A Product Market Fit Show | Startup Podcast for Founders
00:00:00 · Andrew Lockhead, Pablo Srugo
[00:00:00] S0: Some people, we had told them you know what? We'll pay you $5,000 up front, and we're going to recoup that money. As soon as you generate revenue, I'll send you money. [00:00:06] S1: You paid them to become customers. [00:00:08] S0: We offered them. As soon as you offer, you know what? If it's still not enough, I'll pay you 5,000. [00:00:12] S1: Wow. [00:00:12] S0: After a couple of months, you will generate enough revenues. I'm going to recoup that money and pay you back. [00:00:17] S1: Welcome to The Product Market Fit Show, brought to you by Mistral, a seed stage firm based in Canada. I'm Pablo, I'm a founder turned VC. My goal is to help early-stage founders like you find product-market fit. Andrew, welcome to the show. [00:00:34] S0: Hey, Pablo, it's a pleasure. [00:00:34] S1: You're running a company now called Stay22. I remember when you raised your seed round. I saw it late, and I was like, oh, this idea sounds really compelling. Then I saw you grow, and I think you got to about two million in Topline, doing really well. Then Covid happened, and it was like – you're in the travel industry. We’ll get into exactly what you do but went from two million to near zero overnight, and now you've built it back up. Not the two million a year but the two million a month. That's incredible journey, so we'll dive into that. Maybe, Andrew, tell us a little bit what is Stay22 and just a bit about the origin story, like how you started in the first place?
00:00:34 · Pablo Srugo, Andrew Lockhead
[00:00:34] S1: You're running a company now called Stay22. I remember when you raised your seed round. I saw it late, and I was like, oh, this idea sounds really compelling. Then I saw you grow, and I think you got to about two million in Topline, doing really well. Then Covid happened, and it was like – you're in the travel industry. We’ll get into exactly what you do but went from two million to near zero overnight, and now you've built it back up. Not the two million a year but the two million a month. That's incredible journey, so we'll dive into that. Maybe, Andrew, tell us a little bit what is Stay22 and just a bit about the origin story, like how you started in the first place? [00:01:15] S0: Of course. It first started with my previous company. I had a ticketing platform back in the days that I sold, and I was looking for a new challenge. My co-founder was coming from the travel world. He was trying to go through a B2C route, which I hate. I'm a B2B fan from heart, and I told him there's a better way to do what you're doing right now to reach more people. Let's use ticketing platform events to reach out those user, and this is how Stay22 was formed. We were working with events like South by Southwest, CES, Startup Montreal, C2 to just empower their guests to find destination accommodation and restaurants near their next event, and this is how the story started for us about seven years ago. [00:01:54] S1: What was your co-founder doing before? What was his B2C idea?
00:01:54 · Pablo Srugo, Andrew Lockhead
[00:01:54] S1: What was your co-founder doing before? What was his B2C idea? [00:01:58] S0: It was also in travel, something similar to TripIt so kind of a metasearch but for short-term rentals, kind of like Airbnb merged with Vrbo and [ unclear] and all of those short-term rentals. [00:02:08] S1: What you shifted to was like – if I understand correctly, it's like somebody's doing a big event, and then on their own website they embed your platform so that people can find accommodations near the event easily? [00:02:19] S0: Exactly. This was one of our first idea. We came up with an API for them to embed on their website or ticketing platform, which was a big mistake. No one wanted to integrate API. It’s too complex, take too much time, and the sales cycle was really low because of that. We came up with a new solution called a map-based solution. Now that was taking five minutes, the embedded live frame on their website, and they were able to just show where their events was taking place, all the live abilities with prices for destination nearby from Airbnb, Vrbo, Hotel, Booking.com, Expedia, and so on. [00:02:50] S1: What's the rev share model? How do they win? How do you win? [00:02:53] S0: It depends. With that first customer base we started with, we were more of a painkiller for them, so that was great. They didn't need any type of rev share. They're just like you know what? You're solving a problem for me. I can focus on my events. I don't have to worry about finding accommodation for my guests. You keep everything, and I'm happy with this.
00:02:53 · Andrew Lockhead, Pablo Srugo
[00:02:53] S0: It depends. With that first customer base we started with, we were more of a painkiller for them, so that was great. They didn't need any type of rev share. They're just like you know what? You're solving a problem for me. I can focus on my events. I don't have to worry about finding accommodation for my guests. You keep everything, and I'm happy with this. [00:03:12] S1: What did they do before? What was a pain point for them? [00:03:14] S0: It was such a bad experience. They need to reach out to hotels. They need to negotiate deals after this. They need to fill the block. If they don't fill it, they're going to be on the payroll, so they have to pay for whatever room people don't fill out. It's just such a pain for them. They don't want to waste time on this. It's not adding value for the event, so they just decide to use solution like yourself. [00:03:32] S1: Tell me a little bit more about the starting of that. Once you partner up with your co-founder, you decide to go B2B. Do you just start building right away? Do you raise money? Do you talk to customers? You done it before. You weren't starting from square one either.
00:03:32 · Pablo Srugo, Andrew Lockhead
[00:03:32] S1: Tell me a little bit more about the starting of that. Once you partner up with your co-founder, you decide to go B2B. Do you just start building right away? Do you raise money? Do you talk to customers? You done it before. You weren't starting from square one either. [00:03:45] S0: My previous business was bootstrap. For this one, I'm like you know what? I was 28 at that time. I'm like I want to go for the VC path. I want to go fast. I want to break things. I want to see what it's like, so we decided to jump into the journey and jump into another incubator in Denver, Colorado. Me and him barely knew each other for a couple of weeks where we're building stuff in a basement, and we decided to move to Denver, Colorado for four months. [00:04:08] S1: Actually, maybe just before – how did you meet him then? Why did you start working with him? [00:04:12] S0: Startupfest. Startupfest in Montreal is a big event made for entrepreneur people that want to gather around, test idea, shares. There was pitching contests as well, so that was a great place for just meet fellow-minded entrepreneur. [00:04:24] S1: Okay. You met him, and you liked the idea so much that you're like, yeah, yeah, let's do this together?
00:04:24 · Pablo Srugo, Andrew Lockhead
[00:04:24] S1: Okay. You met him, and you liked the idea so much that you're like, yeah, yeah, let's do this together? [00:04:28] S0: Yeah. My previous company was in ticketing. I'm like, “I know what you're trying to do in B2C. It's never going to work out.” He’s like, “Don't worry about it. Build it and it will come.” I'm like this is the boldest idea ever. What we're going to do is we're going to create a good go-to market strategy, find a way to have people to distribute to inventory, and it's going to be so much easy. That is exactly what I did in my previous business, so I knew for a fact it was going to work. [00:04:50] S1: What was the previous business? [00:04:51] S0: Ticketing platform for students. I was not the one selling those tickets. I was selling the platform for students union. They were the one doing the marketing, the promotion, handling the registration, payment, everything, and I was the one cashing in the money every time there was a transaction made. [00:05:06] S1: Like an Eventbrite? [00:05:07] S0: I knew exactly the go – yeah, like an Eventbrite. [00:05:09] S1: You knew this new play, like that go-to market, and so you just jump on. [00:05:13] S0: Exactly. I can pick up the call phone, call my previous competitor and tell him, hey guys, I'm not into the ticket anymore, but I got a great way for you to enhance your user experience, generate revenue out of it, and get more data. Are you in? Obviously, the answer was much easier. [00:05:26] S1: Who would've been your competitors back then?