Alexandre Frankel, from Housi, bets on the billionaire free housing market

A company present in 120 cities is betting that its service offering will pay the bill. Companies like iFood and Magalu have already embarked.

At 44 years old, Alexandre Frankelfounder of Vitacon with brother Ariel Frankel and the house is an entrepreneur in the real estate sector and has the branch in his veins. It just goes well beyond that. He always liked – and dedicated himself – to thinking about the city, mobility and future trends. And along with that, it brought a lot of innovation to the sector, like the trend of compacts and ultra-compacts for more than a decade. He traveled to Brazil talking about the subject: how to improve people’s quality of life, with affordable housing and still help to decarbonize large urban centers? Smaller, better-located apartments were the solution. The engagement helped in the success of Housi, a startup with only three years of history and which this year should reach R$ 100 million in revenue and already with positive results (since the middle of last year).

The compacts that he always defended, so that people could live close to work, attracted criticism from traditional entrepreneurs in the sector and was treated as a small niche at the beginning, but today accounts for about 70% of launches in São Paulo and is now widespread. in several major cities in the country. With 12 years of existence, Vitacon has already launched the equivalent of R$ 7.7 billion in general sales value (PSV) in properties, mainly in compact units. By compact, we mean apartments below 40 square meters.

Exactly a decade ago, Alexandre brought to a project in Vila Olímpia, the birthplace of Vitacon, the New York architect Graham Hill, a specialist in modular and multifunctional furniture to decorate small spaces. The company’s launch was then the smallest in the city, with 19 square meters. But this one didn’t even go down in history as the definitely smaller one. Two years later, in a week, he sold the 10-square-meter apartments, which took a car as payment, of 10 square meters in Bom Retiro, in the heart of the city of São Paulo.

Now, again ahead of his time, he dreams of zero-cost housing, in a model implemented by Housi in which the house is the channel for the consumption of all sorts of products and services. “Why don’t you pay to use Instagram? Because the companies that want to access you as a consumer generate the revenue. It’s the same logic for the house in the future.”

Another flag of Alexandre, for more than a decade, is the culture of sharing goods and services – all, of course, through technology. When Quinto Andar was still an idea being organized in the city of Campinas, Frankel bought the startup Sampa House, which he wanted to manage, but with many services attached, the rent for those who acquired a Vitacon unit thinking about rental income. The business did not take off, but it was an embryo. “Innovation has its pitfalls. Everything we do today at Housi is derived from what we plant. We surfed the changes in the sector and in the behavior of everything we implemented back then”, he evaluates, in an interview with EXAME Magazine.

Despite his passion for bricks, the entrepreneur has always been dissatisfied with the challenges of scale in the sector. The construction and development activity proved to be a regional business, after the resounding failure of companies that tried to operate on a national level — the story of PDG Realty’s bankruptcy was the greatest symbol of the end of this idea. Four years ago, Alexandre started talking, before passing the Vitacon baton to his brother Ariel, who wanted to leave the world of ‘bricks’, to dedicate himself more to the world of ‘bits’, the digital world.

Now, he is dedicated to Housi, which has 300 projects in its portfolio, spread across 120 cities in the country, but no assets on the balance sheet. More than 400 partners are built and incorporated throughout Brazil. Alexandre sets the brand and the software that operates the condominium. The latest novelty was to sell a venture of a partner developer, with the Housi brand, entirely in the metaverse. The company received a single contribution of US$ 50 million, from the manager Redpoint eventures.

Although in the current model, Housi works directly in condominiums, regardless of whether the owner or tenant lives, the expansion of the business is directly related to the expectation of expansion of the rental market in Brazil. Currently, of the national stock of 70 million homes, 21% are dedicated to leasing. Alexandre believes that this percentage is outdated and that there will be a strong expansion of rent – ​​a billionaire market yet to be better explored. In this new reality, services work as a great differential and should make the emergence of more and more specialized niches, such as student housing, for those who have pets, for the mature public and many other trends that are not even foreseen.

In 2020, Housi even tried an IPO, what has changed since then in the business?

Alexander Frankel: In the pre-pandemic period, we operated the compacts, thinking about rent management, with services. We would be a property company, with many assets. Then with the pandemic everything went to zero. No more corporate travel, no more leisure, everything. Everything stopped. We had to reinvent ourselves. An entrepreneur from the south of the country appeared wanting to put Housi as the brand of the building he was going to incorporate. Until then, we didn’t do that. But the model worked really well. It sold everything in a week, in Porto Alegre, which is a difficult place. And then it didn’t stop. As a result, managing the rent, which was Housi’s original idea, became just one more of the revenues, today with about 12% of the total. We ship everything to the developer. It’s as if the buildings were once analog and now they’ve become digital. Before, they only had one concierge. And now we ship everything in the condominium, where the resident can do everything through an application on the cell phone and inside the building itself. We now have giant companies that plug the solutions into their ventures: Rappi, iFood, Unilever, Pets, Magazine Luiza and many others. We put a car by subscription, wine cellar, market, water, pet services, laundry, security system, wi-fi, connection, Netflix, electric car charger and even notary. Now the building goes far beyond just housing.

Have you been inspired by any companies out there?

Frankel: You know not. One of the great difficulties we face is explaining what we are. I ‘am’ Brazil’s home app. There is no app, no company, that does exactly what we do. That’s why I try to look for inspiration in other sectors. And the software market is the closest. You have several cell phone manufacturers: Motorola, Samsung, Nokia and many others. But they need the Android operating system to make that product work. That’s what Housi does. Makes the condominium operational.

So you are housing software?

Frankel: I would say we are the operating system. What changes a little is also that we built this strong national brand. In a good year for the sector, Brazil has between 300 and 350 thousand launch units. Public companies must have between 30% and 40% of this total, adding them all. That is, 70% is fully pulverized. Small and medium developers, who build two buildings a year, if that, have no brand. So they use the name Housi. It’s something like the Intel inside. You take a computer made by a lesser-known manufacturer and put in a warranty.

And what else can you offer to the developer partner?

Frankel: Now we are starting to be a source of scale and, indirectly, of funding. The developer who is Housi will already have several concerns resolved, both in the structure of the enterprise, with clean energy, and in the use of materials. We deliver it ready for them. And this already qualifies them to access differentiated lines of financing because we make buildings more sustainable. Little ones can’t have that ESG structure. So we provide the solutions and models. Also, as we specify the materials, this qualifies us to negotiate much better purchase terms for this developer. Next year, for example, we already know that we will be the biggest buyers of elevators in Brazil, due to the volume of projects with the Housi flag that will go up. We are doing a kind of collective purchase. It goes for everything that is replicable, such as ceramics, crockery and metals. We are even making exclusive Housi materials. The next frontier is negotiating with the big cement companies, steel suppliers. Why not? It is a national scale that no construction company has achieved. For the first time, this benefit becomes accessible.

But, for the resident, do all these services and amenities that you provide have a cost?

Frankel: Not. On the contrary. The condo has revenue and gets cheaper. Just as Housi participates in the revenue from all transactions with partners, a part reverberates to the condominium. And the cost of investing in wine cellars, refrigerators, vendor machines, and everything else is borne by the partner company, which sells the product or service in the building.

And what is the next frontier of housing?

Frankel: My dream is zero cost housing. Everything will migrate into people’s homes. There will be a never-before-imagined revenue from media, consumption, e-commerce and housing costs will be irrelevant. So, it will be infinitely better, with more services, and cheaper. Housing will be a means. Obviously there are a lot of steps to get there. But this is the vision.

In the current model, Housi’s operation does not depend on whether the residents of the condominiums are owners or renters. However, for some time now, you have been talking about specific market niches and how rent is increasingly a trend. Do you still believe that, until we get to free housing?

Frankel: At Housi, rented properties account for 40%. And I really believe in growth. If we take, not what is in stock, but what is coming to the market, I estimate that leasing has already reached 30% and I believe it will reach 50% in the next ten to fifteen years. People are looking for an explanation for this change in the interest rate, trying to guess typology trends. For me, it’s purely behavioral and philosophical. The engine is the will of non-immobilization. Of freedom. It is not part of the youth’s conception of life. He sees no justification for immobilizing himself financially and physically either. There is nothing that makes him see sense in being illiquid, in debt, paying interest for 30 years.

But how do you see the future: will large developers become your customers or will they increasingly create their own solutions?

Frankel: They can try, but they won’t scale. The giants of the sector do how many projects per year? From 20 to 30 buildings. It’s not enough for you to add to the industry. Why would a Magalu go to the trouble of talking and managing something of this size? And today a developer cannot have the number of programmers that we have. There are almost 100. So I understand that the model is totally collaborative and cooperative. Each in their specialty. One understands everything from brick, engineering, design, land purchase and approval. He doesn’t need to understand software. We already have some big ones: Moura Dubeux, Tenda, Plano & Plano, all with an economic model. This is also a design that does not depend on the income range. Today we have around 100 partner companies and more than 200 solutions, which are completely flexible to adapt to the needs of the developer and the type of housing.

Source: Exam