Positioned to cater specifically to the Millennial demographic, this service is a brand new take on rental services.
Being trumpeted as a disrupter in the property market has not made Gil Sperling, CEO of Flow, complacent about his success as a 35-year-old millennial. Sperling made headlines when he grew his first company, Popimedia, into the largest Facebook media buyer in Africa, ultimately selling it to Publicis, one of the largest communication groups in the world.
Sperling’s BSc Engineering (Electrical) degree he acquired from Wits has certainly enhanced his natural analytical and problem-solving talents, which he and his two partners have taken to market most recently through Flow, a property rental service for tenants and landlords, positioned to cater to #GenerationRent, a specific sector of the millennial demographic.
Q: Why the property market?
A: Property is the least innovated industry and has the most to be unlocked. As the largest asset class in the world, property directly affects the basic human need for housing, yet the industry remains tenaciously hooked to the most archaic and manual of processes. I, and my business partners, Jonathan Liebmann and Daniel Levy, see this as presenting enormous opportunities to unlock incredible value through technology and Apps, and to transform the market by directly tapping into markets where it is most needed, like #GenerationRent.
Q: You use the phrase #GenerationRent; please unpack the rationale behind it?
A: #GenerationRent is related specifically to millennials who are currently trending as renters more than owners of property. The two reasons for this is affordability and lifestyle. There may be a correlation of cause and affect between the two but as inflation in property has outstripped individual earnings, millennials have been pushed out of the market because they can only afford to buy much later in life. This actually syncs quite well with the millennial lifestyle of being tied-down to one base, looking rather to be more transient and independent, which will facilitate more flexible choices later in life.
Q: What makes the youth rental market so appealing and what are the typical characteristics of this market?
A: #GenerationRent are millennials who are used to being connected all the time, and need access to information instantly. They demand instant gratification, openness and transparency. This is exactly what’s lacking in the property industry and not being addressed adequately. In being millennials ourselves, Jonathan, Dan and I can relate, which is what leads us to develop platforms that appease these characteristics and unlock new value.
Q: What does #GenerationRent look for in a rental property, and what are landlords expecting from them?
A: These renters look for apartments that are practical, close to work, well-designed and add value to their lives, but the underlying need is affordability. They also want transparency in their relationships with landlords. Conversely, landlords want least-hassle tenants and investments, and to maximise their ownership yield by retaining their best tenants and not having frequent vacancies.
Q: What is Flow, and how does the App work?
A: Tenants use the Flow App to pay their rent on time, connect to their landlord, and engage in a marketplace of partners. Each of these activities earns points which determines the user’s Flow Level. For example the earlier rent is paid, the more points are earned. The Flow Level will determine a discount level in the Flow marketplace, e.g. 50% of prepaid electricity and airtime on Level 4. The tenant’s lifestyle is therefore subsidised because the discounts can be used at various service providers they are already buying from, therefore making renting more affordable. The better the tenancy payments, the more value is unlocked, which is a significant portion of rent, generally 30% of a person's income.
Q: How big is Flow’s footprint?
A: Flow is available to all tenants and landlords in South Africa. Our marketplace partners are national so it should be relevant to all South African tenants and landlords. Once we have achieved mass adoption in South Africa we will be expanding globally. We will be evaluating which territories to expand to first.
Q: You're known as a market disruptor. What does this mean to you?
A: It's a good thing as long as disruption is created by unlocking value through innovation, rather than destructive actions. With Flow the former applies so I’ll gladly accept the ‘disrupter’ title.
Q: What are the challenges in your market?
A: Where Flow is perceived as a disruptor, friction in terms of adoption is created, particularly from some of the large agencies. However, when they embrace it, they realise how much it empowers them because it supercharges their listings with Flow Rewards. Also tenants are retained for much longer, as was proven with some of our early adopter agencies.
Q: What are the opportunities?
A: With the economy sluggish and property at a low point, consumers are struggling to make ends meet and landlords not realising good yields. This is actually an opportunity because tenants using Flow are receiving great rewards, which makes things more affordable for them, and encourages long tenancy so landlords get better, longer retained tenants, who can afford to pay their rent.
Q: Where will you achieve growth - what's next for you?
A: Growth will come from both tenants and landlords that can realise tremendous value from Flow. We're hoping to see more institutional landlords coming on board, as well as smaller landlords who own one or two properties, where Flow can create impact and sustainability for their tenants at scale.