Making Airbnb Affordable Again with Landon Wilkinson

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Creator Science. Today, we'll be breaking down how to make Airbnb affordable again. To drop these value bombs, I brought to Landon Wilkinson and to EO Fire Studios. Landon is one of the co-founders of HostShare.co and has spent 10 years self-employed in commercial multifamily real estate and short-term rentals. He has a wonderful wife who works with him in HostShare as the CMO and two kids under three.

0:35In today's foundation, we'll talk about the opportunity of 3 million unbooked homes. We'll talk about the aha moment that led to HostShare. We'll also talk about getting funding in today's environment and so much more. And a big thank you for sponsoring today's episode goes to Landon and our sponsors. Success Story, hosted by my friend, Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversation on sales, marketing, business, startups, and entrepreneurship.

1:06In a recent episode, Scott brings Kate Bradley on the show, founder and CEO of Lately.ai, to discuss the best ways to use AI to create content. Listen to Success Story wherever you get your podcasts. Yahoo Finance makes it easy to get financial news, data, and insights fast. For comprehensive financial news and analysis, visit the brand behind every great investor, yahoofinance.com. the number one financial destination, yahoofinance.com. That's yahoofinance.com. Landon, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Well, good morning, Fire Nation.

1:46And that's a great question to start off with. I always think when people talk about principles of success, that perseverance is probably one of the things that is like, you know, steady as a hedgehog has sort of always been something that I admire in others and I see in most of the successful people that I'm around or that I've met. And so I think just the ability to stick with something longer than anybody else and work harder at it longer than anybody else is probably one of the biggest distinguishing factors for somebody who gets ahead. Now, the title of our talk today, the focal point is making Airbnb affordable again.

2:24When did it get unaffordable? Take us through that journey of obviously Airbnb started, it was the next best thing, got unaffordable. When did that happen? I started with couch surfing before. And then I came familiar with Airbnb, started listing our own properties and probably 10 years ago now. I mean, we've been doing it for quite a while. And through that time, you've seen obviously the meteoric rise of Airbnb, short-term rentals in general across VRBO and all these other platforms, right? And I think Airbnb is pretty strong with their fee structure. They have about a 25 % roughly commission.

3:04And so that's a big hit to a host if you're trying to make it pencil, especially in 2023. And so you have a lot of things working against you as an Airbnb host between regulators and taxes and Airbnb fees and obviously cleaning fees and just keeping your property desirable in a much more competitive environment. So I think a lot of hosts get blamed for those costs, but the reality is like Airbnb has such a large percentage of that that they could relatively easily survive with a smaller, although as a public company, it's going to be harder to back away from those fees now than ever. But yeah, so I think probably in the last five years between all of the macroeconomic things at play.

3:49It's become very difficult both as a host and for a traveler to make Airbnb work. And the title of the podcast, Making Affordable, our company works really just with hosts and owners of short-term rentals, but that was sort of the mission behind it. I mean, I'll tell you, I have an Airbnb down here in my community in Puerto Rico. It's called Palmas Del Mar. And I am just shocked every single time I see somebody book what percentage of the overall cost is just the fee itself. I'm like, man, this is getting to a point where it's just unsustainable. But the reality is there are actually 3 million unbooked homes, which is just so much wasted potential.

4:32So what do we need to know about this specific opportunity? It was shocking to me as well. So you got just on Airbnb about 6 million listings. they carry an average occupancy rate of about 50 % and the average nightly rate is about$317 last time I checked. So if you're on the math, it's like$330 billion in wasted potential on annual basis. And so you just think about like how many, you know, how many AC systems are running, how many, you know, heaters and plumbing bills and, you know, all these different things that are stacking up for 3 million empty homes. It's like, man, there's got to be another way.

5:07And And especially as you might have gone through this, you know, 2020, I don't know if you had your Airbnb in 2020. I mean, a property that might have been making$2 ,000 a month probably did six grand a month in the peak, you know, COVID times. And so there was this huge influx of listings. And now there's a bit of a return to more, you know, average annual growth. And so you have this interesting dynamic where it's not like the industry is crashing, but compared to the growth that it was, it's alarming to people who got in at the peak. And so you have a lot of these factors combined and the higher occupancy rate is one of those results, or lower occupancy rates rather, is one of those results.

5:48Now, I love hearing about my guests' aha moments. And I'd love to hear the inspiration that actually led you to the idea, which is now HostShare. So kind of walk us through that whole process and where you spotted the opportunity, the void that needed to be filled and then how you went in and did it. My brother and I spent about a week kicking around ideas that led us to landing on specifically short-term rentals as the, I mean, you can pick any asset category, airplanes, boats, particularly luxury asset categories, and there's a very low utilization rate. I mean, it's sort of like the Uber, you know, the beginning motion for Uber was, they looked at how much a car is being driven on a daily basis or being used.

6:34And it's a very small percentage. I don't remember now what it was. But it's a fraction of the time. So they said, well, how can we put that to better use? And that was sort of the same thing with us. It's like, man, we both have short-term rentals. I bought a short-term rental next to my friend's house in Missoula, Montana. And he also rents his out and lives there part-time. And his family was coming to town. and they basically, he was like, hey, do you mind if we, you know, they're coming to town this weekend, do you mind if we book your place and, you know, we just cover the cost of the cleaning fee?

7:06And I was like, oh yeah, of course, no problem. And so that happened probably a month before my brother and I had gotten into this, you know, discussion and that was probably one of the seeds that was planted. My brother and I also own an airplane together with another guy and it's one of the most least affordable hobbies as you can imagine. And so when we did that, we bought it back, I don't know, three or four years ago, we bought it in partnership. And so we split all of the costs three ways. And that same principle of like, well, neither of us, none of us has ever had an issue using the plane, even though there's three of us owning it.

7:40It still sits most of the time. And so it's just amazing how if you can find ways to share things in an organized way that makes it really fair, the power that's unlocked in that is really exciting. And I think it can be applied to a lot of other industries and things, especially if things get tight. Economically speaking, there's even more pressure that way. Fire Nation, I really want you to think about you and your life. When you're walking around and you're seeing opportunities that are cropping up because maybe you're complaining about something or maybe you're just seeing something that's being run poorly or you're like, I just wish this existed.

8:17I mean, man, I'll tell you, now that I have a newborn, I just feel like I'm like, I could just create 75 products that would just crush it. But of course, I just don't personally want to go on that road, which is the qualifier, by the way, of like, of the 99 problems you find, maybe one or two of them you should pursue, you should create the solution for it. Because the other ones, for a lot of reasons, just aren't worth it, because you don't have the interest, because you don't have the skills or various other things. But then, you know, every now and then, you're going to, you know, just like Landon did, you're going to say, wow, this is a problem, and I can solve it.

8:47And I can do it better, because there's the opportunity there. So This is where you need to be thinking, Fire Nation, and get excited about what opportunities lie there for you. And before we move on, Landon, is there anything you want to add to this part? No, I think you hit the nail on the head. I'd kind of been in a couple different industries before HostShare, which is what we're building now. And it didn't come from that same approach. I had kind of taken more traditional routes with real estate investing and these kinds of things. And I had some success in those fields and then realized, man, I could be doing this for the next 50 years very predictably and, you know, be sitting in a boardroom, you know, 30, 40 years from now doing the same thing I'm doing now.

9:29And I guess for me, it was a little bit like, you know, to really try to do something that contributes meaningful value. You kind of have to think outside the box and you have to look under the rocks people aren't looking at. And a lot of times that can be in the form of waste and wasted potential. And that's what we with Ho-Share. And I love that phrase that you used, meaningful value, because Fire Nation, it's going to be meaningful to you. You've got to care about it. There's going to be some passion, some excitement, some enthusiasm. Otherwise, you're just going to get bored and dry out of it.

10:00So what is meaningful passion to you? What is a meaningful idea to you? Think about this. And by the way, what's meaningful to you might not be meaningful to everybody else, and that's fine. Like that's maybe even a more opportunity if you approach it in the right way. So we have a lot more to talk about around this topic when we get back from thanking our sponsors. Personalized support has quickly become an expectation from customers everywhere. They want help and they want it now. But many businesses aren't equipped with the right tools to help them deliver. And that means unhappy customers and frustrated service reps.

10:35So why not get a customer service solution that can help your reps excel and give your customers the best experience possible? The new AI-powered Service Hub from HubSpot is a better way to do service and success. Service Hub helps you fly through the service queues and lighten the load on your reps with AI-powered self-service chat and knowledge-based articles. It also helps you grow your customer base with tools that helps reps anticipate customer needs before they ever become issues. With HubSpot Service Hub, reps are resolving tickets 13 times faster, helping them close 42 % more tickets per day.

11:06and that means increasing retention by more than 80%, scale support, and drive retention and revenue all in one place with HubSpot's all-new service hub. Visit hubspot.com slash service to learn how this all-new solution can help you deliver for your customers. I was lucky to grow up in a household where finances were talked about openly. And so from a young age, I knew the importance of saving and investing. That's why I'm passionate about transparency when it comes to the financials of our business. As you know, we've been creating monthly income reports for the past 11 years. But whether you grew up knowing the importance of saving and investing or not, it's never too late to take control of your financial future.

11:45And to do so, you need the right tools. I know that behind every great investor is Yahoo Finance. Yahoo Finance allows me to get financial news data and insights fast so I can make informed decisions to reach the financial freedom we all want. I love how Yahoo Finance allows me to see all of my investment and retirement accounts in one place. So instead of logging into three or four different sites, I can see it all at yahoofinance.com. For comprehensive financial news and analysis, visit the brand behind every great investor, yahoofinance.com. The number one financial destination, yahoofinance.com.

12:20That's yahoofinance.com. Landon, we're back and I want to talk about funding because man, oh man, getting funding in today's environment is tough with a capital T. but you managed to launch without outside funding. Tell us more. Before we jump into that, I was just going to say, if those of you don't know, and most of you probably don't, HostShare, the way it works is it's basically a platform. If you own a short-term rental, you can join the platform. It's like a home exchange, but it works a little differently in that as soon as you sign up, you get three weeks of free travel for each listing that you add.

12:57You have a house, you sign it up, all of a sudden it's live, you can hit the road as soon as you're verified and approved and start using those basically free stays where you're just paying cleaning fees. And the way it works and the way it's fair is that if you have property that's say$1 ,000 a night, you're going to share less nights than the person who has a$200 a night property. And that's kind of the way we make sure everybody's contributing the same amount of value. And it's only if the homes are available within five days of the booking. So that keeps it, you're not booking far in advance, you're not taking potential revenue nights, or the probability of using revenue nights is very low.

13:37So with that as kind of the basis, you can kind of start to understand the intricacies of building a platform and creating the rules of this game, so to speak, that allows people to do this and make it fair for everybody. It sounds sort of like a normal travel platform when you say it first, but there's a lot more complexity in how it's structured in many ways. I would say a lot more complexity, but it's a different kind of challenge. It's not like you can just say, hey, we want to build an Airbnb knockoff or hey, we want to do this. It takes a lot of creative problem solving and how you structure things to make it really work for everybody.

14:16And so with that in mind, And funding, my brother and I, we had a lot of this idea fleshed out, but we knew we didn't have the technical skills or the know-how to really do the job right and to carry it through successfully on our own. We had heard horror stories and started to kind of examine the path of offshore development teams. and that if you haven't been in the tech space or you you probably aren't familiar but there's a lot of people who who have an idea for an app and look to do that with with an offshore team like out of India or something like that and it can work without a doubt and I'm not trying to downplay the importance of you know exploring all your options but in our case and for many stories we've heard many horror stories it's it can be a pathway to spending a lot of money and having to start over again and that's been something we've heard from a lot of people.

15:11And so we started to do that early on and were willing to explore that. And then we were fortunate enough that my brother-in-law had been in the space and building various apps, Photobox, and he has a number of, if you look up his company, they've developed a number of different platform-based applications. And so Michael Fisk is his name and his business partner, Devin, were really excited about the idea. And we basically formed a partnership with them early on and said, look, you guys know how to build. You get the vision. You both have experience around short-term rentals. And so let's make this happen together.

15:54And so that sort of was what allowed us to, you know, we gave them equity in the company and they have really been the difference between, I think, what would have been a substantial amount of investment and probably would have gone not nearly as smoothly and certainly wouldn't have been as much fun. And so finding those core competencies that you lack, giving them part of the operation, and then just making it a team that you can scale with is something that has enabled us to not have to raise money. And I think what we've discovered having gotten to this point now where it's live and people are traveling and really enjoying it, it's like, man, if you can get to that point, and And this is something that a VC told Michael, our business partner.

16:44He's like, if you guys can get to that point, there's really no reason, unless you're trying to blitz scale to outpace a competitor, that you should have to raise at this point. You know, it's usually getting that initial launch done and, you know, that first six to 12 months where if you can survive that without raising, then you control your destiny and you have a lot more, yeah, just control in the future. So now what would be kind of your final word of advice on this specific topic as far as getting funding in today's environment? Like what would you recommend the listeners do if they wanted to move in a similar direction that you did?

17:20I was in a band for many years. And, you know, back when I was a kid, the idea was you go out and get a record deal and you do, you know, kind of follow this cookie cutter approach. And of course, that changed very much in the middle of what we were doing with the band. And I realized that now what we're doing with HostShare is it's sort of a similar thing where there's sort of a cookie cutter process that if you have a good idea, you get some traction. There's basically a process that a lot of people just sign up for, which is not really always in the best interest of the founder and the CEO or whatever.

17:58and I would like in the VC atmosphere and route is if it's a great one if you don't have another option I would say it that way if if you need the resources and the backing of a VC and a lot of a lot of startups don't do require substantial investment and so I don't want to discredit that that importance to have you know they play a critical role the VCs but if you can avoid it I think it's not a system that's designed for the benefit of the founder generally. And he with the gold makes the rules. And so that's the same thing applies to VCs. And so if you can find a way to get the right people on your team and give them a part of the business and bootstrap, at least so far in my experience, it's a lot more fun.

18:44Now, we were talking about this before the break, but I want to circle back on this to really bring this point home because you believe that how we view the world determines which opportunities will present themselves to us. Tell us more about this philosophy. With HostShare as an example, again, the idea was so catalyzing early on. It was so easy for Michael and Devin and our business partners, my wife included, to really understand and see the need and the value that it was like, yeah, we'll work for free on this. We'll put our nights and weekends and extra time into building this because we so believe in the potential of it.

19:27And if you don't have something that people really can do that for a vision like that, then it becomes increasingly, you know, order of magnitude more difficult to get a team on board with you like that, especially a bootstrap type team. That's what we started with. And so, yeah, again, just kind of perceiving the world in a way of looking for what's missing, what are people not seeing with... Oh, yeah, the market... This business would not have been possible five, ten years ago because people didn't really understand Airbnb even 10 years ago to the degree they do now. And so anyways, it's, yeah, time and preparedness meets opportunity and all those things combined, I guess.

20:15Fire Nation, a lot to take away from today's conversation. Landon, what's the one thing, the single one thing that you really want to make sure our listeners get from our chat today? Pick your partners carefully and pick your path even more carefully. Fire Nation, wise words from a wise man. And you're the average. Of the five people you spend the most time with, you've been hanging out with L-Dubs and JLD today. So keep up the heat. For links to everything we talked about, visit EO Fire and just go ahead and type Landon, L-A-N-D-O-N in the search bar. The show notes page will pop right up. And let's give a call to action for our listeners, Landon.

20:54If they want to learn more about you, connect with you, what is your call to action for Fire Nation today? HostShare.co is our website and it's still free for a limited time so I don't know exactly when this will air but we're not charging for our beta right now so it's we're basically onboarding all US listings that want to be a part of the earlier stages and are willing to go through some of that that growth experience so it'll be a free 12-month access at this point still for a short while. So Oh yeah, hostshare.co. And my personal LinkedIn or stuff is easy to find. My name's Landon Wilkinson.

21:37And yeah, I hope to connect. Landon, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you and we'll catch you on the flip side. Thank you, sir. Hey, Fire Nation, a huge thank you to our sponsors and Landon for sponsoring today's episode. And Fire Nation, successful entrepreneurs are great at three things. So productivity, discipline, focus. That is why I created the Mastery Journal so that you can master these three things in 100 days. And we're talking step-by-step. Visit themasteryjournal.com. And I'll catch you there or I'll catch you on the flip side.

22:12Success Story, hosted by my friend, Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversation on sales, marketing, business, startups, and entrepreneurship. In a recent episode, Scott brings Kate Bradley on the show, founder and CEO of Lately.ai, to discuss the best ways to use AI to create content. Listen to Success Story wherever you get your podcasts. Yahoo Finance makes it easy to get financial news, data, and insights fast.

22:41For car behensile financial news and analysis, visit the brand behind every great investor, yahoofinance.com, the number one financial destination. yahoofinance.com. That's yahoofinance.com. Thank you.