COVID nearly bankrupted him. Then with AI he grew from $0 to $25M ARR in 4 years. | Andrew Lockhead, Founder of Stay22

Stay22 rebuilt after Covid and Airbnb by serving travel bloggers

Stay22 places accommodation links and booking widgets on websites, and Covid plus the loss of Airbnb forced it to rebuild. Events had been its market, so it moved to bloggers and content creators, whose readers kept travelling locally. A tool that fixes broken affiliate links automatically made the switch easy to adopt and rebuilt revenue to about $15m in 2023.

Takeaways

• Covid erased revenue almost overnight. Monthly revenue fell from $130,000 to $10,000 as the event industry collapsed. Government wage and rent support stretched runway from about six months to about 18. The team brainstormed for months and approached competitors about a sale.
• Airbnb dependence nearly ended the company. Airbnb represented about 72% of Stay22's links and dropped the company in March 2021, just as Airbnb pursued an IPO. Stay22 can still link to Airbnb but earns less, so it favours providers that pay more.
• Travel bloggers became the new customer base. Bloggers' readers were taking trips close to home, and some bloggers had thousands of affiliate links to update by hand. A script that replaces broken links automatically, which bloggers said saved about 20 hours, took partners from 5 to almost 2,000.
• Warm introductions and upfront cash won early partners. Brand-building would have cost millions, so Stay22 used introductions from events to ticketing companies. Early partners such as NIGHTOUT needed proof of legitimacy, so some were offered $5,000 up front, recoupable from revenue. Conversion rose because buyers booked lodging right after tickets.
• A five-minute embed beat the failed API. The first product, an API for event websites, failed because nobody wanted to integrate it. A map-based embed that took five minutes to install worked better. Ticketing platforms carried tens of thousands of events a week, so partnering with them reached far more events.
• Customer interviews gave little; reactions proved fit. Lockhead interviewed strangers in Starbucks and McDonald's and says most answers are of little use. Host Pablo Srugo reads the lesson as a need for partnership distribution. Lockhead knew he had fit when customers reacted to the product.

Stay22 revenue and funding path

1. A seed round of roughly $750,000 came when total sales were about $250,000.
2. Annual sales later reached about $1m, and around 2019 a team of about 24 was growing fourfold a year.
3. A round of about $2.5m closed in February 2020, but some investors refused to wire money once the pandemic began. Stay22 sued, and they later asked where to send it.
4. Revenue reached about $5m in 2022 and about $15m in 2023.