1st of the Month Bonus Episode - Simon Says: Human Capital is KEY to Profitability, PLUS Launch of Alex & Annie's List

Welcome to Alex and Annie, the real women of vacation rentals. With more than 35 years combined industry experience. Alex Husner and Anniey Holcombe have teamed up to connect the dots between inspiration and opportunity, seeking to find the one story idea or strategy or decision that led to their guests big aha moment. Join them as they highlight the real stories behind the people and brands that have built vacation rentals into the $100 billion industry. It is today. And now it's time to get real and have some fun with your hosts, Alex and Annie

Welcome to Alex and Annie, the real women of vacation rentals. I'm Alex and I'm Annie. And we are back today for the September 1 I have to think about them for a second or first first of the month bonus episode. This is brought to you by AJL Atelier and Simon Lehmann. Please be sure to stay tuned for the end of the episode because Simon is here and he is going to be coming on to talk to us about top five tips for profitability, which as a operator, or doesn't matter what side of the space you're in profitability for any type of business is the number one thing we should all be concerned about. And Simon is always leading the charge on those discussions. So we're excited for that.

He is hyper focused on profitability. And I think it's what he says is is that's profitability and money is the oxygen that allows the business to breathe and grow. So I'll be interested to see what his tips are. But I know that they are good

Yeah, absolutely. Now we're we're excited to see him again. So it has been a busy month, the month of July was super busy. The last time that we recorded we were just getting into I mean the heat of summer. And both markets that you and I are in this prime time, June, July and August. That's, you know, the big, big, big rental seasons for us. But we also we ended the month on a high note we got ready to go to DARM and we had some exciting things going on with that. And the data and revenue management conference that was in Nashville. And it was an excellent show, as always Amy Hinote note always puts on a great show. And it was this was probably one of the best I think, and it's honestly just just it was a year ago that we were in Charleston that that was the first conference everybody went to post COVID. Right. And I feel like since that conference forward, you can just see the level of innovation that has just catapulted since then are skyrocketed, really, because all the conversations that are being had. And I think that's a big part of of course, what all we do in the collaboration part. And it's it's exciting. It was it was a great show. And we're excited to see everybody going forward for vrma in just a couple months.

Yeah. And again, I think you know, we always joke about starting and ending the year on a high note with Amy. But but she she just out does herself every time and this was just by far, just DARM is one of the best conferences that I've attended for the industry. And it just gets better every time. And so I think what I was really thrilled about for her was that there were no big hiccups. There's no power outage because there was always something crazy. Yeah. Crazy. And Nashville is just such a wonderful town to go to. It's one of my favorite cities to go to. We were able to sit down and have dinner with a dear friend Amber who is again, one of the biggest reasons we ever hurtle. Yeah, Amber Hurdle is one of the reasons we still do this podcast is because of her nudging and cajoling and pushing us to kind of get outside our comfort zone. So great. It was great to see everybody. The content was deep. The content was timely. It was great stuff you and I hosted I hosted a panel on insurance, which was again, I joked about it being the sexiest thing nobody's talking about but fairly well attended. I mean, it was in the main room. i Yeah, yeah, it was shocked. But

there was a lot of there's a lot of smiles. There's a lot of laughter, I would say it was definitely one of the more fun panels and we wouldn't know insurance sexier, but who knew it can

be fun. And there could actually be laughter involved. But I think one of the things that I noticed about that was after the fact talking with some people that said they didn't know some of the things that were talked about an I didn't know anything about insurance, because I don't deal with it. But it connected some of these people that might not have met otherwise, they wanted to have more conversations.

Yeah, I agree with you on that. And one of the interesting conversations that I had there was related to insurance. And it was connecting to vendors actually, that we were talking about, you know, how we use travel insurance and how that's a revenue source and the business and was able to connect to vendors that they're going to start doing some some business together to so I think that, you know, probably other vendors don't go to all the panels. I mean, they definitely don't, but that's that's the benefit of having these really collaborative events. And I will say as far as the type of content that was shared at this event, these are really the great conversations that you want to be part of and it is different than some of the other events that we go to that I think these are the this is a type of conference that I left with a full notebook full of notes.

There was a definite, there was a definite lot of that FOMO like trying to try to get to all the sessions, it was it was hard because they were all of them were good, it was hard. For me, the one thing that was really great was, from a Lexicon standpoint, we didn't have a booth. So I was there representing the organization, but not actually have a booth. So I was able to kind of mill around and ended up connecting with someone that I worked with years ago at Expedia, who's now on the vacation rental side, which are a very large management company, and they happen to be kind of entertaining new channel management. And so that was an opportunity that I didn't know existed. But again, I think that just speaks to you build all these relationships and foster them over the over the years, that it all comes full circle.

And I think just there's so much to learn at these events, to just talking to other property managers that are similar to us at a condo world and how they intertwine revenue management and marketing and how those departments work together and how to really have a Simon's gonna talk about a profitable business, you really have to have those two departments working simultaneously. And you know, in step, and just I learned a lot on that side of things. And one thing that I really liked from one of the one of the panels was a difference between revenue management versus revenue performance. And I think that's really where the industry is now going that revenue management was a new thing, you know, five to seven years ago for all of us. But now it's, we're all doing that. But now the next level is performance and really taking it to that next level. So if you're a company that has a lot of historical data, that's great. But now how can you be adding in these other tools that are giving you market level demand, and really, you know, telling you what you need to be doing? You know, from a market perspective. So that was that was exciting, a lot of great conversations there. And we also one thing that we brought to the show, if anybody follows us on social media, I don't know how you could possibly miss it. But we had our #WeAreNotAirbnb T shirts made and we wore those around the events, and they were a huge hit. And actually, we came up with the idea for that. It was Steve Milo's episode that we aired in July, I believe that was one of our top performing episodes. Yeah, no surprise. And one of the his quotes was, you know, vrma, we as an industry, we need to do a better job of explaining that we are not Airbnb, we are not Airbnb. And I remember you and I were texting after. And we're like, we should make shirts for that. And like, how can we tie something, an initiative like that with our podcast to something that we can give back. So we made shirts, and we have them on our website that the 100% of the proceeds, or we're going to donate to the VMA Advocacy Fund. So we want something that we can give back not just I think the podcast and these conversations that we have, have really opened up a lot of a lot of conversations between different organizations. But now we also want to be able to get back into monetary fashion too. So if you go to AlexandAnniepodcast.com And you go to the store page, you can actually buy a really cute #WeArenotAirbnb, men's or women's T shirts. So

I will caution all the ladies out there, the small runs very large.

These are different. These are different than the ones that we

see the new ones. Yeah. Okay, so yeah, we would love it would be super cool. If like everyone wore it to VRMA, like that would be so awesome that we we gave them out to some folks at the show and people were very excited about it. And actually going back to the panel, we hosted a panel on OTA panel. And all of

almost all Oh, yeah, almost all the guys. Yeah, they were

they wore the shirt and

style them to I mean, yeah, their interpretation of how to wear the shirts was

I mean, props to Alex Alioto from Whimstay and to Craig from Got2go like they wore women's shirts and they looked phenomenal. styling and they were it was great. And so I think it resonated with people and the fact that people can buy them for their entire team and wear them on a you know, maybe we have a you know, like the book direct day that happens. Maybe we have a day where everybody wears that we are not Airbnb shirts. You know, it'd be great. Yeah. And I would raise money for the cause. So that's always good.

Absolutely. Yeah. So very supportive of VRMA in that efforts and being on the Marketing Committee. We are all the all the way behind them. So hopefully we can keep moving that moving that message forward. But besides DARM so moving into something that we talked about on the July 1st of the month episode, we have a big announcement. Now we are announcing Alex & Annies List and officially officially and the companies that we have decided to be part of this list and just to go back to explain a little bit more about what it is. So when Annie and I first came up with the idea for the podcast, it started From a clubhouse that Annie was hosting these clubhouses, where she would bring in people from all different sides of the industry to talk about a topic. And the thing that I loved about those discussions was you were choosing people that weren't necessarily all within the same space. So you'd have property manager, you'd have a vendor that's maybe on the insurance side, a vendor on the marketing side, and you had these great conversations. But clubhouse is only as good as it is in the second, that's not recorded, it can't be shared. So I think that's kind of where clubhouse has lost its steam. But what we wanted to do, we wanted to build this list of these are our preferred partners, these are companies that we really believe in what they're doing. And we know that they're going to be helpful to anybody who is looking for help in any of these categories that they represent. And this is a evolving list that I mean, the ones that are on the list are gonna be on the list. But we've got, we have some companies that are not yet on there that we haven't had a chance to talk to. But we want to make sure that we are building this as a really cohesive and comprehensive list of the best and the brightest. And we will be calling on them to come back there, each company is going to have somebody that is joining our a team. And that is going to be ongoing conversations, webinars, online events may be more where we bring them in and just really get to pick their brains. And a lot of these companies have been on the show previously, some have not, but they will be coming up soon. So we really try to choose companies that are bringing a lot to the space a lot to the conversation. And we're very excited to tell you who is on this the inaugural list. So without further ado, we'll just jump into it. So of course AJL Altelier and Simon Lehmann, who is our partner for the first of the month bonus episode that you're listening to right now. ajl Italia, that was one of the first ones that we contacted and said we want you to be part of these discussions and part of the list with us. Even when just go every other one. Yeah. Okay.

So we so are very actually what's interesting is as after Simon, we actually were approached by this next one, which again, their game changing our industry, and we love them, and they're really phenomenal, Minoan, and we just had Marcus Hostovsky, from Minoan on two weeks ago. And I think that, you know, this just speaks to what we want this list to be. We want people to be the people on the list to be cutting edge. We want them to be forward thinking we want them to be collaborative, we want them to be wanting to have conversations on all all sorts of levels. And so we're really thrilled Minoan was the first one that sort of joined us and they were just right there in front of the list, you know, or front of the pack to, to jump on board with us and saw that what we were trying to do had merit and we're really excited to have them on. Yeah, we

definitely want to make sure we gave them a shout out and big shout out to Ali and Sage from from there. They've been exceptional work with and obviously we just love getting to know mark on his episode. But other other companies that we have on this inaugural first rollout of the list, we have hopefully got to go exploring journey Wednesday.

ICND, Wheelhouse. And Wheelhouse is actually going to be a brand sponsor of the show overall. So we're excited about that. And then we have HVMI, which is

Homes and Villas by Marriott International, Better Talent,

TouchStay.

Rev & Research.

GuestView guide.

Point Central,

Transparent.

Rent Responsibly,

DACK

At Ease,

Travel Boom,

Lexicon

Condo-World,

of course, Shineforth

Be home, excuse me Be home 247. And also Ok2Charge

Flipto

Stayfi

and Employer Brand Central, which that is Amber Hurdles consulting business. So those are these are our first picks our first round through of companies that we know, respect, I think that they bring a lot to the industry and that there will bring a lot to you in the coming months and our episodes and discussions that we're going to be having going forward. So we are very appreciative of them and just excited to continue moving this forward with everybody. Yeah, and

I think it bears repeating. We were starting our All Stars and our A list. And you know, think that one of the things we wanted to do with this list was we had people approaching us that were starting out in the industry or people that have been in the industry and they were looking for advice. And this created a need to be able to consolidate some information but we were we felt like we were in a position of trusted advisor and we wanted to make sure that we were doing our due diligence with these organizations to make sure that what they were providing was the best and the brightest and cutting edge. And you know, and really in tune with what the industry was. So, again, the list will be a living, breathing document, we will add we, as you know, people come in and out. But we look forward to working with everybody, and collaborating and creating educational opportunities. Nothing is set in stone at this point outside of this the list that we're creating. So we're open to all kinds of opportunities to be able to be again, collaborative with people in the industry.

Yeah, absolutely. And one of the things that we mentioned last month was, you know, since post COVID, there's been so much new technology that's come into the space. And I know, as somebody who has been in the industry for 13 years now, you know, there's a lot of vendors that they've been around the all those for 13 years, and many more. But there's just a lot of brand new companies that are coming into the space. And it can be tough to decipher what is worth what new technology is worth bringing on. Because at the end of the day, there's an operational tax of bringing on a new system. And if it's doesn't enhance your profitability and profitability, then it's not, you know, it's probably not a journey that's worth taking. So these are companies that we feel like are very worth the journey. And we are excited to bring them on. And a lot of the reasons, as you mentioned, the questions that we get from listeners asking about, specifically on revenue management, marketing operations, that's how this was built. And so using that basis of this is, this is our knowledge base, we very much enjoy being able to do this and to provide this information to our listeners and just help the industry grow. And that helps all of us in our businesses.

Yeah. And I think the great thing, again, about this list is like it was another aha moment for us. We have these people that were constantly asking us, and it was just like, wait a minute, why don't we just do this together? Yeah, can create something that we can help and serve up to people? So yeah, it's gonna be really exciting to see where we can take it. I think it's got like, it's got a lot of room to breathe. So yeah, yeah.

So super exciting. So stay tuned. There's a lot more to come with this. But another big announcement that we have, and then we'll get to Simon here soon, I promise. But another big announcement, Steve Milo and V trips and Matt Landau asked us to be the official podcast for the Homerunners event in Vegas. So that is on Sunday night of vrma. And this is going to be at Caesars they are doing a we are hosting, I should say a red carpet at the Homerunners premiere, which this is a TV series that Matt Landau has developed and the first company that they profile is Steve and V trips, and we got a preview of the show. It's incredible, really talk about a look behind the curtain of Steve and the company and just how much they've grown and really have grown a lot in the last year with a lot of the new talent that they brought into the business. So that's going to be absolutely phenomenal will be like Joan and Melissa there. And it's gonna be fun. If nothing else, we know it. It'll be fun. So yeah, if you're at VRMA, please make sure it's a free event to go to. And I think it's open bar for the first hour. So, snacks, so make sure to come and see it. This is going to be an exciting night. And make sure you get your tickets. Yeah, get your tickets. Yep, yep. And you I think you can get your tickets when you register for the conference. And online and VRMA. Yeah, on the website. Yeah. Nice. Yeah. So very excited about that. Next step. So looking back on this past month if you missed any episodes, please make sure to go back listen to Mark Hostovsky from Minoan the episode we just mentioned, that was a great one.

one of the things I loved about Andrews We also had Koryn Okey, Matt Loney, from Xplorie predicting tech consolidations. That was an excellent episode. And, of course, Andrew Kitchell with Wheelhouse and just a great conversation about how wheel house has really changed the game in revenue management, revenue performance and putting you in the driver's seat of that important part of the business. Yeah, and episode was it was actually one of those ones that really resonated more with people than we expected it would. And we talked to his very good friend, Dave from Rent Responsibly. And Dave said, I've known this guy since I was 19. And he's never told that story that way. He's like, the way you guys got him to talk about it, which I think just just speaks to like, what we're trying to do is we don't want to have the same old, same old conversation with everybody. We don't want to just talk about the technology, we want to talk about the humans behind it. And he was so open to share kind of his path and his journey. And people really, really enjoyed it. So thank you for everybody that did listen, and you know, all of the guests that we have, they give us little tidbits behind like I said, you know kind of what Steve's saying a little behind the scenes look and glimpse and humanizes each one of them beyond their Technology which is just so rewarding.

Yeah, absolutely. Absolutely. So coming up this next month we have none other than Terry White. Actually that was yesterday. I'm sorry, doesn't that was yesterday, August 31. Be sure to go back. We also have Ben Coleman from Rev & Research. And then we have Lance and Elaine Stitcher our good friends. And Andrew McConnell so we've got a great month coming up. Super excited to continue these conversations, bring more of the A team in and are all stars in and just keep going on. So thank you, everybody, for your support. We are now going to turn over we're gonna welcome Simon Lehmann to the mic like, here comes Simon for Simon Says.

Welcome back, we've got Simon on for this month, Simon Says. Simon, welcome back.

Thank you, Alex. And Annie. It's great to be back. As always.

We're so excited to have you back down under last month, and now you're back home and ready to bring us a super interesting topic on profitability.

Absolutely, yes, travel was great experimenting or experiencing a lot of different vacation rentals around the world, which was awesome. But it's great to be back in the European timezone. before. Before the conference time starts again. Yeah,

so we're going to talk about profitability. That's something that you focus on very much at AJL, when you're consulting with your clients, and we thought it would be timely, in that there's a lot of people that have sold their businesses, bought businesses, starting businesses, but they need to understand what it means to be successful. And as you point out, being profitable is how you, you know, you can be successful. So you've come up with a couple of top five list of things that every property manager should know and focus on to be profitable. So why don't we get started with number one?

Absolutely. So let me do one thing very quickly. We have talked about profitability since 2019, which was literally before COVID struck. And the reason why we did that was at the time when Vacasa raised enormous amount of capital for their businesses and still producing, you know, not very, very good numbers actually produce a high losses, we were always said, eventually, profitability will haunt us, right. So we always said, this is going to happen, no matter when, at that time, a lot of venture capital came into the industry, people just wanted to see growth. But didn't, you know, profitability didn't matter that much. A tele Now, none of the businesses out there are raising any capital if they're not profitable, right, and that, so it has eventually gone full circles in three years. And now when we speak to venture capital companies and private equity, only bad profitable businesses, anyway, it has become very important that we consult the number of property managers, we're now having to turn their business profitable to raise more capital, because it just does not attract very investors to invest in a business that has not approved positive cash flow. So this is one of the background behind it. And, and, you know, you gave me five topics I could have given you 20, in terms of when we talk about profitability, but I tried to set a set my priorities, right. So I think to start off with, it's actually an overarching piece, which I call strategy, you need to have a strategy. And that actually starts in to think about or give yourself an answer. Why are you in this business? What, what made you come in this business, and what you want to get out of that business? And for that, you need a clear strategy. So we've done online tutorial courses in Hotel.School, which is the Strategy Workshop, the first thing we talk about, hey, while you're in this, is this for lifestyle, is that for eventual exit? Is it something you build for your kids that are gonna take you over? What is the strategy and why are you in property management and short term rental? Is it just by accident and you just run a few property? Or is there a real strategy behind? I think that's for me, absolutely. Number one elements, that profitability is part of your overall strategy on the business that you built as a foundation, that would be for me one of the most important

Excellent point

yeah, absolutely.

And obviously, the strategy goes many different questions, how many locations do you want to operate? You want to start urban you go leisure, you go, are you in a seasonal market? Are you in a less seasonal market? Do you want to expand in two or three years? You know, I think three years horizon on a planning is something we should do and of course, it has become very difficult for us to have any predictable predictability in what we've been facing the last few years. But at the end of the day, you need a plan and that plan needs to be more than 12 months, and then measure against But I think that's part and parcel of the strategy as well.

I've got one question on that. So why is it that the private equity and the investment companies that came in around 2019, and then obviously much more, with much more force going into COVID and post COVID? Why were they not looking at the profitability as much as they are now? Did they think that it was going to come around and that it was going to finally balance itself out? I mean, what what has changed in terms of how investors are looking at our industry?

But when are you more to truth? That's

we want the honest answer here.

So now, um, it's a great question, Alex, because at the end of the day, it's an educational process. So while we seize came into this industry, that was that was sort of powered by a very successful IPO of Airbnb, let's not forget that. Right, right. And Airbnb was, it was a big money funding machine that raised an enormous amount of capital until they're trying to profitability. And they manage it, because they build a consumer facing brand has different value behind it, and many other aspects of it. So I think, and yes, we're another Airbnb, we're property management companies, and we need to be mindful of that. But I think what has happened is that the investors have underestimated the challenge of our hyperlocal and hyper fragmented industry, and to build economies of scale, in that at large has not materialized. So I'm not saying these companies have put business plans forward that we're not profitable, we're going to extend years, of course, they showed huge growth, and then eventually, after three, four years, you know, the growth will fund its business and therefore will turn cashflow positive. So of course, venture capital founders, they companies that normally fund, you know, growth companies that will eventually show profitability, but that's not the start off. So I think they put more money on the potential to scale these, this business to a very, very large for it to become very, very profitable eventually. And one thing was underestimated is the fragmentation, the unit densities to run operations in property management and many other aspects. I think, I think now, in the meantime, and I'm involved in a number of conversations, when he goes about funding as well, the investors have learned a lot and are understanding what the risks are in investing into a fast growth business that eventually has to turn profitable as well. Okay,

let's, let's hear number two.

Yeah, I was debating to put that number one. And, and it's actually equally important, because it stems from it, but it's the human capital, you know, because when we just talked about investments here, right, and we talked a lot in, in the VRMA, Executive about the human capital, and, and the importance of it and, and I think human capital from ego is one in one in having a strategy because you want to have the right people on the bus, I mean, my bookshelf over here, my office is full, about, you know, leadership and managerial processes and decisions, and every leader or any manager, I will tell you, what's the most important thing to your career and success is hiring the right people. And, and focusing on the human capital. And that also goes with the founders, the management team, you know, a lot of venture capital firms are, are, you know, I wouldn't put a percentage behind it, but a very large piece of it is excellent human capital, they invest in a lot the actual business, because they know if the business struggles, then they can do something else. And that has proven over and over I've, I've been invested in businesses, during COVID that have, like had massive struggles, totally pivoted, went into something totally different, because they use the spur of the moment and became super profitable. So to human capital is equally important, from the, from the from the management team, but also anything below, it doesn't matter on what level you work at, in a company, you know, the highest portion of our operating cost is still human capital. So once we pay our homeowners and once we pay those OTAs commissions, what is left to us our gross margin, most of that is either going to take and and to the human capital and human capital, you know, if you have a good you know, a good culture in your business that you focusing on the well being of your staff on focusing on retention, you know, we've seen any COVID Many companies will could not afford keep their staff on or have not tried to they've just got rid of everybody now they've struggled to get human capital, but exactly yeah. And others have actually said hey, we're going to keep our troops maybe they don't earn less or whatever, and they're willing to sacrifice something but they're all back and that has gives you a completely different basis in how you run your business. I think to human capital that you know, train your people elevate them, give a gift and make them feel part of something and and let them participate. You know, this is something extreme equally important, and and I think that's one of the key elements of being profitable and successful is investing a good amount into your human capital, you know what people underestimate. If you say, Well, I'm gonna have very low salaries, and then and then your staff churn because they will jump because they get 5000 somewhere else more a year or whatever. It costs you more to recruit, train, and onboard people. And that's in many cases. So short sighted people push very operational expenses to want to pay low salary. But every staff churn is ultimately costing you more than having loyal and, and motivated people on your payroll, right. And

really, that comes down to it comes down to trust and making sure that your people do stay loyal to you, and that you are upholding the vision and the culture of the organization. And one thing that we've really noticed recently at the events that we've gone to, there's been so much more of an emphasis on human capital. And not just because of, of course, everybody's having a hard time with hiring but not just because of that, I've seen more companies like Robin craigan and Moving mountains and Matt Durant and Cozi vacation rentals and several that are similar to them that are using EOS trading. And they're using personality profiles to pick their key leadership people, and really putting a lot more emphasis on how they build their team than I've ever seen, or that has been talked about at these events. So I think you have something to do with that. I would say I think that's definitely been something that's come out in the last year, we've really been pushing the human capital.

Yeah, I did to great point you raise and there's a lot of different tools in how you can do it, you shouldn't over administrative, because at the end of the day boils down to leadership, right? If you're a control freak, as a company owner, you can't overcome that, right. So it's very challenging, that then leads into coaching and or whatever. But if you can really build trust and have others deliver to your expectation and create a culture that is cohesive, you can do that with tools like cultural index, where he can measure the different type of people that need in a business. So they're working well together, there's many different ways that can be extremely effective. Absolutely. And obviously, Robin is a perfect example. I mean, he qualified to be one of the best employees in the United States. So you know, they, they have understood how to build a very strong culture. I think all their staff was hyper loyal. They have zero churn, only somebody moves away from steam.

Yeah, we just had him on recently. And we found out all the reasons why I mean, I can understand why he has that team. They're there. It's an incredible company.

Yeah. I have a question kind of related to like that the upper level human capital and I use this thinking of the announcement recently was of Vacasa putting Rob Greyber as the CEO. And I think that I know him from Expedia days, he was at Egencia met him maybe once or twice, but just saw him speak and saw him lead that team. And, and I think that, you know, he comes from a travel pedigree. He's been around travel space for a long time. And so I think, personally, it seems that maybe the Vacasa made a mistake by bringing Matt Roberts in because he wasn't engaged in the industry, he was not coming from the industry. He didn't understand it, he was technologically minded to its degree, but needing to have somebody who can speak the language to the troops, so to speak, is really important. And I think some of these companies that get these big investments aren't necessarily looking for the right person to lead. They're just looking for a name. And what they think that person brings to the table in terms of connections or visibility, and not really understanding. The uniqueness of again, vacation rentals is a is a very unique and complicated business. And if you don't have any insight on travel as a whole, I think it makes it very hard to gain the trust of your troops. So I'm curious what your thoughts are on that?

Yeah, that's a tough question. First of all, to from where I see Matt Roberts was not brought in as a long term CEO, number one. So I think we need to, we need to take that into equation. Maybe the change probably could have happened a bit earlier, for the right reasons. But let's not forget they went through an IPO. You need somebody very experienced in that process. And then also, I guess his background from an Open Table definitely didn't bring as many similarities as a Rob's background of the Egencia business from Expedia. But now it boils down to leadership if you ask me to be perfectly honest to you, while we were so heavy on human capital, which we just said, I mean, this is material and vacation rental industry, we're still very service heavy. We're you know, we need top people to deal with guests and owners, and all the challenges that we haven't been through and we're in the service business and that requires a lot more experience from a travel industry aspect at large and travel is all service no matter what we do airline In corporate travel, whatever, we still want to be able to serve our customers and have the right understanding of the importance of human capital, and put that to work. So I think that change, I mean, I celebrate that change, I think it's a very smart move, to have somebody like that, you know, coming from from the kitchen of Dara, which I'm a big fan of anyway, these people have made great experiences work in very great management teams. And that culture was always celebrated very heavily in this organization. So I can, I mean, at the end of the day, I can only hope that Rob has the ability to turn this ship into more quiet waters where the team can, can excel in what they're supposed to do and, and put some, you know, get away from this rough waters and have to be successful. And that's what I wish all of them to make that happen. And I think Rob has definitely the ingredients to make that happen. But now it depends how well does that go with the rest of the team as well? So I'm sure we will see some additional changes, which always happen when a CEO comes in?

Yeah, absolutely. Well, let's go to number three,

Balanced approach. And I said, this is something I can talk about it for hours, because that's something gets forgotten. And let's remember, we talked about profitability. And, and I think one of the key ingredients to be profitable. And when I talk about profitability, I think one thing we haven't alluded to at the start of the conversation, this is not about, hey, we want to be profitable tomorrow. And then in six months, we're losing money again, when I talk about profitability, we talk about sustainable growth and sustainable profitability over time. Which means we want to create positive cash flow across the entire year, especially if you're seasonal. That's where people have totally lost it with seasonal businesses, trust accounting, not even understanding how much cash do you have to employ your people, etc, etc. And we'll talk about this in a minute. So balanced approach for me, is the absolute key element. That's why I put it at three so it's in the middle of the five. And the balanced approach is you I believe, very strongly, and we can argue this and I know there's a lot of other people don't see that way. I argue that you want to have a balanced approach equally for the homeowner and for the guests. Okay, because one thing that makes our business unique is we deal with individual homeowners, we don't are we're not asset heavy businesses at large, more than 90% of businesses are still managing someone else's home. That's a that's a customer and the guests is a customer tool. I know companies who don't care, because they get bookings from the OTAs. They don't care what the customer is, they just make sure the homeowner is happy, and others are the opposite. You know, they're very, very guest focus that don't worry about it too much on the on the supply side, which can then result in churn, lower margin, and whatever. And because the value contribution to your proposition should be seen as equal coming from the guests and coming from the owner. So if you remember that our overall margin was massive on depression, United States, you know, we've seen different models Vacasa, Turnkey, Evolve, if you have like these three stages of business models, full service, high, high touch, lower margin, or lower touch, lower margin, and what happened, we see more and more margin compression happening. So what then happens is that all of a sudden, we're like, Okay, where do we get our margins from? If we can't take 40% or 30%? From our owner anymore? Where do we take it? Well, we also take it from the guests upselling, having additional fees, you know, Damage Waiver fees, etc, etc, booking fees. So it's become very challenging. And I think I always said at the time, this is a dangerous, this is a dangerous move. And is it sustainable over time? I'm not sure. Because my My view was always Hey, this is not a low cost approach, right? So you take it is 50 bucks, but you know, you pay for your luggage you pay to go to the bathroom on the flight you bet you afford it isn't that and that's dangerous, because the customer will not like it. And and that's where they get to fees, because they can't get it from the from the owner anymore. And therefore, the balanced approach to understand how does my business model look like? How does my contribution look like? And how important are those customers and that's what I love about vacation rental, so much we deal with to customers all the time. And I believe very strongly in the DNA. In your strategy that you run as a property management company, you should focus equally, both of them are equally important to your business.

Totally agree. Totally.

I remember times where I came into a property management company where the guys who were in charge of the owners defended any noise complaints forever to the sales guy. The sales guy says I want to give a discount to my guest. Do you know what we used to do? Very simple as like half the homeowner guys work in sales for a week and the sales guide with to homeowners for a week that will fix it quickly.

Right? Absolutely. And I think one thing that we run into a lot is, if there's a different fee that we want to add on whether that is or not necessarily we but as a destination, if there's $1, a night fee, or a small tax or something like that, it sounds really easy from the outside for them to say to us just just add $1 A night, just add to the guests have to get to a point it's like, okay, but if we did that, for all the things that come to us, I mean, that dollar a night is $1,000. I mean, it's the same cost as the reservation. So that's one thing that's just really kind of boggled my mind is that you can't keep adding on all these things. I mean, eventually, it's just it's our margins are already low, you really have to be taking a look at all the different things and how they add up, and how you're gonna be able to recoup those costs from a different source.

Yeah, and this comes to the point that we've been preaching as well. Alex is like, you know, we, if I, when people asked me, What are we not good at in property management, vacation rental, I said, we are not good at communicating our value proposition to homeowners, homeowners totally underestimate what it means to run a property. Yeah, totally.

Totally. Okay, so what is number four?

Well, it had to come. But it is coming. And it's it's it's technology. Right? Yeah. So again, I was debating should I put it that above and saying that actually human capital that comes before tech, you know, having a balanced approach comes before tech? Why? Because depending on what kind of approach you you run, you, you potentially require a different type of technology in the ways you how you communicate with guests, and owners, you know, do you have an own report? Or how much visibility you give? Do you have full transparency to your hormones? So you show them all the accounts. And you know, this is what happened when we talked about this balanced approach now that we've had a lot of property managers taking more margins from the guests. They don't want to show that to homeowners as well, because they don't want that they will don't want to have that commissioned also by the OTA. So I think technology is going to be absolutely, yes. And we made this public. My interview in San Antonio, with with Matt Roberts raised a lot of questions for me to say, we need 1.3 billion in revenue, and we need technology, and we become profitable, that that statement I could not live with, because I don't see technology, closing an operational deficiency, as much as probably what Vacasa needed at the time to turn a business into profitability. But having said that, it's equally important because there's so many redundant processes with a business that technology can do more efficient, and better. So we need to be smart. And where do we deploy technology? And where do we deploy human capital, that human capital needs to be deployed very creates value to the guests and to homeowners. That's where human capital needs to be deployed. And the rest can be taken care of by technology, that's accounting, PMS, channel manager, revenue management, or revenue management, today's world can do a lot until you need to make a human interaction with it. And home automation, you know, how much is now going into home automation? Does the property manager know what does it check in and check out actually cost to me? How do I offer a high touch property business like Robin Craigen of course, he has to check in his people, personally, if they request that, but if they don't, there's an automatic door lock. So he can offer both right? So he can apply the technology the way he wants to deploy it. And I think that's where technology is becoming extremely important. To close out these gaps that we've we've had to endure to margin compression, and see how much efficiency we can create through technology. At the right point, human capital, still going to be very important always said, robots are far away from cleaning our homes. Far away, I have a I have a vacuum cleaner robot. I'm never gonna give it back. But I'm not going to do all the job right. So. So we need so this is exactly what I mean, I need to deployed, where it actually makes sense. And where it doesn't make sense. We will use good human capital. So I think technology has a massive impact going forward on on, on, on profitability. Debate. The biggest problem here for me, even when we talk to property managers, is first of all, they're overwhelmed by the offers that are out there. And secondly, most of them do not know what kind of technology they actually need to solve their challenges. Right. So a lot of I have not met a single property manager and I'm looking forward to meeting the person who has had the same PMS for the last 10 years, you know, selecting a PMS and being totally aware, because we just talked about strategies first. Then we say okay, what do we need the human capital, we know what kind of service we want to deliver what brand positioning we have, then we choose our technology then we sit down and write down our specifications. So this is what we need is what we want technology To take care of trust accounting is embedded channel managers are embedded, you know, this and that and the other. So write down your specs, what is important to you, and then source that tool according to your needs. And I think that's something that technology is extremely important. It can be overrated, because we're hospital, hospitality people. So we're not tech people, it can be overrated, and it's a big pain point to ourselves, because we rather deal with fun stuff than technology. But I think that's, again boils down to human capital, if you have the right guy who takes care of that for you, then it will, it will do wonders for you without a doubt.

Yeah, and just like you said, on the human capital part about the cost of hiring somebody and then having to replace them how much that adds up, if that's happening several times throughout the year, same thing with choosing a new service or system. And that not working well, we talked about the operational tax of bringing on a new platform, and if it doesn't work out, and that's certainly that's happened to us many times, there's a big tax, a lot of cases, not only the time that you put into it, but if you have to pay upfront fees, and then you get down the line, and you figure out that it's just not a system that's going to work for your operation. So really knowing how to make those decisions upfront. So you avoid that I think is super important, especially with how many new types of offerings are coming into the market, everything sounds like it's gonna be the next game changing thing for your business. Which ones really will be, you know, it's really gonna make moving the needle.

That's a great point you're raising there, Alex. And that also consists a little bit of benchmarking, you know, go out and ask for references, speak to others. And you're so right. I mean, if you go, this year's exhibition hall in Vegas is probably not not big enough to accommodate all the vendors who want to sell some stuff to the property managers, it's going to be overwhelming, and people just going to walk down and say, Oh, my God, and then next year, it's probably only going to be half of the vendors, they're

consolidated. Or went out.

Exactly. Either went out and sold out or whatever. So I think it helps property managers not to make knee jerk decisions on tech, and plan this really well and sin sit on the right technology as well. Yeah,

absolutely. Absolutely. All right. Well, going into our last point, what is number five?

Number five, I had two to choose from. Obviously, I'm only allowed to go with one. But I can weave the other one sort of into it, because 2.0 Yeah, no, it's actually financial hygiene. Right. So that's actually going full circle at the end of the day, right. So so we would go full circle and say, we have a strategy, we have the right people for it, we've decided to have a balanced approach between guests and owners, we use the right technology to address that. And now we need to understand our strategy in financial terms. Okay. So, for me, financial hygiene means, you know, I have total control over my balance sheets and p&l over the entire year. And seasonality. I do not put my hands into trust accounting. I leave enough cash to go through the tough winters, when I'm in the summer business, so I can pay my staff, I know what my cash flow is at all times, I want to produce positive cash flow. And positive cash flow means you always have a bit of cash in your wallet without the credit cards without anything else that you have. So financial hygiene visibility, for me is absolutely a key element for you to become profitable. I would probably I wouldn't want to say a percentage, but it will be overwhelming to see businesses out there that actually are not delivering positive cash flow and positive contributions on a full year's cycle that are actually people don't know, actually, hey, I'm actually not profitable. I get my homeowners to finance my my cash drains while I don't have bookings. So I think this is and then what goes into the financial hygiene is planning, right? So build it build a budget, have a budget set for the next year. Measure it against measure your performance against that budget. Have we spent higher costs here? What we assumed have we got lower costs there? Can we make adjustments? So you do a budget full planning, which is always one year rolling? And then you do a forecast against it and a forecast I would depending on how big your company is. I will do a quarterly or half a year forecast. Look at your numbers. How do they track against budget? And how do we think the year is going to end up so we can make some decisions? So budgeting forecasting, planning and knowing what your cash flow is at all times I think is absolute key element and we put that under hygiene and what does that have to do with the last portion I want to bring in is I need to know what my gross margin is I need to understand with what do I make profitability am I doing with cleaning is it actually either commission for your for the homeowner, is it? How is my? How does my profitability work? And in order to do that, you need some key performance indicators I find very important. Yes, the cash flow is the most important without a doubt. But you need to have visibility, what is my customer acquisition cost? And then I said, if what I think is very important for sustainable growth and profitability is that you have a balanced mix in your distribution, because they impact you know, your business, how much of your business is coming direct bookings? What is coming from different channels? What is coming from different OTAs? I think that is absolutely fundamental, because that plays into your financial hygiene is what is my customer acquisition cost? What is my own acquisition cost? I can tell you most of the property managers that we have done work with, they have an understanding on what my property acquisition cost roughly is, but truly loaded fully understood, how much does it cost me to get a new property on board? How much is it gonna cost me to get a new guests on board? I think that number can improve itself quite substantially. If you're honest to ourselves and know what the true cost is of these of these pieces in our balance sheet, p&l as well.

Yeah, yeah, we find I find it very interesting. When you that's a question I ask people, when they come to channle management, they say, I want to add all these channels. And I'll ask them the question, you know, how much of your business is derived? How much are using channels? Do you know what it is to your cost of acquisition, and they've never done the math, and they've been in business for 10 years, and they've never looked at what it means to have a profitable booking strategy. It's just all are they able to pay their bills? Are they able to do all these things, I think you've laid out a really good sort of outline and roadmap for people, if they want to start a business or if they're already been in business, these are really, I think, again, there's probably 20 things that they need to know which You've given them five pieces of homework that they really need to drill into and understand a to, again, to be profitable. All of these things have to be

done, these are all these things are not there. These are not things that can just be checked off a list. I mean, these are fundamentals of a business that you have to understand how these things work simultaneously with each other, and really be have buy in from your leadership team in order to make them perform the way that you've just described to us. So I think if someone's not doing all these things, but they're interested in doing them, you have to really put some thought into how you start implementing these types of strategies, which I'm sure Simon you would be happy to help people with?

Absolutely. Absolutely. No, but I it's a great summary. And yeah, I really tried to pick some of the absolute top five keys. And if you have answers to those you already halfway towards profitability as well. And and that's a great start.

Yeah, absolutely. Well, thank you for being with us again on our September 1, first of the month bonus episode. We will see you next month. And thanks, everybody, for tuning in.

Thank you so much for having us. Looking forward to our next session. Take care