Updated: a day ago
Interviewed by Yingying Zhu,
Interviewed December 16, 2019
Francesca Loftus, the CEO and co-founder of hOM a technology-enabled amenities provider building community through partnerships with commercial and multi-family property managers. She is the former Head of North America for Techmeetups.com and theater manager for off-broadway performing art center, MMAC. She also played the title character in Julianne Moore's musical, Freckleface. She is a graduate of MetaProp, a real estate tech accelerator based in NYC. Recognized for her work as a founder and thought leader, she was nominated this year for Top Founder at MIPIM and is two years’ running listed as CRETech’s top female influencers.
How did you and your co-founders start hOM?
My co-founder Ryan Freed’s mother was diagnosed with cancer. She used yoga and other wellness enhancement techniques to expand a one-year prediction to eight years. Around the year that she passed away, Ryan decided to raise capital for then-going-to-be a tea shop that had a meditation studio and he engaged my husband as the lead for putting together a roster of teachers and creating a meditation lifestyle blend for that brick-and-mortar space. We tested that concept in a luxury residential building in Brooklyn called the Edge and it was a real success. We quickly pivoted our business thinking and realized that we should branch out and sell our services directly to buildings where the owners couldn’t afford a full-time amenity manager or to build out a fully furnished amenity floor. We could use a lobby or an apartment unit in a residential building, or a conference room or a vacant floor in a commercial building. Our service now spans everything from recurring fitness classes, shoeshines in the lobby, to art installations and huge networking events. Essentially, anything that is a pop-up live service in a building exists on our platform.
How did you divide your roles in the co-founding team?
Ryan’s big passion was in sales – he had the sales connections in real estate. My passion was in product and I loved the operational piece of the business. Corey’s background is in philosophy and people by having worked for Standard Hotel and Lululemon. That was pretty easy breaking out our areas of focus.
How did you get your first customer for hOM?
After the Edge, we decided to bring our services directly to buildings. Our very first customer was Rose Associates. And they are still customers today. Rose Associates brought us into two buildings on the Upper West Side in 2015. We still remember the three of us walking on that tour and it was unreal that we had convinced someone to pay for our service. They were the very first but it coincided a month later with a variety of other buildings. It swept up in becoming a real business soon.
“Trust is really hard to come by in the real estate industry. That is why technology companies have a hard time breaking in. MetaProp was really helpful for us to get the trust.”
What was the next big moment?
A year into the journey, we got in the second cohort of MetaProp’s accelerator program. That was when we started to expand our products and add additional service providers to the platform like shoeshiners, package wrappers, caterers, and DJs. We expanded into events and commercial real estate. MetaProp connected us with Rudin and Brookfield. In our first month within the program, we met different clients and doubled our client base. We were three really young co-founders. For all of us it was our first start-up. It is really helpful to have bigwigs like Aaron Block and Zack Aarons put their names behind our product and get us through the doors into the right meetings. Trust is really hard to come by in the real estate industry. That is why technology companies have a hard time breaking in. MetaProp was really helpful for us to get the trust.
Where do you see the demand come from?
The residential sector is always competitive and played with hotel style amenities. It is an expectation that people with money would pay the premium to live a space that has all the amenities and the concierge service and be nicely looked after. We were waiting for this same push for the commercial sector. It came a couple of years ago but it came on really fast and strong. The problem for commercial sector was that there is not a very clear ROI because they are normally dealing with 5-10 year leases so there is not a huge concern with turnover. People that are signing the lease are not necessarily those who use the service. But luckily now HRs are more deeply involved in the leasing process and they care a lot about the work life balance of their employees. In the commercial sector, the landlords are competitive. If you need to fill one or two million square feet vacant space and you see one or two landlords across the street using our service, it becomes a FOMO – Fear of Missing Out - to have us in your building as well.
What do you see the impact of coworking?
It is a huge success and a driver for our business. Even with this big black mark on WeWork in the last year, it hasn’t diminished this mass exodus to more community focused and more employee focused concept that co-working has taught us. There is a lot of data around the success of shorter leases and pulling people out of traditional work space.
So you think coworking is a lasting trend?
Yes. I read a great article on LinkedIn about Napster, a music sharing platform, back in the early 2000s. Although Napster failed and few people remembers the name now, we didn’t go back to records and moved on to sharing music and files online. An entire industry and people’s expectations had changed permanently, even though this company (Napster) technically failed. I think everything that coworking has taught us about the desires of tenants is long lasting. Open work plans, community focus and addressing employee’s personal wellbeing in the workplace are lasting, and the model of how to do those things well can be applied to other asset types.
Would you say your business model is a marketplace for amenity service providers?
It is essentially a marketplace but we sell proactively. When it is December, we sell our package of holiday parties or holiday markets. Powering that is a list of vendors and services on our platform that we package together. We have been building a lot of technology so we can scale, such as an easy to use platform where clients can drag from a panel of service providers and drop them onto the calendar. Another thing is to collect data around how to coordinate within the buildings. At the front end, we are plugging into bigger systems so we partner with Lane the tenant experience app. At the back of house, we focused on the coordination – the rules of using freight elevators, certificates of occupancy, finding outlets, garbage disposal, access to water, security codes for bathrooms, getting through security with massive deliveries for the event, you name it. All of those things are really complicated to coordinate and the stakes are high for these events because they often only happen one time. We maintain a really comprehensive set of data that the vendors get to see about orienting themselves in the properties so hOM can scale by not having to be onsite for everything.
What else do you offer on top of the marketplace?
We know a lot of our clients want high-touch, curated seasons of programming proposed. So in addition to the do-it-yourself drag-and-drop calendar services, we will curate a lookbook twice a year based on success from the year before, in terms of what services we recommend to them. They are always able to choose something else from the platform but we always take care of them by tailor making our services.
What concerns do you have in light of the looming economic slowdown?
It is a strange dichotomy because we have competitors in our exact space, following the success of our business model. Fitspot, Lulafit and some smaller competitors from other cities in the commercial space. And TFLiving in the residential space. What is nice for all of us is that we are the more affordable option comparing to hiring amenity managers and consultants. We provide direct-to-landlord services where you are only paying for the a-la-carte services that the building receives, not the monthly consultation on top. So even if we lose the kind of customers that can just afford our services now, and then cannot in some form of downtime, we have this world of customers that are going to be priced out from the more expensive service providers, in an economic slowdown.
How big is your team? How do you grow?
We have 30 people today. We have a really unique business model in that everyone on our full-time team, sales or marketing or a COO, has a lot of touch points in the buildings, as instructors or event leads. We only hire people that have a service background. Even if you are a graphic designer, we still need you to understand the value of the services we provide to the properties. Even myself, I led an event last week at a holiday market because it keeps us all connected to in what is going on in the buildings, and constantly auditing our providers. It adds an additional layer of ad hoc and customer service for our clients that they wouldn’t get from a pure technology company while us having the benefits of scaling like a technology company. But it does add complexity for hiring. We can’t just go through a typical agency for hiring.
“I never liked making more than double what an entry level person in my company is making. Because I want to value everybody’s time equivalently so we work equivalently.”
You wrote a strong piece and posted on LinkedIn about bridging the salary gap between the customer service roles and the traditionally considered professional roles. Can you talk about how you came up with the idea?
I am a trained actor. I did a Broadway show for over a year and it means that I have a completely untraditional background and would never have gotten into a CEO role in a PropTech company if I didn’t put myself into a role like this. So I have a different point of view around education. Also I have a diverse team – sometimes I am hiring somebody who has a deep marketing background and sometimes I am hiring a fitness instructor who has a great natural ability. They can sit in equivalent roles in this company and have very different education background and level of experience. I therefore have this untraditional idea of moving financially as a team. I never liked making more than double what an entry level person in my company is making. Because I want to value everybody’s time equivalently so we work equivalently. There's a lot that I'm doing as a CEO, but sometimes I see somebody lower down in the company is also doing. Even though they may not have the level of experience that I have in this company, I see them dedicating themselves as vividly as I do to our mission. And I always want to make sure that everybody feels they're being compensated for how valuable their time is in the company and not how fabulous their resume is, how expensive their education was before they came into the company. Hopefully we can all keep shifting that bottom salary up in order to keep rising together.
What is the next biggest thing for hOM?
We are starting with Moderne Passport, a later stage accelerator program sponsored by Moderne Venture, in January 2020. Hello Alfred just came through the same program. The main purpose is to help us with expansion into next cities. Their investors are some of our clients but also a lot of clients that we are looking to approach that are outside of our current coverage of Toronto, Philadelphia and New York. National expansion is on the map for us. It can be complicated for a company that has to source and organize a consortium of local vendors and maintain the standard of service. We are really excited for this challenge.
Edited and condensed for clarity.