Bungalow CEO and cofounder Andrew Collins joins The Final Round to discuss how the company has adapted to the changing co-living landscape amid COVID-19, including its recent expansion to a new market, and its plans for the future.
JEN ROGERS: A new survey by Point Two, a real estate search site, found that 74% of millennials want to buy a home within a year. About 88% of them, though, don't have enough saved to make the average US down payment, which is around $62,000. In fact, 14% have reported no savings at all.
So what to do? Move back in with Mom and Dad? Well, maybe you could just move in with some other people. I want to bring in Andrew Collins, Bungalow CEO and co-founder. It's one of LinkedIn's top startups of 2020. So Andrew, for people that don't know anything about Bungalow, what is it?
ANDREW COLLINS: Yeah, we're the largest co-living network in the US. We have 700 properties, 3,000 residents in 12 major markets. And what co-living and what that means is we essentially act as a property manager alternative for homeowners, where we can help them gain excess yield, higher rents than they would in a traditional property manager.
And I really started this out of my own experience as a renter. So for renters, we furnish the properties incredibly nicely. We then help you find other great people to live with. We then take care of getting utilities, Wi-Fi, cleaning, all set up and ready to go. And then have created a seamless digital first experience. So if you need us for maintenance, support, or just to pay your bills, you can do that all through our mobile app.
JEN ROGERS: So I imagine last year talking about your company was really different than talking about it right now. Because last year, everybody would be like, sure, that sounds great. And now, right now, people are not so excited about being with other people. What has COVID and coronavirus done to your business model?
ANDREW COLLINS: Well, I think I challenge that a little bit. I think now, more than ever, people are craving community because we don't get it in the normal ways that we would. It becomes much more difficult to see people that you aren't living with. And so that group of individuals that you live with is really coming to the forefront.
We've seen-- I think we've seen fairly large exoduses from the New Yorks and San Franciscos in the broader real estate market. But we've seen our demand actually increase in a lot of other markets during this time. And as rents have started to stabilize, we've also seen demand really come back in those major markets as well.
JEN ROGERS: So how does that work? Let's say, when you say you're seeing demand-- and I get that people want to be with other people right now. But do you set up-- it's like a pod, kind of, for adults that you're doing?
Like, are you seeing demand right now, and in what towns are you seeing it? What age group? Like, is there any testing involved? Are people just sort of like, all right, I'm going to move to Miami, and I'm going to live with these people.
ANDREW COLLINS: So, very different than the pod or adult dorm. That is not our methodology at all. So we are very much a-- we find three, four, five-bedroom homes. And then we rent individual bedrooms within those homes. We do have a strict adherence policy for anyone who is joining a bungalow to ensure that they have COVID testings and no sign of COVID before entering our properties.
And then we also ensure that we connect the new residents with residents that are living in the home, so that they can actually have conversations about not just your normal standard interests and if you are a good fit for them personality wise, but also, do you take similar precautions when it comes to COVID? And I think we've seen that really shine through as very important.
SEANA SMITH: Hey, Andrew, just in terms of going back to how your strategy and how you're approaching the situation differently now that we are in the midst of this pandemic, obviously, there's a lot of differing, just, consumer behavior. There's a lot of differing, I guess, preferences at this point.
When you try to engage with your audience, are you targeting a certain demographic? I mean, have you seen that at all change as a result of the outbreak?
ANDREW COLLINS: We haven't our demographic change as much, but we have certainly seen consumer preferences completely transform. I think Rich Barton, the CEO of Zillow, outlined that we've seen five years of digital transformation in real estate be pulled forward in the last five or six months. So we've moved, within days, of shelter in place to a fully virtual leasing and touring experience.
But beyond just that, I think we've really demanded-- we've seen our residents really demand flexibility. And so we've tried to rapidly innovate and try and move towards being able to service that. So we've rolled out new products, such as we're naming it Bungalow Passport, where you can actually go and live for three months in Austin, Texas, go live three months following that in San Diego, and then move to our properties wherever you may want to go, whether it's DC, New York, et cetera.
JARED BLIKRE: Hey, Jared Blikre here. I just wanted to ask you about your selection process, maybe some AIL algorithm that you use to put people together. That caught my attention because I would think that's a pretty big deal. How much effort and Capex goes into all of that?
ANDREW COLLINS: We are very much been fortunate to invest heavily in our product R&D and engineering teams. I think for us, we did a lot of work early on, working with Harvard and Stanford behavioral psychologists, trying to understand what creates a great roommate experience and a great roommate match.
We have some recommendation engine in the backend, but I think through our research, what we really found is actually what drives significantly better and higher outcomes from a roommate experience and a roommate satisfaction is giving them agency and the information that they need to be able to choose who they live with.
And so, we will surface what interests are similar. We will surface who we think is a good fit. But then, ultimately, we put those potential roommates in contact with the existing roommates, and then allow the existing roommates to choose and the prospects to choose if they think it's the right fit.
JEN ROGERS: All right, the company is Bungalow. CEO and founder Andrew Collins, great to get a chance to talk with you. Really interesting idea, and hope to hear how it goes in the years ahead.