Why I joined Loft

Or, why I believe Loft will be the biggest Brazilian Unicorn

As soon as I joined Loft several people asked me to share the opportunity I was seeing, and the reason for my decision. I decided to write this post explaining why I believe Loft will be the BIGGEST of the Brazilian unicorns.

Hearing this you may ask yourself “why should I believe you anyway?”. Some of the things that give me confidence in this assessment are:

• I worked years in strategic consulting, where I learned to differentiate a solid business from funny-accounting
• I had my own startup, and I learned exactly how tough it gets on day to day
• I worked in one of the largest venture capital funds in the world, where I analysed hundreds of startups and learned from the best investors (do you know the Forbes Midas list?) Which differentiates good entrepreneurs from fantastic entrepreneurs
• I’ve gone through the challenge of taking a team of 2 and scaling it to 100+ in less than 2 years, and I saw what-it-takes to get there

There are 6 reasons, and I will detail each, but as context I wanted to restate our business: we buy, remodel and sell apartments, and we use technology and data to make this experience super practical and enjoyable.

Reason 1: It is a real and profitable business

Would you buy an older apartment for the same price as a brand new one? I hope not, and that’s the business model of several companies out there.

I met several contractors who accumulated some cash to buy an apartment, tidy it up, and sell it for a premium. I too was saving some money to do something similar in my weekends — this was before I found Loft.

João, one of Loft’s co-founders, has done just that for years, and with excellent margins!

At Loft we are not inventing a new market like Instagram or Twitter. This is already a proven business, and we are bringing technology and data to further improve margins and make it scalable.

Reason 2: There is a strong pain-point in the market

Only those who tried to buy apartments know the suffering involved, but I’ll try to illustrate it:

• There is no objective way to price your apartment. You have to rely on recent transactions in your building and the region (and even if they happened, it’s very difficult to figure out the exact price), or rely on brokers who do not have enough sample or analytical background to help you on this
• The average time to sell an apartment in the market is 1 year and 4 months (!!), if you need the fast cash, look for another alternative
• Many times I explained to agents my preferences, only to be taken to the other side of town to see an apartment half the size I requested right in the first visit
• When you sell an apartment to buy a bigger one, with the current lead-times, odds are you will have to sell yours first, move to a rented one, and then start looking for your next one
• Chances are after you buy a new apartment, you will want to renovate it before moving. This video of Porta dos Fundos (in Portuguese) illustrates well what happens to most people who go that route.

Reason 3: No one is doing this in a structured way in Brazil

Not much to say here. Major online real estate players in Brazil focus on the rental experience (Quinto Andar), or only offer ads (eg. VivaReal, ImovelWeb).

Reason 4: It’s a scalable business

Ever heard of OpenDoor? Yeah, they do something to Loft but in the US. Their valuation is already at ~ US $ 4B, and they only operate in one market. Imagine how big a similar company could be dominating Latin America, a region with more informality and lack of transparency in this sector.

Of course, the fact that the market is so informal also creates several challenges, but thanks to Reason 5 I believe we are well positioned to overcome them all.

Reason 5: Phenomenal Team

I learned in Venture Capital (VC) good business ideas are commodities. One of the most critical success factors for a startup is the quality of the team.

During my interviews, everyone I talked to at Loft left me with the feeling “I could learn a LOT from this person”. I was honored when I received the offer because it meant these awesome professionals felt the same way about me.

Here are some of the stars we have today on our team:

• the best industry expert we could have — I have already mentioned João
• successful entrepreneurs who already sailed these seas of startup and arrived on the other side: Florian and Mate, our CEOs, who recently sold (quite well) their previous startup
• I dont know anyone who has ever succeeded in keeping renovations on schedule, but Mari and Marcus are already running no less than 40 in parallel, and ~90% are delivered on time!
• on the technology side, we have rockstars from Microsoft such as Marcela and Imada, Fred, a PhD in Physics who is also a jedi master in machine learning, an extensive list of the best engineers ITA has to offer, and countless other stars that would not fit in this post

Reason 6: Enough funding to last years, and still a lot of investor interest

Already in the series A we receive investments from Andreessen Horowitz. Don’t know? The world’s most sought after VC fund — who had never invested in Brazil before.

In terms of debt funds (the way we finance the purchases of the apartments), we already have over R$110M available, and the last round of debt raising lasted less than 2 weeks, something unprecedented in the Brazilian market.

In short, the market is very interested in what we are doing, and funding does not seem to be a problem.

We still have a lot of work and challenges ahead to become the biggest Brazilian unicorn, but everything tells me that we hold all the aces here.

What about you? Will you miss the opportunity to be a part of this or will you apply for Loft now? :-)