Rent hasn't changed for several decades. In 2019, 36% of the 122.8 million households in the United States were renting their homes which is more than at any point in the past 50 years. The median price of a home is up nearly 70% in the last decade while median income has grown less than 30% in the same period. Homeownership and building wealth are increasingly out of reach for Americans. When homeownership isn't feasible, more people rent, and rent prices skyrocket as they have done for the past 20 years. The multifamily housing industry is known for being slow to adopt new technology. However, increasing competition and the COVID-19 pandemic paired with generational shifts in apartment ownership to a younger more tech-savvy group has created many opportunities for technology companies to enter the multi-family housing market.
Antler US portfolio company Watson Living is making rent rewarding financially and through improved quality of living. Watson's vision is to reimagine the way local economies function by helping apartment owners create better living experiences for their residents. Their approach leverages the proven loyalty and rewards business model that has worked for decades with hotels, credit cards, and retail businesses. The company applies the best features from these industries and customizes them to work for the multifamily industry, delivering much more than your typical one-dimensional points-based rewards program. Co-founders Chou Hoytt and Andrew Firestone took their combined experience in multifamily real estate and financial services and built the first-ever cash loyalty and rewards program for rental housing communities that is enabled by digital banking technology. Through Watson Living, landlords see more engaged residents, improved online reputation, and substantial financial returns. Residents improve their financial wellness and living experience, while local businesses attract sustained local customers through Watson's community partnerships.
It's a win-win.
Caroline Healey sat down with the team to discuss Watson Living and how they are revolutionizing the rental housing industry.
Tell me about your background and why you and Chou started Watson?
Chou and I met at Antler in New York in 2019. We immediately bonded over shared values and an interest in solving the affordable housing crisis in the U.S. Chou was a former real estate private equity guy, who also ran his family's management company while attending Stanford business school. I had started a rental housing management company and invested in real estate and financial services technology at a venture fund in San Francisco. We both knew that there were problems in rental housing and after we got funding from Antler, we spent over a year interviewing hundreds of property managers about their problems and how we might be able to solve them with software and financial services. We built and tested products for these owners, constantly improving our understanding of how their businesses worked, and out of that intense and iterative process came Watson. We founded the company to make renting rewarding financially and improve the quality of life for renters, property managers, and local businesses.
Rewards and loyalty programs have been used to great effect for decades in hotels, credit cards, and airlines. What differentiates you from other companies in the space?
The points based loyalty and rewards business model is prolific and proven to increase profits. You've seen it work for hotels (Hilton Rewards), credit cards (American Express Points), and in retail (Starbucks Rewards). However, the multi-family apartment business has increased complexity compared to credit cards, hotels, and stores. Watson Living created the first cash loyalty and rewards program that is customized for multifamily operators and built as a digital banking app. The industry-specific features, such as concessions optimization, online reputation improvement (ORA score), and on time rent payment reporting to credit bureaus make it the only full service loyalty, rewards, and payments platform for apartment communities. Companies like Modern Message or Piñata gamify the accumulation of earning points that can become gift cards. This creates a less desirable user experience that caters to only some types of housing, where residents are willing to jump through a bunch of hoops to earn a free coffee. With Watson, everything is instant and cash-based. Watson's banking and payments platform can deliver not only rewards for good leasing behavior but also solve a payments problem for management companies for things like instant security deposit returns that might otherwise take months, or resident referral bonuses that don't work as a rent credit. The robustness of the Watson payments platform allows it to solve more and larger problems for our customers than any points based gift card program, creating more value and impact for all parties involved.
How does the Watson Living rewards program work?
We work closely with each management company or ownership group to identify the best way to apply the Watson platform to their business. A client will tell us what problems they have, what types of properties they manage, and how much budget they have allocated for those problems. Watson will then design a program for each property that targets the goals of the management team in the most optimal way possible with no incremental work required by the onsite teams or ownership groups. Our system learns over time and constantly improves to create optimal outcomes for residents, property managers, and the surrounding communities. It's like magic, you turn on Watson and we do the rest. Onboarding and training for teams take less than an hour and management companies pay a small subscription fee for unlimited use of the platform. Some of the common applications of Watson for clients include:
1. Resident Referrals: Incentivize and administer resident referrals with instant payments.
2. Online Reputation: Improve brand reputation, ORA scores, online reviews, and conversion rates.
3. Concessions Optimization: Repurpose concessions as cash rewards (marketing expenses) to decrease concessions cost and increase asset value.
4. Lease Renewals: Incentivize and market early renewals to improve budget forecasting accuracy and renewal rates.
5. Gift Card Replacement: Save time, money, and resources, by instantly issuing a cash card from Watson instead of using gift cards for incentives.
6. Brand Building: Establish or improve your brand experience across your portfolio to drive long term resident engagement with your company, not just their current home.
7. Cash Rewards Administration: Securely administer funds to residents in seconds for security deposit return, incentives, gifts, or any other need.
8. Engagement: Increase resident engagement with rewards throughout the lease lifecycle to make champions of your residents.
Watson collects data on each of these use cases over time and uses that to demonstrate the success of the program with live performance data. Each of these categories saves the management team time and money with almost zero ongoing work from onsite teams. The universality and flexibility of the platform (everyone loves cash) tend to spark buy-in from everyone from the leasing agent to the property manager, to regional management, and ownership, to the residents themselves.
What's Watson's vision for the future?
Watson Living will put $1 billion back into the pockets of residents at partner communities every year that can be saved or reinvested back into their local economies. We are building a more equitable housing model for one hundred million renters, thousands of property managers, and millions of neighborhood businesses. $500B is spent on rent each year in the U.S. As housing prices rise and homeownership becomes increasingly out of reach for millions of Americans, Watson aims to level the playing field by reducing the absolute cost of living through efficiencies on consumers' largest expenses, rent and living. Watson is building tools to help residents build credit by up to 50 points per year and earn money by being a good neighbor. This improvement in financial wellness can impact people's ability to repay student loans, buy a home, and achieve financial freedom. Improved financial wellness for renters will make a material difference for apartment community operators and the surrounding communities.
To learn more about Watson Living, click here, or read about Watson in The Wall Street Journal & Forbes. To download the Watson Living iOS or Android app, encourage your landlord to contact us so we can bring rewards to you!
