Real estate startup Loftium pivots to rentals, stops offering down payments for share of Airbnb profits

Real estate startup Loftium pivots to rentals, stops offering down payments for share of Airbnb profits

9:30am, 6th May, 2019
Loftium co-founders Yifan Zhang and Adam Stelle. (GeekWire Photo / Monica Nickelsburg) Loftium, the Seattle real estate startup that helped people buy homes in exchange for renting out an extra room on Airbnb, has shifted its focus to rentals. The company to providing down payment assistance to potential homebuyers who agreed to split their Airbnb profits with the company. But late last year, Loftium quietly pivoted in a big way. Now it rents out apartments to tenants at a discounted rate if they agree to become an Airbnb host. In an interview with GeekWire, Loftium CEO cited skyrocketing housing prices as the reason for the shift. Loftium’s original offering was popular — the company signed up more than 10,000 customers for down-payment assistance, Zhang said. However, thanks to high housing prices, competition among buyers and the complexity of the mortgage process, many of Loftium’s customers still weren’t able to afford to buy the homes they wanted. “Given how quickly home prices have risen, we realized that a large portion of our customer base were not able to buy a home even with Loftium’s down payment assistance, and that was a very frustrating part of the business,” said Zhang, a finalist for Young Entrepreneur of the Year at the . Loftium CEO Yifan Zhang leads an all-hands meeting at the company’s new office. (Loftium Photo) Similar to WeWork’s business model with office space, Loftium now rents units directly from landlords and then leases them out to its customers. Zhang wouldn’t say how many units Loftium has in its portfolio, but the switch to rentals has let the company expand quicker. Loftium collects rent from customers, as well as a cut of the money from renting rooms on Airbnb. It hopes that those combined income sources outweigh rent the company pays directly to landlords. The new model is easier to scale because Loftium doesn’t have to raise huge loads of capital to help people with down payments, and it’s much faster and easier to lease out units than it is to close home sales. After making the switch to rentals, Loftium quickly expanded beyond its core area of Seattle to Denver and Portland. Further expansion appears on the horizon, as the company has open positions on its for property acquisition leads in Chicago, Los Angeles, Washington, D.C., New Jersey and San Jose, Calif. Loftium today has approximately 15 employees, and it is hiring across a variety of areas. Though still small, the company is anticipating significant growth, and it just signed a lease for a new office space: A single floor at in downtown Seattle totaling 5,600 square feet. The Loftium office. (Loftium Photo) The idea for Loftium struck Zhang, who has founded multiple startups, when she first moved to Seattle. She and her husband bought a townhome and rented out one bedroom on Airbnb. “I was just amazed by the income stream from that,” Zhang told GeekWire in 2017. “Just one bedroom in our three-bedroom condo could cover the vast majority of our mortgage, taxes, and insurance, which was a little crazy.” Technology companies of all sizes are trying to figure out how to disrupt buying a house, which remains one of the most challenging and costly experiences a person faces. A number of well-funded large companies including Zillow, Redfin, Opendoor and Offerpad have decided that taking control of the process by purchasing homes directly, sprucing them up then and selling them to consumers is the solution. In the Seattle area alone, startups such as FlyHomes, JetClosing and others are tackling different parts of the problem. As she ran Loftium, Zhang was exposed to every wart in the homebuying process. Zhang pointed to the mortgage approval process as a major headache. It can be tough to get a mortgage if you haven’t been in a job for more than two years, an issue that could impact tech workers who make good money but tend to jump around. Zhang would like to see potential revenue from renting out rooms on platforms like Airbnb figured into mortgage calculations as well. “We signed up homebuyers, and then we sent them into this complex process of homebuying,” Zhang said. “With rentals, we do get to control the experience much more and create a really good experience for renters and landlords.”
Amazon stops selling stick-on Dash buttons

Amazon stops selling stick-on Dash buttons

6:15am, 1st March, 2019
has confirmed it’s retired physical stick-on buttons from sale — in favor of that let Prime Members tap a digital button to reorder a staple product. It also points to its — which offers an API for device makers wanting to build Internet connected appliances that can automatically reorder the products they need to function — be it cat food, batteries or washing power — as another reason why physical Dash buttons, which launched (costing $5 a pop), are past their sell by date. Amazon says “hundreds” of IoT devices capable of self-ordering on Amazon have been launched globally to date by brands including Beko, Epson, illy, Samsung and Whirlpool, to name a few. So why press a physical button when a digital one will do? Or, indeed, why not do away with the need to push a button all and just let your gadgets rack up your grocery bill all by themselves while you get on with the importance business of consuming all the stuff they’re ordering? You can see where Amazon wants to get to with its “so customers don’t have to think at all about restocking” line. Consumption that entirely removes the consumer’s decision making process from the transactional loop is quite the capitalist wet dream. Though the company does need to be careful about consumer protection rules as it seeks to excise friction from the buying process. The ecommerce behemoth also claims customers are “increasingly” using its Alexa voice assistant to reorder staples, such as via the voice shopping app (Amazon calls it ‘hands free shopping’) that lets people inform the machine about a purchase intent and it will suggest items to buy based on their Amazon order history. Albeit, it offers no actual usage metrics for Alexa Shopping. So that’s meaningless PR. A less flashy but perhaps more popular option than ‘hands free shopping’, which Amazon also says has contributed to making physical Dash buttons redundant, is its program. This “lets customers automatically receive their favourite items every month”, as Amazon puts it. It offers an added incentive of discounts that kick in if the user signs up to buy five or more products per month. But the mainstay of the sales pitch is convenience with Amazon touting time saved by subscribing to ‘essentials’ — and time saved from compiling boring shopping lists once again means more time to consume the stuff being bought on Amazon… In a statement about retiring physical Dash buttons from global sale on February 28, Amazon also confirmed it will continue to support existing Dash owners — presumably until their buttons wear down to the bare circuit board from repeat use. “Existing Dash customers can continue to use their Dash Button devices,” it writes. “We look forward to continuing support for our customers’ shopping needs, including growing our Dash Replenishment product line-up and expanding availability of virtual Dash Buttons.” So farewell then clunky Dash buttons. Another physical push-button . Though plastic-y Dash were quite unlike the classic iPhone home button — always seeming temporary and experimental rather than slick and coolly reassuring. Even so, the end of both buttons points to the need for tech businesses to tool up for the next wave of contextually savvy connected devices. More smarts, and more controllable smarts is key. Amazon’s statement about ‘shifting focus’ for Dash does not mention potential legal risks around the buttons related to consumer rights challenges — but that’s another angle here. In a court in Germany ruled Dash buttons breached local ecommerce rules, following a challenge by a regional consumer watchdog that raised concerns about T&Cs which allow Amazon to substitute a product of a higher price or even a different product entirely than what the consumer had originally selected. The watchdog argued consumers should be provided with more information about price and product before taking the order — and the judges agreed. Though Amazon said it would seek to appeal. While it’s not clear whether or not that legal challenge contributed to Amazon’s decision to shutter Dash, it’s clear that virtual Dash buttons offer more opportunities for displaying additional information prior to a purchase than a screen-less physical Dash button. So are more easily adaptable to any tightening legal requirements across different markets. The demise of the physical Dash was reported earlier by .