Hostaway!

[00:00:02] Speaker A: This is short term rental management, the show that is all about short term rental property management with your host, yours truly, Luke. Carl. This episode is brought to you by the premier short term rental Facebook group, short term rental long term wealth. We have nearly 50,000 members. This is the biggest independently owned and operated STR Facebook group, and it has been curated by yours truly, cash flow Carl. Join us on Facebook. Search the groups for short term rental long term wealth. That's short term rental long term wealth on Facebook. Here we go. Short term rental management. And I've got Marcus on. I'm very excited about this because Marcus is a metalhead, and it's not every day you meet another rocker, especially in the real estate space, is fairly uncommon. And I was actually first made aware of Marcus personally, other than, of course, his company, Hostaway, which I'm a big fan. But because you were on Avery's podcast and she said, you gotta check this guy out. He's got long hair. He's the real deal. He knows his stuff. And you know how it is in real estate. You kind of roll your eyes a little bit and you're like, oh, yeah. Because he went and saw a foreigner one time in the eighties. He's a rock and roller, but it turns out you really are. So we've got a lot in common. And anyway, Marcus, it's great to have you here, man. How are you? [00:01:35] Speaker B: I'm doing great. I've just come back after two months in Costa Rica, and I'm back home in Toronto, and it's wonderful to be here. The weather is a lot more susceptible to my. One of my favorite hobbies is running, and it's really, really hard to run when a hot day is 96 degrees and a cold day is 95 degrees. So it makes it almost impossible to run. So I've been running around town here, and I love it. But, yeah, life. Life is good right now. [00:02:09] Speaker A: You know, it's interesting. I didn't know that about you, but I'm also a huge runner, which is another boring topic that nobody cares about in real estate. But that's great. So you're training for a race. What's going on with the running? [00:02:23] Speaker B: Yeah, but I always thought that I would. I would be one of those guys who one day ends up middle aged and run a marathon. And I had some financial goals that I set up when I was 16 years old, and I had a spreadsheet in Excel. When I was 16, I started mapping out my personal finance journey, let's call it like that. And I reached those goals when I was 38 instead of 40, but last year I turned 40 and I head upped my goals. That's what tends to happen. Life gets expensive. I did not realize how expensive kids are, but I still managed to reach it just about the same time when I turned 40. And that's when I thought, now I need to change my life. Now I have been working for 24 years to achieve goal one, but there's a lot of sacrifices that have been made, and one of them has been my health. I was quite heavily overweight and I was drinking a lot of beer, eating a lot of red meat, and I still love beer. I actually used to travel around the world to go to different breweries. I've been to a lot of the top 100 breweries in the world, at least in Europe and North America. But I thought, I'll make a change. So I managed in six months to lose 60 pounds. And then the plan was always that I'll lose weight first. So I'm now. I'm now at a good weight. But then I wanted to gain muscle, but then I remember, you know, I really enjoy running. It's really fun to go for a long run, especially long, you know, when you do 20 miles, when you run two, 3 hours, that's really fun because you feel like you accomplished something. But I ran a half marathon about a month ago in, no, three months ago in Miami, and I thought, I need to do the full thing. So I'm now checking my schedule, checking the training, how I need to train. I think it's October 22 when there's a marathon here in Toronto. I'm going to try to do that. [00:04:26] Speaker A: Okay. All right. I love it. This has been a huge part of my life for a very long time. And. Yeah. So I'm right there with you. I'm running a marathon in October. It'll be my 30th full marathon. And I'm happy to exchange messages and what, you know, shoes and it's just, it's an exciting journey. I'm jealous, if you want to know the truth. I'm very jealous. I've been doing it so long, I'm a bit jaded by the whole thing. But I do, I do thoroughly enjoy it. It's the first thing every morning. I get up very early because I have young kids like you, and you got to get it done before they wake up at my age. And it's a huge, huge, huge part of my life. I'm coming off planner right in a plantar fasciitis right now. So I'm like, finally, since all winter, been dealing with this, and now I'm back, and I've got a half marathon this Sunday that I'm really looking forward to, and I'm healthy and enjoying it, and. Yeah. So, man, I'm so excited for you. Toronto, I hear great things. I've never done Toronto, but hear great things about the race. I have run on the waterfront there in town, and it's gorgeous, but it should be a pretty good race for you. [00:05:39] Speaker B: Yeah, well, unfortunately, Toronto is a bit like Boston, where everyone who doesn't live there seems to love it, but people who live here complain all the time. So I've heard from the local runners that it's about the worst marathon you can do. And I asked them why, and they said, well, we're close to New York, and the New York marathon is much better. That's the only argument that I heard on why it's bad. Nobody has actually said why it's bad, just that it's better in New York, but I don't know. It's here. I don't need to travel. I already have 225 travel days planned this year. And actually, we had a talk with our pr agency about employer branding. I have a saying about business, that if you're a vegetarian, you should open a restaurant, or you can open a restaurant, but please don't open a steakhouse. If you don't eat steak, don't operate a steakhouse. And I firmly believe we're a fully remote organization. We got 37 countries represented right now with 180 employees. We need to live at least a bit like our customers. And where this industry lives. We're in the travel industry. A large part of the people who rent occasional rentals, they do not sit in an office all the time, and as a result, we shouldn't be sitting in an office. Yeah. [00:06:59] Speaker A: Tell me. Tell me about the Costa Rica thing. Cause you said you had your kids in a local school there. That sounds incredible. How do I do that? And what. What research did you do to find this school situation? And was it a good experience? [00:07:13] Speaker B: It was mind opening. And the reason why I travel so much is that this is a very, very diverse landscape, the landscape of vacation rentals that I dedicated the last nine years of my life to learning every single piece of it. And I just had a. Had a new employee join us from a new country, Croatia. And he asked me how come host away isn't widely used in Croatia. Nobody has even heard of it. I told him that's because the business model in Croatia is really really unique. It's called the agency model, where a property manager will not be renting out their own properties that they manage and know they will be renting out other property managers properties, which is truly unique to Croatia. And that's just one example of how unique this entire ecosystem is. What I learned spending two months in Costa Rica, is that there's a lot of people who want to travel for several months with children. And the reason we ended up in Tamarindo, probably why we met so many people who were exactly in the same shoes as usual, was that you do your research and you want to make sure there's schools. But actually, the moment we landed, we turned on our phones and we were standing in line to get through customs, which is quite an extreme experience because it's incredibly hot and the line isn't moving at all. We got a phone call from our school, actually a canadian school in Costa Rica, and they told us, hey, we got some bad news. You're supposed to start tomorrow. But the school's closed, where we had a disagreement in the management, and we decided to shut down the school. And we thought, okay, well, that's not too great. Like, we came here so that our daughter could go to school. But then we found another school, and it was actually great. There were a lot of people there from a lot of different countries. Well, to be honest, mostly american and Canada. But we made some new friends. And even just right next door where we were living, we had my daughter, six, and there was a. A seven year old girl who was. Who was living there. So we had a lot of friends and, yeah, a lot of very like minded people. But it just opened my eyes to compared to where I normally spend time, which is southwest Florida, when most people come in either for a week or for the entire winter, there's two types of visitors there and very few locals. Whereas in Costa Rica, it seemed that, yeah, there are some tourists who come in for a week, but a lot of people actually spend several months there. But very few of them would spend an entire winter. He would spend one or two months there. It was very interesting to see the different dynamics in the vacation rental sector. But I'll try to answer your question. I actually had a very exact question asked by a former colleague, because I have been moving around with my wife. We have lived in Poland. We have lived in Amsterdam. We have lived in Barcelona. We lived in Florida and in Canada and in Finland and in Sweden, big metal countries. And I had a former colleague reach out to me and ask me, hey, you know, I want to do exactly what you're doing. I want to live in these places. I want to move to a different country. What do I need to do? And I couldn't answer the question because I still don't know. I mean, it's very simple. You pack up your bags and you leave. In Costa Rica, I met a couple from Washington, DC. They had two young kids. They had sold everything they had and moved down to Costa Rica. They had never been to Costa Rica before. They just decided to stop their life in Washington DC. One of them is a lawyer and the other one works in software. And they moved to Costa Rica without ever visiting. I did the same thing nine years ago. We decided to move to Canada. We had never been to Canada. Like, that's the second biggest country on the planet. We had never been there, and we just decided to move. And I think that's what separates me from my former colleagues, that some people just pack their bags and go, and others ask, what does it take? I'm sorry, I can't give a better answer to your question. [00:11:42] Speaker A: I think that's perfect answer, because I agree with you. We certainly haven't lived in as many places as you, but I've lived in a lot of places in my life and done tons of traveling for a guy that I hate airplanes, which is a bad thing for a guy who loves to travel. We travel constantly. We've done the motorhome thing. But I agree, it's like anything in life, if you want to do it, you just got to go. And if you're asking me, it's probably not going to happen. Do you really want to do this? Because all you got to do is pack your damn bag. I totally agree with you. [00:12:16] Speaker B: Yeah, I guess it's like running a marathon. You just got to start running. I mean, it's hard to run. If you haven't run anything, it's hard to run five minutes. You're going to die in five minutes. But if you just do five minutes once a week, suddenly you can do it once a day, and then you can run ten minutes, then you can run half an hour, and before you know it, you can run 4 hours. [00:12:37] Speaker A: Yeah. And really, that boils down to running is not for everybody. I thoroughly enjoy it, even when I hate it. I've been doing it a long time, not since I was a kid, but since I got, you know, I was a big beer drinker myself and I got in shape in my thirties, and running was my tool to do that. And I've been doing it every day since, and I pick people constantly asking me, Luke, how do I run a half marathon? And I'm just like, you just answered your own question. You just go run a half marathon. It's really pretty. It's the same as real estate. How do I. Luke, how do I buy a house? At the end of the day, you just go buy a damn house, you know, and. And then you figure it out. It's pretty much as simple as that. Now, there's a lot of things, especially with a house that's expensive. You probably want to figure some of that stuff out before you buy it. But, you know, at the end of the day, you're exactly right. So is that how this vacation thing came about? You, I assume that a big chunk of the reason why you're in the business is because you love traveling. How did that all come about? [00:13:38] Speaker B: Yeah, I do love travel, but actually, one of the things I'm really passionate about is real estate, which I think is a bit of shame how mainstream that has become, because I started my real estate career in around 2010, so 14 years ago. And what we've seen since then, globally, is that the real estate markets have not only exploded, but at the same time, there's a huge amount of people that have joined it. And that's great, but I almost feel like it's a curse word these days. If you go and tell someone your hobby is real estate, because they're going to look at you a bit sideways at, oh, you're one of those. But back in 2010, I wasn't one of those. If you told some of my hobby is real estate, they'd say, huh, real estate. Can that be a hobby? But, yeah, I can give you a story of where it started. Really? That simple. We were renting a place in Amsterdam, and rents were atrocious at the time. They're even worse now. But then they had this program where for first time homebuyers, you can actually get not only 100% mortgage, but the 5% on top of that to pay for all the expenses for buying a home. So basically, you needed no down payment or no savings at all to buy a home. So we bought a home in Amsterdam, and even today, we're still renting it out. But that opportunity wouldn't have been available in the US in 2010 and in many other countries. It just happened that we were at the right place at the right time. And that's very similar to a lot of other real estate stories that I've heard being at the right place, at the right time. But the thing is, you can control that. Right now, it's probably a bad time to buy real estate in a lot of markets, but there's other markets where it's a great time to buy real estate, and you just got to get started. [00:15:32] Speaker A: So give me a brief history of hostaway. How did you get involved with the management space? You must be a software guy to some extent. And then also, how did you get caught up in the whole vacation rental thing? [00:15:45] Speaker B: So, yeah, I moved to Canada in 2015 and I was unemployed. And that sucks. Well, it doesn't suck. I actually like being unemployed every now and then. It's really. It's really nice if you're in a position like me who has a wife, who has a somewhat decent job, and you can have food on the table still. But I was thinking about, how can I rent out my place in Amsterdam, because it's a hassle having long term tenants. But then I thought I heard about Airbnb, and I was investigating how do I manage that remotely? Because they're going to be checking in when I'm asleep because. Because of the time difference. Like, I can't remotely do that. There's got to be an app for that. And turned out there wasn't an app for that. What I needed was a property manager. I didn't know that at the time, but it was mind blowing that there was no technology to help property owners get property management services, and there still really isn't today. You still need a property manager. But I started investigating the landscape, and it was incredibly fascinating because at the time, that was maybe the peak of the urban rentals. Every big city in North America and in Europe were turning long term rentals, usually one bedroom condos, into Airbnbs. And it was a massive boom. But I met these property managers in the cities and asked them, honestly, what are your biggest challenges? What are your ambitions? What are your fears? What are your goals? And I was shocked to find that so many of them, they just needed technology. They had everything else. They had a great business model, but the technology wasn't there for them. And I have only worked in technology my entire life. I've never done any other kind of work. And, well, I did work three weeks at McDonald's when I was 15, I quit. But I still consider it a very valuable life experience. And, yeah, I decided to start providing the technology that's holding these people back. And then now, nine years later, we know that the idea to use cities where people live, but tourism isn't the main driver of the city is probably not a good idea. And for example, New York City, they outlawed short term rentals completely. San Francisco has done it before to some extent, but there's a whole different world. There's many communities around the world that are fully dependent on tourism where if you banned short term rentals, you would essentially have mass unemployment because everyone there works either in a restaurant or a car rental or in, they provide tours. Any other services for the tourists? If you don't let tourists come in, then nobody has any jobs. [00:18:44] Speaker A: Yes, that's where I live. You're preaching to the choir there. We've been doing that a long time and that's the only, only places we operate. And I agree with you. You know, I, I own a ton of long term rentals. I love, love long term rentals. They are obviously a little bit different. And those minor in cities, you know, I mean, some of them are kind of out in the country of a suburb of a city, but it's in a metropolitan area. But my short terms, I do what you, exactly what you're talking about. And in these tiny towns, which I live in one. And it's, it's, it's also really weird living in these places because a lot of these people coming in don't understand that people actually live here, you know, and so they're, they're lost and they're, they don't speak the language the right way and they, you know, like, you're almost like, what a wear, walk around wearing a t shirt all the time that says, I'm local, don't mess with me. I'm local, you know, but, yeah, it's. [00:19:42] Speaker B: A wonderful, I know that feeling very well. You know, I lived two and a half years in Amsterdam and it's got, it's got only 600,000 people living there, but every day of the year there's 1 million tourists. So you're in a very tiny minority if you're going to be living there full time. You find these niches, these restaurants that are only for locals. You try to bring your friends who are visiting and they're not allowed in because they only allow locals. I think in Florida you don't have many places like that, but still there's areas of town where, you know where the locals go and probably the off season, that's when you'll find out what those areas are. It was the same thing in Costa Rica. My neighbor said that we don't know now, but in two months everyone will be gone and suddenly we know who lives here full time, right? [00:20:30] Speaker A: And you go to your favorite coffee shop or your bar, and they, you know, they'll call you out. There's a line of people that, like, this time of year is starting to get busy where I live. And you go to the coffee shop. There's a coffee shop, slash bait shop where I live. And you go fishing across the street in the Gulf for Pompanos on the surf fishing. And so I like to take my son surf fishing. So we pop in and there's a huge line of tourists this time of year. But the lady behind the counter, she says, oh, she calls me out, hey, Luke, hey, come up front. You know, so. And then she. But she makes it like a fun thing for the tourists, too. Like, oh, this guy, they. She knows who this guy is. He lives here. That's weird, you know, and it can be. It can be fun in the right local, you know, type of places like that. If you're going to some big giant restaurant where there's a mechanical bowl or something, then you're probably not going to get that, but yeah. Okay, so tell me, talk to me about the boom of these property management softwares. Like, what did the landscape look like? I mean, 2015, it was fairly barren, I would imagine. And then what was it like watching that whole thing progress? [00:21:42] Speaker B: It's been a crazy, crazy journey in hindsight. I mean, we were at the right place at the right time. There's no other way I can explain it. We got incredibly lucky, I must admit that. We had a great team in place that made miracles happen. But basically, there were two generations that merged right around 2020. Well, between 2015 and 2020. So the old generation would be in places like Destin, places where if you went there 20 years ago, it would be the same. People live on tourism, whereas a more dynamic place than an urban place like New York City 20 years ago, where people work, they maybe worked in banks 20 years ago, and today they work in software. Things are changing. And essentially, Vrbo and property managers in vacation rental destinations, they started merging with Airbnb in urban locations, and there wasn't really any software that could handle both of those worlds. So there were a lot of softwares that were founded 2030 years ago, like Streamline, Libras, Escapia, that were catering to the vacation rental crowd and serving their needs. Meanwhile, there were softwares that were serving the Airbnb crowd in the cities, but there wasn't really much overlap at all. And same thing in Europe. Avanteo, for example, has been catering to traditional markets. [00:23:22] Speaker A: So you just mentioned four. Was that pretty much it when you first started there was like these. An escape is owned by Vrbo. I don't know if it was at. [00:23:30] Speaker B: The time, but it was, it was at the time. Actually, those companies weren't even on our radar at the time because we were talking to property managers in the cities and they were looking at completely different solutions. So there was a massive boom of software. I remember I've been pitching to investors a lot in my life and the most common complaint or rejection by, by investors were that it's competitive. Yeah, because there were 50 or 100 software providers who were trying to do the same thing as us and because the demand for that software was so big, because there wasn't really anything available that could do what they wanted it to do, to automate everything. A lot of companies started up, a lot of companies were able to attract and it was just, just crazy to see how even the landscape evolved over time. But what eventually ended up happening is when you have a gold rush, you're going to end up with just a handful of winners. Eventually there's going to be too many people coming. They won't find any gold or they'll find it and spend it all at the strip club one night and then the next morning there's no more gold left. And they're wondering, hey, what happened? I was supposed to make it big here. That's exactly what happened in our space right now, there's a lot of companies that are struggling. We got a marketplace with almost 200 integrated software partners, a lot of them you know as well, and you probably use their services, dynamic pricing provider, website builders, a lot of tools for operations. But today a lot of those companies are struggling because they raise capital based on, in a climate back in 2021 where raising capital was easy if you were growing, but you cant have that many companies. When you look at more mature markets like telecom or banks or even car manufacturers or airplane manufacturers, there used to be hundreds. Now theres two airplane manufacturers left in the world, pretty much. Theres some smaller ones, but other big ones, theres only two to choose from. That's where this market is going as well. And that has all happened in less than ten years. It's been a crazy ride. [00:25:55] Speaker C: This episode of the short term show is brought to you by the short term shop. If you're interested in buying a short term rental in one of the top vacation markets in America, just go to theshortermshop.com and click Get Connected with an agent. If you purchase a home with the shop, you'll have access to all of our client only benefits, such as training on how to manage your short term rental. So we'll teach you everything you need to know, from how to set up your Airbnb and Burbo listings to how to use the property management software that you'll need to streamline your business, all the way down to helping you source your local boots on the ground like cleaners, handy people, etcetera. We've taught thousands of people just like you how to buy and manage their vacation homes from anywhere in the world. So head on over to the shorttermshop.com and click get connected with an agent to get started. I do have to mention that we're brokered by Exp or else I get in trouble. We'll see you guys over there. [00:26:47] Speaker A: Yeah, it was 2015, or no, 20. I think it was 2018. Right. When. When the softwares were able to get a little bit more interaction. As far as verbo specifically, I think at that point was getting easier to communicate with. And that's when everything all hell broke loose. Right. So what did that look like as far as your life was concerned? It's like, oh, my goodness, this is now changing. And now there's a ton of people jumping in this space. How do we compete? Or were you already pretty well established and it was fairly easy to hold that off? [00:27:18] Speaker B: Yeah, I mean, that's, that's the thing. Why, why companies win and lose is that there's going to be changes in the market. There's going to be younger, more hungry and agile companies that are able to adopt to the new reality faster than those who have become complacent and just do things the way they used to. And that applies to pretty much every industry in the world. And that's exactly what happened to us as well. We were able to see the trends and adopt to them faster than anyone else. And perhaps the, the biggest trends in the last few years have been, first of all, what Covid did to travel is something that is, we're never going to go back to normal. There's at least two things, maybe three things that happened. First of all, a lot of travel demand was created in areas that do not fall into these two categories. They were not in urban and not in vacation rental destinations. So you could take a rural location, let's say a two, three hour drive outside of a city, but not next to a lake, not in the mountains, not next to a beach, and people would rent it. And it was a massive boom. That boom has since ended. If you're 3 hours away from a city in the middle of nowhere and you got an Airbnb there. Not a lot of people choose to spend their vacation there, but during COVID that's all you had because you didn't want to fly. So that was one boom and bust there. But a couple of other things happened. A lot of people found, I'm talking consumers here. They found out vacation rentals for the first time in their life, and they enjoyed it so much, they are not going back to hotels ever. And there's a certain percentage that's higher than zero. It might be 5% of the consumers, might be 10% of the consumers, but it doesn't matter. There's a certain percentage that will never choose a hotel if they can. And we see that in the rates. Because today, if you book a vacation rental, it might be more expensive than a hotel, which it should, because you get so much more value of having your own pool, your own backyard, your own kitchen. But that's not the way it was five years ago. Five years ago, it was a cheap option. And a lot of media is criticizing that. You've probably read the headlines, Airbnb is more expensive than hotels these days. But, yeah, that's because the consumers are willing to pay more for that. The third thing that happened was remote work and these digital nomads. That isn't a new thing, but it was kind of a niche thing to do ten years ago. Today, it's just normal. A lot of people, I'd say pretty much everyone knows someone who is doing it or has done it, and it's more and more normal. And these are things that changed since 2020, and a lot of them will never go back to normal. There will be a lot of consumers out there who will, 20 years from now, they will still choose a vacation rental or a hotel if they have the opportunity to do so. [00:30:31] Speaker A: Yeah, I have a very similar perspective and a little different at the same time where we were living in an area, again, that was a tourist town. And so it was the way you rented houses there. We bought a couple of houses in middle Tennessee, and then we started buying houses in east Tennessee. We were living in the area, and it was like, okay, if we're going to buy, we're going to scoot over basically one town over and start buying over here. Well, they rent houses differently here than you do over here. And so, and this was in the early days. I've been on Airbnb since 2011, which, as you know, is basically the beginning. And so at the time nobody else was really doing it, that VrBo was obviously, they've been around since the nineties. And. And so I told Avery, I said, listen, we're younger than everybody else out here doing this, and these property managers don't know what the hell they're talking about, and they're using their own websites. I think we're going to clean house. And sure enough, that's exactly what happened. But again, it was, to me, a guy that loves long term rental. To me, I was renting my house the way that that market rented the house. And the other market where I had these other rentals, you put them on zillow and you put somebody to live in the house. And over here, we don't do that. Nobody lives in this town. Of course, you have the locals, but that's a whole different thing. And, and then, you know, of course, then you get this long conversation about, well, the locals don't have anywhere to live. And to me, that's all bull crap, you know? I mean, most of the time, and I'm. And I can say that because I am one of these locals, most of the time, these locals are traveling 20 minutes into where the tourist areas are, and those houses are more expensive in the tourist area. And everybody's okay with that because those houses bring in the freaking economy for the area. This is where the money comes from, you know? Anyway, so to me, it was like, okay, over here, I rent these houses on, on zillow with a tenant, and over here, I rent these houses on Vrbo, and there's no lease. And that's kind of cool. And that's kind of how it was for me. But I love the way you put the fact that, you know, people understood, oh, this is actually kind of cool now that I've tried it. And to me, it's the. As for you as well, I would imagine the washer and dryer is everything compared to a hotel. I've got little kids. If you're traveling on the road with these kids, you need a damn washing machine. You know? So a lot of times it's like, do I need a washing machine or am I just in and out? Because if I'm in and out, the hotel is probably going to be a little cheaper and easier, honestly, in some areas of the nation. But if I'm with my family and we need more than one room and a washer and dryer and a refrigerator, then it's a no brainer. We're going on VRBO or Airbnb. Simple as that. [00:33:19] Speaker B: Yeah, another. Yeah, you're absolutely right. With kids, it becomes very apparent. There was a big industry conference. VrMA was in Disney World in Orlando last year, and I went that I was fortunate enough to bring my family, and immediately we noticed that while staying at a resort is great because they got kids activities there, they have trained people who do fun things with the kids. Just a simple thing. If the kid is hungry in the evening, wants some granola with milk, well, where's the milk? Where's the bowl? Where's the spoon? Where's the granola? It's not, because this is a resort, you can't get that stuff. And it's just so basic, you know, we go anywhere in the world, we rent a home, then we go to the store, we buy some milk and granola, and that's it. Then we're covered. We know that there's gonna be a spoon and a bowl, but, you know, you can go to one of the most expensive resorts in the world, and you. They don't even give you a spoon. Like, I think that's. That's pretty lame. [00:34:18] Speaker A: It's weird. It's, like, perfect. How did you not think of this? I might need a freaking spoon, you know? But, yeah, so, I mean, obviously the hotels serve a purpose to me. They're two different things. [00:34:29] Speaker B: Yeah. [00:34:30] Speaker A: I need. Do I need a vacation house today, or do I need a hotel? Get in and out easy, and they might have some breakfast downstairs or something like that, you know? [00:34:39] Speaker B: But, yeah, but it's not always. I don't think hotels are easy. I mean, just last time I was in London, I was staying. I was on a two day trip. So I thought, I'll give hotels a try. And first of all, they had me waiting for 6 hours after arrival. I did a mistake of arriving on a Sunday before I could get access to my room. So I went for a nice run, but I had to. They didn't have any showers there, like any common area showers. So I didn't get a shower after the run. And then I had a sports injury, a neck injury, actually. And I had this heating pad that you put 30 seconds in a microwave. When I got my room, there was no microwave there, obviously, because it's a hotel. So I went and asked them, hey, can you just heat this up, put it 30 seconds in the microwave? And I said, no, that's not hygienic. Which is fair. But, you know, why am I paying $300 a night and I can't even get a microwave that you can buy for $40? In the, in the store? [00:35:42] Speaker A: Yeah. [00:35:42] Speaker B: That's kind of ridiculous. [00:35:44] Speaker A: It is ridiculous. And now they mentioned, I've got a couple horror stories from recent history. Recent past where one time recently, we were going to a conference, and Avery, my wife, of course, she was one of the headliner speakers at this conference. And it was. The conference was in the hotel. We get up to the front desk of the hotel and they said, I'm sorry, we don't have a room for you. And I'm sitting there like these. We. I hate to. I don't want to sound like a jerk here, but she sold the tickets for the people to come and stay in these rooms, and now we can't even get our own room. And it was like, how did this even happen? I mean, forget about the reason why we're here and all that, but like, any, anybody who had a room reserved that gets told, no, I'm sorry, there's no room here. What? You know, that. That's probably not going to happen in a vacation house. I mean, there's, there's some weird things every now and then where somebody might get double booked, but it seems that's happened to me twice in the past year where I showed up and they're like, sorry, we don't have a room. And I'm like, it's exactly like Seinfeld, of course, with the, you know how to take the reservation, but you don't know how to hold the reservation with the rental car, you know, but anyway. Okay, cool. [00:36:51] Speaker B: What time we got that very situation? A week from now, we're going to have a solar eclipse. And I'm, uh, just 90 minutes south of here. The Niagara region near Buffalo. That's where I'm, I'm going with a million other people. The car, the roads there have never seen a million people. I don't know how that's going to work out, but I read a story that. So family had booked a hotel over a year in advance, and then they just cancelled the booking. And now they would have to pay 30,000 for one night if they wanted something similar. But there's nothing they can do now. One more trend I forgot to mention, by the way, that I'm not sure if you've seen it in destin, but I sure seen it in southwest Florida and in Costa Rica. A lot of people, they are choosing the third option. So they go on vacation somewhere, but then they decide to move over there. And there's been a massive movement in the last couple of years out from New York, out from California and into Texas and Florida. So the number of locals is increasing and that has brought some extra pressure to vacation rentals, especially to operators, because while there's a lot of supply, sometimes now actually the supply is threatened because when a property is being sold, the new owner is planning to live there. So normally you would be able to assume at least the bookings that you have already. But if a new owner moves in, you're going to lose property, possibly forever. Have you seen that? [00:38:22] Speaker A: I have not. I've actually never even considered that. That's a very interesting perspective for certain markets might be at risk of losing supply. [00:38:31] Speaker B: Yeah, I mean, in some markets you can just build more if there's land available, but in some places they're pretty full. And there's also, of course, regulation is something that I struggle sometimes a bit to understand. I had a terrible experience last summer in a really nice island called Prince Edward county. It's in Ontario, it's in the Thousand Islands, where the thousand islands sauce comes from. And they decided, they got a beautiful big island there that's full of wineries and fancy restaurants and of course, cottages, but they decided to outlaw vacation rentals there. And of course they grandfathered in the existing ones and we were able to rent one. But every restaurant that we went to, every winery, the owners were there, they couldn't afford staff anymore. Everything was empty. And everyone was complaining about the lack of tourists, which is hilarious because those were the very same people who voted to ban vacation rentals and now they're complaining because their business is going bankrupt. It's terrible. [00:39:46] Speaker A: So they'll bring it back around again. It's just going to be, take them. Some basically need to open their eyes and say, oh, this is actually where the money comes from. I think a lot of times that happens because the local economy is trying to protect the property tax. They're like, oh, if we don't have these people living in these houses, we can't, nobody's going to pay their property tax and we're not going to get the money from the taxes, et cetera. And then all of a sudden they realize, well, shit, you know, even if, if they're renting it out, they're still paying their property tax. And then I get all that money coming in from somewhere else with these people. Because people on vacation, what do they do? They spend money, you know, it's as simple as that. Well, tell me about, tell me about the raise. I don't, I'll be honest, I don't know anything about raising money. For tech, it's not something I have any concept of. You tell me. I don't even know. Maybe it's not okay to ask about. But I know you've been on a journey here recently and you've had some success, so tell us what's going on with that. [00:40:37] Speaker B: Yeah, so there's been a big boom in a lot of asset classes over the last decade or so. Real estate is one of them. If you just look at house prices back in 2010 and compare it to now, I'm pretty sure it's more expensive pretty much everywhere in the world, at least in the western world, than it was back then. Same thing can be said about bitcoin and gold, just hit all time high last week. But tech stocks is something that has also appreciated massively, even more than real estate over the last 15 years, actually the last 30 years to be frank. And the reason is very simple. Technology allows you to build a very scalable business model where you can add one more customer and essentially do that without adding any costs. So very different from real estate where if you buy one more house, you actually need to pay the money to buy that house. And if you decide to manage one more property, that's one more expense item that you have. That's one more hour of work every week or every month. Whereas in software you can build a model where you can add one more customer and the marginal cost of that is almost nothing. So this is why tech stocks are so popular. But because of that growth potential, theres a huge amount of leverage put in, just like in real estate, just like what happened in 2008, because of the potential, lets say. I think actually real estate, long term rentals is a great example where you can rent out a place and every year you increase the rent, maybe by inflation or maybe some number, but you get more money every year. But the cost of that extra $25 a month is nothing to you. You don't increase your other costs just because the rent went up 25. And that's exactly why it's so heavily leveraged. And that works well when interest rates are low. But now interest rates are high, which means you dont want to see leverage in technology and not in real estate either. And as a result of it, a lot of companies that were dependent on getting outside funding, which means essentially theyre running nonprofitable businesses just for growing them. And they do that by selling parts of their shares to get money. That has been a great model for the last 20 years, but it hasnt worked in the last two years because its very very difficult to raise capital these days because the interest rates are too high. And this is why a lot of tech companies are struggling right now, unless they happen to be the magic combination that almost never exists, which is high growth and high profitability. But if you have a gold rush market like the vacation rental softwares, thats very rare. You wont find many companies in the space that are high growth and high profitability at the same time. [00:43:51] Speaker A: Interesting. Okay. I never thought of it that way, where when you are raising money, you kind of pay it back and the interest rate is going to change that dollar figure. I just am so removed from that world of investing. I do everything in real estate. But you're growing. Yes. What does the future look like for hostaway? [00:44:12] Speaker B: It looks pretty darn good, to be honest, where, of course, every business needs to evaluate risks all the time. But right now there's not a lot of risks because what's going on in our space is a huge wave of consolidation. It means that some companies decide to merge with other companies, and that just helps us out. And we're constantly looking at companies that we could acquire. [00:44:43] Speaker A: Do you have any rumors for us? Do you know of any that are going to go away or that are going to be absorbed by others? Are you allowed to tell us if you do know? [00:44:52] Speaker B: One of the sad things with becoming big or getting involved with big capital is these non disclosure agreements you have to sign, and you have to sign them all the time, which basically means you never really know. What are you allowed to say to whom? But I could say this, that out of our 200 partners on our marketplace, there's a lot of companies that are struggling financially. There's a lot of companies that are looking to sell their business, not perhaps because they're struggling right now, but because they don't see the future the same way that we do. We see a very bright future. But the thing is, things are going to change. Just like someone whos a first time real estate investor and has been, they bought an investment condo. Five years ago, interest rates were low. Now interest rates are high. Theyre not going to, sorry, youre in the US with fixed 30 year mortgage. [00:45:46] Speaker A: But theyre still high. If you go get another one today, thats the thing. [00:45:49] Speaker B: They cant get another one. So they cant grow their business, essentially. And if interest rates are going to stay this high another five years, unless rents go up, which I don't think they can too much, I mean, there's a limit to how much people can pay, then they're never going to get a second property. And that's what's happening in the tech space as well. There's a lot of companies that just don't have the money to grow anymore. [00:46:12] Speaker A: Okay. All right. So, yeah, I think that a lot of these softwares are going to kind of start to again, maybe not disappear, but be absorbed, that kind of thing. Let's say that I'm brand new or maybe I have one or two properties and I'm kicking around which software to use. Give me a little bit of a sales pitch on your product. Maybe not necessarily. I don't even know what the other ones do. But what do you do that kicks ass and what's going to be a benefit for me as maybe an owner operator? [00:46:43] Speaker B: Yeah, especially if you're an owner operator and if you're starting out, you probably don't know which questions to ask. It's very common across all businesses that when you're starting out, if you know the questions to ask, you can find the answers. But the biggest challenge is finding those questions to ask. How should I be doing? This is probably something that you didn't wake up and think about. We work with thousands, actually tens of thousands property managers worldwide. We've seen it all. We know exactly you think your business model is unique. We got 100 customers in different parts of the world who do exactly the same thing as you do. And the nice thing is that means we know what problems you're going to face two years down the road. We know what challenges you're going to have when you grow from two properties to five to ten to 20. And not only do we have the tools, but the people as well to help you support that. One of the things that really make hostelway unique is we've got a customer success team who helps the business owners run their business more smoothly. So if you're suddenly getting bad reviews from guests, or you're having problems managing your cash flow, or you're having problems structuring your owner agreements, we got a team that's dedicated to helping you with that. [00:48:02] Speaker A: Okay, wonderful. That's great. That's great. What am I looking for as far as the software is concerned in general? To make my life easier. And it's really cool that you have people that can help me with that, but what are the main attributes of a software that will make my life easier? [00:48:20] Speaker B: Yeah. So the reason why a lot of people end up using this is, first of all, you want to have the same experience across all the channels. So if you're renting out on Airbnb Verbo, booking.com, comma, Expedia. Maybe you want your own website, which the software also builds. You want to do it the same way you want to report the finances, you want to know how much money you made. You want to answer guest communication on one mobile app, not four of them, and you want the same prices and same availability on all the channels. That's one reason why a lot of people started looking for software. Another reason is you want to manage, especially as you grow. You want to manage your cleaners, you want to manage your owners, you don't want them calling you in the middle of the night or when you're at your kids school rehearsal and asking, how much money am I making this month? You want to give them a website that they can log into and check how much money they're making. Also, when it comes to a lot of automations, let's say the guests are throwing a party and your neighbors call you about it and you need to contact the guest. Well, guess what? There's a way to automate that. You can install just sensors that measures the volume in the property and automatically our software sends a message to the guests. Same thing. Let's say you need to sign a rental agreement, then you need a security deposit, and then you need to program your smart log with the new code. Well, our software can actually automate all those things so that all the guest needs to do is make a few clicks on their cell phone and then they get their code so they can enter the property. [00:50:04] Speaker A: Which product are you using for the noise in minute or noise aware or what are we using? Or do you have your own? [00:50:12] Speaker B: We don't have our own. We have, like I mentioned before, a marketplace with 200 partners that provide a lot of the technology because not everyone needs all the technology. But yeah, I would recommend minit and noise aware. They're both integrated with hostoway. [00:50:27] Speaker A: Okay, great. So it'll send a message. I get this certain and I can set the decibel level and say, hey, once we get over this, we send a message and say, hey, stop partying. [00:50:36] Speaker B: Exactly. I like that. Things like humidity. I mean, in Florida some people might leave the doors and windows open, I don't know why, but suddenly your air conditioning freezes up and you see the humidity levels or the temperature goes a lot higher. [00:50:52] Speaker A: I'll tell you why, because they're going in and out from the pool and they don't give a crap about the air conditioner. You know, they just want to blow all the time. And then next thing, you know, it freezes up and it's hot and then they're pissed off and it's like, well, you left the door open. You know, what did you expect? But people are not smart enough to know that does, who does. The humidity is that minute also? [00:51:10] Speaker B: Yeah, they have that very cool. [00:51:13] Speaker A: So you can set it up to send a humidity alert. Hey, please close the door. [00:51:16] Speaker B: Yep. [00:51:17] Speaker A: Oh, that's brilliant. Brilliant. How many would you say if there's some sort of ratio between third party property management companies versus owner operators? Do you lean one way or the other as far as your clients? [00:51:30] Speaker B: So we divide our business. One thing that we do quite differently from a lot of other companies in the space is that, and I think one reason why we've grown so much faster than our competition is that we essentially divide our company into three. So we got, we call them rbos rental by owners. That's typically people who have between one and five homes. They have a certain experience when it comes to how the product works and how the onboarding works, pricing model. Then we have the SMB segment. So they are typically property managers, but quite often they own a couple of properties themselves as well. But they might have between five and let's say 50 or 100 properties. And then we have the enterprise segment, which typically is, well, like you said, if you manage 200 properties already, you're in that segment and these three user groups will have a different experience. For example, the sales process. If you manage 200 properties and you want to evaluate the software, you're going to take a completely different approach because that's just, you need to know that nothing can go wrong. Unlike someone who has five properties looking for their first software, there's no switch needed because there's not going to be a switch if you're getting your first software, right? So. Yeah, and support levels also, the product functionality will be different. And the reason I said that's key to our success is that people have been able to upgrade. So there's a lot of softwares that only cater to one segment here. So if you grow out of that segment, you have to change platform, which is a big hassle. But we have been able to create a platform that can adopt as you grow from one segment to the other. [00:53:22] Speaker A: Yes. Switching is a big pain in the ass. So that's cool, man. That's cool. I dig it. Well, what else do we need to know? What does the future of our space look like? [00:53:32] Speaker B: Have you seen Black Mirror? [00:53:35] Speaker A: I have, I have. [00:53:37] Speaker B: I just watched the scariest episode of my flight home. For Costa Rica. It's called San Junipero. [00:53:44] Speaker A: Is it? I'll be honest, I have not watched that show in years. Did it have a new season or is it an older one? [00:53:49] Speaker B: I think this is an older one. They're in a place that looks pretty much. I would say it's Mexico. They're all young. In the eighties, there's a lot of neon lights and turns out it's all computer generated. And they're actually 60, 70, 80 year olds sitting in an old people's home in a care facility. And a computer is just generating these fake memories for them so that they can enjoy their youth as they die. Which is a super scary thought. But that's right now there's a lot of talk about AI. I don't see anything revolutionary coming out of AI. I mean, other. You know, when Google got popular, actually, search engines, Google wasn't the search engine, it was. Altavista was the market leader at one point, and Yahoo was market leader at another point. Point. But nobody was talking about how our search engines going to revolutionize the world. There wasn't much talk about that today. There's a lot of talk about how is AI going to change the world. I don't believe it will. I believe AI will just become a part of. Just like today, search engines are a part of our world. If you don't know the answer to a question, you just google it. And it's a term that you use. That's how AI will change over the next couple of years. One thing that the travel industry isn't looking carefully enough at is how can we create better augmented experiences? And even how can we market travel to travelers using technology in a better way? I mean, even today, if I'm looking to book a vacation rental, the number one thing that I will look at is the pictures. And the second one is the location. Well, actually, location probably comes first because I'll filter based on that. But that's the same way it's been for decades. When will that change? Because what would be really cool is if I could go on a. On a guided tour around the property before I even book it. Why isn't that available? [00:55:54] Speaker A: It should be. [00:55:55] Speaker B: Yeah, it should be. But I mean, the technology is there. Matterhorn has these 3d cameras, but even there, I don't want to click through to go to different rooms because I'm not going to buy a property. If you buy real estate, I buy real estate. You browse the listings and you try to figure things out. And it's nice if you can have a treaty tour, but buying a property piece of real estate, that's a big commitment that I'm willing to do that. But there's got to be a better way for me to check out. Where am I going to spend one week or one month or three months of my life without, other than just pictures and descriptions and maybe reviews? [00:56:34] Speaker A: So where are you saying this is going? We're gonna have a YouTube channel for a house? [00:56:38] Speaker B: I hope so. I hope. I don't know what the solution is. I just think it's. There's a big barrier of, let's say, to book a place. There's a big barrier because all you got is these pictures. And the more time you spend researching, reading reviews, looking at pictures, even choosing location, the less likely you're going to book. A lot of the bookings that take place today, people choose the location and they find the best property for their budget, and then they book it. But if they spend more time there looking at more pictures and reading more stuff, eventually they get so tired, they just leave the computer. [00:57:17] Speaker A: Yeah, they get analysis paralysis on their house. Just go. I mean, if you don't like it, worst case scenario, you go on another vacation. I don't know, man. People need to get out a little bit more often. It's funny you mentioned Black Mirror, and also, I looked it up. That episode is season three, episode four, which is the same season as an episode that I bring up all the time in my life, which also is blowing my mind now that I'm noticing these shows are eight years old. [00:57:47] Speaker B: Really? [00:57:48] Speaker A: Yes. It's 2016. I can't believe that. I feel like it was yesterday. I was watching these when they were new. And there's one from that same season, the first episode from season three, I bring that up all the time, is called nosedive. And it's actually got Ron Howard's daughter in the show, and she's wonderful. But that episode is about reviews, and it's about people walking around in the world with their phones, and if somebody says something to them they don't like, they just point their phone at the human and leave the human a review on wherever and every tiny little thing in their life is a review. Like, somebody cuts you off in traffic, you just point in review, three stars. He's a terrible driver, two stars. And. And I bring that episode up a lot because it's like, okay, if you want to know what your. Your new life is like as a vacation rental landlord, then. Then watch this episode. Now, of course, this black mirror. So it's very dark and. And you know, it's deep and heavy, heavy, heavy. But I'm going to check that one out. I guarantee I've seen that one you've mentioned, but again. And now I'm realizing it's been eight years ago. Holy crap. Seems like yesterday, man. We're not getting any younger. Well, listen, we're best friends now. I don't know if you realize that. You're a metalhead and you runner. So we're best friends now. And I look forward to. [00:59:11] Speaker B: Why don't you come and run the throne marathon with me? [00:59:14] Speaker A: I'm already booked in October as of right now, but maybe I'll change my mind. Come do Toronto. I'm booked for Detroit, which I think is the same weekend, actually. I think it's the 22 October and it's not. That actually goes into Canada. There's a bridge there and you had to. I had to give my passport copies of my. Because they, you know, you don't have to take it with you, but they. The run directors or whatever, they want it on files. Just because you're going. You basically go into over the bridge and turn around, from what I understand. But it does go into Canada. I've run into Canada many times. I've actually run on the. I've been to Aurelia, which is not that terribly. It's a vacation town not that far from you. About 3 hours, I think. And they have these snowmobile trails up there. I've got a long, crazy story about something that happened to me on a run up there one time on a 21 miler. Actually one of the most memorable runs of my life. It was gorgeous, but some crazy things happened. But anyway, anything else you want to cover before I say goodbye? [01:00:19] Speaker B: No, I think that's it. Thanks a lot. Let me know if you see any great metal shows. I went to Montreal and I spent two days in the snake pit with Metallica last summer. And I think I'm not going to top that experience ever. It's really cool. Inside the snake pit. [01:00:40] Speaker A: Yes. Big metallica fan. Actually, I have a crappy little Metallica tattoo from one drunken evening years ago. I was in a Metallica tribute band when I was 15. [01:00:52] Speaker B: Me too. [01:00:53] Speaker A: Me too. Okay, great. That's awesome. But yeah, I'm going to see Priest. I think I told you I'm going to see Priest in about a month, taking the kids. And then we actually have Rolling Stones ticket. Not metal, but rock and roll. The Stones are doing like ten shows. We're going to see them in Atlanta. So my three year old son is going to see the Rolling Stones, which I never in a million years dreamed that something like that was possible, as old as these guys are. But, but wonderful, man. This is absolutely. I never officially met you before, so I feel like we're best friends from way back in the day. And it's wonderful to have you on the program. And with that, I will thank you for your time and say goodbye. And on behalf of short term rental management, as always, don't overthink it.