Guesty's CEO on AI, Acquisitions, and What Comes Next.

0:00Brandreth Canaley: Good morning. Hey, Brandi. Good morning. Happy Monday. Happy Monday. Best day of the week. If you can tell, we are not at home right now. We are out and about in Spain where Brandi is telling us the best restaurants, ordering for us and navigating around Spain for the boys as usual. Yeah, Brandi and the boys go to Spain part two. I love being back in Madrid. I feel very nostalgic. I went to college here. So this is, although different over a decade later. So not to age myself. Don't say that. We are staying in a hotel right next to Capital, which is a club that we used to go to all the time. And I saw all the kids like in line and I was you.

0:42Brandreth Canaley: I was once you. So that's fun. Well, we've got a great episode today. Yes. We're here with a very special guest. Yes. Yes, our chief commercial officer at State Terra, Alex Cisneros, because we have some fun news today. Breaking news again here on the show. Yes. So, Alex, do you want to tell us what the big news is? Yes. So we are super excited. We have completed a great acquisition. It's gathered. So we have added Hawaii to the great destinations that we have. So we are super excited. We are surpassing 2 ,000 great homes and properties that we have at State Terra. Yeah, it's really exciting. Andrea and her team have really built such an incredible business.

1:27Brandreth Canaley: The homes are stunning. I'm trying to figure out what angle I need to pitch to go do operations market research in Hawaii. Because it's just such an incredible business and we're really excited. So we definitely need to find a good excuse to go and spend quality time. And Michael, you're always welcome to join us. We can have a GMH summit. And Will behind the scenes is saying that he needs to come to. Well, we have to come with our producer, too. So, of course, maybe a State Terra GMH crossover event in Hawaii. That sounds like a point. Perfect. So on Gather, obviously a well-known large brand with higher end homes.

2:08It seems like Cetera is navigating more on the luxury side of things. Is that a big part of the strategy? Yeah, we definitely want to focus on a great experience. And some of that is a combination of good teams, good people, good product. And I think this really aligns well with what our other brands offer. So we are super excited because it's a little bit an elevated experience with great people. We have very knowledgeable local team members that are going to deliver a great experience. Yeah, and it puts a pin in the map in another one of the top five states in the country for short-term rentals.

2:47Yeah, Hawaii. Florida, Hawaii, Colorado, ticking the boxes here. Yeah, and Gather actually has a presence in California and Washington. So we are expanding now to the West Coast. And who doesn't want to go to Hawaii, right? Get ready for the time zones. Yes.

3:05Brandreth Canaley: Yeah, I think our meeting schedules are going to be pretty difficult to deal with. Yeah, time zones. Time zones are a lot. Time zones are a lot. But yeah, it's really exciting. And being part of the team, it just feels like there's this injection of energy. And it's so great to bring on a team like the Gather Vacations team. So really exciting. And there were other big acquisition news here at Gastival. all. And we will be jumping into the episode here shortly. Brandy and I have interviewed Amiad Soto, the CEO of Guesty. Yes. And we're looking forward to sharing that with you right now. Yeah. So enjoy the interview and have a great rest of the week.

4:15Brandreth Canaley: Hello, everyone. Normally, I would start this by saying good morning, happy Monday, but it is neither morning nor Monday, but we are equally excited to be here. It's still a good day of the week. It's still a good day of the week. And we're equally excited because we have a really fantastic interview for you today with Amiyad, of course, the CEO and co-founder of Guesty. So without further ado, thank you, Amiyad. Thank you. Thank you. Good to see you. First of all, thank you so much for having us. This is our second year of doing it and our first year of doing a live episode on stage. So it's an epic.

4:57I think everyone loves coming to this, and the numbers show it each year as it gets bigger and bigger. Yeah. Guestival is the festival of the year, and we've been very successful in growing it year over year. I think this year we broke a record of 700 attendees, which I'm very excited about. That's incredible. So today we want to click into a couple things that you talked about this morning in your opening session, the first being what you led with, the acquisition of Smiley. Yes. Big congrats to you and Sebastian. Thank you.

5:30Brandreth Canaley: Yes, it's a big day. And so you've had a couple of acquisitions in recent years, and there still are a lot of PMS options in the landscape. So what would you say this acquisition means for smaller PMS brands? Yes. First of all, it's been eight acquisitions to date. We've been very acquisitive, I think, over the years. Our first one was Your Porter, then MyVR, and most recently Rentals United and now Smiley. We really believe in consolidation in our ecosystem. We really believe that more and more companies should pull resources from against each other towards the same goal, which enable us to provide better technology and better product eventually to property managers worldwide.

6:16I think that what's really, really shining here is that where brands like Smiley have created good, loyal customer base, it makes a whole lot of sense for us to accelerate our growth in those countries by combining forces. I think what it means for other brands is that, one, talk to us. We are very acquisitive. It's definitely not going to be our last acquisition. I think, if anything, it's only going to accelerate further. Our market leadership has been established pretty nicely. I think Sebastian said it earlier in one of our talks, is that it's been one of the reasons why he chose Guesty as the company to acquire his business was the fact that we continue to innovate, and that was important for him to pass his customers to a market leader and an innovator so he knows that those customers will be handled correctly and, if anything, upgraded to an even better platform.

7:16Awesome. One of the things that I heard Airbnb mention this morning was you guys traded office visits and you got out to San Francisco and met Brian Chesky. How was that? Yeah, first of all, it's not my first time meeting Brian. I think when we started the company, we were at their office a couple of times. And both us and Airbnb has continuously invested more and more in the relationship. I think I want to give kudos to Airbnb for really showing its emphasis in the professional community, which was really important to establish. over the years they were known mostly to focus on the guests and the individual host.

7:55In the last couple of years, they've shown more and more inclination to support professionals and help to grow the professional community, which is very much appreciated. So I want to give them a huge shout out for that. And Brian said it too in our meeting that he wants to double down on the relationship. He wants to continue to grow his investment in professionals, and we are obviously a great partner for that. Beautiful.

8:18Brandreth Canaley: Yeah, and so in the last couple of years, there's been a lot of development. There's been consolidation in the tech side, but we're still hearing that PMs are struggling. I was an in-the-field operator for a decade. I very much relate to that. So right now, what are some of the challenges that you see your guesty customers facing, and how are you helping them with those? Well, first, it's important to note that we came a long way. Over the last 13 years, we closed a lot of gaps. And it's very hard when you look back even one year to notice sometimes. But when you look like five years, even in looking at your own pictures five years ago, you're like, whoa, that's a big leap where you can't see it in one year.

9:02Don't look at the hedgehog. The same thing happens with technology. We close many, many, many gaps. And over the years, it increased substantially our product focus. And yet, there's so much to do in this ecosystem. I think, Gessie, when I explain it to investors, for example, I say it's not one product, like 50 different products combined into one. It just shows you how much vastness there is still to be done. And I think now there is a light at the end of the tunnel with AI agents because for once we actually see ability to automate workloads that in the past were being enabled by technology players like SD but weren't being able to be replaced by technology players.

9:43So I think that's going to be a major transformation. and I'm very excited about the AI agent in the future. And I think I couldn't be more excited about it.

9:55Brandreth Canaley: Yeah, it's interesting because I was a Guesty client at Romy for many years and that was, we started with Guesty at this point probably four or five years ago and now I'm like, wow, if we had had these AI agents, it would have been incredible back then. So I really have to commend you and your team for the progress in a pretty short period of time. Yeah, it took us, obviously, we dabbled with AI for years. We had AI in both the guest inbox and with pricing tools, but it took us really a significant amount of resources to invest until we got to that aha moment where we saw agents that actually show intelligence that we can rely on fully automating tasks.

10:38I think that the aha moment was instead of building one major agent that does everything but kind of mediocre. We focus on building a lot of agents that each of them is excellent. And that was the kind of thing that clicked. And we now have more than 65 agents live. I think by the end of the year, we'll cross 100 easily. And we announced the agent workspaces that will allow our customers to manage those hundreds of agents more efficiently. And I think that that's just the beginning. Yeah. You just said that it feels like, guest is not just one product, it's 50 products, right? What's one product that you're not going to be building?

11:17Yeah, great question. Look, we obviously don't see ourselves as a hardware player. We integrate with 200 different companies in our ecosystem now and hundreds more that are marketplace integration partners. And hardware is just one thing that we stay away from, but we still integrate with and provide a lot of API access. Hardware is hard. Hardware is hard. But it's getting better. I think in the future it will be more seamless. I have a story about how I gave my AI agent to connect to my home system and it all of a sudden clicked. And it was really awesome. I just told him, get access. And he investigated everything and it all of a sudden worked.

12:07So hardware is becoming better, and yet it's not our key focus. Another area that we don't see ourselves growing into is OTAs. Yes, we integrate with dozens of OTAs for our Yesi distribution software and Rentals United, another tool that we offer. And there are so many very talented engineers working in Books.com and Airbnb and Vrbo and so many of the other OTAs that we don't see an area for us to innovate in. However, AI is opening up new frontiers with allowing property managers access to more demand in LLMs, which could be interesting. And yet we don't see ourselves as, again, an OTA or a demand generator, but more like as a technology partner.

12:56Well, let's double click into that as well. We've seen top of funnel shift very quickly from Google to ChatGPT and other LLMs. Is this a chance where short-term operators can take back some market share from the OTAs? How do you see it playing out? I think the jury is still out on that one. Don't forget that channels themselves are working closely with OpenAI, with Grok, with Gemini. So I believe that the future is going to be a combination. It's going to be a combination of brands creating good narratives that only they can deliver. and OTAs creating good user experiences with loyalty and vastness.

13:40I think scale is one thing that guests really like, the ability to see hundreds of inventory pieces. And therefore, it's very hard to predict where the future will be with demand generation, but we'll definitely help our customers working with all of it. Yeah, it feels like it can go either direction, and jury's very much still out.

14:01Brandreth Canaley: Yeah, this has been a hot-button topic, I feel, definitely this summer. For those who have listened to the show, this has come up repeatedly. And I feel like we are in a sweet spot where you can't, if you're an operator that is super tech savvy, which I think everyone here is because you're at Gastival, you have this opportunity to experiment with some really interesting products and see where it goes. I get asked quite a lot, where do I see the future in three years? I no longer am able to answer that question. You took one of our questions. That was one of the questions coming up, but we'll trim it down.

14:33Great minds think alike. Look, I think one year out is very hard to, like, with models coming out every month or two, with all the big model companies giving extension, like, warnings. Like, who knows where the industry will go. I think that where it's important for us to be is at the forefront of that technology, providing access to our customers to the latest technology and what's capable. And I'll leave predictions to other people. So hammering into that point, this morning you said what used to take Gesty a year to develop now takes a month or a week. Yeah, we've seen it. Let's not aim three years out, but 12 months out.

15:16I mean, that's a substantial change. Yeah, I think more and more of the work in our platform will be done by agents. Just easy prediction. and our customers, the humans within our customers will be monitoring and supervising. Almost like every one of the staff members of your companies will be elevated to a managerial role instead of a working hand role, which is great. It will free up so much time to focus on what matters. I touched on it in my opening deck. I think eventually our businesses are built on people, guests, owners, eventually, if we are not providing the human experience that's elevated, what are we actually building here?

16:04And ability to remove technology, in a sense, by taking care of all the manual workload is something to be aspired to instead of shy away from. I think that will enable you to be better efficiency, higher EBITDA, higher profits, but also back-focusing on what matters to you and delivering your own brand promise.

16:28Brandreth Canaley: Yeah, I think that that's been something over the last, certainly five years, you get, you know, so bogged down in the back-end work and things that weren't a part of your hospitality business to start with now are consuming so much of your time. So to be able to take some of that time back and be able to have those maybe in-person guest, you know, experiences or be able to deliver gifts because an agent, you know, found out what all the gifts are, maybe ordered all the gifts for you, had the delivery route planned. Like, it gets back to hospitality, which is why everybody got into the business.

16:59And even that will be AI enabled. Look, eventually, even if you don't believe AI is there now, it's like an S-curve. So we are here accelerating. So you don't believe we're now. Walking around earlier, right? Like, six months from now, it's going to be like ten times better. Like, our AI agents are improving every week. We're seeing it. we're seeing the agents doing better and better at each prompt. And we already are at like fourth generation of some of those agents, fifth generation of some of those agents, based on feedback that we get and improvements we're seeing. I believe that by the end of the year, a lot of those agents will be like things that you feel very comfortable letting go and letting roam by themselves.

17:44No, 100%. AI is obviously part of everybody's future, but I loved Will Reynolds' discussion this morning. on how sometimes less is more. Don't go out and create a bunch of slop. Make it focused. Make it answerable to what your clients are needing, what your users are wanting and needing. And don't just throw a bunch of stuff against the wall. We've all gotten those emails that's like, you clearly wrote this giant book with AI. Just send me the bullet points.

18:11Brandreth Canaley: Yeah, so many M dashes. AI slop is actually human slop in disguise. I love that. AI slop means a human didn't take the time to mature his prompt or its harness. Eventually, the output is as good as the input is. And you see some of the same models run on benchmarks with better harnesses. They can get like 90 % score versus 40 % score with a cheap harness. And harness just basically means the quality of your prompting. So if you come in and improve the level of your harnesses, you'll get a tremendously better output. So I think that if you are getting AI slop, start questioning yourself and not the model anymore.

18:56Can you ask it what your score is? How do you find that out? Yeah. Look, obviously for images, it's easy. You see that. But nowadays, images are so good that you don't see that anymore. It used to have those six fingers and all that kind of stuff. All that kind of stuff is clear now. You're generating videos that look hyper-realistic. And when I say AI swap, it's just like the things that we saw Will, for example, show on screen, that people are creating those blog posts with generic phrases. I think that if you input a lot more character to your bots, they will come back at you dramatically more enhanced.

19:36Yeah.

19:36Brandreth Canaley: I want to touch on something you said also this morning, that the best companies in the next three to five years are not necessarily going to be the biggest. And I love that because right now, we've been hearing a lot about scaling, and I'm in that. I work for State Tero, so we're obviously part of the scaling group. But can you touch on what the future for the 50-unit, 100-unit operator looks like? Well, obviously, we're great partners with enterprises the same way we are partners with individual hosts and professionals. I think that what really was created is kind of like a democratization of...

20:14The technology basically created democratization that every company has access to things that in the past were reserved only to big corporations. Yeah, for sure. I think that if you think about Hollywood, for example, in the past, to create huge or beautiful movies with hyper effects, you had to have really tens of millions of dollars of budgets. and nowadays you can run an indie project with a single digit of millions of dollars and with looking just as good, and I expect that price to go down to even below a million dollars in the future. This means that nowadays technology allows you accessibility to things that weren't available to you in the past, and that's exactly what Gestea is.

20:56We are enabling our customers to do better work, bigger work, and provide their customers with outputs that are equivalent to a Formula One team. Like in the past, you couldn't compete in Formula One if you didn't have$200 million. I expect every one of our customers to perform at the top of their game pending their investment in themselves, in adoption, in learning, and building their own harnesses. Right, yeah, consolidation is happening. There's lots of private equity companies out there. and also referencing Will from this morning, brand is important, but you can build a brand with 50 units and you can build a brand with 5 ,000 units.

21:38So the jury's still out for me. I'm going to use the same analogy of a movie. If we have the same script to two different directors, they will come up with completely different movies. And I think that that's exactly the differences that are going to happen in the future between property managers. The technology is going to be the same. They're all going to use guest, hopefully. But their output is going to be their character, their own personas, what they bring, their artistic sense, their operational excellence, what they pay attention to. So I think we're going to have very different outcomes of property managers that are in the presence of their owners and entrepreneurs.

22:19Being a founder is going to mean inheriting your DNA to your company. You will be able to execute your own preferences in a way that was not feasible in the past because you rely on so many third parties or big workloads that you couldn't manage to the standards that you were hoping for. And I think that that's no longer going to be a constraint. Yeah. Well, on being a founder, I'm wildly impressed with you guys. I met you probably 10 years ago, and you guys have just grown and grown and grown. and it's not an easy path. Most people in here are founders. So big congratulations for all the success and I'm sure all the future success to come.

23:04Thank you. And thank you for the interview.

23:06Brandreth Canaley: Yeah, thanks for joining us. And you can tune in on Monday. And it's not Monday morning when we normally have our coffees, but it is coffee break time. It is coffee break time. Thank you, everyone. Thank you.

23:25Uh,

23:30uh, uh.