Do you want more funding?
Bill Smith is the founder and CEO of Landing which develops a membership-based network of fully-finished urban apartment homes. The company has raised over $145 million from top-tier investors which include Greycroft, Foundry Group, Maveron, and Abstract Ventures. Prior to this Bill Smith founded Shipt which he sold to Target for $500 million.
In this episode, you will learn:
- Choosing your investors wisely
- Raising money when you don’t really need it
- The future of living
- The advantage of naivety
- Bill’s top advice for other entrepreneurs
- The struggle of working with big companies as an entrepreneur
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About Bill Smith:
Bill Smith is the founder and CEO of Landing, the industry’s first membership-based leasing model for long-term living. The company provides members with access to a network of fully-finished and unfurnished apartments with flexible leases to accommodate the needs of today’s modern renter.
Founded in June of 2019, Bill created Landing to resolve the pain points of traditional renting that he experienced first hand when he moved to San Francisco in 2016. Faced with stubborn leases, high moving costs and a largely offline experience, Bill set out to create a more seamless renting experience and change the way people live with Landing.
A lifelong entrepreneur, before Landing, Bill was the founder and CEO of Shipt, the online grocery delivery marketplace, which he sold to Target for $550M in December of 2017.
Connect with Bill Smith:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m super, super excited with the founder that we have today. He’s built many, many companies, incredible stories, incredible exits, but I don’t want to make anyone wait any longer, so let’s welcome our guest today, Bill Smith, welcome to the show.
Bill Smith: Thank you. I’m so glad to be here with you.
Alejandro: Born in Birmingham, Alabama. How was life growing up there?
Bill Smith: It was great. I think I had a great childhood. I’ve always loved Birmingham. It’s a great city; it’s a great, easy place to live, and so I had a great childhood here.
Alejandro: I think one thing that really influenced you and the career that you’ve chosen as an entrepreneur was the fact that you saw that at home early.
Bill Smith: I did. My father was an entrepreneur his whole life, and I was able to grow up seeing him build businesses. The one that was probably the most interesting to me was my father got into the wireless business when I was two. This was in the mid-‘80s when cellular phones were just getting out in the consumer market, so I was able to grow up seeing him build a business in that space, which was really cool.
Alejandro: Tell us about receiving your computer at five-years-old. I don’t even think I got my PlayStation until I was ten. So, what were you doing with a computer at five?
Bill Smith: My parents split at an early age, and my mom worked a ton. She was a medical transcriptionist. She got a computer, somehow, when I was five years old, and I believe it was a 386 for those that were in technology back in those days, and it had DOS. I started playing with it, and I was instantly attracted to technology from an early age. I started learning how to write code. I can remember writing BASIC back then and figuring out technology, and all of that experience that I had at a young age has really helped me so much over the years as I’ve built businesses.
Alejandro: Let’s talk about building businesses. The first one came knocking when you were in high school. How crazy is that? Tell us about this.
Bill Smith: I actually had my first job when I was 11. I always loved to work, but the first real business I had was, I was what they called an authorized agent for one of the cellular carriers, which was T-Mobile back then. I started selling cell phones as an outside salesperson while I was in high school, and I was making great money. I was making a few thousand dollars a month selling these phones. I decided I wanted to start a business and open up my own store, basically. I opened my own store. I ended up having a second store, and that’s how I got my start in the business world.
Alejandro: Whatever happened with this business?
Bill Smith: I ended up selling the cellular business after a few years, and that was fun, but it definitely wasn’t the business that I wanted to build long-term. I ended up starting a company called Insight, which is a company that issues payroll cards. It’s basically a fintech company before that term was thrown around a bunch. When prepaid Visa cards were just coming out and just becoming a thing, I got into that space and ended up building a company that had national distribution, and I sold it to Green Dot, which is a public company in the space, and I think the largest company in prepaid at the time.
Alejandro: Here’s a company where you didn’t raise any money, and you built from the ground up, and where you actually had the exposure to seeing how the full cycle is of building, scaling, and exiting a business. How was being able to see that from a 30,000-foot view and know that it can be done?
Bill Smith: It gets easier every time. Once you’ve seen the movie, it definitely gets easier. I still had a ton to learn and still do today, but at the time, selling the company to a public company, I was really lucky in that. The buyers were amazing. I loved working with them. They were bought into the business. I kept all my employees, and brand, and all that, so it’s cool. It was a really great experience.
Alejandro: One thing that is remarkable here is that you actually didn’t go to college. You taught yourself everything.
Bill Smith: You know, I did. I’d say I had to learn a lot of it the hard way. I had great parents, and that set me up for success and being able to get out there and figure things out. My parents were always very supportive of me from a young age of going out and figuring out businesses and supported all the curiosity I had. I was doing these businesses back before there was so much knowledge and talk of entrepreneurship and business. From my first couple of companies, I didn’t know anybody or have any other friends that were building businesses because I was doing it at such a young age.
Alejandro: One thing that is really interesting here – I enjoy my trips to the grocery, but you had one that was life-changing, so tell us what happened there.
Bill Smith: Fast-forward after I sold Insight, I went to the grocery store, to Publix, with my newborn and one-year-old on a Sunday afternoon. I experienced first-hand the pain of grocery shopping with kids. Both of my children were crying in the grocery cart, and we were thinking, “We’ve just got to get out of here and get back to the house and put these kids down for their naps.” In the parking lot of this Publix store, I looked at my wife, and I said, “You know what? I’m going to solve this problem. I’m going to figure out a way to deliver groceries to people.” That was the beginning of what became Shipt. Grocery delivery had existed in the Northeast and in New York for a long time but didn’t exist in the rest of America, and that was the problem I set out to solve.
Alejandro: Here is your third company, so you’ve been around the block at this time. When you were looking into the idea and bringing it to life and validating it, what process did you follow that you had learned from your previous companies?
Bill Smith: One of the key pieces of this was, I wanted to test and see if there was a real demand for grocery delivery before I invested in building out the software, and hiring a team, etc. I think a lot of people will tell you, “Oh, yeah. That’s a cool idea.” Most people don’t want to tell you the truth that a lot of ideas aren’t great ideas. The one way I found to test the demand is to see if somebody will pay me for it. If people will get their credit cards out, that’s a great true test of demand. My goal was to get 1,000 people to signup and pay for a one-year membership for grocery delivery before we wrote the first line of code. We put together this super, low-quality video that would be able to show people what this could look like and said, “Look. If we get 1,000 people to sign up, we’ll build it. Within three weeks, we got 1,000 people in Birmingham to sign up. We didn’t spend any money on customer acquisition or anything like that. It was all through word-of-mouth. We went to work building it and launched it three months later.
Alejandro: Wow. What was that process? You finally get this validation; you have all these people via word-of-mouth, then you know that you’ve targeted or have struck a nerve in the market. Once you realize that there is something there worth exploring, what do you do in order to bring this to life? What is that process or that journey?
Bill Smith: The first thing I would figure out is, what’s the team going to look like? I knew I had to build that initial team that could build a product and get it launched. When I’m building a new company, I like to get really close to the customer experience and in every detail of how that product is actually going to be executed. The grocery business is very complex, actually. One of the biggest hurdles we had to figure out early on was how we would build a catalog of all of the grocery items that are in the store. Your typical grocery store has like 40,000 items in it. I called one of the large grocery chains and said, “I’m Bill Smith. I’m building a company; I’m building a grocery marketplace, and we’re going to provide delivery. Can we partner with you?” You can guess what their answer was: “No, thanks. We have it all figured out.” I had to figure out another way to get access to this data that did not exist on the internet. What we ended up deciding to do is send people into grocery stores and go through all these different ways of taking cameras and taking pictures and doing all these other things to ultimately figure out what products were available to build our first catalog.
Alejandro: Wow. What an incredible journey. So, you are figuring out what that is going to look like, and then eventually, when you bring this to life, what ended up being the business model so that the people that are listening get it?
Bill Smith: The business model for Shipt was all membership-based, or at least it was at the time where you’d pay $99 per year. You would get unlimited delivery of groceries. Every time you place an order, we would send out our shoppers, which are independent contractors, and they would get an order on their app, and they’d go in the store and pick the perfect avocado and all the items that you order and deliver them to your home, and you’d pay for the groceries. Between what you paid for the groceries and the membership, we were able to build a sustainable business.
Alejandro: Why do you say that retailers were not so welcoming to working with you guys?
Bill Smith: I think it’s the challenge with every large company, which is most large company’s initial reaction is always defensive, particularly when there’s a new technology or a new product. Then you also have people that work inside companies, and sometimes, they’re not incentivized to have someone else that has figured out how to do something that maybe they thought they should have figured out if that makes any sense. That’s the challenge. Plus, when you’re a large company, and you have somebody that comes along and is a small entrepreneur, there’s a lot of risks, at least a lot of perceived risk in working with people like that. You don’t get fired for hiring McKinsey, but you can get fired for hiring some guy from Birmingham to build a grocery delivery marketplace for you. That’s the way I see it.
Alejandro: Yeah, and in this case, when you’re building this, you actually invested a little of your money to get this up and running. But, eventually, you realized that this is going to require a bit more funds. What was that moment like where you needed a little extra muscle on the financing, and how did you go about it?
Bill Smith: I initially put a million dollars into Shipt, and I think, ultimately, I had about $3 million of my own capital invested. I realized, “Man! I’m going to need to raise a lot of money.” I had never raised capital from anybody before, and I had to learn how VC worked. There were a few VCs that were reaching out to me, I guess, as they heard of Shipt. We took some meetings and started doing that. Then I realized that all the capital for this is really in the Bay Area. So, I traveled to San Francisco for my first time. I went out and started meeting VCs. I probably met maybe 40 or 50 different investors, and it was a challenging time to raise. I think this was the beginning of 2016. I think I can remember the SaaS market had a major downturn in the public markets at the time. Then there were also other companies in the space that have raised a significant amount of capital compared to where we were. But, ultimately, we found a great partner in Greycroft, and they backed us, and we raised $20 million for our Series A.
Alejandro: What was the entire amount that you guys raised for Shipt?
Bill Smith: From start to finish, I believe we raised $65 million, and we only deployed about $35 million of that. We ended up spending about $35 million to build a business that was doing $500 million in revenue.
Alejandro: It doesn’t seem like you really needed the money because you didn’t deploy all of it. So, why did you end up raising the money?
Bill Smith: We needed to raise the money if we continued as an independent company, but we literally closed our Series B about two or three months before the company was sold.
Alejandro: Going back to what we were talking about, all the retailers saying, no. Then, all the time here realizing you have to raise money and going through the roadshow of raising that financing, it was quite a process with Shipt. What was that point in time during the lifespan of the business where you realized, “I think we’re onto something”?
Bill Smith: I knew we were onto something from the very early days. We launched our first city, I think, in April. Within three months, we launched the next four markets, and they were all in Florida. We had thousands of people signing up for the service, and we couldn’t keep up with demand, so I knew immediately that we were onto something. Once we started hitting milestones, like our first million orders, we started to land partnerships with large retailers. That’s when it became clear that “This is really going to be an enduring company.”
Alejandro: And during that process, you did receive an offer that you rejected. What happened with that story?
Bill Smith: It started out as an interesting time. Amazon bought Whole Foods, and I was actually on vacation celebrating my Father’s birthday. I woke up, and I saw this news, and of course, I spent the whole day talking to investors and board members about what that could mean for us. Within a week, we started to take calls from large retailers that were interested in talking to us either about joining Shipt in a partnership or buying the company. One of those companies offered us a few hundred million dollars. I can remember making the phone call to say, “I really appreciate your interest, but this just doesn’t work for us. We’re not for sale.” That was an interesting moment because I can remember thinking that if I ever started a business that was worth $100 million, I would have reached the precipice. I thought that was going to be the greatest accomplishment, so for me to get an offer at that point for well beyond that and have the support from my board and my team and decided, “We’re going to continue forward,” that was a memorable day.
Alejandro: It sounds like a lot of zeros – turning down a lot of zeros. How was that moment for you? Here you are, someone that hasn’t gone to college, that has built this incredible business, and turning down an offering of hundreds of millions. Probably, when you were on the line, you were like, “I can’t believe right now what I’m doing.” Is that right?
Bill Smith: I couldn’t believe it. No, I couldn’t. It was a crazy moment because, at that point, I had to have faith that this is going to pay out, and this is ultimately going to be a company that’s much larger and much more valuable. My thinking on this has changed even since then, even since selling Shipt. When I think about building companies now, I’m not interested in selling this company. I don’t think I’ll ever sell my current business. I think it’s much better if you can continue to build for a very long period of time, but you really have to go into the company from day one with that type of mindset, I think.
Alejandro: Why did you take more seriously the time when Target called?
Bill Smith: First, it was Target. [Laughter] Target is an amazing company and loved by so many consumers in the U.S. and a really well-respected brand. My wife and I are loyal Target shoppers, so when they called, it was pretty exciting. The CEO flew to Birmingham and had dinner with me. I just knew that this is a team that really gets it. They really understood where the market was going and wanted to go big in delivery. And at the same time, they wanted Shipt to remain as an independent entity and support other retailers. That was really key to me. I built Shipt in partnership with some really amazing regional and national grocery retailers, and I didn’t want to sell the company to another player that was going to shut down the current model and just use the platform. Does that make sense?
Alejandro: Yeah. So, being insiders here, Bill, what was that day like when you inked the deal, which ended up being reported being $550 million?
Bill Smith: We signed the deal before it was announced, of course, and we were really heads-down for a while just making sure it closed. Once the deal closed, and we were able to announce it to our team, it was an amazing day, but it’s also bitter-sweet. I had this company that my team and I had put so much effort into building, and now selling it to the next company, and you hope they do great things with it. So, it’s a mix of emotions.
Alejandro: Yeah. You know, there are a lot of people that talk about it as being like a loss in your family, like someone passing away. It’s just a rollercoaster, so I can totally get that. Then, after that, you joined forces with Shipt and Target. You ended up growing the business to over $2 billion, and then you realized that maybe it was time to go at it again. How was that for you?
Bill Smith: Once that first anniversary of the sale came around, I started to think about really where should I be spending my time? I think a lot about return on time. Time is the only thing that we can’t get back. You can always make more money, but you can’t make more time. I started to think about what was next, and I wanted to find a company that I could be excited about building for the next few decades. I wanted to find a business that I wouldn’t be selling after a few years and that I could be interested in. I chose real estate because it’s this massive category; it’s generally offline and pretty old school, I think, that consumers want a new approach. I personally had experienced a huge pain point, so the first apartment I ever rented, I rented in San Francisco when I was building Shipt. I thought it would be super simple, and it’s complicated. I’m having to call all these people and get cashier’s checks and sign paper leases and all this kind of stuff. I decided to go out and solve that problem.
Alejandro: Tell us, what was this process like of putting what you said you did with Shipt, which was putting together the team and what that would look like? Now that you really understood what an A+ team looked like, how did you go about finding the right people that would join you in the journey with Landing?
Bill Smith: I have to say it was easier with Landing than it was with Shipt because I had a track record at that point. But it’s still not a slam-dunk. It still takes a lot of time, and you’ve got to have people that will trust you to leave whatever they’re doing that’s currently successful and have faith that this new company is going to work out. I spent a ton of time building that team, and I have to say, I have an amazing team here at Landing. Then, I started to work on this product within four weeks of leaving Shipt, so very quickly. It’s a complex product. We’re solving a complex problem, which people are interested in joining, so it’s been really exciting.
Alejandro: Tell us about the business model. How do you guys make money with Landing?
Bill Smith: Let me tell you first what the experience is. Landing is Living as a Service. Instead of going out and signing a one-year lease and having to own furniture that you constantly move around from apartment to apartment, and paying deposits, and all that kind of stuff, you can just opt to be a Landing member. It’s $199 per year, and that gets you access to our network of apartments that are in 78 cities across the U.S. Once you’re a member, you just open the app, and you pick the apartment that you want to live in. You show up. It’s fully furnished with our exclusive line of furniture that’s all designed by our team, and it’s amazing. I’ve always wanted to live at the Four Seasons. I’ve always loved that kind of thought. This is essentially that. You get to go live in this amazing apartment, but you don’t have any of the headaches or hassles. Then, you get the flexibility to move to a new neighborhood, or if you want to take a new job in a new city or live in Miami for six months, you just open up your app; you choose your next place, and you show up and live.
Alejandro: Wow. That’s pretty cool. Obviously, this is the future of living. Now, especially with everything that we’ve seen with COVID and so forth, I’m sure there are all types of shifts and movements that you guys are seeing, as well, with Landing.
Bill Smith: Yeah. Look. This is the future of living. I think that really is the way that people want to live. I thought it would take a decade for the mindset to shift this direction, but COVID has accelerated that, where people have realized, “I can work from anywhere now.” I think the genie is out of the bottle on remote work. I think people are going to have that flexibility, and you need a platform that can support that. The existing marketplace really doesn’t fulfill this need today in the way that it needs to be filled. With Landing, we were luckily in the right place at the right time and have benefited from all the change that’s happening in the way that people live now.
Alejandro: Yeah, and definitely even with concierge services. You don’t get that in the normal living, so definitely Four Seasons’ style.
Bill Smith: You should try it out. It’s pretty awesome.
Alejandro: Very cool. Why did you guys decide to raise money? It seems that after all those exits that you had under your belt, I’m sure that it was not a problem for you to just finance this thing, so why get outside capital?
Bill Smith: Look. I think outside capital does a lot of things for you. First, it’s not just about the money. It’s about the people. I found that the partners that I’ve had that invested in Shipt and invested in Landing have been tremendously helpful in just thinking about the strategy and recruiting talent and the validation that’s provided there, so I found that to be huge. And this is the business that, at the rate it’s growing, needs a lot of capital. So it’s nice to have other people that are on the team and helping out to create a great business.
Alejandro: I’m sure that you knew the kind of investors that you wanted for this, the type of network, the type of engagement or interactions that you were going to have with them, and how you were going to have them work for you at a board level, not you reporting to them, which is what happens, unfortunately, in many boards. But, in this case, why did you decide to go for, let’s say, Maveron, or Greycroft, or even Foundry Group?
Bill Smith: I like to build relationships with people over a long period of time. When I think about my history, everyone that has invested with me in the past has always come along to the next thing. Greycroft invested in Shipt. They were the first investors in Landing. My partner, Dan Levitan at Maveron, invested in Shipt, as well. I build relationships with people, and I really like to work with those people over a very long period of time.
Alejandro: One thing that I find really amazing from your journey is that you’ve jumped from one sector to the other. You first do fintech, then you go into grocery, and now you’re going to real estate. How do you get up-to-speed in a completely new environment and new industry?
Bill Smith: I love doing this. The first thing I say is after I’ve built a company, I would never go back and do anything close to it ever again because once you know all the problems and how hard it is, you never want to deal with it again, or, at least, I never want to deal with it again. I like the switching, and I think going in kind of naively into a new business is actually the only way that most people would be willing to do it because if you knew how hard it was going to be, you might not do it in the first place. The way I like to figure things out is I literally go down to the transaction level. That’s what I do. I like to figure out how does this transaction actually work? Who are the participants? How does the money move? What are the contracts? I get down to that level in every business, and then I build it from there once I’ve identified that there’s demand for it.
Alejandro: One of the things that I like to expand on because I think it affects probably all the people that are listening to us here is that with COVID, you were alluding to it that now you don’t need to go to New York City, to sit down at your desk, and live close to the office, where it’s probably a shoebox. Now, you can do it remotely. You can perhaps go to the office from time-to-time. I think the companies that don’t offer remote work are going to play at a disadvantage against others. What do you think is going to be that world that we are going to be living in, where essentially things happen remotely, and you can live wherever you want?
Bill Smith: I think it’s going to be a mix. I don’t think that we’ll be all in on 100% remote work for everyone. I think it will depend on the role that you’re in. But the model that seems to be playing out will be a model where you can live in a bunch of different cities, work with the same company. I think larger companies will have multiple regional offices. Maybe you used to work in the Bay Area. Now you live in Austin, but your company has an office there, and maybe you go into the office two or three days a week, and you work from home the other days. I think it’s going to look more flexible, but I do think there is a mixed value from being in person. Still, to this day, nobody has been able to replicate that experience, so I think it will be more of a mix.
Alejandro: In Landing’s case, how big is Landing today? What’s the scope or the size or anything that you can share in terms of maybe the number of employees or anything else for the people that are listening to understand how big Landing is today?
Bill Smith: We have 10,000 apartments in our network today in the U.S. We have about 500 people that work with us, either employees or contractors across the country.
Alejandro: That’s amazing. Bill, imagine you go to sleep tonight – a tremendous snooze. You wake up five years later. Imagine. You’ve been an entrepreneur all your life; you probably don’t even sleep. You work in your sleep, Bill. But you wake up five years later in a world where the vision of Landing is fully realized. What does that world look like?
Bill Smith: I think, at that point, Landing is ubiquitous with living. I think it’s as simple as – today, if you were going to order food delivery, you might have your favorite one that you trust, and you’re going to go there, and you get what you want. I think that will be the same experience with Landing, where, at that point, anybody that’s thinking about renting an apartment or moving to the next city will just open up their Landing app, and they’ll choose where they want to be, and they’ll show up, and it will be amazing.
Alejandro: I love it. It definitely sounds amazing. Bill, one of the questions that I ask the guests that come on the show is if you had the opportunity to go into a time machine, and we’re bringing you back to Birmingham, AL, to that point where, in high school, you were about to build your first thing. Let’s say you had that ear from that younger Bill. Obviously, our younger selves never listen but imagine that younger Bill would listen. And you had the opportunity to give yourself one piece of advice before launching a business. What would that be, and why knowing what you know now?
Bill Smith: It would be, focus on getting the best talent from day one. That’s one of the things that I’ve learned and seen play out is that if I can just have the best people on our team and always be building that amazing talent, that’s going to be the best advice. That’s what I’d tell myself.
Alejandro: Just to expand on this, what has been your biggest lesson around people?
Bill Smith: I think that people are all the difference. I’ve always said that I like to build businesses in a people-first way, and I think it all comes down to people. It’s not just having the best people. It’s how you treat people and the culture around that. That’s one of the things, one of the common links, across particularly Shipt and Landing, that we’ve been able to use to differentiate is we have amazing frontline people. The way that the culture you build there with the frontline is key. Everyone talks about having a great experience for engineers and people like that, but what is it like for the person that’s shopping for groceries or cleaning apartments? If I can create an environment where that person is valued and appreciated and has upward mobility, that’s a great outcome for everybody, and that’s how you build the best experience for your customers.
Alejandro: I love it, Bill. For the folks that are listening, what is the best way for them to reach out and say hi?
Bill Smith: They can shoot me a message: [email protected].
Alejandro: That’s amazing. Very easy. Well, Bill, thank you so much for being on the DealMakers show today.
Bill Smith: It was awesome to be with you. Thank you so much. I’ll see you soon.
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