It was a quiet news week for Airbnb, though the themes of acquisitions, group travel and regulations remain top of mind.
This week, Jasper chats with Margot Schmorak, CEO and Co-Founder of Hostfully. They deliberate Airbnb’s recent acquisition of micropayments platform Tilt as well as an interesting perspective on regulations that appeared on BaconsRebellion.com this week.
Margot also covers her recent Airbnb experiences in Hawaii, offering feedback to hosts regarding consistency and responsiveness, and Jasper shares a recent investment that will make his international travels easier – and more exclusive!
Article #1: Airbnb Buys Tilt, Signaling Its Growing Interest in Group Travel
Article #2: Just a Thought: Instead of Extending Regs to Airbnb Rentals, Let’s Roll Back Regs on Hotels
Margot’s Feedback for Airbnb Hosts
Jasper’s New Membership in JetSmarter
This episode is sponsored by Aviva IQ. Aviva IQ automates messages to your Airbnb guests. It's also free!
Complete Transcript for Get Paid for Your Pad Episode 132
Welcome to Get Paid For Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real-life experiences from Airbnb hosts all over the world. Welcome.
Jasper: I began using a really cool service from Aviva IQ, and it’s made my life so much easier. My guests love receiving all the important details about their stay exactly when they need it, and I love all the five-star reviews I’m getting on communication. Check them out at www.avivaiq.com.
Welcome, everybody, another episode of Get Paid For Your Pad, today with my cohost, Margot. Margot, how’s it going?
Margot: Good. How are you?
Jasper: I’m a little shaky, if I’m honest.
Margot: Had a big weekend?
Jasper: Well, this weekend is Carnaval, and in Holland, people celebrate Carnaval in the south of the country. And I’ve never actually celebrated Carnaval before because it’s always the week that I used to go skiing with my family, because it’s the week where the children, they don’t have to go to school, and my brother has two children, so we’d always go skiing.
But, I always wanted to celebrate Carnaval because the idea of putting on a crazy suit and just acting like a fool and drinking a lot during the day sounds kind of appealing to me for some reason. And so, this weekend was the first time I kind of had that opportunity, and so I took the opportunity. I jumped on a plane and went to Eindhoven, a city in Holland, and I basically celebrated until like 8:00 in the morning.
The next day, I was supposed to take a bus to Antwerp and get on a train to London, but I got on the bus, (I managed to get on the bus), but half an hour into the bus ride, I suddenly saw a sign along the side of the road that said “German border in 1 kilometer”, which basically made me realize that I was on the wrong bus, which is funny because there was a guy sitting behind me from Japan who was also on the wrong bus. But, at the time, I was kind of laughing about it when I found out that he was on the wrong bus because I didn’t realize I was on the wrong bus, too. But, that’s how quickly karma works these days.
Margot: That’s right.
Jasper: So, you have to be careful about who you’re laughing at.
But, yeah, I spent two hours in Düsseldorf, a city in Germany. The Japanese guy had to wait there, as well, for two hours to take the bus back, so we had some beers together and just chatted, and then we took the bus back. And the whole ordeal was about seven hours, so that was my Sunday.
Margot: So, that was Sunday from 8:00 a.m. until whenever.
Jasper: Yeah. I managed to get a few hours of sleep in after I got to the hotel at 8:00 a.m., but, yeah, basically, I decided not to go to London anymore and just go home to Amsterdam, and just go to sleep.
Margot: Well, sorry you missed the party, but it sounds like a lot of fun. For those of us that have little kids, we don’t get to do those crazy experiences as much anymore, so it’s always much more appealing from the other side.
Jasper: Right. You probably woke up before I got back home, I think.
Margot: Probably, yeah, 6:00, 6:30. That’s what happens when you’ve got little ones.
Margot: No, it’s great. I’m in San Francisco, and you’re in Holland now, right?
Jasper: Yeah. So, I went back to Amsterdam and I have Airbnb guests, which means that I’m staying in a hotel now.
Margot: Oh, really? You rent out your whole place?
Jasper: Yeah, it’s rented out for a few days. I was supposed to go to London, so that’s why.
Margot: Oh, got it, yup.
Jasper: But, you know, I’m slowly recovering. Hopefully, you can do most of the talking.
Margot: Well, aren’t you the main host of this show? No, I’m happy to do a little talking.
Margot: Although, I heard that you guys, last week with Silvia, talked a little bit about the Tilt acquisition which was going to happen, and it sounds like it did last week with Airbnb.
Jasper: It did, yeah. Absolutely, let’s talk about that.
Margot: Yeah. So, Tilt was acquired by Airbnb. It looks kind of like it was an acquihire, which means that they really invested in the talent and maintained the local talent that they could bring on board into the Airbnb team. They actually let go, I think, of some of the offshore talent that they had for Tilt.
But, for those of you who didn’t catch the show last week, Tilt is a platform for making payments. It was micropayments. And it was, actually, it got going on college campuses where I think people were trying to, you know, go in on beer and pizza together, and it basically competes with Venmo and Square Cash, and some of those other peer-to-peer payment platforms here in the United States. I know, in other parts of the world, there are other much more efficient and evolved markets for peer-to-peer payments, but we’re just getting started here with peer-to-peer payments, especially over mobile.
And what I think is interesting about the Tilt acquisition is that, now that they acquired Tilt, they acquired ChangeCoin, they also made investments in a start-up called Resy, and all of these are ways for travelers to spend money while they’re on vacation, and they’re ways to facilitate payment. So, it looks like Airbnb is just going to go deeper in bookings and travel, and really focus on that with these kinds of acquisitions. So, it’ll be interesting to see if we see some more. I expect that we would. Their investors are probably wanting them to quickly dominate the bookings market and travel, so they’re going to be snatching up a bunch of good technologies that they could put together to focus on bookings and travel. We’ll see what happens.
Jasper: Interesting, yeah. And it says the purchase price was in the $10 million to $20 million range, but those estimates reflected just one part of the broader deal. The final price was more closer to the $62 million that Tilt had previously raised from investors. So, they raised a serious amount of money.
Margot: They did, and those investors are probably not very happy because they basically got their money back.
Jasper: Right. Is that what you think the deal was, that they would basically hire the team, and then they would just pay back the investors?
Margot: Yes, I think that’s probably what happened, but that’s very common for these kinds of acquisitions, and it’s something that, especially if you have a lead investor who has a substantial portion. I haven’t looked at their crunchbase profile, but probably, that’s what was happening with that acquisition.
Jasper: Right. That’s not too bad, though.
Margot: It’s not too bad, but actually, from the investors’ standpoint it is bad because they had all this working capital tied up in Tilt, and then it didn’t return anything. It’s interesting when you talk to venture capitalists because it’s almost like they’d rather have a bigger risk than have a sure thing that’s no risk.
Margot: So, we’ll see whether the tide will change and we’ll see more tightening up of investors and how they invest in companies around Airbnb or travel. It’ll be interesting to see what happens there.
Jasper: Before you invest in a start-up… Like, I’ve invested in three start-ups myself, and I mean, nine out of ten times, your money’s basically gone, right?
Jasper: So, to get your money back, at least, you know, I felt that… I mean, yeah, obviously, you want to preferably make like 10x, 20x or something, but it’s not that bad, is it?
Margot: Well, when I talk to different type of investors, they’re looking for different things. So, for every venture firm, every ten companies that they invest in, they expect three or four to die, they expect three or four to sort of linger on, and then they hope that one or two will basically hit it really big. And, they would actually rather have more start-ups die faster than kind of linger on for a long time.
And with angel investors, like you’re mentioning which you are, angel investors do care a little bit more about getting return back. It just has to do with the mentality. And I think angel investors typically have to invest in about 20 deals in order to see one do very well, just because of the early stage that they’re investing in companies in. And I think for angels, a return which is like a 1x return is not a terrible thing, but I think for VCs it’s actually perceived to be almost as bad as just losing the money altogether.
Jasper: Right, got it. Okay.
Margot: It’s interesting.
Jasper: Interesting, yeah. I didn’t know that.
Margot: It depends on the stage that they’re investing in and everything, but yeah, that’s how it works.
Jasper: Well, there’s not a lot of other news. There’s one article that, you know, it’s a pretty small article, and I just wanted to mention it because I thought it was an interesting thought. But, it’s an article in a newspaper. It’s not a newspaper. I don’t know if it’s a newspaper. It’s a website, I guess. And it’s called Bacon’s Rebellion – Reinventing Virginia for the 21st Century. I have no idea what this website is about, but they have an article about Airbnb.
Margot: I’m going to look up Bacon’s Rebellion right now while we’re talking.
Jasper: All right. Well, let me tell you what the gist of the article is.
So, everybody knows how, around the world, the focus has been very much on creating regulation for Airbnb, right, and the hotel lobby always makes a fair point when they say, “Okay, we have all these rules. We have to comply with all sorts of different rules in order to run a hotel, and so it’s only fair that Airbnb hosts, Airbnb should be regulated, as well, to create a level playing field.” And, you know, I think that’s fair enough.
And so, the author of this article says, “Well, instead of creating a whole lot of regulation around Airbnb, maybe we could look at the regulation that’s in place for the hotels and see if some of these regulations might be a little obsolete by now because a lot of regulations have been made up a long time ago and the world has changed.”
One point that he makes is, with the rise of platforms like Yelp and other online venues where you can find a lot of reviews from consumers, it might be the case that some regulations that have been put in place to sort of protect the consumer might actually not be necessary anymore because consumers are so much more capable of finding out information about the hotels.
Margot: Well, yes, but I would also argue that big companies have probably used those regulations to their advantage to protect themselves against any newcomer, right?
Margot: So, Bacon’s Rebellion was an armed rebellion in 1676 where Virginia settlers who were led by Nathaniel Bacon, who rebelled against the rule of Governor William Berkeley, so it sounds like the website is sort of like anti-regulation, right, which doesn’t surprise me.
Jasper: That’s kind of funny, isn’t it?
Margot: It is a good question, though, because for every regulation that protects the consumer, like you say, there’s probably another company that’s taking advantage of that regulation to actually do things that might not be good for innovation, or might not be good for consumers overall. So, it’s always a question, an open question. I don’t think there’s an answer to that.
Jasper: It is funny, though, that by looking for news about Airbnb, you come across some pretty interesting news websites sometimes.
Margot: Exactly, yeah. Yeah, I didn’t see any other news either. Actually, when we were preparing for this, we looked through a bunch of different sources, and aside from sort of the classic regulation around home-sharing, there wasn’t a ton of news about Airbnb.
Did you want to talk a little bit about some of your experiences with hosting or staying at Airbnbs?
Jasper: Well, you know, I’d prefer not to talk too much, so maybe this is a good opportunity for you to share some of your experiences.
Margot: Oh, sure. Well, I had the pleasure of staying in Airbnbs, I think, six times over the last three months. I was traveling a lot for work, and I stayed in a different Airbnb each time. Some were a shared place with hosts who lived there, and some were a place on my own. One was like an apartment right next to another hired apartment. Some were even somewhere in between. And I got to see and really feel the Airbnb experience many times with different situations.
And it was really interesting, the last time I stayed, I noticed that Airbnb had done an update to the app, so that when you land, they show a little message about that you’ve landed. But then, when I dug in a little deeper, like I clicked on a button that said ‘Learn More’ or ‘Get Your Directions’, it actually didn’t work, so that was sort of a letdown. But, I was excited about that. It’s actually something that we’re focused on with Hostfully because it’s kind of an overlap in how we work, and our value proposition works, with Airbnb. So, it was very fascinating to see that.
I also was able to stay in different kind of grades of Airbnbs, which was interesting, too, like understand where my quality barometer, I guess, matches with other guests. Because, for instance, I stayed at this beautiful apartment in Honolulu, right on the edge of Waikiki facing Diamond Head, which is just beautiful views, like around-the-corner views of this apartment. And it was with a couple and they were lovely, and I stayed there, and I had my own bathroom, and it was extremely clean. And then, I ended up paying the same price for a private place two doors down from that, same location, but the stay was so different because the property was just a little dingy and the shades didn’t work.
And it was interesting how these details really are what makes a great or poor experience, and I find that it’s hard, I think, when you live in the place, or even when you own a place and you’re not living there, to really be able to see that through a guest’s lens. And I wonder how many hosts have a chance to kind of interview their guests afterwards, not so much to get a good review, but just to understand what stood out to that guest as being a reason why they would come back or pay what they paid.
Anyway, I’m a little bit thinking about it because of my role as CEO of Hostfully, and that’s one of the things we’re studying, as well. But, I just wondered how many hosts actually did that. Have you done that?
Jasper: Well, you know, that’s something that I learned throughout my hosting journey, actually. I remember the first time when somebody gave me some feedback about what they loved about my apartment, and it was something that I hadn’t thought about. It’s the fact that my apartment, it used to be two apartments, but the apartments in Amsterdam are really small. You know, you’re talking like 500 square feet, which is probably, you know, you live in the U.S., so that’s probably the size of your wardrobe. But, you know, it’s very small.
Margot: Well, I live in San Francisco, so it’s a little smaller here, but yes.
Jasper: And so, the apartments are put together so that it’s symmetrical. So, the bedrooms are exactly the same size and they’re on opposite ends of the apartment. And I never thought about that as a way to stand out on Airbnb, or as what the advantage of that is until I hosted this group of people and they consisted of two couples, and they told me that they really loved my apartment because, first of all, they didn’t have to fight over who gets the master bedroom because they’re both equal, and secondly, because the bedrooms are on opposite sides, you have a sense of privacy. So, you travel with another couple and the bedrooms are right next to each other, you might not necessarily want the other couple to hear, you know, whatever is going on in the bedroom.
Margot: I can imagine, not adjacent is good.
Jasper: I mean, it’s just funny, right, because I never thought about that, but that actually made me change my title to ‘perfect couples’ getaway’ because I realized, “Okay, you know what, my apartment has an advantage over other apartments for this particular demographic.”
Margot: Yeah, and I agree with that completely, and I wish that in the second place I stayed in, which was kind of dingy, like they could have highlighted the fact that it was actually perfect for a business traveler because it had everything I needed, but it was also tiny. There was like one foot around the bed to walk. And so, it should have said, like, “cozy business-ready accommodation”. You know what I mean? Like, as opposed to saying, “vacation rental apartment”.
Jasper: That’s a good title. Did you suggest that title to the hosts?
Margot: I should. I should write that back to him. And then, I also said, “Yeah, I think you need to do a deep cleaning because it was just a little dirty, but otherwise, the sheets were good and everything, just the floors.”
Yeah, I try to be as upfront as I can with the reviews, but I know, sometimes you’re busy or you just don’t know how to frame the review, so that’s a good point, though, about highlighting the part that differentiates your listing from others. That’s a great idea.
Jasper: And you said this was in Hawaii?
Margot: Yeah, I’ve been in Hawaii because our start-up was part of this program called Blue Startups, which is an accelerator program for travel companies, and I was there, on and off, for 14 weeks, so I had a lot of trips to Hawaii. I have great recommendations there.
Jasper: Tough life.
Margot: Yeah. Oh, it’s a great place to travel, yeah. It’s a wonderful place to travel for work. It’s just a lot of travel. I’m happy to be home in San Francisco.
Jasper: Yeah, because it’s quite a plane ride. Is it five or six hours, or something?
Margot: It’s five to six hours, but that part is kind of the least of it. It’s more just, it takes a day to travel there, just like it does from here to New York, or from where you are to New York. Like, from Europe to New York, it just takes a day, no matter how you look at it, so it eats into your schedule a lot. And it’s also, just at a start-up, things are moving so fast and they’re changing so fast that it’s really important to be close to the team, and so we’ve really prioritized that as a company. It was hard to have people gone for certain parts of that.
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And now that we’re talking about start-ups and travel, have you ever heard of a company called JetSmarter?
Margot: No. No, I have not.
Jasper: Well, I signed up for it. It’s the base for Airbnb for private jets.
Margot: Ooh! I like it!
Jasper: So, on Wednesday, I am getting on a private jet and flying to Paris.
Jasper: So, I’ve never flown a private jet, but I’m getting a little older, so you know, I need a little bit more comfort.
Margot: Oh, yeah, yeah.
Jasper: Yeah. I could do business class and first class, but it’s still quite a lot of people, and I don’t know, I feel like I need something more exclusive.
Margot: Yeah! Well, can I ask how much it costs?
Jasper: The membership is $15,000 per year, and it includes unlimited flights with private jets, basically, when they’re available.
Margot: Wow, $15,000.
Jasper: Yeah, so obviously, it’s a decent chunk of money, but if you think about it, you get to travel private jets for a year. You know, that’s pretty cool.
Margot: If you’re traveling enough, then it’s great.
Margot: There are other companies out there that are about the same as this one. Actually, one of them was a client of another company that I worked for, and I can’t remember it right now, but it was very similar. I think it was, at that time, it was 2008, 2009, and it was like $10,000 or $12,000 a year, same model, unlimited flights. Yeah, cool. Well, have fun! Take some pictures.
Jasper: Yeah, I mean, otherwise, how do you otherwise get a chance to travel on these jets?
Jasper: Never, really.
Margot: You do get to go to where you want to go if you have to take commercial.
Margot: No, I’m just kidding, giving you a hard time. Well, I think, especially for you, because I mean, how many international flights are you taking per year?
Jasper: I don’t know. A lot.
Margot: A lot, right, yeah.
Jasper: And it’s also, you know, I was thinking about it, other than the fact that it’s kind of a cool experience, I was also thinking I might meet some interesting people on those planes. And the other thing is, it’s much less of a hassle when you get to the airport because, apparently, you’re literally, from the time that you arrive at the airport until you’re actually flying away, it tends to be like only 20, 30 minutes or so.
Margot: Yeah, that’s great. I flew in a… Have you ever flown in a small plane before, like that, or no?
Jasper: No, no. Never, no.
Margot: Okay. I flew in a friend’s dad’s plane one time when I was in college for like a one-hour flight. He had a plane and he kind of took me from like one airport to the nearby airport so that I could fly home, and it was great. It was like 10 minutes. We came up the runway, you walk in. It's just like a car. You open the door, get in and check everything, make sure it’s good to go, and then take off, easy. Yeah, it’s great.
Margot: It’s like a minivan.
Jasper: Yeah, I’m pretty excited about it, so I’ll probably talk a little bit more about the experience after next week or the week after.
Margot: Yeah. Well, you think, for $15,000, if you’re going to take ten flights, then it’s definitely worth it, ten round-trip flights.
Jasper: Yeah, exactly.
Margot: Yeah, yeah.
Jasper: Yeah, so I just need to make the most of it.
Margot: Exactly. Do you travel like two or three times a month or something, or what is your typical…?
Jasper: It really depends, you know. I really don’t have a fixed schedule, but I think, now, if I can travel in private jets, I’ll probably travel more.
Margot: And then the company will crack down and say, “No more unlimited!” No, that’s very cool.
Margot: I’m going to talk to my cousin about it. He’s actually working for a private jet company in Minneapolis, and he can fly these kinds of planes, so I’m going to ask him if he’s heard of it. He’s just getting started.
Jasper: Awesome. And you said you stayed in six or seven Airbnbs?
Margot: I did.
Jasper: Is there something that you’ve noticed, like something overall, that hosts could do better?
Margot: You know, I think that it’s all about consistency and responsiveness with hosts. So, like one thing is that if you say you’re going to do something in the description, you have to do it in the listing, you know, even when it comes to basic logistical things.
Like, I had one host who said, “Oh, just text me anytime, I can answer questions.” And then, I did because I had a hard time finding the apartment number, which was a really stupid thing. I don’t know why they don’t make it more obvious. And I texted him and I sat there for 15 minutes, and I was like, “Oh no, this person’s not going to text me back.” But, I would have rather he say, like, “I’m available, typically, within these hours and I usually can get back to you within an hour or two,” just so I had the right expectation when I contacted him.
So, I think it’s just all about that consistency, and it goes with everything, from how to highlight the differentiating parts of your listing, to how you’re going to communicate, and also just how your listing matches up to the description. You don’t want to oversell. You could definitely describe it in a nice way, but you don’t want to make it unrealistic, so that you can’t achieve it. You know what I mean?
Margot: So, I think it’s all about just, it’s almost like just meeting expectations is great, and if you exceed them it’s amazing, but meeting them is the really, really important part.
Jasper: Right. So, it’s better to under-promise and over-deliver.
Margot: Yes, absolutely.
Jasper: So, being accurate, having a very accurate listing. Yeah, I think it’s a really good point.
Jasper: Yeah, I made some adjustments to my listing at some point because it’s a bit noisy in my neighborhood. And the thing is, when you’re being accurate, then you get better reviews, basically.
Margot: Yes, that’s right.
Jasper: All right, because you might lose a booking or two. Like, right now, I mention in my listing that it’s a bit noisy, so people who are light sleepers or people who want to sleep late in the morning, I literally just write in my listing, I write, if you are like that, you need to find a different place because you probably won’t like it. But it makes sense, right?
Margot: Yeah, I think that’s really important. Yeah, totally. I think that’s so important. Like, the last place I stayed in, there was a nightclub right below it and it was kind of noisy until like 9:00 or 10:00 p.m., but then after that, it was fine. And it was fine if I’m traveling alone, but I liked that they said that in the listing because if I had my kids with me or something, that would not have been okay, right. So, I would have been extremely unhappy and given a bad review, but as it worked out, I was better that they would be just more upfront about the limitations of the listing. So, yeah, I totally agree with you.
Jasper: Awesome. Well, it’s a good time to end this episode, and I’ll speak to you again in three or four weeks, probably, right?
Margot: Three or four weeks, yeah, exactly. Yeah, looking forward to it, and I hope you recover nicely from Carnaval.
Jasper: Yeah, just one more night of sleep and I’ll be okay.
Margot: Yeah, exactly. And thanks, everybody out there, for listening. We continue to get people who have been listening to the podcast coming to check us out, and so we love hearing from people who are listening to the podcast about questions they have about Hostfully. So, if you ever have any questions, feel free to sign up, and when you do sign up, we see all the sign-ups and you can always reply to anybody on our team if you have questions about Hostfully or what we’re working on, too.
Jasper: All right, well, thanks Margot, and thanks everybody for listening. And until next week.
Margot: All righty. Thanks, Jasper. Take care.