What is so special about ethnic Chinese billionaire Eric Wu?

August 11, 2021 11:07
Eric Wu, cofounder and CEO of Opendoor. Photo: Bloomberg

Mirror, mirror on the wall, who makes the most money of them all?

When one thinks of the highest paid Chinese executive, usually either Tencent Holdings President Martin Lau Chi-ping, or CK Hutchison group Co-Managing Director Canning Fok Kin-ning comes to mind.

Among executives of Hong Kong-listed companies, Lau led with a whopping 427 million yuan (HK$512 million) pay cheque last year, up 20.56 per cent. Fok took home HK$166 million, down 27 per cent but that was his 20th consecutive year with a nine-digit dollar pay cheque.

But it was Eric Wu, the cofounder and chief executive of Opendoor, who stole the limelight. In fact he was the only ethnic Chinese who made to the top 10 highest-paid CEO list among the US corporations last year.

According to Bloomberg, Wu made US$388 million (HK$3.02 billion) last year, thanks to his stock options in his special purpose acquisition company (SPAC) listed just last December.

That put him fifth on the list, which Tesla CEO Elon Musk dominated with a jaw-dropping US$6.6 billion in compensation.

What makes Eric Wu stand out? As with most local top earners, he is with the property sector, particular big in California. But he is also in the technology business, enabling him to offer a unique online solution in the home-buying market.

Opendoor is a leader in what is known as the “iBuying” market, which allows homeowners quickly offload their houses to the company, which then lists them on the platform after renovation.

Some rich Hong Kong companies also do these trades. But no one does it like Opendoor, which devises its own algorithms to determine the right price acceptable to both parties.

In 2019, Opendoor completed about 19,000 transactions in the United States, according to Forbes, which estimated it represented only 0.5 per cent of all US home transactions.

Posting revenue of US$4.7 billion with a net loss of US$339 million in 2019, Opendoor is expected to announce this week a substantial drop in sales due to the pandemic.

In March 2020, it temporarily suspended home buying for two months before launching a contact-free platform in May that could complete the whole transaction online.

Last December, Social Capital Hedosophia Holdings Corp II, a special-purpose acquisition company led by Chmath Palihapitiya, approved the merger with Opendoor at a valuation of US$4.8 billion.

Wu ended up holding six per cent of a company whose shares were down 38 per cent year-to-date. At yesterday closing of US$14.85, it was also down 62 per cent from the peak.

Still it does not stop Wu from becoming a billionaire and joining the group of top Chinese money-earners. Not bad for a seven-year start-up co-founder who knows how to best leverage on the property and technology sectors.

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EJ Insight writer