At Media Jobs we like to bring you the most innovative companies. In this interview we will learn about a new company that is differentiating themselves in the highly competitive residential real estate market by targeting the upscale market of frequent flyers and how awarding thousands of frequent flyer points can create a new business model for selling homes. Imagine being able to take a free vacation after spending your life savings on a home.
Listen in as Roy Weissman of MediaJobs.com interviews the CEO and Founder of Flyhomes.com Stephen Lane.
| Roy: | This is Roy Weissman from Mediajobs.com and we’re talking with Stephen Lane, the CEO of FlyHomes. What is FlyHomes? How did this idea come about? What problem are you trying to solve?
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| Steven: | FlyHomes is an online real estate brokerage with a new way to buy real estate online that we launched in Seattle that literally lets buyers own their own home buying process. The kicker, which is the fun word of mouth thing is, again, they earn airline miles through the entire home purchase. In Seattle, if you buy a half a million dollar home, you earn a half million airline miles.
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| In terms of how the process started, and how we started in this, my background, I’ve worked for a developer, I’ve got an undergraduate degree in real estate. When I went through my first home purchase, I tried to go around agents, and I tried to buy a house without using an agent, but in the end, I still got an agent to help me out through the process, the paperwork. I’d never seen these things. It’s like my biggest financial decision in my entire lifetime.
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| When you start asking around to other people of my generation, everybody honestly says the same thing, that they didn’t want to use an agent, but they still did. What we did is we created this experience. We’ve designed an entire platform around this idea. There’s a generation of people that, they’re not accustomed to using agents. They’d rather buy their TV on Amazon than go into a Best Buy and get personal help, but they still need that help.
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| We made a flexible platform, a flexible experience where we can provide as much or as little help as you want. If you want to go tour houses, just in open houses, and submit an offer on here, cool, we’ll help. If you want to be hand-held through the entire transaction and start off and understand what neighborhoods, look, we’ve got an incredibly experienced team in Seattle to help out, too. We’re letting buyers own their experience and create a flexible platform around that.
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| Roy: | The real estate market is just littered with tons of websites with homes on them. Everything from Realtor.com, StreetEasy, there’s an endless list. How do you feel you guys are going to rise above that and become the dominant force?
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| Steven: | Our goal is not necessarily to become the dominant force. Real estate is a very big business, and there’s a ton of people that want very different types of service, and we realize that. What we’ve done is, we are targeting a specific group. At FlyHomes, you earn miles for your entire transaction. There’s an entire group of people that love earning miles. They do things like read the points guide. They open up credit cards just to get miles. This is a group of people that are, brokers in the market that are very connected to their friends and they’re obsessed with these things.
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| We’ve got experience of building around this, so that people know if they would buy a house with FlyHomes, they earn miles through the whole thing. It is a very targeted group. We’re not going after every single customer in the world. That’s the experience we’re doing.
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| Roy: | Go ahead, yeah.
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| Steven: | If you think about it, where building a business, a lot of it is, who’s your customer? We’re designing this business around this couple. The guy works in a start-up, they love to travel, they go and use miles, etc., and they’re buying their first house. We design the entire experience around those people.
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| Roy: | These miles are on which airlines?
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| Steven: | We are currently with Alaska Airlines in Seattle. Buyers can earn Alaska miles in Seattle. We’re expanding to other markets here in the next few weeks. We’ll have a new partner announced in a couple of weeks, a very big airline.
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| Roy: | Basically, the hook is the airline miles. What’s to stop another real estate broker from saying, “We’ll give you 500,000 airline miles.”?
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| Steven: | There have been a lot of people in the past that tried discount models and things like that. What you’ll learn is, when you talk to a lot of the most senior brokers in the market, they’ll tell you over and over and over again that models fail because people are attracting buyers that are looking for a discount. If you’re willing to cut a commission by 50%, and then, somebody else says they’ll do 60%, the buyer is going to switch. They’re not loyal. It’s a race to the bottom.
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| What we’re doing with the airlines, in a way is, we’re providing an uplifting, positive experience. We’re like, “Go take the honeymoon of your dreams if you buy a house with your new wife.” We’re like, “These are positive moments that are really exciting.” That said, obviously, those miles cost us money on the back end. We are taking a traditional approach in terms of rebates and things like that. We’re not necessarily competing with the standard broker.
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| We’re building a brand around it. At the end of the day, we’ve launched with almost no marketing, and people across the country are talking about us. We’ve created a feature, somebody can sign up, request a new market on Saturday. On Sunday morning, we had somebody from Dallas request us to be there. We’re building an entire brand around this segment. We want to make sure everybody what FlyHomes is.
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| Roy: | How many markets are you in currently?
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| Steven: | We’re in Seattle, but we’ll be expanding to Boston and Silicon Valley this summer.
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| Roy: | This summer?
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| Steven: | Yes.
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| Roy: | This summer. When was this founded?
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| Steven: | We launched in late 2015 in beta; no website, no platform or anything. We’ve now done 15 transactions. We’re growing every month.
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| Roy: | Is it just you? Are there other founders?
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| Steven: | My co-founder is a machine learning expert from Microsoft. We’ve got a really awesome team in Seattle. One of the perks here is we let buyers take tours whenever they want, this afternoon, etc. We actually now are employing agents, people that used to be real estate agents and are still licensed that are now Uber drivers. They’re in Seattle opening up doors for our clients to let them tour homes.
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| Roy: | If I want to see a house, I just call up and the Uber, do they charge me for the ride?
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| Steven: | You call me up, and we will have a home tour for you this afternoon.
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| Roy: | Does the Uber driver pick me up?
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| Steven: | We’re not there yet. We had multiple people talk about it. We’ve had a couple of clients that didn’t have cars, and we made it work. We’re flexible. At the end of the day, that’s what we are. We plan a flexible experience. It’s quite unique.
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| Roy: | How would you define the market size? Is it just real estate transactions? Is it a different way of defining the market? How do you define the market and what kind of dollar value would you put on it?
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| Steven: | We’ve looked at it in multiple different cuts, multiple different versions. There’s a company called Rocketmiles. They go after the same segment. They’re kind of like Expedia. You can book a hotel and earn miles. We connected with them in terms of how much they value the market. What we came up with was very close. On the home buying side, it’s about a three and a half billion dollar market. The segment is young, tech-savvy people that love to travel.
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| Roy: | You’re going after the travel segment. You’re carving out-
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| Steven: | We’re going after people that love miles. There’s an entire group of people that are obsessed with earning miles. They do things like read the points guide, or open up credit cards to get miles. They talk to all their friends about how cool it is, they just took this trip on miles. We know who those people are, and they’re talking about us.
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| Roy: | How many of those people exist?
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| Steven: | It’s a three and a half billion dollar market.
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| Roy: | Three and one half billion dollars. Do you know how many people are in it?
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| Steven: | In terms of exact number of people? No, I’m not, it will be, I don’t know the exact number of people, no, not at all.
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| Roy: | Is it 20 million, 50 million, 100 million?
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| Steven: | It’s about 10% of the millennial segment.
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| Roy: | 10% of-
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| Steven: | The millennial home-buying segment. It’s the demographics we’re going, not demographics, but people that specifically love to travel and look for ways to earn miles.
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| Roy: | It’s interesting because, typically, the real estate market does a mass advertising effort. It’s definitely unique that you’re choosing to say, “Let’s focus, so we can try to attract a niche audience.”, which, I think, is definitely something. Is there anyone else you consider competition?
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| Steven: | Well, at the end of the say, a lot of people will ask, “Is Redfin your competitor?”, or things like that. Real estate is a huge market. We’re not out here, we’re not going to go transform real estate and be the only real estate company that exists. We’re going after a segment of people that is a very good segment for us to go after. They’re obsessed with what we offer, and that’s who we’re going after. Roy, the vast majority of people still use traditional agents. Us, it’s not going to be, we’re going to take shares from “X” Real Estate. At the end of the day, our share is going to come from the overall market. Roy, a lot of major, major, companies say their goal is to get 5% of the market. Real estate is an incredibly large market. We’re going after one group.
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| Roy: | You think your company is more of a marketing play or a technology play?
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| Steven: | It’s twofold. The brand and the miles is a great way to spread the word about and get people interested in us as a business. If we don’t get deliver on the experience, if people don’t enjoy buying on FlyHomes more than they would using, let’s say, “X” person or whatever, if they don’t enjoy the experience more, they’re not going to tell their friends to buy a house with us. Roy, if somebody loses a house because they worked with us, we’re like, well, we’ll never be in business. Our experience is key. If we can go and target this group of people that love miles and deliver an experience that they love, they will go tell their friends about how great it is to buy with FlyHomes, and how cool it is because you also earn miles.
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| Roy: | You mentioned your co-founder is an expert in machine learning.
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| Steven: | Yes.
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| Roy: | Is there a message there? Is it something with the technology or whether it’s going to develop? Can you give us a sense of that?
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| Steven: | Yeah. Obviously, real estate is a very complicated business. Every house is different, every buyer is different. One buyer loves a pink wall, one buyer loves beige. It is a very complicated business in terms of valuing homes and things like that. We’re obviously investing in technology. We’ve built that in. We believe the brand is incredibly important, but we’re focused solely on the experience in terms of making it better and better for buyers. We’re working at, long-term, there’s a number of different algorithms and things that we’re working on.
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| Roy: | Do you see data factoring into this in some way?
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| Steven: | Yeah, 100%. If we’re letting buyers own their own experience, Ray, today’s buyers, instead of me providing my opinion, they’d much rather see why it is that we think something should be some way. We’re working on that. We’re investing in it very early out of the gate.
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| Roy: | How many people do you have working in your company now?
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| Steven: | It’s kind of an interesting question, Roy. If you ask Uber how many people work for Uber, is it all the drivers, is it the central people, etc.? We’ve got 3 developers working around the clock, myself, my co-founder is in Seattle helping with that office, with another centralized person there helping buyers. We have 8 part-time people now that are going to do home tours in Seattle. We’ve already landed market directors for Boston and in Silicon Valley. We’re starting that hiring path soon.
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| Roy: | What kind of people will you be looking for?
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| Steven: | In terms of people that work for us?
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| Roy: | Yeah.
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| Steven: | Smart people. Our goal is to have the smartest human that exists.
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| Roy: | No, I mean, but, what kind of roles?
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| Steven: | Oh. We’re taking a very team-based approach to the business. In Seattle, when you’re a buyer on a website, you can go tour homes, etc. That’s easy. In terms of helping the clients, we have a team-based approach. Some people will be focused on marketing. Somebody’s focused on sales. Somebody’s focused on customer acquisition. Somebody’s helping those buyers through the negotiations. We’re talking a team-based approach to the business. In terms of what type of roles, we actually have a very diverse, for the summer, we’re starting to hire a very diverse team. We’ve just landed Lazire We just landed somebody who’s sole focus is digital advertising. We’re taking a very team-based approach to the business.
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| Roy: | If people were going to be looking at work at your company, what disciplines would you want? What kind of disciplines would you be looking for?
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| Steven: | Honestly, we’re looking for a lot of different disciplines. Everything from computer science, to graphic design to, you just got an MBA, or to, you’re this person that’s been a real estate agent for 5 years, and you love the business and you want to make it better. We’re looking for really smart people that want to transform the business.
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| Roy: | Do you expect to be opening in New York anytime soon?
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| Steven: | New York is down the list a little bit. I think Redfin is an awesome company. There’s a ton of really awesome companies. The complexity of the New York market is very apparent in the fact that Redfin launched over 10 years ago, and they’re still not in Manhattan. It’s definitely not at the top of our list.
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| Roy: | What would be your top 3 or 4 cities, that you’d say, “These are going to be our real, best cities.”?
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| Steven: | We’re going to Boston, Silicon Valley. The roadmap after that is not announced yet. We’ve got some cities that we like.
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| Roy: | Is there anything else you want to add about FlyHomes that I didn’t ask?
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| Steven: | Well, do you have any friends buying a house? If so, shoot them to us.
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| Roy: | The website is Flyhomes.com?
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| Steven: | Yes |
