This High School Dropout Sold Shipt To Target For $550 Million. His Next Startup Could Be Worth Double.

Serial entrepreneur Bill Smith launched Landing in 2019. The furnished apartment rental firm expects $200 million in revenue this year by catering to the work-from-anywhere generation.

Bill Smith steers his black Tesla X through the streets of downtown Birmingham, Alabama, and pulls into a low-rise apartment complex.

“This used to be a brothel 100 years ago,” he says, with a smile.

Today, it’s a modern, renovated building, and one of 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 into a sunny one-bedroom, with a railroad layout that goes for $1,800 a month, a 20% premium to what it would rent or empty. It’s decorated with innocuous furniture, inoffensive linens, even taupe-colored dishware, all designed and manufactured by his team. “Someone wants to move into an apartment in five days, we have to be able to acquire it and make it beautiful in a short period of time,” he says, “It looks really simple on the outside, but it’s very complex.”

As the way Americans live and work has changed, Landing offers its members (who pay $199 a year) instant access to move-in-ready apartments with the flexibility to rent for as short as one month. Cheaper than a hotel or a corporate apartment and more predictable than an Airbnb, Landing markets itself to Millennials with the flexibility to work remotely, as well as to others (traveling nurses, empty nesters, those new to a city) who don’t want the hassle of figuring out housing and buying furniture for a temporary stay.

The bulk of Landing’s $200 million revenue (2022, projected) comes from the 20%-to-50% markup that it charges over its cost of leasing apartments from owners of multi-family buildings including mega-landlords like Greystar and American Landmark. It operates in 81 markets across the country, but its biggest are fast-growing Sunbelt cities like Las Vegas, Phoenix, Austin, Atlanta, Nashville and Tampa.

Smith sold his previous company, online grocery delivery service Shipt, to Target for $550 million in 2018. But he sees a much bigger opportunity with Landing: according to his aggressive estimates, perhaps 10% of the 40 million Americans who live in apartments could choose flexible-stay, furnished homes within a decade.

“Covid pulled forward a change in living that I thought would take five years,” says Smith. “We think we’ll be doing $1 billion in revenue by 2025….and we’ll still be just scratching the surface of the opportunity.”

Landing founder Bill Smith in one of the company’s apartments in Birmingham, Alabama: “I can’t rent apartments for $8,000 a month so the furniture needs to be the lowest cost possible and very high quality.”

Landing has raised $237 million in VC funding, including $75 million (previously undisclosed) at a recent valuation of $475 million. Not bad for a company whose revenue hit $83 million in 2021, up six-fold from 2020 revenue. But not as much as he hoped, especially given his track record and revenue growth. “If it was December, we’d already be in the billion-dollar club,” notes Smith, who says raising money in this market has “not been fun.” One silver lining to remaining a non-unicorn: Landing still qualifies for a spot on this year’s Forbes Next Billion-Dollar Startups list as one of 25 venture-backed companies we think most likely to reach a $1 billion valuation.

As WeWork’s rise and fall showed, there’s both huge potential in new models of real estate—and enormous risk. Smith is working to manage the risk and operational complexity with data, and lots of it. What cities have both demand and potential profitability? How can they cut installation costs? Adjust pricing and marketing for seasonality? “This needs to be tech-driven and not people-driven,” Smith says, who relies on his firm’s data and its own proprietary algorithm. “I truly believe this is the only way this model will work.”

Smith, who owns roughly one-third of Landing and is worth an estimated $400 million including cash from Shipt, is up for the challenges: “I get bored really easily. I’m attracted to solving these complicated problems.”

Smith grew up in Birmingham, the son of a Cellular One agent and a medical transcriptionist. Smith recalls asking for a briefcase for his birthday at age five and later lugging his desktop computer to his dad’s home for weekends after his parents divorced.

He wasn’t much interested in school (“I hated it. I really did,” he says) and at age 16 he dropped out. He’d already been selling Nextel phones after school, and, as he recalls, making $4,000 or more a month, a tidy sum for a teenager 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 young millionaire, he started snapping up local real estate. He showed up at an auction to buy 33 condos (since sold) and then decided on the spot to bid for seven floors in a pre-war former bank headquarters known as the John Hand Building. His winning bid: $510,00. “I am like, ‘Oh my gosh, what did I just win?’” he says. “The luck was that I started Shipt and was able to fill it up.” (It’s now Landing’s headquarters).

“Bill Smith is very unassuming, very different from your Adam Neumanns and your Travis Kalanicks.”

In 2014, Smith launched Shipt to offer same-day delivery to customers who ordered groceries online, investing $3 million of his own money. By 2016, Shipt was available in 27 cities across nine states—challenging Amazon and Instacart, especially in smaller markets. With an ownership stake of roughly 50% at the time of the $550 million sale to Target, he was now seriously rich. “It didn’t feel like a huge life change even though from the outside it would appear that way,” he says. “I live in the same house and go to the same places and do the same things I did before.”

Smith keeps a list of 30-some ideas for businesses in his phone, and after he left Target (as part of the deal, he worked for the retailer for 15 months) he started thinking about which one to tackle next. Venture capitalists were eager to fund whatever it was. “If he told me he was doing moon exploration, I probably would have given him money,” says Greycroft’s Ian Sigalow, who led Shipt’s first outside funding round at a pre-money valuation of $45 million and subsequently invested in Landing.

His first try, called Homesie, targeted homeowners who needed repairs, letting them text for help. “It was a total flop,” he says. “We tested it for a few weeks, and literally no one signed up.” Smith shuttered it almost immediately and moved on, transforming the website’s operations and concept into Landing. “Consumer companies are either a rocket ship or they’re not, and if it’s not a rocket ship I don’t want to waste any time on it,” he says.

The basic idea for Landing had been in his phone for years. During his brief time as a landlord of those 33 condos, he’d seen how often medical residents at the University of Alabama at Birmingham would take apartments they needed for just a year. And his own experience moving temporarily to San Francisco, one of America’s toughest housing markets, in 2016 while building Shipt, rankled. “I was on Craigslist trying to find a place that was going to work for my family, and it was just a huge headache,” he recalls.

As people gained more flexibility on where to live, he wanted to make it easier for them to pick up and move to furnished, flexible-lease apartments that didn’t cost corporate rates. As with Shipt, Smith put up some initial cash, ultimately investing $15 million.

The launch of Landing was tough. Smith was personally juggling the demands of a startup with those of his youngest child (he has three), who was born with special needs in June 2018 and required multiple surgeries. Then, in March 2020, Covid hit, offices shut down and Landing’s fate hung in the balance.

All of this has helped keep Smith humble, according to Landing’s CFO Casey Woo. “Bill Smith is very unassuming. He’s very different from your Adam Neumanns and your Travises,” says Woo, referring to WeWork’s founder (and his former boss) and Uber’s Kalanick. “You generally get the ego or you get less killer instinct.”

While the potential is enormous, Landing faces plenty of competition: from venture-backed startups in the flexible, furnished rental space like New York City-based Blueground and San Francisco’s Zeus Living to hotels that have moved further into extended-stay options. Even Airbnb is pushing long-term stays for remote workers, with stays of 28 days or longer being its fastest growing category in 2021.

Running a business like this is also capital intensive. In addition to the equity raised, Landing has secured $150 million in credit to help pay for everything from the leases and technology to furniture and shipping. To maximize profitability, it uses the algorithm to help fill the apartments, constantly gauging demand, scouting locations and setting prices in real time. Right now it says it has 7,000 apartments with occupancy rates hovering around 90% but admits profitability is still a few years off.

Rather than sign leases with landlords upfront, risking vacancies if no one rents, Landing relies on software to list apartments first, then signs leases and sets them up with furniture within a few days once it has a renter. Having learned from WeWork’s troubles with long-term leases, Landing inks one-year leases with property owners, allowing it to quickly reset prices or exit properties that no longer make sense. “What’s made Landing so successful is that we operate on demand,” says Marcus Higgins, the company’s chief operating officer, who previously worked for SoftBank-backed Oyo Hotels. “This is a giant Rubik’s cube, and as soon as you get a couple of things right, you have to turn it and do it again.”

High school dropout Bill Smith is worth more than $400 million from his startups Shipt and Landing.

That is particularly challenging given the nomadic nature of Landing’s customers. For instance, Kendyl Cochran, a 25-year-old business development director at Gartner, spent most of the past year living in Landing apartments with her boyfriend and dog after learning about the company on TikTok. “We wanted to do 12 cities in 12 months,” she says. After an initial Airbnb stay, they lived in Landing apartments in Atlanta, Baltimore, Austin, Dallas, Denver, Tucson and Salt Lake City, typically spending $2,200 to $2,400 a month on rent. It was great for them but every time they moved out, Landing had to find folks to move in for the remaining months on the lease.

As for the cookie-cutter design, that’s a key part to keeping costs down. The firm manufactures its furniture at factories in Vietnam where costs are lower. Then it ships them back to a 280,000-square-foot warehouse in Moody, Alabama. It also has smaller warehouses in Las Vegas, Austin and Lakeland, Florida.

Controlling design meant flexibility when ocean freight costs skyrocketed: the firm’s kitchen chairs are now stackable, allowing it to jam more of them into a shipping container. A new line of furniture in the works includes coffee tables and side tables that will be assembled locally in Alabama rather than shipped that way to save on freight. By using its own trucks and drivers and standardizing everything, Landing has shaved installation costs of by more than 60% since launch, according to CFO Woo.

The big question, of course, is how many people will want to live in temporary housing, month-to-month, and whether the mobility of the pandemic for white-collar workers will not only continue but remain popular enough to make the financials work. “The world of work right now [is in] a massive period of experimentation,” says Steve Cadigan, a future of work consultant and author of “Workquake,” who was LinkedIn’s first chief HR director. “The digital nomad has a shelf life until you want to settle down and have kids. The older we get the more we like continuity.”

Smith is, of course, much more bullish, figuring that the housing market is so big that even capturing even his own small sliver will be a huge home run. Says he: “Not everyone is going to live like this, and not even the majority will, but millions of Americans are going to live flexibly.”

Header image of Landing founder Bill Smith in front of the 1912 bank vault that serves as a boardroom at his company’s headquarters.