The Business Leadership Podcast

Stella - Edited & Filler Removed
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Salli: [00:00:00] You're listening to the business leadership podcast with Edwin Frondoso.

Marcus: When you book a place, you don't really know what to expect.

there's a lot of people out there who need a software to run their vacation rental business on.

in order to be successful in this industry, you actually have to know an HVAC guy who's willing to come out to the site on a Sunday morning.

Edwin: Good morning. Good afternoon. And good evening biz leader. Welcome to another episode of the business leadership podcast. I'm your host Edwin Frondozo. And today we are featuring a special episode. From our future narrator mini series recorded live at collision conference in Toronto, Canada. In this series, we explore the future of leadership. Innovation and storytelling with visionary leaders who are not just designing products. But our creating entire new worlds and markets.

Joining [00:01:00] me is Dr. Paul Newton and together we'll be speaking with Marcus redder. Marcus is the co-founder of Hostaway and has a remarkable journey starting his first company at the age of 11. With over 10 years of experience in online marketing and various startups. Marcus now dedicates his efforts to solving problems within the vacation rental industry.

In our conversation, Marcus will share Hostaways his journey from identifying a crucial problem in vacation rental management, to becoming a leader. In the market. We'll discuss the limitations of AI. The importance of automation and the future of the vacation rental industry. So without further ado. Here we go.

We're now speaking with Marcus Raider, co founder of HostAway. How are you doing today?

Marcus: I'm doing absolutely fantastic. Thank you very much for having me here.

Edwin: Thank you for [00:02:00] taking the time to join us today. Marcus, I'm just going to jump right in. ~I want to, I want, ~I'm curious if you could share what problem is HostAway solving in the travel industry?

Marcus: A lot of startups spend a lot of time, way too much time trying to figure out the problems that I just spoke to an investor out there.

Edwin: Yeah.

Marcus: He said, these startups have no idea how to define their problem. We spent six years figuring out the problem and eventually we found out the problem was that people need vacation rental software. And accidentally the solution that we had built was vacation rental software. So the problem was actually right there.

It's a bit like when you want to watch TV, the problem is you want to watch TV, right? It's not that you're lonely. It's not that you have childhood trauma. It's not that you're happy. It's not that you just smoked weed. No, you want to watch TV because you want to watch TV and the solution is TV. We're the same.

We produce vacation rental software and the problem that it solves is that there's a lot of people out there who need a software to run their [00:03:00] vacation rental business on. Very simple.

Edwin: I love how it's clear as day for you now, Marcus. ~But, ~ walk me through in terms of that problem ~like that.~

~Were you, ~ when you're in the child industry, ~was it, ~did you just have the software sitting there or how did that look?

Marcus: So originally before we had any solution, we spoke to a bunch of people and they said here's the problem that I'm listed on Airbnb, but I don't, they don't feel my calendars. So I need to be on these other websites as well, like book.com, Expedia, Verbo. And then the calendars don't synchronize. So I got a booking here and it might already be booked on another platform. And then when we solved that problem, ~then ~there were new problems. Oh, ~but ~now I have this problem that Airbnb does this part, they check for example, the ID of the guest, but this platform doesn't.

And some other platform, they take the payment and this platform doesn't. So you needed to have all of it coordinated. ~And then yeah, ~there were a lot of ~other ~problems, but it was quite hard in the early years ~to try ~to explain that to investors, that this is a real problem. But it was actually [00:04:00] part of our marketing.

And that was a problem for our marketing as well, because how do you solve a problem when there's many different problems to be solved? ~Yeah. ~ And how do you reach the audience? ~Yeah. But ~ eventually, the audience self educated themselves, just like someone who knows, now I want a beer. You don't have to define what is the reason are you thirsty? Are you happy? What is the real ~problem? For underlying ~problem. No, you just want a beer and it's the same thing here. You just want you already know ~You want a question right? You know what, ~

Edwin: you know what you want But ~I guess ~when you're looking at it from the client side ~and I'm just enjoying this conversation when it comes to problem But ~for a problem definition, ~it's like ~you can't force them to know what They don't know yet. They're just gonna know it when they know it

Marcus: Exactly. And actually it was really good for us because we get a large part of our customers from referrals or virality. So the way people find out they need vacation rental software is they have problems in their business and they talk to someone else who's experienced and they say, Oh, I know you need vacation rental software.

A bit like you see a friend who just got fired and you say, I know what you need. You need [00:05:00] a beer. You know the solution. So that way we, all we can, all we need to do is market. Hey, you're looking for vacation at the software. We got it. And we got the best one and the best support at the best price.

Yeah. And then, the rest happens itself. Yeah.

Edwin: And I'm assuming when it comes to that, probably in that problem set, it's like a night and day for your clients. When they finally get it, they're like, Oh. I've been dreaming about this the whole time, right?

Marcus: Yeah, absolutely.

Edwin: We're sitting here in Collision and there's a lot of talk about AI, automation. I'm curious how is AI and automation revolutionizing the vacation experience nowadays?

Marcus: That's a great question. Unfortunately, I haven't seen much impressive stuff on the AI front. What I have seen, there's some in our space.

We have a marketplace at Hostaway. We have over 200 integrated software partners there. Including Airbnb, for example but there's a lot of AI startups now that can answer ~the ~guest questions by itself. ~And that, ~that I find intriguing, but what AI can't really do is solve the actual [00:06:00] problem. Let's say you're renting a house and the air conditioning doesn't turn off.

Maybe you don't know how to use it, or maybe it's broken. AI can't know that. ~Cause then. ~AI would have to know which unit is in there and ~how do you, ~what ~are the ~steps ~you need ~to take to find out what the problem is? And then AI can't also promise that someone's going to come out because how many HVAC people work on a Sunday morning?

~I know it's zero, ~exactly zero of them work on a Sunday morning. So AI can't solve that problem. But automation on the other hand has done ~a ~tremendous work in the vacation rental sector. It's ~an industry, like it has ~become an industry standard ~when you. ~When you book a place, ~it used to be so that ~you don't really know what to expect.

Are you gonna meet someone? Are you gonna have to bring some cash? Are you gonna have to bring ID? What are you gonna do? And automations have done all of this very clear. Best case, you just get a text message the day before that says, ~Hey, you're, ~when you get to the door tomorrow, the code is 1, 2, 3, 4.

Just punch it in and you're in. ~And ~that's what our software does. That's the ultimate automation. ~So ~[00:07:00] when you travel enough by renting homes you start seeing these patterns and suddenly consumers have expectations that this is how it needs to be. So it's a self feeding prophecy.

Edwin: Self feeding. And it's really frees up all of your client's time and anxiety, not anxieties, but at least the stresses that were traditionally there in terms of like from the both sides, right? From renter and rentee as well.

Marcus: Yeah. The funny thing is though, compared to the hotel industry. I sometimes am forced to use hotels, for example, I go to a lot of conferences and a hotel might be the most practical option for a short stay.

They used to be standardized. 20 years ago, the experience when checking into a hotel was exactly the same in 99 percent of the hotels around the world.

Edwin: Yeah.

Marcus: But today, for some reason, you never know what's going to happen when you enter a hotel. It's very surreal how the fragmented vacation rental market has been able to standardize itself while the hotel market has gone [00:08:00] haywire.

I was just at a hotel in downtown Miami. They had a kiosk. They didn't allow me to change or upgrade the room. And I had to ask the guy to do that manually. And then he didn't know how. Yeah it's just, yeah, it's weird. Why would an industry go backwards when you're going to go forward? You had it good 20 years ago, hotels don't change it or if you're going to change all of it so the consumers know what to expect.

Edwin: Yeah, that's really interesting. And I guess, coming from your point of view, it's so easy to recognize these. Maybe for myself, who doesn't travel that as much as you do, I don't even notice those things. But that's interesting.

Marcus: Yeah, I was just thinking, how come airlines, they don't, they can't do anything. Like even today, you have to do the same thing as 30 years ago, you have to check in. Sure, you can check in online, but Then I realized, yeah, there's regulation in place. You have to check the ID and and do all kinds of security checks.

That's why they make it so difficult. Ideally what you would do is just walk up to the [00:09:00] plane, enter it. Cause they already know who you are, right? It's on your ticket. Yeah. They can see your face. What's so hard about that? Then I realized it's regulation, but that's not what hotels are bringing in.

You need to scan your. Passport and the scanner doesn't work, which is a common problem in the airport. So basically the hotel industry is trying to bring in the problems from the airlines into their hotel lobbies. Yeah, and that's where I'm very happy. Vacation rentals are doing the opposite. They're making the easier for the guests.

Edwin: That's great. That's great. So I know we've talked about ~some not so much. ~AI automation has been a big Factor within the rental vacation space. Maybe not so much in the hotels, what are you seeing personally? If there's any other major disruptions that are shaping the industry now.

Marcus: So right now there's a very interesting, I would say almost macro trend going on, which is quite rare for this industry.

So the industry I'm talking about is vacation rental property management. So companies that manage other people's properties and rent them out. [00:10:00] What's been going on for many years is a consolidation where the big guys are buying up the small guys and it all becomes one big. All of the big ones today are failing.

Oh. Because, in order to be successful in this industry, you actually have to know an HVAC guy who's willing to come out to the site on a Sunday morning.

Edwin: The personal connections.

Marcus: And if you're a national chain, you're not gonna know an HVAC guy like that in every small town and in every beach. Town in the country, and this is why the local ones, the small ones who are managing 10, maybe 20 properties, but they know the area, they know every single plumber, they know every single hardware store, they know every single restaurant, they know the owners of the restaurants. They are shining and they're thriving right now.

Edwin: Wow, so that's a very interesting and unique perspective because it sounds like the vacation rental property manager, I don't know the property, the term, but If [00:11:00] they're localized and they have X amount, maybe there's a maximum amount of properties they have, they're crushing it because of supply chain.

Marcus: Exactly. They are. And it's it's really a market also that has a low barrier of entry. So anyone can set it up, which means unfortunately competition can be hard sometimes. Yeah. Sometimes you find these markets where there's a bunch of old companies who get complacent. And if you just come in and give a good service, you're going to take market share instantly.

Edwin: Yeah, that's really interesting which kind of leads me into the next question with this change of this macro like Impact that's happening right now. What where do you see the future of I guess this? Globally this property rental business. What's it gonna look like?

Marcus: The future looks very bleak ~I think ~Capitalism ~we ~had a good run here in North America. ~It was a ~ right around World War Two, ~suddenly ~the rest of the industrialized world was lying in shambles, mostly Western Europe. And we had industrialization, and suddenly you had something called American Dream, where you can be a [00:12:00] single income bringer. You can raise a three kid family with two cars, live in a big house in a big city, and ~you can ~do all of that with one salary ~and, that's it. ~That was an abnormality ~when you look thousands of years, like ~thousands of years ago, there was a glitch. That was a king. He owned all the land. You were allowed to walk on the land, but ~if you wanted to do that, and ~if you wanted food, you had to ~also ~work on the land. That's the normal. But then this weird thing happened with the new America, the American dream, industrialization, second world war.

And suddenly people thought, Oh, we should have this thing called middle class. Yes, but now we're going back to normal. So the middle class is gonna disappear. There's gonna be a couple of kings who own everything ~and ~That's why I say the future looks bleak ~and we're seeing that ~we're seeing Blackrock buying real estate like crazy We're seeing that in a lot of places around the world People are complaining about the cost of living how real estate buying and renting is going up in price and then they ban short term rentals and it keeps going up in price. Banning shorter rentals isn't [00:13:00] a solution. The solution is really that we ~maybe ~need ~world war three, maybe ~a revolution or something, but ~yeah what's on the other hand, ~what's going to happen is we're going to have a lot of companies buy up this real estate, develop it and rent it out. It's that simple.

Edwin: So it's so when you talk about bleak, the bleak, and I'm just trying to ensure that I heard you right, the bleak part is that, The middle class is disappearing.

Marcus: Yes.

Edwin: So when it comes to, I guess the vacation rental space, that industry will still be available, but the people who are owning it are probably one of the few.

Marcus: There's going to be fewer owners. Yes. Someone who owns a family cottage that's been in generation, they're eventually going to sell it because the kids need a bedroom and the bedroom is going to cost the same as your cottage.

Now it's going to get bought by someone who already has 10 cottages or a hundred or 10, 000 cottages, and then be rented out. So they will still be available on the rental market. It's just that the wealth will be more concentrated.

Edwin: I guess this is a little on the personal side and when it comes to [00:14:00] building that real estate assets. Do you find, and when people talk to you about real estate, cause you have a lot of insight from it, is it still something that's achievable or is it's done for middle class?

Marcus: It's definitely still achievable on it. It's just just the mindset, but I'd say the amount of effort you have to do to get in, you need to treat it like a full time business. You need to actually do good research. And there were some periods, especially with the financial crisis in 2008, right around 2011 to let's say 2015, especially in North America.

The real estate asset prices were extremely low because it takes so many years to correct. So they didn't fall in 2008. They fell really hard in 2010, two years later, and they continued falling. They started going up a bit in 2014. But right around that time, you could pretty much make any move you wanted.

If you could get some credit and make money on real estate. But now the expectations for the future for real estate are set pretty high. Same thing on the stock [00:15:00] market. Same thing on. Bitcoin. I don't know if any of the listeners, there's two, two objects that I like to measure, how much money do we have?

They're both collectors items. One of them is Cuban cigars. Prices have skyrocketed and they're not going to go down. Just to give an example, a cigar that used to cost 20 now costs 300 and it's going to keep going up. Another one is collectible guitars. I don't actually collect cigars, but I follow the market, but I do collect the guitars then. Same thing. The 3, 000 guitar is now 15, 000.

Edwin: It's crazy. And I know, you brought up Bitcoin. I guess it's similar for those who are listening. Bitcoin skyrocketed this year.

Marcus: Yeah.

Edwin: And it's still going to keep going. And you could look at it as a collectible or a value asset or whatnot. But it's, I guess to your point, things are just increasing higher and higher.

Marcus: Yeah. It's the expected, basically when an asset goes up in price, it means that the expected return goes down. Which means that those who invest in Bitcoin today or guitars or real estate [00:16:00] or stocks, they should expect to earn less than previous, if they had invested five years ago. And investors are okay with that.

And the reason they're okay with that is the same wealth concentration. There's fewer people with more money. They are forced to invest, which is why they're buying these things. And that's why they go up in price.

Edwin: Yeah. And they throw it in there.

Now that's amazing. I'm loving this conversation. I guess thank you.

Thinking about your point of view, leading your teams and understanding what's happening within the real estate market, the vacation rentals, what are your markets, what are your biggest challenges so that you're facing today?

Marcus: Right now there's not many challenges when you're winning an industry or leader, but there are certainly growth pains. We've gone from 125 employees to 200 in the last six months. And we're a very profitable business by the way. So we're not, definitely not burning cash. That's not popular these days, but I never understood the idea of why you have to raise money to burn cash.

Edwin: That's right.

Marcus: It's stupid to me, but investors [00:17:00] loved it until they didn't. But, one challenge that we have is that we're. We're fully remote and we're always going to stay that way. But we now have 200 people in 41 countries. Wow. And there's a lot of details that go into that because it turns out that when you're a big, when you're a small business, nobody cares, but when you're a big business, then suddenly they care.

And if you have an employee sitting somewhere in, in Brazil or in Japan or somewhere, then suddenly you need to figure out if someone going to care and what are we going to do about it? And what do we need to do? So there's a lot of. A lot of paperwork, a lot of legal, a lot of stuff, whatever we find out. Because every company on the planet is constantly doing something wrong. They're always breaking some rule, mostly because they don't know about it.

Edwin: Sure.

Marcus: So you're playing catch up. There's, let's say, we're breaking 200 rules today, and tomorrow we're fixing 20 of them. And then the day after we'll fix 20.

But then there's other rules that are made and we don't know about it. It's crazy. You just do the best you can that's that I would say is the major challenge right now

Edwin: Yeah, so [00:18:00] how are you navigating that within your leadership team?

Marcus: I mean it's difficult when you have to tell for example a North American Commercial leader who has you know hired and let go thousands of people in their career that here.

Here's this one Employee in Europe, but you're not allowed to fire them, but they need to be gone. But the regulations in that country is like this. So we need to do it this way.

Edwin: I see the point of view

Marcus: because they don't understand. They're like, Oh, can I just fire them? No, you can't. That's illegal. We're going to, we're going to end up losing 10 years of salary.

If you do that, don't be stupid, but it's yeah, that's just the way it is.

Edwin: That's wild. in terms of what we're doing and we're talking to business leaders, CEOs. I'm curious what your vision of the future is now in terms of what you're building.

Marcus: Our vision is pretty much the same as it's always been. We want to be the biggest. We actually became the biggest in the industry this year. Right now we're on a path here to become the first unicorn in our space. [00:19:00] And we're hoping to achieve that very soon. But I always tell the staff that look, You may not think this is the nicest industry to be in or the best one, but the thing is we're here to make money.

Edwin: That's right.

Marcus: And that's why all our employees have stock options. And if we don't make the money, someone else is going to make it. Now, you can choose whether you want to be a good person or a bad person, but we try to hire good people here. Now, if we give up on this opportunity, And we let someone else come and make all this money instead of us.

And they will. That's how markets work. When there's an opportunity, people go for it. They might be bad people. So let's make sure that the good team wins.

Edwin: That's right.

Marcus: That's how I motivate my team.

Edwin: I love that. And congrats on that.

Paul: When you're the good guys in the industry what's possible for the people with properties that are renting and then the, and the renters,

Marcus: Being the good guys means essentially we be very much value our customer success because we can identify with their story because [00:20:00] we, as a company, we started very differently than most of our competition and the most companies.

We knew nothing about the industry where we were an outsider. We also had no experience. We hadn't started in businesses. We didn't have any money. Most people who start, who have their. First successful startup. It's actually their fifth, but they never mentioned a four that failed, but we didn't really have those.

And, we try to make sure our customers are successful. That's the core value within the company because we know how hard it is to be successful, but all of our customers, they're entrepreneurs just like us. So we make everything around in our company around making the customer successful.

Edwin: That's amazing. Marcus. Thank you for your time and thank you for joining us on the business leadership podcast. Thank

Marcus: you very much.

Edwin: That's it. Biz leader. Thank you for joining me on another special episode of the business leadership podcast. Part of the future narrative mini series recorded live at the collision conference in Toronto, Canada. It was [00:21:00] an insightful conversation with Marcus exploring the evolution of host the, we end. And the future of the vacation rental industry.

So for links to all the resources we discussed to connect with Marcus and to learn more about the future narrative project. Check the show notes in the app that you are listening to right now.

And also, if you are interested in reading more about Marcus and all the other amazing business leaders, we profiled that collision. Joined the wait list for an upcoming book.

By the way. If you found value in this episode and if you haven't done so yet, please do subscribe rate and share it with the very first person who comes to mind that could benefit and be grateful from hearing from you. Your support. Truly helps us grow. It empowers us to bring you more. Great. Content.

Thanks again for tuning in, in. Really truly being part of our [00:22:00] community until next time have a 100 X day. Don't