The anti-Adam Neumann
According to earlier reports this week, Adam Neumann, the renowned and contentious co-founder of WeWork, is developing a vast network of residential real estate properties that, we assume, will be rented out on a very flexible basis to people who prefer to live as “global citizens” rather than being tied down to one place or lease. It was the premise behind Neumann’s earlier business, WeLive, a short-lived subsidiary of his much better-known firm, WeWork. This concept is more relevant than ever in the post-COVID era, where remote work is the norm.
In 2016, Neumann discussed the concept with The Guardian, stating that it would “be a new way of life, day to day, week to week, month to month, year to year.” You will have the status of a world citizen. You are a member of all of them if you are a member of one.
Even if you’ve never heard of him, another serial entrepreneur may already be farther advanced with his version of the idea since it is so topical. Bill Smith, 36, is the owner and founder of Landing, a three-year-old, 600-person, membership-only flexible rental business.
Smith, a resident of Birmingham, Alabama, who prefers button-down shirts over graphic t-shirts, is in many ways the antithesis of Neumann. Smith has quietly made his own supporters a lot of money, while Neumann’s real-life drama with his investors served as the basis for a television series. In his twenties, Smith raised money from friends and family to start a reloadable Visa card business, which he later sold to the bank holding firm Green Dot for, according to Forbes, tens of millions of dollars. Smith created his next business, Shipt, a same-day delivery service, in 2014 and sold it to Target in 2017 for $550 million.
Smith has also been cautious when it comes to venture capital, in contrast to Neumann who is known for selling too much of WeWork to SoftBank at an unreasonable price. Before being sold, Shipt received $65 million from investors including the venture capital firm Greycroft, although Smith retained full ownership of the business. He now refers to the result as a “game changer,” and it provided him the confidence and resources he needed to invest at least $15 million of his own money in Landing, which he owns one-third of. (Forbes reports that Greycroft is one of the $237 million in venture capital that Landing has received to date at a $475 million valuation. Andreessen Horowitz just provided $350 million in investment to Neumann’s Flow, which has not yet launched.
Aside from these distinctions, it would seem that both are vying for the same potential to build a platform that anybody wanting to pay a small fee may join in order to have a more flexible lifestyle.
What Neumann may charge a member is a speculation; but, based on how most WeWork sites look, one imagines obtaining a SoHo-type vibe for the money. In the case of Landing, the annual membership price is $199, and the rent is 30 to 40 percent more than what Landing itself pays to rent space from building owners. However, a Landing member can reside in an increasing number of locations where Landing has leased properties, including Tampa, Austin, and Las Vegas, in exchange for at least a six-month commitment. Members are given completely equipped rentals (Landing has its own innocuous furnishings made in Vietnam and shipped to the U.S. to keep its costs down). And how long can a member remain in one place before moving on? Only one month.
We asked Smith to answer some of our own questions after reading a (very nice) Forbes article on the company earlier this week, such as what lessons he has, if any, learnt from observing Adam Neumann from a distance. This chat may be heard here. The following list of exceptions has been lengthened.
You predict that by ten years, 10% of the 40 million Americans who currently reside in apartments may opt to live in furnished, flexible stay houses. How did you arrive at that estimation?
The way we live has altered drastically when compared to all the other facets of our lives during the past ten years. However, renting an apartment is typically a very manual, antiquated procedure. The existing model doesn’t provide much freedom, flexibility, or convenience, and a major chunk of the 40 million individuals who rent now are between 20 and 40 years old, who desire this flexibility.
You’re going beyond the bounds of flexibility. As a customer, that sounds appealing, but from a business perspective, how can you justify it?
We’re not attempting to establish a travel or vacation brand. Landing residents are devoted to this way of life and to living on our platform, which allows us to maintain extremely high occupancy. Additionally, if you can maintain high occupancy, you may sell this product at a price that is affordable to many customers who remain for an extended period of time.
How long do people typically remain in one place?
At the moment, individuals typically stay in one place for six months.
Do you perform any types of repairs on homes? You attempted to create a marketplace for home services before launching Landing.
Not us. The businesses that own the buildings where we are located are in charge of home repairs. We do offer cleaning and similar services. But you’re correct. After leaving Shipt, I founded my first business, which was a sort of concierge service for homes. We tested it out for about a month, but it quickly failed, so we switched to what is now landing.
By adjusting your price depending on region and seasonality, for example, you are utilizing data to attempt to learn how to reduce your expenses. Could you elaborate on the kind of data you are processing and your intended uses? In a similar vein, how much information can you get about your consumers after they enter a unit?
We are looking at what neighborhoods people are searching in, what seasons they want to live there, and how quickly they want to move in. We are using that information to power our supply efforts because we need to know where people want to live so that we can have supply available and ready for them.
We also have our own last-mile delivery network and distribution hubs, and we utilize analytics to decide where to invest in those areas of the business. We need to have real products ready to ship in certain regions so that people can move in very quickly. For example, there can be a lot of demand to relocate to particular sections of Phoenix at certain times of the year, while you might see a surge in demand in Miami at other times.
Before you even agree to a lease with a landlord, your programme offers an apartment, and you then find the renter. You sign the lease with the landlord after the tenant signs a lease with you, and you furnish the unit. Is that the method?
Indeed, what we have created is the first on-demand strategy for expanding supply in this manner. Apartment complexes will list their units on our site, and we’ve developed the technology and operational infrastructure to build a “Landing” in just a few days. This process may seem simple, but it’s actually incredibly complicated when you consider everything that goes into setting up and furnishing an entire home, from the sofa to the silverware.
Do you place a lot of emphasis on software development?
Landing has a major technological component. Everything you see on our website, from finding and booking a house to the experience after you check in, including how you access the building and [ensuring all your requirements are addressed] once you are living there, is something we designed. Additionally, our teams’ usage of applications while providing services in the field is a factor. Our last-mile delivery network and distribution facilities are also powered by this technology. We have thus had to develop a sizable amount of technology to manage this firm. You cannot simply purchase it off the shelf.
Do you pay any attention to structures with communal spaces? Adam Neumann focused on the physical flow and gathering of people, and I assume his firm Flow is still doing the same. Does this matter when you are looking at buildings in a future where fewer people work in offices?
Instead of merely considering communities from a property level, we also consider them as neighbourhoods. There could be 250 apartments in a standard apartment complex, so there aren’t many people there, but they’ll be a highly varied bunch with different interests. Therefore, we focus more on the neighbourhood and creating a sense of community among those who have decided to live this lifestyle in Miami.
You and the unit owners sign one-year contracts. Why not secure these premises for a little while longer, maybe for a better rent?
We could certainly attempt to get into multi-year agreements, but I believe it would be better if the firm had very minimal leasing responsibility. In contrast to the We Work model, where we have very minimal lease responsibility, we would be the opposite. Additionally, we can adapt as the markets alter. Additionally, as time goes on, we will work with building owners to introduce this product to their structure. In reality, it won’t be a Landing leasing offering; instead, they will simply join the Landing platform. They won’t operate on this paradigm where Landing leases it and is committed to that lease; instead, they will use our standards and technologies.
So in certain aspects, Landing will develop into an enterprise SaaS company?
The easiest way to characterize it is probably as having a SaaS component, yes.
Are you learning any additional lessons from We Work as a student of the area, or are you avoiding them?
Office versus residential is just such a distinct sector for businesses than We Work and Landing. But what I really learned—not specifically from We Work, but rather more generally—is how important the business’s unit economics are. You are attempting to determine the unit economics in the early stages of any business. But with this one in particular, we had to quickly grasp unit economics. We didn’t have the five or six years that many other consumer firms did to demonstrate that we were right, and I believe it is because people saw We Work and all its difficulties.
