Pacaso reached unicorn status fast. From the date of its founding in 2020, it took only five months and 23 days. Why? Because a lot of people believed in it. The startup raised more than $90 million and $1 billion in debt financing, and upon announcing its valuation, cofounder Austin Allison proclaimed: “Our mission to democratize second homeownership has resonated with people looking for a refuge.”

A month later, a “Stop Pacaso” sign popped up. 

As it turns out, it didn’t resonate with everyone. And Allison hadn’t seen that coming. He’d started Pacaso with Spencer Rascoff, a cofounder of Zillow. They envisioned a new real-estate marketplace that solved a problem for people who wanted a luxury vacation home but couldn’t afford it. Pacaso made their getaway dreams possible by letting them buy just part of the home, and using that home part of the time. 

But the neighbors who lived next to those homes were not so enthused. After the first “Stop Pacaso” sign appeared, more followed. Many more. And protests. And bad press. Death threats, regulations, a whole anti-Pacaso movement. 

To solve that problem, Allison and Rascoff would have to do more than just build a great product. In a world where rage spreads online faster than any marketing message, they’d need to learn a skill that is critical to business today: how to anticipate, listen, and engage with critics. Because when you genuinely understand why people are upset, that’s how you unlock success.

Pacaso has done it: In just a few years, the company has sold more than $1 billion in luxury real estate transactions and services and made over $138 million in gross profit. But it didn’t come easy.

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Austin Allison grew up far from any fancy second homes. The son of a carpenter from Ohio, he started selling real estate at age 18 to pay for college. By graduation, he’d spent enough time carting documents around to identify a pain point worth solving: That year, 2009, he started DotLoop (a “loop” being an agent’s online workspace) to digitize all the paperwork involved in buying a house. It was a kind of DocuSign-meets-Dropbox for real estate, as he put it. That was revolutionary at the time, and Allison grew the startup to 124 employees with nearly half a million users — Entrepreneur even put him on the cover in 2012. Zillow bought the company in 2015 for $120 million, which is how Allison met Rascoff.  “The acquisition,” Rascoff says, “created the foundation for Zillow’s expansion into real estate transaction tools, which is a cornerstone of its strategy to this day.”  

Image Credit: Courtesy of Pacaso

After the sale, Allison ran DotLoop at Zillow for nearly three-and-a-half years before leaving in late 2018. Coincidentally, a few months later, Rascoff left too — and the former colleagues started talking about building something together. Allison reflected on a problem he’d had before he sold his company, when money was tighter. He’d bought a second home in Lake Tahoe, and loved what it added to his life — but he struggled to afford it and ended up renting the place out while trying to manage it from afar. “That was a real pain,” he says. Although this was a problem only people with a certain level of wealth ever have, he became convinced there were enough of them for a viable business.

Rascoff was in. His formula for a great startup opportunity is to look for ideas with a high total addressable market (TAM) and a low Net Promoter Score (NPS). In other words: What’s something that’s in high demand, but where most people are unsatisfied with the current solutions? Real estate certainly met those criteria; it’s why he had success with Zillow. Travel also fit the mold, which is why Rascoff previously cofounded Hotwire, a platform that sells cheap hotel rooms and plane tickets, and sold it to Expedia for nearly $700 million. Also as a second-home owner himself, he saw the potential for an idea like Pacaso.

“We estimate the TAM to be $500 billion, so that’s very big. And today, traditional second-home ownership is often a challenge,” Rascoff says. “It’s an enriching experience, but the time and mental load of dealing with a solely owned second home can be enormous.” He signed on as Pacaso’s cofounder and board chair. From the very outset, both he and Allison were aware of a potential problem: Their idea sounded a lot like a timeshare, which also involves owning stakes in vacation homes. But timeshares are notorious for predatory sales tactics, hidden fees, difficulty reselling, and outright scams. They’re also associated with a lot of partying and people coming and going. So Allison and Rascoff knew they’d need to hammer home this difference: With timeshares, you buy a block of time. With Pacaso, you’ve purchased actual property and can sell it whenever you’d like.

Still, Allison recognized the confusion would pose an ongoing challenge, because the nuances are complex. Yes, with timeshares, you buy the right to use a vacation home for specific weeks or months. But those rights can technically include a kind of ownership tied to that time period — ownership which you can sell to others. 

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There were other things to figure out as well, like how to build the business side. This was an especially important point for Allison, who regretted the model he’d come up with for DotLoop. That startup went to market as a software-as-a-service (SaaS) company, where realtors paid a monthly or yearly subscription fee to use to manage all their deals, closings, compliance and other paperwork as often as they’d like. But what if DotLoop had charged per transaction instead? Considering how lucrative a transaction can be in real estate, Allison believed that DotLoop would have brought in higher revenue numbers — and sold for a lot more than $120 million. “The way that we set our pricing model up early on didn’t enable us to be rewarded,” he says. 

Before starting Pacaso, he read a quote that’s sometimes attributed to Einstein: 

“If you had 60 minutes to save the world, you should spend 55 minutes understanding the problem and only five minutes on the solution.”

“It was the opposite of what I did at my first company,” he says, because he’d jumped in too fast without fully understanding market needs. So this time, he took a year off to study co-ownership, diving into market research and looking at other business models like NetJets, which offers fractional ownership in private planes. 

The resulting first version of Pacaso was simply a marketplace to connect co-owners to homes with some ongoing management. Pacaso would turn each house into an LLC with eight shares, and one person could purchase up to four of those shares — with the number dictating the amount of time they could use the place. The co-owners would never meet, and they’d schedule dates for staying at the house through Pacaso’s platform. Unlike DotLoop, Pacaso was set up from the beginning to have multiple revenue streams, including a 10% purchase fee and annual management fee of 1% of the purchase price. (Now those numbers vary depending on the home and market.) Pacaso also takes a commission on resale.

Allison and Rascoff, both proven entrepreneurs, easily scored a Series A — $17 million in VC money along with $250 million in debt financing to buy the home shares. With the funding, after running a few successful test houses, they launched on October 1, 2020 — right when people were fleeing cities because of the pandemic, driving demand in the housing market in desirable locales.

When Pacaso officially started buying vacation homes to sell off in slices, to Allison’s and Rascoff’s surprise, their customers revealed they didn’t just want the house — they were looking for more services. They loved the idea of walking through the door, kicking off their shoes, and having somebody else take care of the rest. “They wanted one throat to choke,” says Allison, “not a fragmented experience where stuff breaks and they don’t know who to call.” 

So that first year, Pacaso turned itself into a management company. With the help of the unicorn raise in March 2021, which landed an additional $75 million, Allison and Rascoff brought all the design and furnishing services in-house, and developed financing for fractional ownership. “There are a lot of startups trying to do this,” says real-estate attorney Andy Sirkin, who has specialized in co-ownership for the last 40 years and did some work for Pacaso. “But I don’t think anybody before them understood that the management could be the business.”

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It didn’t take long for the first opponents to appear. 

Image Credit: Nicolás Ortega

But that’s what happened. The problems began in Bel Aire, a quiet neighborhood in Napa County, California (not to be confused with the tony Bel Air in Los Angeles). Most residents live there full-time, and they objected to seeing a house down the street gobbled up and resold for double the median home price. They were also concerned about a tech startup coming in to corporatize and ruin their community.

Things got heated fast. Allison received threats. People parked vehicles in front of the house that Pacaso bought, spray-painted their vans with anti-Pacaso signs and organized protests. He was caught off guard, and didn’t know how to respond. “So I basically kind of ignored it. I’m like, These people are just misinformed, and I’m gonna stay the course and do what I know is right,” he says. “That was a huge mistake.” 

Angry and unheard, the neighbors just got louder, taking to social media and going to the press, with The Wall Street Journal, NPR, Vice, and local papers all writing negative articles about Pacaso. The residents even started a movement called “STOP Pacaso NOW” which spread to other towns, where signs sprouted on lawns, buildings, and telephone poles proclaiming“pacaso timeshares not welcome” and “stop pacaso from eating neighborhoods.”

Like Allison, David Willbrand, Pacaso’s chief legal officer, was sidewinded. “We’re going along thinking we’re doing great things for these communities — we’re mom and apple pie, waving the flag,” he says. “And then all of a sudden, all these stories pop up and we’re like, Oh, my God, what happened? Why don’t these people see us for what we are?” 

In trying to answer that question, Pacaso learned a pivotal lesson about dealing with a crisis: “When it comes to community relations and public affairs, the facts almost don’t matter,” says Allison. “All that matters is the perception. Perception becomes reality, and you have to take it seriously.” 

That is to say, Pacaso would never win by trying to explain its position. It would need to do something more.

The battle seemed lost in Bel Aire, so Pacaso sold its home there. But going forward, Allison realized he’d need to take a different approach to local opposition. He shouldn’t have ignored their criticism — but it wasn’t just enough to react, either. From here on, his company would need to proactively anticipate problems like this. And that involved listening and engaging.

First, the Pacaso team put more research into the locations they bought in, focusing on neighborhoods with a high concentration of second homes, so its model wouldn’t seem as foreign. Next, the company changed its approach on the ground. Before they entered a community, they talked to its leaders, city managers, and elected officials, to provide information, and in some cases, agree to certain rules. 

Critically, the Pacaso team needed to understand what was motivating the opposition in the first place. “In Northern California, where we started,” says Willbrand, “those communities, in their defense, had experienced 10 or 12 years of the short-term rental boom and had been fighting against timeshares for a long time. They just dumped us in that bucket. And so we had to work to crawl out of it.”

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But that was just the start of Pacaso’s problems. Soon, regulators got involved.

Many cities and states have laws against timeshares, either banning them outright or heavily regulating how they can be used and sold — and often, when they refer to “timeshare,” it’s broadly defined. “I don’t think I’ve ever seen a law anywhere that says if you own it, it’s not a timeshare,” says Sirkin, the real estate attorney who specializes in co-ownership. “These laws are typically based on usage.” Namely, if multiple people are using a home at different times, and there’s a structure managing it all, that can legally fall under a timeshare. 

So here Pacaso was: It had come to market offering a timeshare-like experience…and it set up in places that often banned or looked down upon timeshares. Whether intentional or not (and Allison insists it was not), the approach was reminiscent of how disruptors like Airbnb and Uber went to market. Which is to say: It’s better to ask forgiveness than permission. Uber, for example, charged into a city, nevermind the that city heavily regulated who can drive a taxi (and was unlikely to ever give the company permission to operate there). But by the time lawmakers caught up with Uber, locals were already using and loving the service, and wanted it to stay. It was an effective strategy.

Allison can see the comparison, but says he’s done something different. Airbnb and Uber, he argues, introduced new commercial uses — literally rethinking what a taxi or hotel could be.  All Pacaso did is expand access to traditional homeownership. “Any early friction came from the fact that our co-ownership model didn’t fit neatly into existing zoning categories,” he says. 

Whatever the case, Pacaso made the first move by buying houses in these cities and towns. When many of them pushed back, it began experimenting with different responses.

In some cases, like in St. Helena, California, Pacaso sued, though the results of that strategy have been mixed. “We ended up settling [with St. Helena] and we can continue to operate the homes we have there, but we agreed to press pause,” says Willbrand. “I would’ve preferred not to press pause. But I thought it was best to be accommodating and work on that relationship.  And I’m hopeful that over time, St. Helena will be open to us. But if they never are, life goes on, and you look to geographies that might be.”

In other places, Pacaso took a more collaborative approach — proactively engaging local leaders to hear their concerns and work together on local laws that make Pacaso’s homes legal.  A big win was Utah, which passed a new bill in 2023 that ensures Pacaso’s model is allowed throughout the state. Other successes include Miami Beach, Florida, and Palm Springs, California, where co-ownership is now a distinct category of zoning. In turn, Pacaso agreed to rules the city governments wanted like limits on the number of houses they opened and having a local contact person available 24/7.  

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Often, when founders listen to their critics, they develop what you might call a response muscle. As they do, they feel less paralyzed in moments of tension and more able to figure out a successful course of action. If, early on, Allison had absolutely no idea how to respond to the angry residents of Bel Aire, that totally changed by 2024, when he had enough experience working with opponents to stop smaller critics from becoming big ones.

One example was a guy named Mike DelPrete, who showed up that year when Pacaso decided to raise another round of funding. The company had navigated turbulent times as high interest rates in 2023 slowed the housing market, and now that they were through it, Pacaso wanted to give ordinary people the opportunity to invest. So the company pursued what’s called Reg A, essentially a way to do equity crowdfunding. Allison thought it had the advantage of raising brand awareness, and the potential to interest some of the investors in becoming customers. 

This caught the attention of DelPrete, a scholar-in-residence at the University of Colorado Boulder, where he leads the Real Estate Technology program and studies innovations that change how people buy homes. He looked at Pacaso’s pitch deck for investors and saw a chart he didn’t like. Pacaso had presented its revenue numbers as cumulative, instead of annual or quarterly, and DelPrete thought that could be deceptive. “To me, the truth matters,” he wrote in a blog post. “And a recent example from Pacaso’s fundraising deck reveals the latest example of a company toeing the line between accuracy and what looks good.”  

One or two days later, DelPrete got an email from Allison.

“I was like, Oh boy, here we go…” DelPrete says. “But it was really good, crediting me and [saying] he takes all this seriously.”

Allison respected DelPrete’s expertise and had clearly learned his lesson from Bel Aire. He wasn’t ignoring critics anymore. He asked DelPrete for a phone conversation, where he explained that cumulative results were common for businesses that had assets under management, and pointed out that Pacaso did include annual and quarterly earnings in its full report. But Allison also listened intently to DelPrete’s points, and took pains to understand where he was coming from — because even if Allison was right on the facts, perception is what mattered. Bel Aire had taught him that too. 

“It was a great conversation,” Allison says. Although he still felt there was nothing wrong with Pacaso’s revenue chart, he changed it to avoid causing confusion. 

DelPrete was impressed. And he was even more impressed the next time Pacaso released its financials. “They put a lot more thought into explaining information, and reached out to people like myself beforehand,” he says. DelPrete invited Allison on his podcast, Context, where they talked about the incident. 

“I really respect that he called us out,” says Allison, “and it made us better. It was a constructive moment.”  

Today, Pacaso is growing. It isn’t profitable yet, like many early-stage, fast-growth, venture-backed businesses. But it’s closing the gap. With a team of 141 people, it’s now expanded into three countries. Some international cities, like London and Paris, are already very familiar with fractional ownership, which have made those paths easier.

Looking back, Allison would have done many things differently — but he doesn’t regret the conflicts Pacaso caused. To him, that’s just the price to pay for innovation.

“Everything I’ve ever done that had an impact, meant resistance,” he says. “My first company, we were pioneering e-signatures, and we got lawsuits and/or legal threats from title companies, banks, and trade associations for years.” He also thinks of other innovators, like Tesla, which came to market by selling directly to consumers — even though states often mandated that cars be sold through dealers. Many fights ensued. But the end result was often a better experience for consumers, and stronger growth for Tesla. “So I think resistance is actually a sign of a good idea,” Allison says. “The question as an entrepreneur is, which battles you fight.” 

For sure there’s one battle he’s still waging — and will be for a long time. It’s that same problem he always knew would dog them. “To this day,” he says, “25% of the time on a sales call, people are asking us how it’s different from a timeshare.” But that’s fine, he says. Pacaso has proved its answer.

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