According to earlier reports this week, Adam Neumann, the famed, controversial co-founder of WeWork, is in the process of creating a vast network of residential real estate properties that — we’re guessing — can be rented on a highly flexible basis to people who don’t want to be confined to one location or lease but to live as “global citizens.” It was the vision behind an earlier company that Neumann started, WeLive, a short-lived offshoot of his far better-known company, WeWork, and it’s an idea that in a post-COVID world where remote-work reigns, makes more sense than ever.
Here’s Neumann talking to The Guardian about the idea in 2016: “It’s going to be a new way of living, day to day, week to week, month to month, year to year. You will be a global citizen of the world. If you’re a member of one, you’re a member of all of them.”
The idea is so timely that another serial entrepreneur may be even further along with his version of it — even if you haven’t heard of him before. He’s Bill Smith, the 36-year-old founder of the three-year-old, 600-person, membership-only flexible, furnished rental company Landing.
Smith, who lives in Birmingham, Alabama, and favors button downs to graphic T-shirts, is the anti-Neumann in many ways. While Neumann’s real-life drama with his investors became fodder for a television series, Smith has, with little fanfare, made his own backers a lot of money. After raising capital from friends and family for a reloadable Visa card company in his 20s, Smith sold that outfit to the bank-holding company Green Dot for what Forbes says was tens of millions of dollars. His next startup Shipt, a same-day delivery company that Smith founded in 2014, sold to Target in 2017 for $550 million.
Smith — unlike Neumann, who famously sold too much of WeWork to SoftBank at too unrealistic a price — has also been conservative when it comes to VC. Shipt raised $65 million from the venture firm Greycroft and others before it was sold, but Smith still owned fully half the company. The outcome, which he now calls a “game changer,” gave him enough confidence and capital that he has now sunk at least $15 million of his own money into Landing, of which he owns one-third. (According to Forbes, Landing has raised $237 million in venture funding to date at a $475 million valuation, including from Greycroft. Meanwhile Neumann’s Flow, which has yet to launch, just raised $350 million in funding from Andreessen Horowitz at a reported $1 billion valuation.)
Such differences aside, both appear to be chasing a very similar opportunity to create a platform that anyone willing to pay a slight premium can join in order to live a highly flexible lifestyle.
It’s a guessing game, what Neumann might charge a member, though one imagines receiving a SoHo-type aesthetic for the price, based on the appearance of most WeWork locations. In Landing’s case, its membership fee is $199 per year and the rent is 30% to 40% above what Landing itself pays building owners to lease their space. But in return for at least a six-month commitment, a Landing member can live in a growing number of places — including Tampa, Austin and Las Vegas — where Landing has leased apartments. Members receive fully outfitted rentals (Landing has its own innocuous furnishings made in Vietnam and shipped to the U.S. to keep its costs down). And the longest a member need stay in one location? Just one month.
After reading a (very good) Forbes piece about the business earlier this week, we asked Smith to walk us through some of our own questions, including what lessons he has learned, if any, from watching Adam Neumann from a distance. You can hear that conversation here. Excepts, edited for length, follow below.
You estimate that perhaps 10% of the 40 million Americans who live in apartments right now could choose furnished, flexible stay homes within a decade. How have you come up with that estimate?
When you think about all the other aspects of our lives over the last decade, the way that we live has completely changed. But apartment living is generally an offline, pretty old-school process. There’s not much freedom and flexibility and convenience in the current model . . . and a large portion of the 40 million people who rent today are anywhere from 20 to 40 years old and they want this flexibility.
You’re taking “flexible” to an extreme. That’s enticing as a consumer, but from a business standpoint, how do you rationalize it?
We’re not trying to create a vacation brand or a travel business. People that live with Landing are committed to this lifestyle and to living on our platform, which enables us to deliver really high occupancy. And if you can deliver high occupancy, you can provide this product at a cost that’s accessible to a large number of people who stay for a long time.
How long do people tend to stay in one location?
Right now people are staying in one location about six months on average.
Do you handle any type of home repairs? Before launching Landing, you were trying to build a home services type marketplace.
We don’t. Home repairs are handled by the companies that own the properties that we’re located in. We do provide cleaning and those types of services. You’re right, though. The first company I started [after Shipt] was kind of concierge home services for homeowners, and we tested that for about a month, and that was a very fast flop, and we decided to move from that to what is now Landing.
You’re using data to try and understand how to cut your costs, including to adjust your pricing based on location and seasonality. Can you share a bit more about the kind of data that you are churning through and how you are using it? Relatedly, how much can you glean from your customers once they are inside a unit?
We need to know where people want to live so that we can have supply available for them and ready, so we’re looking at what neighborhoods people are searching in; what time of year they want to live there; and how fast they want to move in, and we’re using that information to power our supply efforts.
We also have distribution centers and our own last-mile delivery network, and we use data to determine where we make investments on that side of the business. Certain times of the year, there might be a lot of demand to move to certain parts of Phoenix, while in other parts of the year, you see a spike in demand in Miami, and we have to have physical items ready to ship in those areas so that people can move in very quickly.
Your software lists an apartment before you even sign a lease with a landlord, then you find the tenant. Once that renter has signed a lease with you, you sign the lease with the landlord and you furnish the apartment. Is that how it works?
Yeah, so what we’ve built is the first on-demand model for building out supply this way. An apartment community will list units on our site, then we’ve built the technology and the operational infrastructure to create a ‘Landing’ in just a few days, which sounds super simple but is incredibly complex if you think about everything it takes to furnish and set up an entire home from your sofa down to the silverware.
Is software development a big focus of yours?
There’s a huge technology component of Landing. We’ve built the entire platform that operates our business, everything you see on our site from discovering and reserving a home, to the experience once you check in, including how you access the building and [ensuring all your needs are met] once you’re living there. It’s also the apps that our teams who are providing services in the field use. It’s the technology running our distribution centers and our last-mile delivery network. So there’s a significant amount of technology that we’ve had to build to run this business. It’s not something you can just buy off the shelf.
Are you at all focused on buildings with community spaces? How people literally flow and gather was a focus of Adam Neumann, and I’m guessing it continues to be with his company Flow. In a world where fewer people go into offices, is this a consideration when you are looking at buildings?
We think about community more from a neighborhood level instead of just a property level. If you think about the typical apartment community, there might be 250 units, so it’s not a large number of people and [they] are going to be a very diverse group with unique interests. So we think about it more on a neighborhood level and building community between people that have chosen to live this lifestyle in a particular part of Miami, for example.
You sign one-year leases with apartment owners. Why not lock down these spaces slightly longer, and hopefully lock in better rent?
Certainly we could try to do multi-year deals, but I think it’s better to have very little lease liability in the company. We would be the antithesis of the WeWork model where we have very little lease liability. And we can flex as there are changes in the markets. [Also], over time, we will partner with owners to bring this product to their building, and it really won’t be a Landing lease product; they’ll just join the Landing platform. They’ll operate using our technology and our standards and it won’t be this model of, Landing leases it and is committed to that lease.
So Landing will become an enterprise SaaS company in some ways?
Having a SaaS component is probably the best way to describe it, yeah.
As a student of the space, are there other lessons from WeWork that you’re replicating or avoiding?
WeWork and Landing are really such different businesses — office versus residential is just a totally different category. But what I learned really, and not directly from WeWork but just generally, is that the unit economics of the business are critical. In the early days of any company, you’re trying to figure out the unit economics. But on this one, in particular, we had to master the unit economics really fast. We didn’t have five or six years to prove that out like a lot of other other consumer businesses did, and I think that’s because people saw WeWork and saw all the challenges there.
Comment