As residents of the San Francisco Bay Area, Alex Lofton and Jonathan Asmis saw firsthand how rising costs of housing can make homeownership impossible for many who want to buy their first home. Seeking a solution, they founded Landed Inc. just weeks after earning their MBAs from Stanford Graduate School of Business in June 2015.
Alex Lofton: “There is a Chance You Will Fail”
Alex Lofton: “There is a Chance You Will Fail”
Can a community model help first-time homebuyers?
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Lofton and Asmis are taking a new approach to equity. Landed raises capital from outside investors who want a piece of their local real estate market, and uses those funds to help people buy their first home. Landed has raised more than $1 million for home-buying teachers in California so far. For those who already have a 10% down payment on a house, Landed will match those funds to give the homeowner a 20% total down payment.
After seven years, the homeowner pays back the invested capital, as well as up to 25% of any increase in value on the house if there is one.
The fledgling company is backed by angel investors from the Stanford community, as well as Y Combinator. Lofton talked with Insights by Stanford Business about his venture.
In 10 words or fewer, what is the big idea behind your business?
“Smarter home ownership” is people helping people buy their first home.
The place where you live carries a lot of emotion and is the biggest financial investment for most people. Having a roof over your head that you own is part of “The American Dream” and can give you a sense of security, control, and togetherness. However, it is harder and harder to achieve in places like the Bay Area. Even people with high-paying jobs need help.
At the same time, investors are looking for more places to put their money. Residential homes are historically hard to invest in unless you do it at scale. Community investment is a smarter way for people to build wealth.
We are building a product that enables people to help each other and builds communities. That requires a creative technology to increase communication and transparency while reducing the costs of monitoring a single asset owned by multiple players.
How would you describe your business model?
We connect home buyers and people who want to invest in homes so that they can share the upside and the downside of home investment. Our role in that is to make sure both sides are holding up their end of the bargain and to provide a marketplace.
Personally, I have family members who lost everything in the real estate crisis of 2009. There is responsibility on every side. My relatives took on more risk than they should have and ended up losing their home. I feel personally passionate about playing a market maker role in this. There is a big problem that needs to be figured out. It has such a big impact on micro and macro economics.
How do you describe your primary target audience?
Our buyers are first-time buyers, mostly millennials, in stable jobs making relatively good money but unable to buy a home without help. Right now they have only two choices: rent or take out a big mortgage. We think there should be more options. Perhaps larger family-and-friend networks want to invest in them. More than 50% of people already get help from their families to buy their first homes.
What are your biggest challenges right now in building your business?
Continuing to deliver real value to the customers we have, as well as building a strong pipeline of new customers. It can be dangerous to blow a lot of money on a marketing campaign when you still need to put so much care into customer relationships and build a reputation.
What is the best advice you’ve ever received?
A friend told me a few years ago to always start with self-care. There is a chance you will fail. All you have at the end is yourself. I find ways to laugh even when things are stressful. I love the dance floor and yoga. My personal relationships, from my fiancée to my family, are grounding.
What was the most difficult lesson you have learned on the job?
More than 50% of people already get help from their families to buy their first homes.
When we first got started we didn’t know what we were doing. We had a great idea, and started to engage with a buyer in Los Angeles. We tried to match him with an outside investor but were not able to come through for him. We ended up having to scramble to find an alternative way for him to purchase the house. It put into perspective how central buying a house is to people’s lives. The design processes of iterating and failing fast are not always aligned with something as big as a home purchase. You need to be really clear about expectations.
What inspires you? How do you come up with your best ideas?
What is your greatest achievement?
In 2008 I led a couple hundred paid staffers for Barack Obama’s campaign in Georgia. We registered 250,000 people and helped shape the national narrative. We brought so many people to the vote for the first time.
What do you consider your biggest failure?
Being selfish in love.
What values are important to you in business?
Being real with yourself and your business, both with the solutions you are creating as well as the problems you are exacerbating.
What impact would you like to have on the world?
I would love to be an example for people of how to get more and more comfortable with stuff “outside the box.” Life is not a rigid, controllable reality. It’s much more fluid than that.
What was your first paying job?
I was a swamper at a restaurant in Seattle. I took dirty dishes from bussers and organized them for the dishwashers. I started when I was 15. I worked the night of my 16th birthday in the kitchen. Everyone gave me a big percentage of their tips and gave me one of their famous chocolate cakes.
What is the best business book you have read?
Business Model Generation by Alexander Osterwalder and Yves Pigneur.
What businessperson do you most admire?
Elon Musk, CEO of Tesla and SpaceX. He is clear about the problems in the world that he wants to go after. He gives me permission to think and dream wild and act on stuff.
What do you think is the greatest innovation in the past decade?
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