Full transcript: Sam Shank on London Real
0:00 In London, technology is the silicone roundabout. Introducing a new talk show dedicated to the people of the London technology startup scene. Silicon Real. Each week, interviewing entrepreneurs, venture capitalists, financial technology, accelerators and incubators in an exciting three-person format. Learn about the people behind the innovation.
0:31 Locally filmed, locally sourced. Silicon Reel. It’s about the people. This is Silicon Reel, the weekly talk show dedicated to the people of the London technology startup scene. I am Brian Rose. I also host London Real.
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1:01 But today we’re here to talk tech. I just wanted to say hi to the guys from House Quest. I was assaulted last night on the tube by two young men who came up to me and had seen the show. And we took a picture and they showed me their app right there on the tube without any wireless internet. So I was very impressed.
1:18 So thanks to those guys. If you do want to come on the show, just send us a message. Tell us about your company and yourself. It’s hello at siliconreal.com. It’s always good to hear from the people.
1:28 So let’s get on to the show. This gentleman here is Mr. Sam Shank, who is the co-founder and CEO of Hotel Tonight, the world’s leading hotel booking app. You have over 11 million downloads. You’re in over 10,000 hotels, 450 cities, 27 countries, might be more now.
1:45 You’ve raised a total of $80 million in funding from US Venture Partners, Excel Partners, Battery Ventures, and Co2 Management. And you yourself previously founded dealbase.com, a travel deal search engine and travel post, the second largest hotel review site. Sam, thanks for being here. I know you’re off to Dublin in a couple hours. Welcome to Silicon Real.
2:06 Yeah, great to be here. Thanks for making this happen at short notice. One of our models at Hotel Tonight is that we help the world be more spontaneous, so it’s appropriate that this all came together in the past like 12 hours. No, I didn’t think about that. Yeah, it’s great here because it’s a small operation and we can just flip the switch and go and when there’s a great story, it just feels like we had to have you on just because there’s so many different things happening with you.
2:29 I know you’re over here to talk about a bunch of different things. I know you’re in some cities in Europe and you’re expanding your business model from kind of a last minute to now of a longer booking. I was wondering for people that don’t know if you could bring us up to speed with the idea of Hotel Tonight, kind of roughly how it started, where you are now, and then I’d love to talk more about design because I know you’re a mobile-only app which has all sorts of fantastic limitations and possibilities when it comes from a design.
2:56 So let’s start off quickly with the story of the company. Yeah, yeah, so we’ve been at it for about three and a half years, and I’d done two other starts before, as you mentioned, and really in travel, if you’re in travel, you start recognizing new opportunities earlier than maybe others do, once you’re in a business and you start understanding a business more. So when I saw mobile come out, I started watching TV and I was holding my phone in front of the TV and I said, wait a second, this is the next computing platform.
3:21 Why isn’t anyone doing something interesting and mobile? I looked at the app store in the travel category, there were a handful of apps, I think the big guys only, like half of them had an app, those apps were very uninspiring, unoriginal, they were just the website ported over into a mobile app format. And I said, what year is this approximately? This is end of 2010. So yeah, just about four years ago is when you started thinking about this, and then started thinking about, all right, if you started with a clean slate, and a new brand, a new tech platform, a new app, what would you build for hotel booking?
3:51 What does that look like for the mobile era? And that’s when we started coming up with Hotel Tonight. And I did a sketch, that sketch is on a whiteboard that’s hanging in our lobby now. I’ve never seen a picture of that size. And just a few taps to book a hotel, a small list of hotels, just the best hotels, the very best hotels for you for that moment in time.
4:09 And working with hotel partners that have access inventory, access capacity, I think that’s one of the things that mobile commerce really helps is, with the last minute, nature of booking, is that when a supplier has excess capacity, that can then be utilized by matching a buyer with a supplier in real time. And so that’s what we did. We allowed hotels and enable hotels still to give a discount for these rooms that would otherwise go unsold. So the discounts, they range from 20% all the way up to 70% off what you’d pay if you’d booked in advance or what you’d pay if you walked into the hotel and booked directly at the hotel.
4:42 And the average is about 30%, but the discounts can go up from there. Again, there’s no profit in a room that’s unsold. So we launched the business about 10 weeks after deciding to go for it and saying, all right, we’re going to bet our whole career on mobile. This is a future. This is what we think is the right product. We’re not sure. The market isn’t asking for this product, which is kind of one of those calls as an entrepreneur you have to make is that nobody was saying that they had to have this, but we felt that it hit a lot of what the market needed. And we launched it and it took a few months for us to validate that there was a market, there was a sort of scary and soul-searching few months.
5:22 But then we started getting traction and setting up more hotels and just feeling that momentum and that growth. And this is before marketplaces were hot, right? This is before the Ubers and the Airbnbs where everyone was like, we’re going to be the marketplace of. I mean, this is kind of before those existed, right? Yeah.
5:38 I’ve always been attracted to marketplaces. That’s actually when I’m talking about the web summit tomorrow is about mobile marketplaces. But I’ve always loved marketplaces. My first business, TravelPost, was kind of a market for hotel reviews and information. That was why it was hard to compete against TripAdvisor.
5:55 We were a number two at the time, but a very distant number two, because people wanted to write reviews on the site that had the most reviews, and people wanted to read reviews on the site that had the most reviews posted. So it fed itself. But I’ve always loved marketplace models in that you can facilitate a transaction. You can connect buyers and sellers together in a way that you couldn’t have done before the internet with real-time information, but you don’t have to actually ship a box.
6:19 You facilitate a transaction, but you don’t do the transaction. You don’t fulfill the transaction. So it’s very high margin, and once you get enough traction, it’s very hard to displace that business. So I’ve always loved that dynamic, and mobile creates new types of marketplaces. In our case, it’s the temporal dimension of a very last minute, creates new inventory that was otherwise not available, not bookable.
6:40 We’ve unlocked that inventory, given it to people to book. Right. Talk to me about this mobile-only platform because it’s a fascinating spin and before I heard you talk about it, I hadn’t thought about all the issues you have with mobile-only, as in you kind of bypass all of the goods and bads of the SEOs and the search engines and the relationships with Google, but then at the same time, you’re also quite on your own out there and it either makes or breaks or gets lost in the app store.
7:05 Is that a simplistic way of describing that? And is that a choice you consciously made because your previously businesses weren’t mobile only, right? Yeah, that’s right. It’s one of the ways I talk about startups and to be successful is that you have to be better than what’s out there, which my first two companies were incrementally better than the previous, you know, than TripAdvisor in terms of the future functionality and DealBase was incrementally better than TravelZoo, but they weren’t different enough.
7:30 So because of that, they weren’t memorable. And I call it like remarkability. They weren’t remarkable. So people didn’t say, oh, I have to have that. I need to know that.
7:37 I need to tell my friends about that. They weren’t inherently viral, and so they didn’t catch fire. Whereas with Hotel Tonight, I said, all right, we’re going to be better at mobile booking. We’re also going to be different. So we’re not going to have a website.
7:48 We’re going to have a website that’s going to link to the app. That’s going to cause people to say, hey, there’s something special here. I need to get this app. We were only doing tonight. At that time, it was noon to 2 AM.
7:57 And very different than any other business. We only showed three hotels at a time. We’ve expanded a little bit since then, but it’s still a hand-picked selection of hotels. So it’s very different. And with that, we knew that we could focus on this specific use case, and this is where the market was going.
8:13 It was growing at well over 100% year over year, mobile hotel bookings and mobile commerce. And I would rather focus on that than focus on the area that was growing in single digits. Right. I didn’t know that the hotel industry and the bookings industry always sometimes have a tenuous relationship, I think, where one tries to control the other and it can not always be a symbiotic relationship. But with you, you really curate your hotels.
8:36 I know you go out and take your own pictures of the hotels. And like you said, you only offer, say, three selections in a really beautiful manner on the phone. And it’s not like some of these sites where you see where you’ve seen different fonts and different letters. And it’s quite a jumbled mess. Is that a decision you made early on, not to curate and not to get involved in this kind of the battle that goes out there between the two?
8:58 Yeah, I think that at a higher level, what we saw as going to be one of the big differentiators of mobile and apps versus websites is that apps have transparent ratings in the app store. And we get a report card every day about how well we’re doing. And that crosses every element of our business from the design of the app to the hotel partners we work with. You know, you’re only as good as the company you keep, to the photos, to the curation, to the speed of booking, all the way to the prices we have and then the customer service if you have a question.
9:28 And so we get graded on all of that every day and it’s important. And we just said, we’re gonna be the best. going to be five out of five and we’re going to work really hard to get there. And that led to a lot of differences in the decision-making about the business that we would have not made had we been a website where you don’t have that rating, where you don’t have that feedback loop. Right. So it’s helped you in the long run.
9:49 Yeah. I mean, it ends up being like you just make good business decisions for the long term because you’ve got this rating out there that persists. You don’t make short-term decisions about, well, we could add this hotel partner. Nobody really likes them. They have a really bad rating, but they’re giving us a great margin and a great rate.
10:07 We would never make that decision because we don’t want our guests to have a bad night’s sleep and then rate us poorly in the app store. It just wouldn’t be worth it. If someone is listening to this right now and they’re thinking, I’m going to go mobile only or not mobile only, what’s kind of a bit of advice that you could tell them of a good reason to do it and a good reason not to do it? Yeah. A good reason to do it is the remarkably of it and that you can stand out in the market.
10:29 This is where the world’s going is, I think TripAdvisor released their earnings yesterday and 50% of their traffic is now mobile traffic, which is pretty astounding. That’s up from single digits I think when we started Hotel Tonight, low single digits when we started Hotel Tonight. So it’s really amazing that, I think that my iPhone, maybe my iPhone 8 or my iPhone 9 is going to be the only computing device I have. And it’s gonna connect with a larger screen, it’s gonna connect to the keyboard, but I’m not gonna lug around a laptop and an iPhone.
10:55 It doesn’t make any sense. So this is where the world’s going. With the earlier you get there, you don’t have to worry about supporting multiple platforms. You can focus on the one that’s the future. The downside is it’s very hard to reach customers, especially with apps.
11:08 It’s a very crowded app store. It’s very hard to stand out, very hard to get featured by Apple, very hard to get recognition. And after getting product market fit, distribution is the number one thing entrepreneurs need to work on, at least if you’re marketing really any product. It’s either sales or it’s marketing. It’s getting it out there.
11:27 Knows about you when you launch, and you’ve got to tell the world, and that’s really hard to do. Harder to do than just on the web. And it’s hard to do in general. When you’re in an app store, it’s even harder, right? Because you’ve got to download an app, you’ve got to put it in a password.
11:41 Most people only have a handful of apps, so you’ve got to be really, really useful where it’s an imperative where you say, this is the app that I’m going to use for all my hotel booking, a majority of my hotel booking. This is the app that I’m going to use to get around the city in the case of Uber. This is the app that I’m going to use to order food in the case of just to eat or or Grubhub in the States. So you need to be in one of those categories of frequent use if you’re gonna be an app.
12:01 Otherwise you can be mobile only if, but more with a web presence because that opens up more distribution opportunities. We had Ben Holmes in here two weeks ago and he kind of was the partner in charge of Just Eat for four or five years before they went public this year. And he said that the app was the ultimate piece to get people to actually have that app on their phone and use it. Because until that happened, He said he’s always worried about Google swooping in or this company swooping in and just taking all the traffic from the web.
12:30 But he said, once you have that app, you have that piece of real estate on that person’s phone and like you said, the passwords are already in there and it’s ready to go. And having that piece of real estate, you know, it’s, I guess it’s a buried entry in a long way. It’s a buried entry. It gives people a connection to your product and brand and service very, very quickly. You don’t have to reacquire the customer.
12:49 Every time, like you do with Google, you have to either earn it through SEO, which takes a lot of love and care, or pay for it through SEM, which Booking.com pays. They’re the number one advertiser on Google, and they spent $700 million last quarter alone on search advertising, which is, again, an astounding number. And those are customers I’m sure a lot of those have already purchased before on Booking.com. And they know this, and they’re trying to bring people back in directly from Google into Booking.com, but the dynamics of the app store are such that you can acquire somebody once, either through press, either through word of mouth, either through paid downloads, and then if they have a good experience, then they come back over and over without having to pay for them.
13:31 So the dynamics are very different, and it’s much more like before the web where you would sort of market and get a brand loyalist by building a great product to service. The dynamics are more like that than they are the search, arbitrage, search, reacquisition type of approach. Right, and so does that affect your marketing strategy? Do you kind of go back to before the web marketing ideas, such as television or other kind of ad bases? Because once you’re out of the mind of the web, you have to go somewhere else to compete, right?
14:01 Yeah, we do everything. So we don’t do a big TV campaign yet because we don’t spend a lot of money on marketing and we’re very ROI focused and very analytical in that, but we also don’t have a huge war chest to want to spend on a $50 million TV campaign. And to do TV well, I mean, you’re talking well over 20 million to make it have a difference. So we, but everything else we do, we’ve actually tested some direct response television. We do a lot of radio.
14:29 We do ads and cabs. I mean, I could talk for another five minutes on all the different marketing things we’ve tried. Not all of them have worked. The ones that work, we continue to hone and keep doing. Okay. You mentioned war chest.
14:39 I know about a year ago, you did your last big raise. I don’t know if it was 30 million or 30 plus. How goes it with cashflow? How goes it? Will there be another raise in the future?
14:48 How’s business? How’s expansion? How good? Business is great. We’re growing still at well over 100% year over year.
14:55 Revenues. Revenues and bookings, they sort of go in lock stack. And so we’re really happy with how the business is going. Adding more cities, the same store sales, existing cities are growing really, really nicely as well. And our hotel partners are benefiting by filling up their hotels that would have been empty or had empty rooms at the end of it.
15:14 So one of the things that I’ve seen with travel businesses in general is they take a long time to get to profitability. But once they do, then they’re very, very successful in profitable businesses. And we are patient. We’re focused. We’ve got the money to see this through.
15:34 In Kayak’s case, which was sort of the last at least US company to achieve that level of success, it took nine years. I think that if you look at, before that it was Hotwire, that took about six years. Booking.com has been around for over 15 years. These things take a while. But we’re patient, we’re focused, and we’ve got a great set of plans ahead to continue to make Hotel Tonight better.
15:59 What year are you in right now? So it’s three and a half, so I guess we’re still in our third year. Okay. Or fourth year, however you want to count it. Offices where right now?
16:09 So our headquarters are in San Francisco. All development is there, and I think that’s a strategic and competitive advantage for us. We’re close to all of our key distribution partners, Google, Apple, also Facebook, and a lot of the really interesting ad tech that’s coming out in the mobile space is all based in San Francisco. So, that gives us a real big advantage over the other big travel companies that aren’t based in San Francisco. They’re based in New York, or they’re based…
16:31 So Expedia’s based in Seattle, Booking’s based in Amsterdam, and I think the other players, none of them are based in San Francisco. Orbits is based in Chicago, travel is Dallas. So yeah, it’s a big advantage for us. And you know the the other offices, we have offices here in London, sales office, we’re opening offices now in Paris and Berlin, also sales offices, and then soon Toronto and Sydney. Okay, we’re in Europe so let’s talk real quickly about Europe. How is the market different over here in London and in Europe when it comes to you know, you’re in San Francisco thinking about how do we design, how How do they consume over here, different languages, how do you tackle some of those issues?
17:09 Yeah, just providing the app in multiple languages is a challenge in its own right. When you deal with German in particular, it’s a lot more verbose, there’s more characters so you have to create a design that allows for more space. So the button can’t just say cancel and it has to have more room around it to say cancel in German, for example. And I’m told that Germans want to see things in German. And they do, yeah, and that’s what we do.
17:33 So we’ve localized the business and adding more and more languages as we see the demand for this. But the main thing is we put the process in place. We did that fairly early so that it wasn’t a big burden to do later on. And the other thing that we saw is that, well, I think that Europe long-term is going to be more successful for us than the U.S. The U.S. has been great for us, but the hotel inventory in Europe is just really wonderful.
18:03 Fragmented. There’s a lot more independent hotels. There’s a lot more hotels that have a really compelling and unique story to tell. And unique hotels that are looking for distribution that need help at the last minute and they turn to hotel tonight. And I’m guessing they have relatively low tech booking systems or I’m guessing they’re slow to adapt tech as opposed to the US. And we can work with the myriad if they want to log into our website. As long as they have an internet connection, they can work with us and they can even log in on their phone and work with us that way. So it can be super low tech. As long as they have an iPhone, they can work with us. And we work all the way up to people that do want really high tech, real time integrations with their backend system. So however the hotel wants to work with us, we’ll accommodate.
18:45 Okay. There’s a lecture on Stanford right now called how to start a startup. And they’ve got all sorts of people coming through from Andreessen Horowitz to the guys at Stripe who were on this show and they had the Airbnb founder, one of them on there. And he was talking about, I think Europe’s over 50% of their, of their market or something high. Maybe it wasn’t that high, but I was surprised at how big it was.
19:04 Is that something, is that going to be your numbers some day? Will it be 50% of your revenues? Yeah, I don’t see why not. It’s again, the independent hotels, I think that the challenge for us has been on telling people about Hotel Tonight and getting people to understand what Hotel Tonight is. Just awareness.
19:21 Same challenges in the US. I think that it’s a bigger challenge in Europe because it’s not just one big country. It’s a lot of little countries. And so we do a lot of PR. We do a lot of partnerships.
19:32 We do a lot of outbound marketing in terms of what we, just to get the word out, to let people know about it. Once they find it, they really like it. There’s value. There’s convenience. There’s speed.
19:43 There’s ease of access. There’s great hotels, unique inventory. But it’s just a crowded market, and we need to make sure that we’re putting the right resources in place. So to that end, we’ve actually doubled the investment in Europe and recently hired a guy named Oliver Young, who’s an incredible executive. He was at Airbnb and at House, previous to this, accomplished entrepreneur in his own right has done amazing things and we were at dinner last night and plotting the course for Europe and it’s pretty exciting what’s ahead.
20:12 Plotting the course or plotting? Both, both. We were doing a lot of eating too. And so the idea is once you get that app on the phone then you feel like you can really be in the consumer’s right in their face and once you get that app on that phone, Is there anything that would change that from a medium to long-term perspective, or is that really the beachhead that you want to conquer? Yeah, getting the app on the phone is one thing, but getting people to start booking is another thing.
20:41 The app installation is just one element of a multi-step process to get somebody to become a loyalist, and that’s all proprietary how we do that, but something that we focus a lot on as well and continue to hone that. It’s an entire conversion funnel. Yeah, it’s tricky. had Ritzus Viscoscus from Y-Plan here, I know you’re an investor in that as well, and they have a huge number of downloads, and they were in London first, weren’t they, before they went to the States, and I really like Ritzus, really smart guy, but I sometimes have the app on my phone, and then I get reminded that I have it from their email, and it’s tricky because you’re constantly trying to remind people that they have it, and then use it, especially something like Y-Plan, where it’s like, Y-Plan, I think, tries to surprise you with an event you hadn’t thought about, so it’s not like you have to eat or have to stay somewhere, it’s tricky.
21:28 Just because you have the real estate doesn’t mean that you own that mindshare, do you? Yeah. We talk a lot about spontaneous bookings and incremental bookings. You’re at dinner and you’re with your significant other and you decide to stay in the city instead of commuting home. Those types of use cases that we and mobile technology have really unlocked for hotels and brought them new incremental business, but it’s very hard to always be spontaneous.
21:53 You can’t always book a hotel. If I said, I’ll give you a room tonight at the Ace of New York for a dollar, you wouldn’t give me that dollar, right? Because you’ve got to be in the right place at the right time. So making sure people remember us and making sure that we’re in that consideration set when somebody says, huh, tonight’s really fun and it’s raining. I don’t want to get on the tube and go home.
22:13 And I can stay at a really great place with a super steep discount exclusive rate, 100 pounds. Yeah, I’m going to do that so that we can be in that consideration set so we can let people think about us. That’s important. It takes a lot of, I tell the team that it’s going to take us 20 different touch points with our customers before they’re feeling comfortable book. 20. It used to be 10, didn’t it?
22:36 Yeah, I think it might be 100. I mean, especially with hotel where you’re trusting us with your night’s sleep, right? And trusting us with your shelter, which is a basic human need. It’s food, clothing, and shelter. You know, you can get by with, you know, like most people are already dressed so you don’t really need clothing on demand.
22:52 You’ve got food which you can basically get by with out for the night, but if you don’t have shelter and it’s cold outside, this is life or death. I’m being a little facetious, but we need to take it seriously and we need to make sure that people trust that we’re going to deliver. That’s where we’ve proven time and time again that you can trust us. That’s why that app store rating is really important for us so that people can say, hey, there’s 10,000 people that have rated this app.
23:17 That’s significant. That’s as much as the big guys. I can trust these guys. Right. And I think the curation cannot be overstated because as a consumer, you know, we are just inundated with too much choice sometimes on the web and you go to these sites and I’ve been to TripAdvisor before and I’m like, just give me a suggestion.
23:32 You know, I can’t read through 40 reviews and all that. So that’s a real component of trust and branding for you, isn’t it? Yeah, absolutely. And that was one of the reactions I had is that the first version of e-commerce was about giving people ultimate selection, connecting you with every product in the world, connecting you with every hotel in the world, making it easy to book. and you get all this information and sort and filter, read reviews, full transparency, that was great on the web because it was novel and it was empowering.
24:01 It becomes a burden on a mobile device, small screen, limited time span. And I want somebody else to take all of that information that’s out there and bring back what’s right for me. I wanna save time, I want to trust, I need to develop a relationship with a service that I trust so that I can get back to my night, get back to the rest of my life, don’t have to spend hours planning and then still might get stuck with the wrong hotel because I didn’t read that next review that told me that the hotel was under renovation.
24:30 I don’t want that, right? I want somebody to have done that for me and that’s the feeling that we can, that’s what we do and the feeling should be that you’re talking to your best friend and that knows New York really well or knows London really well and say, hey, where should I stay tonight? And they’re like, oh, well, you know, this is a great new hotel. You’d like it because you’ve stayed at a similar hotel before. Make sure to go up and get a drink on the rooftop.
24:52 And by the way, I negotiated an exclusive rate for you 40% off. That’s how it should feel. Right. That feels pretty good. Sounds pretty good.
25:00 You know, it’s interesting. If we do continue to go mobile and it looks like we are, then I guess as consumers we’re going to have to continue to trust more curators because if we can’t go and read all those long trip advisor reports, because you can’t on the mobile, then you really have to find people that you trust that really deliver something that’s a great product every time, you know, whether it’s the Just Eats or your server, you really have to be like, okay, I’m going to build this relationship. I think it starts with transparency around what we’re doing and why.
25:26 So we’re very clear that we curate by looking at hotel reviews ahead of time before we let hotels in. We quality control, we do site visits, and then we monitor quality. And if the quality is not good, we don’t put those hotels in. And then within maybe the 150 hotels we work with in London, we’re going to show you the 15 best deals across all price points, best rates, best discounts at that moment in time based on where you are. So we’re very transparent in how we do it.
25:50 Over time then, you don’t think about that. All you think is that I know that I’m getting the best from this service because if I went and looked myself, I wouldn’t find anything better. And that’s the promise that we have. That’s what makes what we do so hard is that we have to deliver on that every time. Right.
26:05 It’s all the things you can’t see on the app. I remember I had the guys from Halo in here that they’re the on-demand Black Cab app here and they’ve had a huge investment and they’re trying to obviously take on Uber. And I said to him, I’m like, yeah, your app is so simple. And he was stealing over there. And he was like, just because it’s simple, it doesn’t mean it doesn’t take a team of 50, 100 people to make it simple.
26:22 The irony of simplicity on the app is that there’s a lot of complexity behind the scenes. And that’s one of the barriers to entry is that it was simple when we started. We launched the thing in 10 weeks, so that was simple. But to scale this thing up where you’re doing thousands and thousands of bookings every day, that’s really hard. And that’s what takes a lot of effort.
26:40 Let’s talk about design really quick, because I think you started with Photoshop work when you got out of college. You are a design guy by nature and let’s be honest design gets gets a lot of lip service in tech but it doesn’t always it doesn’t always really come from the core of the company and the successful companies you can see that it does everyone’s of course sites apples of the world and I can name a variety of others but if it’s important to the CEO it becomes important to the company and if it’s not it just becomes something else and some other metric drives the company and And you’ve talked about the design and how it actually permeates your entire culture. And I was just wondering if you could tell me how it started and then how you look at design and how it relates to Hotel Tonight.
27:22 Yeah, so I’ve always loved great design. My dad’s an architect, contemporary architect, so I grew up with blueprints around when they were actually blue and based, you know, ammonium based. And I think I’ve always respected great clean design and it’s just an aesthetic taste. I think that great design can’t make a business, but it can help a business stand out and help augment a business, help it be memorable and remarkable. And then for us, it is part of the culture. I think it’s infused in our product. We focus a lot on design, and I spent a lot of time working with the team and encouraging them to come up with great designs. And some of the things that I’m most proud of is that that leads to a lot of innovation in our design. So my My favorite example of this is the checkout process on Hotel Tonight.
28:06 It’s three taps in a swipe. The swipe is our Hotel Tonight logo, and you trace that in order to complete your purchase so that we know you’re actually wanting to book a hotel. We didn’t have that before, and people were saying that they had booked by mistake, caused problems. One of our designers and developers worked together to come up with that on their own. They said that what had been done before was really awful, and I agree, it was you had to enter your initials.
28:33 Felt like you were signing a legal form. And these guys came up with that. And it’s magical, it’s iconic, and it’s one of the most memorable features. And it just feels cool. It feels right.
28:42 Right. So what was a problem is now an asset of you and people. And I think it’s because the design was elevated to a point where that’s important. And if it had not been there, we would have still been doing the signature, put in your initials to sign this document that you really want to book a hotel, which feels awful, which is completely off-brand for us, which isn’t delightful, which isn’t memorable. And it turned it from a process that was painful into something that’s really memorable and iconic.
29:07 So that’s my favorite example. And so I think that when you make design a priority, when you respect it, when you hire great people that respect design as well, that, you know, great product results. Right, you have some tag words that you say, I think your core values are build, question and respect. When I heard you say those, it felt like words pulled out of the dictionary because like they don’t flow together. And I was wondering why you chose those words and why you chose those core values?
29:33 Sure, yeah, we thought about that early on and we knew that we were hopeful that we were gonna be building a large company. We wanted to make sure that we defined our culture early so that we would be hiring the right people. And we’re big in the power of three, so we launched with three cities, we launched with three hotels in each city. There’s a magic in that number three, so we wanted to keep everything simple, which is also one of our product values is simplicity.
29:58 But on the cultural value side, So we wanted to be a culture of builders. So we wanted to always be shipping stuff, always be bringing new things to the world. But it wasn’t throwaway stuff. It was meaningful. It was lasting.
30:10 That could be a relationship with a hotel all the way down to a new product feature. On the question side, we also never wanted to be complacent. We never wanted to just accept the status quo. We always wanted to challenge ourselves to be better. Always wanted to challenge ourselves to be more innovative.
30:25 And we wanted people that were curious by nature along those lines. And then on the respect side, It’s really that we wanted to work with optimists, we wanted to work with people that we wanted to be around, that were respectful of each other, that were respectful of our customers and our partners. In our industry in particular, there’s a lot of lack of respect for customers, you know, where, you know, let’s just get them through and, you know, once we get their money, it’s okay.
30:49 Like we didn’t want that type of a culture, we wanted to build something long-term and lasting and meaningful. So that was where the respect came into place. And as we then hire people, as we interview them, as we get to know them, we can apply these filters and to make sure that they’re consistent with the type of people that we’ve said is our culture. Is it tough finding talent in San Francisco? It’s tough, but here’s my take on it, is that it’s always tough to find talent.
31:18 So if everybody in the world was available for hire right now and they were affordable, it would still be really hard to find the right team that works together that has the same values, has the same type of drive that really wants to build the right things together. It’s really hard to put together one of these teams. It’s like putting together a professional baseball team or a football team is that you’ve got to find the right chemistry, not only just the right people, the right talent.
31:43 So somebody that’s really talented could be difficult to work with and it wouldn’t be the right person to bring in. Now, on top of that, in San Francisco, exacerbating that inherent challenge is that it is really competitive right now. Not so much against other companies like Uber, but more against the opportunity to start your own business. There’s a lot of money out there, and we had four senior design candidates that we were very close to hiring. They all backed out recently.
32:11 One went to work for Johnny Ive at Apple, which, how can you turn that down? I was excited for him. And then the other three had the opportunity to start their own company, which again is hard to argue with, but not everybody can start their own company. We need to find people that want to work at companies, too, as they grow. And there’s a time in life to start a company, there’s a time in life to work for a company, and it’s up to us to find people that are at that point where they’re not ready to start a company or they’ve started, they had started a company and they want to do something different.
32:41 How much of your time do you spend recruiting? It’s a priority for me. When I’m in the office, it’s about 20% of my time. And I always am asking, what can I do? Who can I call?
32:53 I’m always asking people, do you know anybody that’s hiring, or know anybody that’s looking for everybody’s hiring? Do you know anybody that’s looking for something new, or who’s the best person you know? Those types of questions. So it’s endless. In fact, after this, I’m going to go call a candidate, a product management candidate that we’ve made an offer to, and encourage him to take the offer.
33:14 To take it. What does London feel like to you? I’m sure you visited this place over the years, and for me to watch it, I’ve been doing the show now about a year and a quarter, and it’s taking on new vibes, it’s getting new confidence. You’re seeing some pretty incredible FinTech companies raising good series B rounds, and you’re really seeing London stamp their signature on a few things, which they really, to be honest, haven’t done, say, three, five years ago.
33:37 And I was wondering what it feels like to you to come here, and does it feel like the Valley did 10 years ago, or New York seven years ago, or what’s the vibe you get more than anything when you’re here? Yeah, I love London. Every time I come, I visit, I love it more. I think there’s just, you know, It grows on you. It grows, it’s just amazing energy and, you know, it’s just such an incredible city.
33:59 I think it’s more similar to New York than it is to Silicon Valley, given the density and given that it’s more of a finance-driven town and it’s got more history. But I do feel like, you know, every time I come, there’s more stuff going on, there’s more meetups. I wish I could stay longer and go to more of them. But it does feel like there’s this awakening going on and an excitement around new ideas and around new businesses. And it’s great to see friends with Jay at Halo and he’s no longer there, but seeing him build that business from here was very cool.
34:30 And Rittus as well at Y plans. Right, right, right. So you’re pretty optimistic on what’s going on over here, but also a lot of American companies are coming over here to compete as are you and you guys bring a lot of experience. You bring a lot of different core values as an American that also make it easy for you to compete over here, I would say. Yeah, but I think that that just plants the seeds for others then to go and do their own thing.
34:54 And I hate to lose people at hotel tonight, but what makes me really proud is when they leave and they go and start their own businesses. That’s how I want them to depart because that’s the success for me is if they’ve been able to then realize their own dreams and that is, and start their own thing. So I think what you’ll see is that sort of second generation of tech employee will become, go from employee to entrepreneur. Right, right. You know, we always ask people a few questions here on the show, and I’m gonna hit you with those.
35:24 Sam, if you could give a phone call to the 20-year-old Sam Schenk, I don’t know if he was on Photoshop yet, I’m not sure, and give that young man a bit of advice. From everything you know now, what would you tell him? What would you suggest that he do? I think I’d tell myself to be patient, that you have to, my 20s I was very frustrated because I knew what I wanted to do, I wanted to start businesses, I wanted to make an impact, I wanted to change the world and bring something new to the world and it wasn’t happening fast enough for me and I didn’t see a path for it to happen and I needed to be more patient, enjoy the moment one and two was realize that there’s a time to learn and then there’s a time to put that learning to work and that put that learning to work for me happened more in my early 30s And then, you know, I needed to go back, I’d go back and say, don’t be so frustrated, you know, just wait.
36:13 Right. It seems like you have that perspective right now, as in, you know what you’re doing, you even said it earlier when you mentioned the time, you know, you’re at three and a half years, you’re not at seven or eight. So it’s like these things took time, we’re doing the right things. You know, you seem more comfortable with that timeframe, you know, than a lot of people. Yep.
36:31 And part of it is having done this twice before with other companies and being through that cycle and being through the ups and downs of it, I developed some muscle memory and thicker skin and some more scars, but I think that there is a cadence to it and if I look back on my 20s and if I could talk to myself, I’d be like, hey, don’t worry, you’re gonna be doing exactly what you wanted to be doing. It’s actually gonna be a lot better than you ever expected. So just hang tight.
36:56 Right, that’s very good advice. Best advice you’ve ever received, I would guess maybe business or personal. I mean, you’ve worked in startups for many, many years. Yeah, the best business advice was from my dad, who said that, you know, you think your idea is so great, you know, 100 other people have it. The difference is that 99 of them aren’t gonna do anything with it.
37:17 I think Hotel Tonight really falls into that category that, you know, so many people have said, oh, that’s such a great idea, I wish I had thought of it. Like, I’m sure lots of people did. It was like the hard work of actually launching it, marketing it, getting out there with the press, getting out there with hotels. That was what separated it from just being an idea. Best personal advice was from my wife’s grandfather.
37:37 He was a pretty amazing man. He was born in poverty in the South in Mississippi, ended up becoming the president of ABC Television. And I said, how did you balance family and work during all of this? Because you’re working so hard and you have a great family life. And he said, Sam, don’t even try.
37:54 It’s always gonna be a struggle. You’re always gonna feel guilty one way or the other. The only way to deal with it is learn to live with that conflict and just do your best. And that stuck with me too. So I’m not trying to ever be 100%.
38:08 I’m always giving my, when I’m present, I’m present with either one, but I know that it’s never going to be fulfilling either way. And that really was helpful because you always feel unsettled. That’s good advice because there’s so many people that talk these days about the balance and about how they do this and refuse to do that. And it’s, I guess it’s important to realize that it’s always going to be a struggle and you’re always going to be hard on yourself about both choices, right?
38:32 That’s exactly right. It’s fascinating because I have a lot of people here on London Real, and some of them are fascinating and they’re starting businesses and they’re pushing new ideas out there. Sometimes I get people that are really struggling internally like that, and sometimes I say that if you’re really struggling with something, that’s a good sign. That means that you’re- It means you care. Yeah, it means you care, that means you’re pushing the envelope when it comes to building it as fast as you can.
38:57 I think you need to be a little unsure when you’re building something great out of yourself or out of your company. The other way I look at the world is I try to be a little uncomfortable in my situation. That means that I’m in the right place. If I’m too complacent, then I’m not pushing myself hard enough. I’m not growing and advancing, and I’m not maximizing my capabilities.
39:18 Right. And in chaos, some great things are built, right? Most great things are built in chaos. That’s fantastic. Next two years for you guys.
39:24 There are some big milestones. I know you’ve just opened your platform up for that seven-day booking, which is is a huge move, takes a whole new piece of the market share and a whole new list of competitors as well. Is that kind of the main focus? Are there other things on your mind in the future Asia or other geographies? Yeah, with moving to Sydney, which we’ve announced but haven’t moved in yet, that’s a whole new area of the globe for us and a whole new continent.
39:47 And that’s really exciting about where that could take us from there. So certainly of aspirations about being a global brand in this day and age, there’s no need to be just single country’s brand, the world’s a global marketplace. So that’s one big focus for us. Other is just awareness. We are still far behind in awareness of this.
40:06 I was telling a guy that books 100 rooms a year about Hotel Tonight, and he’s, on my age, he should be using us because he’s wasting money on other services, wasting time on other services. And he’s like, how come I don’t know about you? And he just hadn’t heard of this yet. So we have a lot more work to do to tell the market about and tell the world about what we do and why they should use us. Right, and then I guess that makes making your product just that much better so it just grows virally that much quicker and like that exit tool as opposed to putting those letters in, someone else tells a friend how cool it was and that word of mouth takes time but it can be very, very vicious when it gets going, right?
40:47 Absolutely, and it’s about all the, like, so virality is about product quality and product quality is all about the little details. It’s, you know, we fixate on little words and the variations of colors that we have in the app. And so it’s about those details and about caring about the error that hits only 0.01% of people is still an error that we need to fix. And it’d be easy to dismiss that and say, no, analytically, like, statistically, that’s not even worth us thinking about.
41:15 It all adds up, because you don’t know if that one person out of 1,000 that’s looking at it or out of 10,000 that’s looking at it is someone like you that could then tell the world about what a bad experience they had on our app. Yeah, it’s fascinating. I mean, the big thing people say now is do things that don’t scale, and the Y Combinator guys talk about it a lot of times, but when you’re in a company where you are and you’re trying to grow as fast as possible, you’re always 80-20 and think, oh, that’s not important, but ultimately, these are those little things that are important, because that’s ultimately where your product is, and if people are really caring about them in your company, then that determines your fate, so.
41:45 Absolutely. Hence the struggle you talked about. The struggle. Sam, thanks so much for coming in. I’m so glad we made this happen.
41:50 It’s a great story, it’s a great vision, a great idea. I think people can learn a ton from what you said today. Great being here. Thanks for making it happen last minute. Yeah, no, I know.
41:59 It’s just like your app. So it’s fantastic. Hotel Tonight is the app. You can get, I’m guessing, on Android and Apple and go to your website if they want some more information. But it is a mobile device.
42:09 That’s right. Windows Phone 2. Windows Phone are there. OK, very good. Fantastic.
42:12 Have fun at the Web Summit. As we say on Silicon Real, it’s about the people. Thanks. I appreciate you coming and all the best on your journey. Shank you very much.
42:20 All right, take care.
