Improving the World, One Spare Bedroom at a Time: An Interview with Loftium CEO and Co-Founder Yifan Zhang
This interview is with Yifan Zhang , CEO and Co-Founder of Loftium, which provides down payments for home buyers who are willing to AirBnB an extra bedroom in their house.
DroneSeed has benefitted tremendously from crowdsourcing- we’re huge fans. This interview is lead by CEO Grant Canary of DroneSeed which is a drone company positioning to automate and dominate the forestry services vertical.
Grant: You and I met at a speaking engagement recently. I’m a huge fan of what you’re up to at Loftium. If you could introduce yourself and give a little bit of a description of what you’re doing, please?
Yifan: I’m the CEO and co-founder of Loftium which provides down payments for home buyers, if they’re a willing to AirBnB an extra bedroom in their house for 12 to 36 months after a home purchase. We are the first and only regulator-approved, for-profit down payment product. We’re able to offer up to $50,000 for home buyers in Seattle.
Grant: What are the details you can share about the down payment and rev share? Who’s your target demographic?
Yifan: We are looking for people who are willing to actually share their primary residence. We’re not looking for investors buying up full properties to put on AirBnB. You can share an extra bedroom inside your home, a mother-in-law’s unit or any other additional unit, but it does have to be part of your primary home.
Grant: Why’d you draw that distinction?
Yifan: We’ve gotten a lot of requests from people who are looking to purchase secondary homes or rental properties — that’s not really the mission of Loftium. Our mission is to make home ownership more affordable, especially in cities like Seattle that are getting really expensive for the middle class. Also, a unique aspect of Lofium is that we are turning these primary residences into revenue-generating properties, so that their home becomes a place of financial support rather than financial obligation, like mortgages are typically thought of. We thought long and hard about the investment property end goal and decided, “Life is too short.” You really have to focus and we’d rather do the primary residence thing that we feel like would do a lot of good for the world.
Grant: How’d you get started in this? This is your third venture. It seems like there’s a connection in a social mission in each of your three ventures.
Yifan: I had no experience with the real estate or fintech space. I studied economics at Harvard. And I guess I like to start companies that really create the right incentives and solve a problem in the world!
During college, I founded a fashion non-profit where people donated clothing to be sold offline to benefit charities.
After graduation, I started at my first for-profit company called Pact. It was a mobile fitness app where you put money on the line to commit to healthy behaviors. You paid if you didn’t meet your commitments and you earned money if you did. I learned a lot through that experience about consumer technology, marketing and fundraising for a scalable startup.
That led me to Loftium, which was inspired by personal experience. My husband and I left San Francisco because the housing prices were so ridiculous and we didn’t see the city doing anything to improve it. We ended up buying a town home in Seattle in the Beacon Hill neighborhood. It’s not a super central neighborhood but despite that, one bedroom out of our three-bedroom town house was able to cover our mortgage using AirBnB. Seeing the power of that spare bedroom really made me aware of this could be a solution to the down payment problem that a lot of the millennial and other first-time home buyers.
Grant: How have you improved as an entrepreneur over those three ventures?
Yifan: Hopefully I’ve improved a lot. The biggest difference with Loftium is that I make decisions slightly slower than I used to. I hope that they’re better decisions. When you move quickly and iterate a lot, you can create a lot of technical debt and other debt for the company. In the short 11 months since I started Loftium, things have moved way faster than any of my previous ventures despite making decisions slightly slower than before.
Grant: I love the origin story that your experience is a product that you want yourself. Standard, but also a hallmark of what makes a good business. We have an origin story as well. What’s one detail you don’t normally tell investors about the origin story?
Yifan: I had this down payment idea forever. Maybe one detail is originally my idea was even more ambitious. I wanted to actually run a mortgage company that was entirely based off of AirBnB income and I got knocked off of that cliff by some very smart people. Just doing this piece is hard enough. I can’t imagine running a mortgage company.
Grant: That’s awesome. It sounds like a lean startup process. You go out there and put a bunch of ideas out there so people who know some things are like, “I wouldn’t buy that.”
Yifan: Yeah, that’s happened a lot to us especially mortgage and fintech are such regulated industries. It’s been nice to have people who know what they’re talking about. And then I come in, with big ideas, but not their experience, and we come up with something interesting in the middle.
Grant: How are you approaching getting people to trust you? What’s your biggest point of social proof?
Yifan: The trust piece is really important because we’re doing something that’s never been done before. We really focus on getting legitimate partners for us. That meant instead of trying to go around regulations, we actually got approval from regulators. We are also working with Umpqua Bank which is a really strong local bank brand. Both of those things helped as a pretty young startup. For our launch, we are getting a lot of great media. Hopefully, that will help to legitimize us- we’re actually going to be able to help people with their down payment.
Grant: You mentioned you were getting regulatory approvals. What was your approach? We’ve been working really closely with the FAA on regulation- we have that in common.
Yifan: At Pact, we ended up going into the health insurance space. We were also trying to innovate and go around regulations because that’s the typical Silicon Valley mindset. But we just ran into so many hurdles. When you’re working in a space like health insurance or mortgages, sometimes regulations are antiquated, but sometimes, they are there for a reason. Think about mortgages post-2008. For Loftium, we quickly realized that the only way to build a scalable down payment product was to go straight the regulators.
Grant: How many customers are you looking for on launch date or are you looking for any?
Yifan: Our goal is to initially do 50 down payments in Seattle. That’s step number one. If we can do that quickly, then we’ll spread out to four more cities and have a lot more down payments we could offer.
Grant: Any closing thoughts?
Yifan: Cities are where it’s at! Personally, I see a lot of excitement in innovation cities. Cities like Seattle that have such a great local government that’s supportive of new initiatives. It’s an exciting time to be in this industry.
