The co-founder of Zillow and Pacaso just isn’t that into traditional real estate — at least as an income-generating investment, he told Arrived CEO Ryan Frazier in a recent interview.
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Spencer Rascoff co-founded — and once ran — the company that has become one of the most ubiquitous names in real estate.
In the years since Rascoff left Zillow, the serial entrepreneur has co-founded or invested in a slew of other companies, including venture capital firms and real estate fractional-ownership companies.
One area he’s stayed away from, however, is the traditional path to investing in rental properties, Rascoff told Arrived CEO Ryan Frazier last month in a recorded conversation.
“Not for any income,” Rascoff said. “I own a couple of homes for my own use, and I own a Pacaso, but no, I have not done any proper real estate investing.”
It’s not for lack of interest in the subject. Rascoff’s startup Pacaso is all about offering smaller investors a way into second-home ownership, usually by pooling money with a group of other small investors. He’s also an investor in Frazier’s company, which offers similar services to consumers.
And presumably for Rascoff, money isn’t what’s holding him back from investing in entire real estate properties.
“I always found it unapproachable and complex,” Rascoff said. “I didn’t know where to start. It seemed really expensive. I didn’t really know how to do it. I didn’t want to deal with the operational elements of it.”
So what is Rascoff investing in these days? About 80 percent of the companies he invests in are consumer-facing products, he said, with the rest being in business-to-business solutions. He usually gets in at the pre-seed, seed or Series A stage. He also incubates new startups.
“I had been a passive angel investor in startups really my whole career, for 20 years,” Rascoff said. “I wasn’t very good at it. I did it kind of opportunistically. Like when a former employee would start a company, I would invest a small amount. When I left Zillow about three, three-and-a-half years ago, I decided to do it more intentionally.”
He said his investments break down into four main areas, each representing about a quarter of his portfolio.
- Proptech companies — Real estate tech solutions remain one of the main areas of interest for Rascoff.
- Human resources tech — Rascoff remains interested in the future of work, and how tech solutions can keep employees engaged, he said.
- The ‘creator economy’ — This is an area that aims to leverage influencers in a “Hollywood meets Silicon Valley” type of concept, he said.
- More ‘out there’ stuff — Space, AI and robotics companies capture Rascoff’s imagination, he said, and round out the final quarter of his portfolio.
View the full conversation here.