costs $18,000, etc. This is obviously not an insignificant amount of money. Homie is banking on a group of individuals, people raised on tech and unafraid of solo ventures, being open to an alternative.
“We’re building out the technology so once you’re under contract, we’ll have a dashboard for both buyer and seller showing them the next steps they need to complete — they need a home inspection, they need to get their loan approved, they need to find a title company, and then they need to schedule a closing. Our software will guide both through that process,” Thorne said.
With an idea like this, one that so strongly challenges a deeply-rooted industry, there are bound to be people that kick back. We’ve seen companies like Uber, Lyft, and Zenefits engaged in legal disputes with industry veterans championing outdated laws, threatened by the appearance of something new.
Should Homie expect the same? Only time will tell, but in the meantime, they’re doing everything in their power to ensure things go smoothly.
“We’re not representing the buyer or the seller,” Hanna said. “We’re just an online marketplace where they can meet, interact, negotiate, and then transact online. We definitely see it being a disruptive technology, there may be some challenges in our future, but right now we’re doing everything legally and ethically in following all the rules.”
Thorne echoed those sentiments.
“Uber is a very similar thing, there were laws surrounding what they do and they went into places they thought they could operate first, got the consumers behind them, and got some of those laws changed,” he said. “That’s a similar model for what we want to do, we want to have some champions out there, we want homebuilders and consumers on our side, and we want people to demand that they use Homie to buy and sell their own real estate. It’s such a huge win for the consumer. And we think we can get there, we think we have that same kind of product, same kind of story, and same type of value proposition.”
Homie can smell blood in the air. They’re convinced that the real estate industry is ripe for change, an aging, wounded animal ready to be overtaken by something younger and hungrier. An impressive collection of Utah startup talent stands fully committed to this goal.
Next up, transformation.
“This is one of the biggest industries in the United States,” Thorne said. “Trillions of dollars of real estate transactions happen every year, and hundreds of billions of dollars in commissions are paid to real estate agents. It’s such a giant market that if we can capture 1% of it, we’re a billion dollar company. If we can capture 10% of it, the sky’s the limit.”
*Homie was recently featured on an episode of The Beehive Podcast. Hanna and Thorne both joined us in studio to discuss the past, present, and future of Homie. *You can listen here.