Serial entrepreneur Bill Smith launched Landing in 2019. The furnished apartment rental firm expects $200 million in revenue this season by catering to the work-from-anywhere generation.
Bill Smith steers his midnight silver Tesla X through the streets of downtown Birmingham, Alabama, and pulls right into a low-rise apartment complex. This was previously a brothel 100 years back, he says, with a smile.
Today, its today’s, renovated building, among dozens in this old industrial city where his company, Landing, rents fully furnished flexible-lease apartments. A thin man with intense blue eyes, Smith, 36, steps right into a sunny one-bedroom with a railroad layout. It applies to $1,800 per month, a 20% premium from what it could rent for empty. Its decorated with innocuous furniture, inoffensive linens, even taupe dishware, all designed and manufactured by his team. Someone really wants to move into a flat in five days, we need to have the ability to acquire it and ensure it is beautiful in a brief period of time, he says, It looks really simple externally, but its highly complex.
Because the way Americans live and work has changed, Landing offers its members (who pay $199 per year) fast usage of move-in-ready apartments with the flexibleness to rent for less than a month. Cheaper when compared to a hotel or perhaps a corporate apartment and much more predictable than an Airbnb, Landing markets itself to Millennials with the flexibleness to work remotely, in addition to to others (traveling nurses, empty nesters, those not used to a city) who dont want the trouble of determining housing and purchasing furniture for a temporary stay.
The majority of Landings $200 million revenue (2022, projected) originates from its markup, typically 30% to 40% over what it pays to lease apartments from owners of multifamily buildings, including mega-landlords American Landmark and Northwood Ravin. It operates in 81 markets in the united states, but its biggest are fast-growing Sun Belt cities like NEVADA, Phoenix, Austin, Atlanta, Nashville and Tampa.
Smith sold his previous company, online grocery delivery service Shipt, to focus on for $550 million in 2018. He sees a much bigger opportunity with Landing: In accordance with his aggressive estimates, perhaps 10% of the 40 million Americans who reside in apartments could choose furnished, flexible-stay homes inside a decade.
Covid pulled forward a big change in living that I thought would take five years, he says. We think well be doing $1 billion in revenue by 2025 . . . and well be just scratching the top of opportunity.
Landing has raised $237 million in VC funding, including $75 million (previously undisclosed) at a recently available valuation of $475 million. Pretty good for an organization whose revenue hit $83 million in 2021, up sixfold from the year earlierbut less than he hoped, especially given his background and revenue growth. If it had been December, wed already maintain the billion-dollar club, he notes, adding that raising profit this market is not fun. One silver lining to remaining a non-unicorn: Landing still qualifies for an area with this years Forbes Next Billion-Dollar Startups list as you of 25 venture-backed companies we think are likely to attain a $1 billion valuation.
As WeWorks rise and fall showed, theres both huge potential in new types of real estateand enormous risk. Smith is attempting to manage the chance and operational complexity with data, and a lot of it. Which cities have both demand and potential profitability? How do he cut installation costs? Adjust pricing and marketing for seasonality? This must be tech-driven rather than people-driven, says Smith, who depends on his firms data and its own proprietary algorithm. I must say i believe this is actually the only way this model will continue to work.
Smith, who owns roughly 1 / 3 of Landing and will probably be worth a lot more than $400 million including cash from Shipt, is up for the task. I get bored really easily, he says. Im drawn to solving these complicated problems.
Smith was raised in Birmingham, Alabama, the son of a Cellular One agent and a medical transcriptionist. He recalls requesting a briefcase for his fifth birthday and later lugging his pc to his dads home for weekends after his parents divorced.
He wasnt much thinking about school (I hated it, I must say i did) and dropped out when he was 16. Hed been selling Nextel phones after school, attracting $5,000 or even more per month, a tidy sum for an adolescent in Alabama. In 2009, he founded Insight Card Services, offering reloadable prepaid Visa cards. Five years later, at 28, he sold that business to bank-holding company Green Dot for tens of millions.
As a millionaire, he started snapping up local property. He arrived at an auction to get 33 condos (since sold), then chosen the location to bid for seven floors in a prewar former bank headquarters referred to as the John Hand Building. His winning bid: $510,000. Im, like, Oh my gosh, what did I simply win? he says. The luck was that I started Shipt and could fill it up. (Its now Landings headquarters.)
Bill Smith is quite unassuming, completely different from your own Adam Neumanns as well as your Travis Kalanicks.
In 2014, Smith launched Shipt to provide same-day delivery to customers who ordered groceries online, investing $3 million of their own money. By 2016, Shipt was obtainable in 25 cities across eight stateschallenging Amazon and Instacart, especially in smaller markets. Having an ownership stake of roughly 50% during the $550 million sale to focus on, he was now seriously rich. It didnt feel just like an enormous life change, despite the fact that from the exterior any difficulty . way, he says. I reside in exactly the same house and visit the same places and do exactly the same things I did so before.
Smith keeps a summary of 30-some ideas for businesses in his phone, and after he left Target (within the deal, he worked for the retailer for per year . 5) he started considering which to tackle next. Venture capitalists were wanting to finance whatever he selected. If he explained he was doing moon exploration, I would have given him money, says Greycrofts Ian Sigalow, who led Shipts first outside funding round at a pre-money valuation of $45 million and subsequently committed to Landing.
His first try, called Homesie, targeted homeowners who needed repairs, permitting them to text for help. It had been a complete flop, he says. We tested it for some weeks, and literally nobody registered. Smith shuttered it almost immediately and shifted, transforming web sites operations and concept into Landing. Consumer companies are the rocket ship or theyre not, and when its not just a rocket ship I dont desire to waste any moment onto it.
The essential idea for Landing have been in his phone for a long time. During his brief stint as landlord of these 33 condos, he previously seen how often medical residents at the University of Alabama at Birmingham would take apartments they necessary for only a year. And their own experience moving temporarily to SAN FRANCISCO BAY AREA, among Americas toughest housing markets, in 2016 while building Shipt, rankled. I was on Craigslist looking for a place that has been going to work with my family, also it was only a huge headache, he recalls.
As people gained more flexibility on where you can live, he wished to ensure it is easier to allow them to grab and proceed to furnished, flexible-lease apartments that didnt cost corporate rates. Much like Shipt, Smith set up some initial cash, ultimately investing $15 million.
Landings launch was tough. Smith was personally juggling the demands of a startup with those of his youngest child (he’s got three), who was simply born with special needs in June 2019 and required multiple surgeries. Then, in March 2020, the pandemic emerged, offices shut and Landings fate hung in the total amount.
All of this has helped keep him humble. Bill Smith is quite unassuming. Hes completely different from your own Adam Neumanns as well as your Travises, says Landing CFO Casey Woo, discussing WeWorks founder (and Woos former boss) and Ubers mercurial founder, Travis Kalanick. You generally obtain the ego or you obtain less killer instinct.
A higher school dropout, Smith will probably be worth a lot more than $400 million from his startups Shipt and Landing.
While the potential is enormous, it faces a lot of competitionfrom venture-backed startups in the flexible, furnished rental space, like NY City-based Blueground and San Franciscos Zeus Living, to hotels which have moved further into extended-stay options. Even Airbnb is pushing long-term stays for remote workers, with durations of 28 days or even more its fastest-growing category in 2021.
In operation like this can be capital-intensive. As well as the equity raised, Landing has secured $230 million with debt, which it has drawn down $80 million, to greatly help pay for from leases and technology to furniture and shipping. To increase profitability, it uses its algorithm to help to fill apartments, constantly gauging demand, scouting locations and setting prices instantly. At this time it says it has 7,000 apartments rented, with occupancy rates hovering around 90%, but admits profitability continues to be a couple of years away.
Instead of sign leases with landlords in advance, risking vacancies if no-one rents, Landing depends on software to list apartments first (it has 20,000 in its database), then signs leases and furnishes them in a few days once a renter is set up. Having learned from WeWorks troubles with long-term leases, Landing inks one-year leases with home owners, and can quickly reset prices or exit properties that no more seem sensible. Whats made Landing so successful is that people are powered by demand, says Marcus Higgins, the companys chief operating officer, who previously worked for SoftBank-backed Oyo Hotels. It is a giant Rubiks Cube, so when soon as you obtain a few things right, you need to transform it and repeat.
Thats particularly challenging, given the itinerant nature of its clientele. Kendyl Cochran, a 25-year-old business development director at Gartner, spent the majority of the past year surviving in Landing apartments with her boyfriend and dog after studying the business on TikTok. We wished to do 12 cities in 12 months, she says. After a short Airbnb stay, they hopscotched among Landing apartments in Atlanta, Baltimore, Austin, Dallas, Denver, Tucson and Salt Lake City, typically spending $2,200 to $2,400 per month on rent. It had been ideal for them, but every time they moved out, Landing had to get tenants to go in for the rest of the lease.
Are you aware that apartments cookie-cutter design, thats one key to keeping costs down. The firm manufactures its furniture at factories in Vietnam, where costs are lower. After that it ships them back to a 280,000-square-foot warehouse in Moody, Alabama. In addition, it has smaller warehouses in NEVADA, Austin and Phoenix.
Controlling design meant flexibility when ocean freight costs skyrocketed: Landings kitchen chairs are actually stackable, and can jam more of these right into a shipping container. A fresh type of furniture in the works includes coffee tables and side tables that’ll be assembled in Alabama instead of shipped this way, to save lots of on freight. Through the use of its trucks and drivers and standardizing everything, Landing has shaved installation costs by a lot more than 50% since launch, in accordance with CFO Woo.
The big question, needless to say, is just how many people would want to live every month in temporary housing, and if the mobility of the pandemic for white-collar workers can not only continue but remain popular enough to help make the financials work. The planet of work at this time [is in] an enormous amount of experimentation, says Steve Cadigan, a future-of-work consultant and writer of Workquake, who was simply LinkedIns first chief HR officer. The digital nomad includes a shelf life and soon you want to relax and also have kids. The older we get, the more we like continuity.
Smith, needless to say, is a lot more bullish, figuring that the housing marketplace is indeed big that capturing even their own small sliver is a huge home run. Not many people are likely to live such as this, rather than even almost all will, he says, but an incredible number of Americans are likely to live flexibly.
Header image of Landing founder Bill Smith while watching 1912 bank vault that serves as a boardroom at his companys headquarters.
MORE FROM FORBES
MORE FROM FORBESHighest-Paid NFL Players 2022: Tom Brady Leads The List For THE VERY FIRST TIMEBy Brett KnightMORE FROM FORBESLinkedIn Profiles Indicate 300 Current TikTok And ByteDance Employees Used To WORK WITH Chinese State Media-And Some Still DoBy Emily Baker-WhiteMORE FROM FORBESHow $5.6 Billion Cloud Company Fivetran Acquired Its SOLUTION TO SurvivalBy Kenrick CaiMORE FROM FORBESHow Tesla Lost The Race For Affordable EVs To AN URGENT RivalBy Alan Ohnsman