E281: Sam Shank of Hotel Tonight – TWiST



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Today on TWiST, we tackled the travel vertical with Sam Shank, co-founder of Hotel Tonight. If you need a place to crash ASAP, Hotel Tonight, has an app for that–and it’s the best friend of travelers and hoteliers alike.

1:08 Hey everyone. Welcome to This Week in Startups. We have Sam Shank with us of Hotel Tonight.
1:47 Thank you to all of the members of the TWiST backchannel. Go to twistlist.co to see what all of the excitement is about.
2:13 Thank you to our sponsor Mailchimp. It’s a great program for delivering mail.
6:01 Sam, you founded HotelTonight and previously founded SideStep. Which came first, SideStep or Kayak?
6:53 What did it mean to be VP of biz dev at SideStep?
7:19 Side deals can be transformative to a business, yeah?
7:30 People tend to confuse biz dev and sales, right?
8:12 Can you trust the hotel reviews you find online? Do you trust them personally?
9:02 How gamed are hotel reviews? How many of those reviews, on a percentage basis, are done by PR companies?
10:58 So tell me a little bit about HotelTonight.
11:19 So what do we see here (in the iPad app)?
12:07 So the service is, I don’t book ahead, but I trust that you’re going to have great deals when I arrive?
13:02 So it’s opportunistic? I don’t buy that completely.
13:46 I’m looking at HotelTonight very closely, and starting to say, I’m just going to go to a city and roll the dice and hope I get a deal. How many users fit that use case?
14:50 It’s a special trip so I want a special room. You’ll definitely have big island hotels available every night?
15:26 So there are only three options of hotels?
16:18 And you can only book a room after what time?
16:45 So if I come in at 3am I’m actually buying for the next day?
17:07 Is there a fear amongst hotels that you’re going to become the default place to get people hotels?
17:31 How did you alleviate that fear?
18:11 If you’re using an iPhone to buy, you’ve just selected yourself into a higher group? Are Android guests worth a little less?
18:57 Can they reject iPhone 3GS users?
19:04 How many rooms does a hotel put in every night?
19:34 If they say we have 25 rooms and all of a sudden they have zero, that’s ok?
19:46 So it’s AdWords for hotel rooms?
19:55 What makes one deal better than another?
20:40 Break for MailChimp ad. Teaser: I had a subpar experience but it actually made sense
21:14 Thanks to Squarespace, which just launched its v6 that works cross-platform. Twist listers get 10% off with code TWiST8.
24:54 So I was at a fancy dinner w/ VCs and I was supposed to go home. I called up Krute and asked him to book me room. Starwood is great — only 10K points for a room. I decided I wanted to try HotelTonight. Krute told me he found a great place. I went there and thought, this is not the hotel I would normally stay at at this point in my life. We paid $200 on the service. I had a very jawing experience. Great website & app but the room wasn’t a $200 hotel. I felt like I got ripped off and paid 2x as much for the hotel. What happened?
26:54 What do you call a solid hotel?
27:05 Basic would be the hotel I stayed in?
28:21 Do you have some sort of indicator that there’s surge pricing going on?
28:39 What’s the lesson there for you guys? You need to do a massive job communicating it?
29:39 What cities does this work best in?
30:29 Airbnb kind of championed taking photos of peoples places so they’re big and gorgeous. Do you hire freelance photographers? How much do you pay them?
31:34 And it’s actually what it looks like? What do you think of Oyster where they professionally review rooms?
32:08 How do they make money?
32:17 Everyone is starting a company around hotels these days. It seems that people stay away from airline booking. Why?
32:59 What’s the commission on something like that?
33:09 Sam: No money in airlines because of the power of the supplier. It’s a terrible business
33:26 So airlines need innovation but aren’t willing to pay for it?
34:54 You guys have been getting knocked off left and right. People have been stealing your idea, right? Does it make you angry to have so many copycats?
36:18 You’ve raised a warchest. You’ve done 3 rounds of funding in how many years?
36:31 So in 18 months you raised your angel, A, B and C?
37:14 You’re talking about a specific person at a firm, not just a firm. You’re not picking a firm as much as you’re picking a partner, yes?
37:38 So who did the A?
38:02 People talk about this board chemistry. Why is that important to you as a founder? Why is that such an issue for entrepreneurs?
38:45 And their role in that discussion is to help you frame the discussion and reach the best answer?
39:24 The egos might be large at times in the room since these are very successful people. You’ve got to manage 5 or 6 strong personalities in the room.
40:12 But you hear those stories of the ego in the room just tearing the founder apart?
40:33 You keep hearing of this “founder-first” trend. Founders getting control of their company post IPO. This is benefiting founders, isn’t it? The general idea used to be founders can be replaced and should be.
41:51 How does your MBA become a personal liability?
42:23 But people don’t want to work for an MBA? That’s fascinating.
43:47 Sam: Now partners are looking at the lifetime of a relationship with a founder.
45:51 There are VCs in the Valley where people say watch out for that one. Go on ahead and tell us which ones they are?
46:25 How ridiculous is the talent competition right now?
47:39 So if you’re valued at $150M, you can buy a company for $50M and get a few great developers?
48:58 Sam: The Ritz Carlton and other high-end hotels don’t do discounts.
49:28 The world is moving to value. If people can’t make more money, prices are going to have to come down for services.
50:05 So what’s next for the firm? What’s the challenge for you as an entrepreneur?
50:52 So you have to make a decision as a founder that you’re going to go long-term for the happiness of your team in making something that is exciting to build?
51:57 What kind of language do you have to use with a superstar employee when you are dead set against their idea?
54:06 Some say that if an iPad app doesn’t flip, it’s the sign that it’s not a quality app.
55:03 What about developing on Android?
55:33 Sam: We spend a lot more time debugging than building the features that consumers want.
56:19 We have to be on Android is our thinking because our customers and partners keep telling us that, but we don’t see the results.
57:49 Do you think Apple will make their own payments service?
58:48 Has HotelTonight ever been in a commercial yet? Ever put you in a keynote?
59:30 It’s a different business than Room 77.
59:50 Everyone follow @samshank on Twitter and everyone go download HotelTonight.
1:00:16 Thank you to Squarespace
1:00:25 You know, your sales people gave me a $50 credit!
1:00:50 I don’t think it’s a good approach when you’re working with an angel to send you a significant monetary gift. Don’t send your angel investors things that are expensive because then they’re going to feel guilty.
1:01:55 Any big successes we should know about?
1:03:10 Thanks everyone

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Jason: @jason
Sam: @samshank
Hotel Tonight: @hoteltonight
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