YouSaid · the spoken record

Francis Davidson

lines on the record: 53
first: 2021-11-30
most recent: 2021-11-30
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“A rematch next year will be much better, but I thought that was such a nice kindness because it's unusual and it's unexpected. And she knows that it can be a one-”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, this is really a funny one. So, my girlfriend, she knows me very well. I mean, we started dating March 14th, 2020, which was perfect timing for COVID, I guess. And we've spent every day together since then. It's been a really wonderful story. And she knows me quite well. And she introduced me to Squash like a couple months ago. So I started playing squash. But like, I'm a beginner. I don't know what I'm doing. It was my birthday month ago. And she decided to organize a squash tournament called the Francis Games where a bunch of people showed up and we played a squash tournament as a beginner against players that were actually quite good. And as a birthday present, I basically got my ass kicked by every single player at that tournament and finished at the bottom of the pile. But she knew that that would actually be some of the would motivate me quite a lot. And I'd find really funny and entertaining. Now I'm super motivated for Francis Games number two, hopefully.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Return a negative ROI to whoever would be building that technology and offering it to their franchisees. And so even though it was a really great trick for Wall Street back then, and it did create some value, at least on paper initially, it really caused this technological adoption debt that we think now provides for really, really interesting opportunity that no one's pursuing.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Add a little bit on the reason why it's puzzling. Why is it that that hasn't been done? There's really large, there's $100 billion of market cap of companies, of hospitality brands. Why is it that they haven't built this technology already? And there's been an interesting shift that occurred in the 90s mostly, where hotel companies used to actually operate and own even the properties that they had under their flags, but then they decided to actually split these companies in half. And on the one side, there was the real estate company, the real estate investment trust. They spun it out, that trades separately. And now they have basically the core, the hospitality brands that we know today are mostly franchising businesses. And the franchise contracts, once you dig under the hood, really what they are is a percentage of revenue contract. They take call it 15% of top line. There's no incentive in there to ensure that the cost structure is reduced. In fact, if the cost structure is reduced, that means that some of those gains can be passed over to customers that will deteriorate the value of these franchise contracts because they make a percentage of the top line. So if I cut costs by 50% and I can offer 20% lower price to my customers, that would actually”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot of players in the space, even our business model is one that over 10 companies have decided to pursue like a really obvious idea to pursue. And therefore, there's a lot of competition for it. I like what I'm seeing on the glamping front and experiences that are almost nature forward, but still with a high degree of consistency and quality. I think I'm seeing the rise of also some boutique brands in Europe and the US, typically ones that are led by someone who's really design-centric, designed forward. I think there's a model that's been really great. They've been around for much longer than we have, but there's a lot of innovation going on in a brand like Citizen M. There's a lot to learn there based in the Netherlands, and they're expanding to the US. There's a lot of interesting models out there and source of inspiration that we could have, I think what becomes challenging is to reconcile models that are really interesting from a guest experience perspective and ones that can really scale from a business perspective. I think a key component there is really the cost optimization and the utilization of technology to kind of rebuilding of the hospitality technology stack.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Take us again years in order to really perfect the technology that we're building and even for our own selves. Once we feel really good about what we've done and we feel like there's substantial areas of innovation and R&D that are ready to be packaged and offered to other companies, we're going to be offering our software tools a little bit like AWS style, build it for your own self, but really within mind the idea that this is something that's going to be appealing for a lot of others as well.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that some brands are doing a better job of modernizing their service. And it is a dynamic market. And so that actually motivates us quite a bit to keep innovating really rapidly. But we're seeing some brands announce that housekeeping is going to be by request only instead of being offered as a default in certain brands, in some kind of sub-segments of their brands. We're seeing the importance of offering a completely keyless frictionless contact list check-in experience as something that I know is on the radar of a lot more companies right now. So there's some of these themes that the industry is waking up to and being like, oh yeah, you know what? We are behind and we need to invest some more. And so there's going to be quite a lot of need in the hospitality. What it means for us is that part of our vision that I didn't explain because it doesn't quite relate to the customer experience, but it is meaningful business driver for us will be to white label and offer our suite of software services, what we call the hospitality operating system to other operators and other brands. And so it's going to”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Pop open the calendar so that the guests can then figure out when they want to extend their state until to have that happen in real time automatically. That's what we mean by modern and frictionless service is that without even a human in the loop allow you to through a messaging interface complete a lot of the actions that otherwise would require someone to step in but do so in real time.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Messaging and all the investments that could be done within messaging. So, I mean, maybe messaging is underselling it. It's not just the idea that you can go back and forth and that you can do that with rich media and so on, but that we're going to incorporate features, functions within the messaging interface. So for example, you're going to say something like, hey, can I extend my stay? Which by the way, you can do on the app with a couple taps, but we know that some guests even today will reach out to us, send us an SMS or message us, and say, hey, I want to extend my stay. So instead of redirecting them or doing the work manually, having someone on our team actually change the dates on their behalf, what we're going to do is pop up a calendar inside of the messaging interface and then allow you to just select that date and then complete the payment within that same interface. And likewise for a variety of other features that are present inside of the app, but roll them in with sometimes even visual UI so that you can complete those tasks by yourself using increasing amounts of natural language processing in order to deliver those kinds of features. So if you message us, hey, I want to extend my stay, instead of having someone on our team push a button that says, hey, here.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Design, and then things almost never go wrong. The process power that Hamilton Hemmler would call it of 15 years of having identified micro issues and identified root causes and implemented system-wide solutions that make the probability of that issue coming back to the system near zero. So I think 15 years into the building, the business, hopefully, be really far along these three investment areas that I think are not going to change in the next decade and be truly global brand, right? Be recognized Saunders is really relatively unknown today simply because we don't have enough supply to serve.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm hoping that we're actually going to fulfill the vision of being able to offer truly modern and automated operations within hospitality industry. We're really, I'd say, 20% of the way there right now. It's kind of crazy to think about the fact that we have like an engineering organization of over 100 people yet. In many years, we've only been able to build 20% of the stack. It is really a complex meaty problem to bring this industry into the modern era. So I'm hoping that we'll be much further along there, that we'll be all over the world, call it the top 100 global cities, including Asia, including Latin America, that our spaces will be featured in design magazines. I really, really love the idea of Ray and Charles Eames, for example, that not only were incredible designers, but were one that shared this philosophy that great design ought to be democratized and available to the many. And so I'm hoping that we're going to achieve a thousand dollar a night booty hotel levels of design, but at a $150 price point. So hopefully you see that modern service, you see the incredible...”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Experience do people really love it here, the level of employee engagement. So those are the five dimensions of the business where we think that there is huge value. And then for each of these, we have a much more routine cadence where we ask ourselves what are the biggest problems to solve. So every two weeks we do one of these decision-making meetings and review of the roadmap and the OKRs. And then for other departments, obviously other things that are important in the organization, it can't just be five metrics. Then we have a monthly cadence. So we've built into our customs a distribution of time that's proportional to the importance that it has to move the needle organizationally. And then there's clear executives that are responsible, the stewards of each company goal. And their company goal because every department works on them, but we've appointed individuals within the organization that are really the ones that we're going to look towards in order to actually deliver on the most important things.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Huge, huge fan of the Seven Powers. Hamilton, Hemmler, Seven Powers, Foundations of Business Strategy, I think is just a masterpiece. Read the book through Saunders Lens and tried to see how each of these powers could be built into the kinds of strategic initiatives that we pursue as a business. And really it comes down to us to five, call them co-equal company goals. And again, while avoiding the prioritization, I think it comes down to the quality of the customer experience for which there's a series of measurements, the growth, volume, and quality of growth. Of course, in the OKRs of each of these company goals, there's counterbalancing metrics to ensure that we're not going one direction at the expense of another. And then the third is our capacity to generate demand. So what we call in the hospitality industry RevPar revenue per available room, just how much monetization can we squeeze out of a room, occupancy, and price, the product of occupancy and price. And then we have the cost to serve, these efficiency metrics that we described earlier in terms of our capacity to deliver an experience, a really efficient cost structure by leveraging technology. And then finally, the employee.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Are being kind of transferred to the right people afterwards, but that infrastructure that relates to decision making and meetings, in my view, is a super important lever for organizational efficiency.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“That decision, if it's deemed to be really important company level decision, surely we want to have five, six brains think about it and reviewing each other's work before actually calling an important shot. And so every participant is going to write down their feedback. And then the meeting owner is going to appoint like a decision maker for that decision. That decision maker will go through everyone's feedback and then write down a proposed decision after conversation. And then every person that's attending the meeting will either will write down whether they agree or disagree, a plus one if they agree, if they disagree, what they would have done differently. And so it's basically like a decision-making mechanism and a way to ensure that we're collecting 360 view multiple departments, multiple individuals before actually committing to a decision. So these meetings are highly structured in a way that basically forces us to have conversations in a way that's far more productive, avoid a bunch of cognitive biases, be really robust when it comes to tracking action items and due dates. And there's a whole system that connects afterwards with Asana where we make sure that those things are kind of being kept track of and we inform out what the decisions made.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Recurring meeting, for example, for a company goal meeting, there's going to be progress against OKRs. Every two weeks, we're going to look at that green, yellow, red commentary on which OKRs are on track versus off track. We're going to do a similar thing for the roadmap progress. So of all the things that we said we'd do, are we on track or not with some commentary, holding that accountability to inputs and outputs? And then the third part is going to be what we call problem solution. What are the blockers and what is the biggest issue that we find delivering better outcomes? And what are some changes? So a proposed solution and changes that we want to bring to the organization in order to just generate better output. And instead of just having someone write the problem solution and then having a discussion, we ask every participant in the meeting to submit their written commentary ahead of time. And the people that are invited to the meeting are what's called kind of the brain trust of the meeting. So for the decisions discussed during the meeting, who are the most important relevant people in the organization, whether they're senior or junior, doesn't matter. Let's bring in the six to eight most important people and have them actually weigh in.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“If I look at just in a very abstract basis, what is it that us knowledge workers do all day? We sit in front of our computers and then we read stuff and then we write stuff and then we hear stuff and then we say stuff. That's basically the work that is done. And hopefully the things that we say and the things that we write are going to cause an organization to perform better. So the way in which that speaking and that writing and that reading occurs is really crucial how it's organized. And one of the biggest time sucks is meetings, especially for managers, business functions and so on. So the way in which meetings are run in our view is a massive decision. And so the person we've taken, I think there's quite a lot of innovation again with Amazon. Big students of Amazon have referenced them a few times, but I think there was a lot of cultural innovation there is the memo. But instead of having a memo and a reading hall of beginning of the meeting where basically you pass out a printed document, I guess in the late 90s and everyone reads and then has a chat about it. What we do is that the memo is sent 24 hours before the meeting. It has defined sections.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, I'm a big believer in trade offs and everything that one does in an organization, everything that you take on is implicitly something that you're not taking on. And likewise for customer experience, there's this belief that a company has to have only eight players. And I've come to realize just in practice, it's just not really the case. Sometimes you have, especially for like capabilities, functions that don't drive core company goals where you have someone that's doing a fine job and then you just have to prioritize, is it really worth it to try and find an A to replace that person if they're doing a fine job? Or should I just double down in other areas of the business or other teams that are performing extremely well? So it's just almost treating organizational up leveling in the same way that you would a tech roadmap where you have a backlog and you can't do everything you need to prioritize. So there's an inherent lack of focus in trying to have A's absolutely everywhere. Obviously everyone knows what to do with C's, but B's is something where I think there's actually a healthy amount of B's in an organization.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“This idea, like, wow, that sounds awesome! No one's ever told me this, and it sounds very credible, and that person's telling me it's already working. And I'm really excited about having that person implement some of these tried and true tactics inside of the organization. Another side benefit of it, especially for first-time entrepreneur like me, was just learning a function. So I want to hire a head of HR, I'm going to interview 20 heads of HR and I'm going to go through 20 hours of domain specific interviews where I'm going to basically learn from people across the market what are their best tricks in order to perform in their function. And I'm going to start building this knowledge base and a familiarity with the discipline that's going to be really helpful in overseeing it later.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Person's life story taking some notes and then having that as nuggets to build connection later on, accelerate trust building and relationship building. But the second one is what I call a deep dive domain expertise interview. And so they'll just ask questions like, what are basically your jobs to be done inside of your function? And then tell me things that you do that few people do in your function that give you a differentiated capacity to reach these kinds of outcomes. And what I'm looking for here, frankly, is to learn stuff. There's a lot of people, it turns out that have fancy, impressive resumes, but actually just don't do anything that's really different than anyone else. When it's like, if we're claiming that we're a company that's about top talent and people that really will do something special for the business, give us differentiated shot at building something great. They must be doing things differently. And if they can't articulate that and in one hour conversation, I think we're unlikely to get that kind of outlier performer. Whereas there are some folks that are just truly masters of their craft and they can't wait. That's kind of their favorite interview. Like, oh, I have so many tricks to share. Here's one thing that you could do in order to improve team engagement.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Hiring process is really about doing two things the jobs to be done are twofold. One is a prediction problem, which is will this person be a top performer? So everything in the interview process has to basically help give you signal if you're a Bayesian thinker, basically every conversation you have, every note you take, every part of the investigation is to give you a better shot at predicting whether they're going to be at the top of the performance ladder. And then the second one is sales and closing. And so I think we've designed an interview process that allows us to, at least for managers, it's very heavy, so not going to do this for every IC, but for managers and executives in particular, something that's really thorough that is going to give us a much better prediction and much better likelihood to close and bring that candidate in. Something that we look for that I think is potentially a little bit unusual is that we look for executives that are also masters of their craft. That's what we do in the second interview. The first interview is a getting to know each other story, actually like laying the tracks for the sales component if it's useful at the end, just knowing the”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Prospect of employer, this true honest perspective as to how they did in their last job, it is so much more valuable. And then what I'll do is I'll reciprocate with my own 360. It's just a really weird way to start a relationship because it's supposed to be about courting and I'm so great and you're so great and there are no problems. But when you just say, hey, here's all the stuff I'm good at, but also all the stuff people tell me I'm terrible at. It just builds this amount of trust and it just kicks off. I think the relationship in a much better way. It allows us to also have a differentiated interview process. There's a lot more stuff that we do there to be different than most companies that make it such that candidates that really are into that ghost kind of innovations are not only impressed by the fact that we're having these kinds of conversations, but they're like, wow, okay, I mean, there is meaningful innovation going on in that organization. And I'm going to learn more tricks. If I'm seeing this in the introductory process, what about how they do planning or how they hold meetings or all the other rituals that exist in the organization are likely to be things that are worthy of learning as well?”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Funnily enough, I met Reed Hastings once, and that's one piece of advice that he gave me very tactical. He said, when you hire people, references are super important. Probably even a better signal than the entire interview process. And the way that people do it is wrong. People lie when they do references, and therefore you need to basically be on video with them. And that was, I guess, pre-COVID, pre-Zoom, but he said just FaceTime them and don't tell them who the reference is about and do back channels only. And that's how you see the truth. And anything that's under that person was absolutely extraordinary. And I was so gutted that they left and I do everything to bring them back is effectively a bad reference. And so it's a really interesting filter to use. Another thing that we started using is the latest 360 or performance evaluation. I mean, that honestly, there's so much more signal there than there is in conversations with people. People are very good at interviewing sometimes, very difficult to know how they're going to do on the job. But when you see an actual 360 of peers and their reports and their boss performance evaluation that wasn't meant to be shared with.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're getting known, and our business is working really well, and therefore might make more sense to launch Abu Dhabi that's an hour away than to launch something that's in a completely different geographical area.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, we've built a market prioritization model. I'll call it prioritization because the ambition of the business is to be everywhere. It's going to take decades, but we truly want to be everywhere. So which places do we go first? There's a lot of variables in that model, but I think one of the things that's most important is just like the depth of supply. Once we start seeding the market, we want to know there's going to be years and years of growth that's available there. And then our estimate of what the economics are going to look like. And of course, markets that are better for remote work are going to do a little bit better all else equal than they would have prior to the pandemic and have been recovering faster that moves them up a little bit. The bigger factors are really the size of the market, the total aggregate dollar opportunity behind a market. And then it's operational complexity. Like, is it nearby other markets that we currently operate in? So for example, like we're not in Asia. And so even though like a Singapore or a Seoul or Tokyo sound like very appealing opportunities when you look at the spreadsheet operationally is kind of complex to do that versus say opening an Abu Dhabi because we're very successful in Dubai and we have networks.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Let me maybe start with a Saunders specific example, which is that I think there's no better way to be a digital nomad than to stay at a Saunder property. The cost is checks that box, the Wi-Fi, the comfort, the service, the consistency. If something goes wrong, we have these large buildings where we can flip you to another unit in a matter of minutes. And I've done it myself for several months in the last year and a half. And it's been absolutely wonderful. I'm not sure the extent to which we're going to be able to change consumer behavior. I think there's just a lot of people that are waking up and be like, wow, I mean, I have the capacity to spend maybe a month in Mexico and work from there because my employer is comfortable with it and what a nice life experience that could be. And I think that's going to be like a lot more people than we have rooms to fill. And we just happen to be a beneficiary or have an offering that works really well for that new demand segment that is much more substantial accelerated probably by a decade plus as a result of the pandemic.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“In the most extreme example of demand shocks that we would be way better at finding alternative ways in order to keep those rooms filled.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, in the last 18 months, we've been very, I'd say, resilient and quick in adapting to changing market conditions. Travel demand evaporates overnight, revenue falls 75% for us from March to April 2020. What we decide to do is basically pivot towards what we call an extended stay offering. So instead of having people stay in our spaces for three, four nights at a time, which is our core business, we found folks that would stay in Sonny's spaces for 14 days, 28 days plus. I myself did that for nine months with my girlfriend. We stayed in 20 plus Saunders across nine countries. So summer of 2020, we were right back to where we were pre-COVID in terms of occupancy rate. Of course, prices were lower. We had to lower our prices in order to entice that longer-term demand. But nonetheless, we managed to really outperform. That's been a really beautiful story for us of resilience because our business model takes quite a lot of risk. We actually operate these properties. It's not 90% gross margin SAS like we have operating costs, even though we're more efficient in the industry. There's some risk to our business model, but it was really wonderful to see that.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Market participants. It's all about creating the growth engine that makes it the best possible decision for a developer or property owner to work with Sonder and really comes down to the numbers.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Properties they look good. They have a good price point. They're offered with really high quality and consistency, so it's really all about supply growth. And on the supply growth side, the developers are homo economicus. Like they respond to ROI. And so it's all about basically the pitch is a side-by-side spreadsheet. It's a model. It's also the capacity to convince their lenders and other folks around them. So developers will go and have LPs and they'll even syndicate their GP stake to some of these developments and they'll have lenders, construction lenders, and then takeout lenders once the building is complete. They're going to swap out an expensive construction loan for much more inexpensive permanent financing. And so we've built a team of capital markets team to help them interface with their lenders so that objections that we can handle with the property developer themselves. There are still others that we have to convince in order to, especially for big development projects, multi-hundred units could be in the tens of millions of dollars, hundred million dollar plus projects where we have to have a team that's really credible and knows to speak the language of these other”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Need to have a value proposition to property developers on the one hand that have maybe a plot of land or maybe they're in the process of building a building or converting an office given that they're not too bullish on office anymore and they want to convert that to a hospitality use. And then on the other side it's operating assets, primarily independent hotels of which there is like a plethora, especially in Europe, our strategy there in markets like Barcelona or in Amsterdam or Paris where there's the vast majority of the property stock for hospitality is independently owned and operated not under a flag. There's oftentimes in these cities regulations that limit even the construction of new hospitality uses and so we're really constrained to the existing supply. So there's kind of a finite universe in some markets and other markets where the zoning is a little bit more lax. It's more about figuring out how we can entice property developers to work with us as their highest and best use. So listen, I think developers and convincing real estate owners to work with us is the way that this business grows. We are not a demand constrained organization. It's very easy to fill our”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Not something that you can improvise. There's a whole industry of broker dealers and people that will sit in the middle, whereas we've just ended up hiring folks that came from the industry where they actually did furniture and artwork and bedding linens procurement for some large brands and had already contacts overseas and knew and had worked with certain factories before hiring people that really, really understand how it works was really crucial there. Maybe one thing that comes to mind now is the idea that planning for the useful life of these assets. So for example when you work with a manufacturer They should also send you extra chair legs and they should send you markers for the exact finish of the wood that's being used so that you can do touch ups and maintain them over time instead of having 20 extra inventory and swap out the whole thing like you can actually repair and keep these assets useful for a very long time if you work with manufacturers that are used to delivering that care package.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Even though we've been doing this for seven plus years. So we wouldn't want owners to then just go out in the market and purchase what's available because there really is institutional knowledge that's crucial for the whole thing to work there.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we have manufacturing partners overseas in the US that we work with. We source and we buy from them. And then the owners will either give us an allowance or buy the furniture, the artwork from us. And so that way we can ensure that we're benefiting from economies of scale. There's quality control that's in place. But at the same time, we get the capital-like nature of it. So that was an evolution in our business. It's only been about a couple years that we've been doing these fully asset-like deals where owners are actually footing the bill and we're putting in almost nothing, which allows us really rapid paybacks and allows us to scale really rapidly without consuming an inordinate amount of capital. We love to have the control end to end. And there's a lot of learnings there. Hey, something so trivial, but it's taken us years to understand what kind of couches to buy. What kind of fabrics can you use for hospitality grade that will clean well and that will age well and what kind of sofa bed mechanisms can you use because a sofa bed will increase RevAR revenue per available room by 8% and a one bedroom apartment, just all these kinds of learnings. We're still not a 10 out of 10.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“This is an area where we've done both. We actually have two systems running in parallel right now, one that's in source that we've built from scratch and one that's outsourced. I think that's probably one of the mistakes that I've done building this company is that we started off doing too much in-house. Maybe that's the hutspah, the entrepreneur that's building company for the first time and then being confronted with the real world and the fact that actually the most simple thing like changing light bulbs at scale is a lot more challenging than what it turns out to be. So I think now we're much more focused on figuring out what are the true areas of R&D where differentiation is crucial. I think keyless entry systems, maybe five, six years ago, there wasn't something great, but increasingly there are great solutions out there. I don't see us investing meaningfully in that area of R&D into the future, but there are other areas, for example, like using messaging as a key component of interaction, like shifting the paradigm of service within hospitality to be messaging focused and using automation and AI in order to respond to customer requests that are frequent.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Continuous improvement system that yields really high quality consistency and predictability. So those are really high level things, but I find that the West in question is a little bit reductive. I much prefer Jeff Bezos' analogy. I was reading his charly letters recently and he asked the question like, what are the things, instead of trying to predict the future, what are the things that are not going to change? And his view is just, well, I know that people are going to want more selection and they're going to want faster delivery times and they want lower prices. And then we can invest into that for a decade. So instead of something that feels, from my perspective, a little gimmicky, like a better mattress for sure it's important, but there's hundreds of things that are really valuable. And what are those meta categories? Well, the categories that we can invest into for a decade plus are inspiring design, modern service, and exceptional quality.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Like it's just completely seamless. And this is something that, for example, like having an in-person interaction for our customer demographic isn't necessarily preferential or preferred to simply messaging back and forth and interacting with a brand using emojis and jiffies. It's just really convenient. You can do it on your phone wherever you're at in the city. You don't have to pick up a phone in the room or go down to the front desk in order to get service, but you can just do it before, after your stay, wherever you are on a device that's native without really having to wait for someone to pick up the phone on the other side. So all these little benefits. But I think the modernization of service and specifically tailoring the message and using the medium that feels native and natural to the younger demographic that is going to be the majority of travelers the next handful of years. The third thing I'd say is exceptional quality. That's something where things cannot go wrong. Travel is a high cost of failure. Hospitality is a high cost of failure market. If you spend three nights somewhere and something goes horribly wrong, it can ruin your trip. And so making sure that of the hundreds of thousands of things that could go wrong.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I'm not sure I'm going to have a great answer for your guest in house, but I can tell you for the hospital industry what the opportunity looks like. I think there's three dimensions that are super important. The one we just discussed, which I'll call inspiring design. It doesn't mean there's just one aesthetic, but it's just excellent. I am a believer in the objectivity of aesthetics being a philosophy student in college. It's a profound multi-0000 year debate, but I do believe that there's such a thing as better and worse that is objective when it comes to design. And we ought to offer things that really look great that make people feel really good. So work with an interior designer and make sure that it's really thoughtfully done. Number two is what I call modern service. The idea that there is a really easy way for a frictionless way for people to check in and get into their units, for example, for us, there's no front desk check-in process. You book on your phone, you verify your ID, once you've done it once, you don't need to do it for other stays with us. And then you just get in your room with your phone and you just.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Get design that looks like this, but without breaking the bank. And yeah, totally. Like, it doesn't even cost more to be thoughtful about it. You just have to care about it and has to be part of the ethos of the organization. Design is a word that's part of our mission statement. I don't think there's another hospitality company that has the word design inside of their mission statement. So having built that as the core value of the brand from the start has enabled us to do something that's quite differentiated.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, honestly, it's really simple. Go on Instagram and follow a bunch of popular architecture interior design accounts, study some of the good architects. And even, I mean, the Bauhaus movement, I think now is 100 years old and the Eichler homes and mid-century modern is now not something that's new. It's just really incredible design movements that have existed for a while, but just haven't been applied in the hospitality industry for what I call the mid-scale to upscale segments. There are some luxury boutique hotels that adopt that design standard that clearly like millennials and Gen Z really love and aspire to in their own homes, but for some odd reason I frankly can't still piece it together today. Why is it that the hospitality industry keeps churning out these ugly hotels? Like, I don't know how else to say it. Maybe it's a generational thing. Maybe it's just there was less importance placed on it, but we're just basically studying some of the good design that exists out there and applying it. And we've hired some folks on our team that first thing I asked was, hey, is it possible to?”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that's great insight. And I think we probably could have done a better job. We're in 39 markets today. We're just scratching the surface of market penetration. And there was a lot of advantages in scaling locally, of course. If I had done it differently, we'd probably be at”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, the way we structure our contracts obviously has to be a win for them. And so, what we're going to look at is side by side of what their pro forma looks like, ideally even historical results if it's a hotel conversion, if it's a new development, we're going to look at comp properties around and what would be the P&L of the asset. And then we're going to position, we're going to put together an offer that's just slightly better than that. Epsilon more than what they would have gotten is where we're going to start off our negotiations. And so the vast majority of the value creation of our superior cost structure is something that we get to absorb and we have to offer only a small slice of that value to owners to incite them to work with us.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“As Andre, there's no process to receive your luggage. We have luggage lockers that are self-serve. We have also what we call an essentials section where you can find extra coffee. And so basically call it guest requests are going to be self-served by the guest either in person through the physical things that we put in the property or digitally by just interacting with the app and getting that early check-in and that late checkout. Housekeeping, for example, instead of offering a daily and having someone go in, it's an opt-in mechanism. So you have to request it through the app and there's some properties specifically our larger apartment properties where we also charge to the guest per use. And we realize that actually if people knew how much it cost to clean their room every day, they would opt out of it almost always. It's not a good value going back to the ROI of that investment.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Plus percent range instead of being in the 20 to 25 percent range as a result of these costs going out the window. We say that roughly the operating costs advantage that we have versus a traditionally operated hotels in the realm of about 50%.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“See the operating cost at a property level. If you look at the real estate investment trust, for example, there was these publicly traded companies that have basically a bunch of hotel assets on their books, and they're going to generate free cash flow margins, of call it 15% to 20%, call it pre-COVID 2019 levels of free cash flow margins. For Sonder, we can generate a similar amount, if not better. I think what we showed is our steady state, what we think once we've fully built out the technology, we think we're going to be able to be at roughly 30%, what we call property level profit margins. But without owning the underlying real estate. So what's crazy is that we can generate cash flows that are similar to that of those who own the real estate, but by still delivering a large quantity of economics to the owners. So by taking on an asset, the stream of cash flows, the present value of our operations in that asset is equivalent to the underlying value of the real estate, even though we don't own it. So if we were to own the real estate, then you'd be talking about margins that are much, much higher be in the six.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Make it easy for you to get food delivery. We'd done a partnership with one of the food delivery companies so that we can just completely eliminate that service offering. Obviously, the taxi stand is another example. A lot of hotels still provide someone that whistles for the taxi and on the Sonder app, you'll be able to just request a ride directly from the app. If you're at the airport, for example, you'll be able to say like request Uber automatically puts in your destination address so you don't have to type it in. Or if you're in London, for example, where there's like seven King Streets, you're not confused. You just arrive at the right spot. So it's basically I could go on and on about the kinds of examples of things that basically require manual intervention that either things that could be automated or things that frankly just aren't necessary and can be obtained or can be delivered to the customer through a partnership that basically requires no cost on our side, but for an equally good customer experience.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Basically, we've broken down what it's like to operate a hotel and what are all the work streams that are involved in delivering a customer experience and realize that the vast majority of what happens is done manually. So I gave this trivial example of early check-in, but one reason why I love to give the early check-in and late checkout example is because over a third of all of our guests ask for an early check-in or early checkout. And the process to go and figure out, is the room available? And oh, do I need to change rooms in order to offer it to you? And even the time it takes to interact with the customer, at what time do you need it and pulling up your reservation, et cetera, consumes quite a lot of time. And we've just completely automated that process. You open up the app and you just select a new time. If you look as well at services that were once necessary, but that aren't, in our view, in an era of on-demand apps. So, for example, room service is oftentimes a money losing operation for hotels requires quite a lot of staff. 24-7 is a requirement for a lot of four or five star designation properties. What we do is just say, hey, you know what? Let's.”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“American story of consistency driving huge value, but we haven't seen that in the short term rental space. And so that was”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Been such a surprise to me building this business. I wasn't coming from an entrepreneurial family or wasn't my life's journey. I just stumble upon this problem as a college student. I was in Montreal studying at McGill and I saw a bunch of my fellow classmates were leaving for the summer internship opportunity, going back home, whatever it is. There's thousands of empty apartments that are just lying around the center of Montreal and the high season during the summer when all the tourists love to come. And I thought that I could make use of these assets. I could rent them out to travelers, pay some money to those students that otherwise would have an empty apartment and did that for a couple summers as a side gig just to earn income to get me through my college degree and realized a couple years in, I had some like 80 apartments I was managing for the summer. There was no brand that was offering an apartment alternative accommodation, alternative to a hotel that came with really high consistency and quality. There's no brand in that space. You'd seen in the hotel industry large brands like Hilton and Marriott offer standards, consistency holiday, and actually is a phenomenal all of the”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source
“Competitor size that we win the market. So there's plenty of other examples like that, but growth, unit economics, and customer experience, I view as three really crucial components that have to be carefully weighted one against the other. I think it's a mistake to just think that customer experience is the ruler above all other business objectives”
2021-11-30 · Invest Like the Best · Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253] · IDENTIFIED FROM THE TRANSCRIPT · source