How A Bad DMV Experience Inspired Jonas Frey's Multi-Million Dollar Business

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3:15There are some businesses that are created to solve a problem and you think, man, that opportunity was right under my nose. I knew that was a problem and I could have solved that problem and made so much money. Well, when I tell you about this business, you are going to have one of those moments, because I did. Today, I'm talking to Jonas Frey, who founded Appointment Trader. It's a company that buys and sells coveted reservations at restaurants, on golf courses, and more. Today, we talk about how Jonas used his rent money to start this company, how the DMV inspired the business idea, and what critics are saying.

3:45And honestly, this might be my new side hustle, so if you're in the market for one, stick with me. So Jonas Frey, welcome to Money Rehab. Hey, Ms. Lapin, how are you? I'm good. And I'm so excited to talk to you because when I first saw a story about your company, I was like, damn, why did I not start this company? How did you come up with it? Thank you. Yeah. People always tell me not to tell that story, but I'll still do it. I tried to get an appointment at the DMV in Las Vegas and I couldn't get one. There was actually a really long line in front of the DMV and it was really visceral. because you see these 150 people lined up in front of the DMV.

4:26And I said, oh, surely it's a special day or something today. So I'll come back tomorrow. And I went back the next day and I saw that same long line. And I was standing there and I said, I'm in the United States of America and I cannot buy an appointment. That's crazy. You can buy anything, any commodity, anything is tradable, but a time slot is not. And I was thinking of these people standing there. And I thought, that's 150 people standing. And literally over the course of 20 years or 30 years or 50 years, 150 people's lives will be wasted standing in line, if you think about it, like over time.

5:01And I thought this is absolutely ridiculous. There should be a solution for that. And that's why it's called appointment trader, not reservation trader, because it was actually the first trade was, I believe, a DMV appointment. Yeah. And you saw money hiding in plain sight. Everybody hates waiting in line at the DMV for sure. I always say this is like time I'm never going to get back in my life. But the DMV isn't your bread and butter. So you said that it's not appointment reservations, which people often think it's appointment trader, but restaurants is really your thing, right? Yeah. And it's one of these things when you start something and then you see where the demand really comes in from, we still trade DMVs, right?

5:37And now we're adding doctor's appointments and we started adding tea times for golf. It was actually funny. It was a very famous singer that knew me and he goes, you're that appointment guy. I want to trade tee times. And yeah. Who was it? Can you tell? I hope he's not going to be pissed off. It was Nick Carter from the Backstreet Boys. Nick, I'm sorry if you hear this and you hate me for it. I'm very sorry. I've got to buy a pizza. I think he'll love it. And if you give, you don't need to buy him a pizza. You just need to give him all the good tee times. Yeah, you said, hey, is there something we can do together?

6:16And it actually made me start thinking about how I can have sponsors of one vertical, that you have different people who really represent one certain vertical that we do. We also have, for instance, RV parking spots. And believe it or not, there is actually a market for that in high seasons. At the end of the day, what I realized as we were doing this, because you were asking about the restaurant reservations, it's actually interesting how a price for an appointment builds. You would think, oh, a DMV appointment is so important to people and they really need it. But it's funny, the average trading price for a DMV upon was around$25, while a restaurant reservation is in off-season at$80 and in high-season at between$100 across literally the last 50 ,000 trades.

7:05It's like literally$100. And the interesting part about it is it's whenever people get to take other people with them, it becomes relevant to the person. because they go to a place that's very hard to get into. And that was an interesting observation. It's not my first business that I built. And when I do something consumer-facing, I always think about how can I automate a luxury that is currently reserved for people with more buying power? And if you think about it, if you're a really wealthy person, you don't need appointment trader. You probably know the guy at the restaurant or you're used to slipping people a hundred bucks.

7:45But if we have this, I have this one story, there's this firefighter that did something really great and his wife wanted to do something for him. And she wrote to us, I always wanted to take him to Delilah Las Vegas. And we're just not in that social circle. We didn't know anyone. And I didn't want to be embarrassed at the door. And for$70, I did this for him and it was such a day. And so I thought it's actually a really cool thing where the very wealthy generally get their availability all of the time, anywhere. And we give that power to anyone. Yeah. So$70 for Delilah in Vegas might be average, right?

8:21But it can get really expensive for some of the bigger spots. Like Carbone in New York can get up to what, 300 bucks? So it's supply and amend, right? But now, ironically, we sold like 5 ,000 reservations in a year in all of the car bones. And like whenever you go into a car bone that a few tables are from appointment traders, like literally a section there. They don't love that. It's that way, but it is that way. Carbone is not as hard to get as, for instance, the Polo Bar. So if you look at the average trading price, you'll notice that Polo Bar trades well over $250 on average across thousands of trades, right?

8:57And that is the most expensive reservations in the world. Polo Bar, New York. And it's the weirdest thing. You get a burger. But I have to say, that man knows how to do things very well. I love that restaurant. It's great. Whenever I go to New York, I go there. And Carbone, I think Carbone lives very much off of the impression that it's hard to get into. So just explain to me, how are you getting all these reservations? I'm not getting any of them. So the way I was looking at it when I first wrote out the initial draft for appointment trader. I said, why is it sometimes hard to get availability and why is it not hard sometimes?

9:38And especially in restaurants, there are a lot of factors. So restaurants generally don't open their books for prime time, even if they're not sold out, because they want to appear as if they were hard to get, which is part of the reason why appointment trader works so well. So if you have less in-demand spots, they look like they're sold lot, but they're really not, which means that people with means to contact the restaurant, we'll be able to get the reservation. But then there are these spots like Polo Bar in Miami, there is a spot called Boya Day, and they literally have 14 tables. And I know the chef and the chef says to me, Jonas, I cannot get a table because we have 15 reservations for our 14 tables.

10:21So there you really need a marketplace where a person that is dining gets an incentive to give up their table. So when I was building this, I said, okay, we need to solve this accessibility problem with the marketplace because there is no other way to do it. Because when you have a saturated market, when there is no availability, the only thing you can do is you can offer an incentive for someone not to go. So you have this, it's like a - Yeah, it's like on the airplane. Who wants to give up their seat for 400 bucks and then it goes up if nobody's doing it. And ironically, plane seats would trade like crazy.

10:56but you can't trade them today. When you need a business class seat and there's just nothing available, there's nothing you can do to buy another dude's spot. It's just impossible. If you're in the airport and you offer the guy$2 ,000, the airline will not let you sit there. But you could go up to a person who had a business class ticket, like waiting in the waiting area and say, here's$2 ,000 cash. Do you want to sit and coach and I'll give you the money? Yeah. So we were actually thinking about implementing a feature that allows exactly that within the platform, but it's illegal. And while it might work sometimes and sometimes it doesn't, you need the consent from the airline.

11:37So that's why there we actually have to work with the airlines that they allow that. However, we take about 30 % of each trade and the partner we're looking at is that obviously they have a substantial incentive in allowing these trades because they'll get a part of the trading fees. And basically, it's a peer-to-peer platform. So I get a reservation at Rayo's or Nobu Malibu or whatever, like a coveted thing a couple months out, and I can't go or I want to put it on appointment trader and I want to see how much it could go for. Then I list my reservation to somebody else who is in need of that reservation, and it can be bid up.

12:16Explain how it works. The way the marketplace works is exactly what you just said. So you have a variety of players, you have the restaurants, you have diners, and you have professionals that actually make money in the market. So if you just go and you have your Rayo's reservation, and you just change your mind, don't want to go and don't want to be charged no show fee, literally a button that says trade in your reservation, you click on it, you upload your confirmation, the system will look at what time is it, how far in the future is it, and what kind of comparable is it. trades have happened to indicate a price.

12:50So the thing will say, okay, you should list this for $75, for instance. And then depending on how good the price is, it'll either sell instantly, and it'll tell you that. If another customer already went in and said, hey, I'm interested in this reservation, I'm offering a reward for anyone who can get me this reservation, it'll say, hey, you can sell this reservation instantly for X dollars, or you can list it for whatever number you would like to get for it. And the thing with, and we call those, you can have a bid and an ask. So if you upload your reservation - Like in the stock market. Like in the stock market, you have an ask, right?

13:24And now we rolled out a feature that allows market makers to literally make the market so it's always liquid. And the way we do this is we buy cell phone data around the world so we know how many cell phones walk in and out of any restaurant in the world. And then we buy event data and have our own data, a whole bunch of mix it together and rate an hour on a scale from 0 to 10. And then we say, okay, a popularity score 10 in 14 days from today in Miami in this season generally sells for$180, table of four, for instance. Now the market makers go in and say, okay, I'm interested in all popularity scores, seven and up, and I'm bidding$30.

14:04And then they place 10 ,000 bids in one go. Or they go in and say, I want to buy up all of Art Basel or I want to buy up all of fashion week in New York. So now when you, Nicole, want to sell your reservation, the system will say, hey, you can sell it instantly for 25 or 30 or 35, whatever number there is, or you can list it for 75, whatever you want to do. So now we have these professional traders that literally just leverage and say, okay, I'm going to buy these tables in the future and I'm buying them for 90 days in the future and the trading price is$30, but 30 days in closer to the date, it'll go for 70.

14:46And then right now, because it spreads huge and there's not that many players doing it, people can double their money in 30 days. And there is limited liquidity also, right? It's not that you can do any number. It's not that you can put$50 million in there and then double it in a month. But in a smaller scale, it works like that. How many of these professionals are trading and how much money are they actually making? So the first professional tier we got were people that have connections in the industry, like concierges, hustlers, people who know the industry. And when you go to our top list, there's a little button that says money network.

15:22You can actually see how much money people make. And the top guy has been at$35 ,000 a month doing this for the last three, four months. But last year, the biggest$1099 that we sent out was$270 ,000 to one guy that he made in one year. And the top 10 in May, the top 10 people together made 200 grand. 10 people. How much are you making? So we take 30 % of a completed trade and the marketplace volume right now is 6.35 million. You can actually see it when you go on the website. We have a live ticker and show you how much we traded in the last 24 hours. And in the last 12 months, it's all live data.

16:02And like last year, we were at a little under 3 million, I think, at this time for 12 month trailing. So 1.5 million-ish this year. Yeah, something in that. I always look at 12-month trailing because we've been growing. Luckily, we've been growing pretty heavily, so I'm always looking at 12-month trailing. Is that what you expected when you started this? I was in a really shit situation when I started this. I had a different tech business, and it went out over COVID. it. And I remember sitting in my apartment with my wife and one of my neighbors was an executive for Facebook. And he goes, Hey, Jonas, you're a good techie.

16:45Don't you want to work for Facebook? And they offered me a position at$300 an hour or something. That was going to be around$300 an hour. And I really had no money. I was completely fucked. I had absolutely no cash in the bank. All my money was in the old business. And I had one credit card that had$30 ,000 limit left. and I said to my wife, listen, I can't do this. I've been an entrepreneur my whole life. I'm sorry. We're going to have to rough it and we're going to have to somehow live off of that credit card. While I'm building this, I said, I have this idea. And she goes, what's the idea? And I said, it's called appointment traders.

17:24She goes, appointment what? And as an appointment trader, people can exchange reservations. Are you nuts? But I guess it sounds good enough. She was still pissed off that deal or not pissed off, But she was really upset that our old business failed because we were on it for five years and day and night and raised a lot of money for it. And it was just a very heartfelt situation. But you know what you're going to do? You're going to have to live. And I said, I have 30 grand in a credit card. Hopefully, they're not going to cancel it on me. And this is our window that we can use to build the next business.

17:56That's just what we're going to have to do. and then I sat down and she always described that she would always bring me Red Bull and sandwiches like from left and right I was just sitting there coding and building the business so I was hoping that it would work but you didn't know until it worked you needed it to work right okay yeah I had no chance yeah there was no other option it's really it was crazy it was when we when I was a couple months in I called my landlord and I said listen I just wired you rent, I will not be able to pay the next rent. I told him, I said, I'm very sorry. I don't want to be this guy, but I will not be able to make next rent.

18:32This is the thing I'm working on. Our old business failed. This is the new thing I'm working on. He was actually the first guy to get a presentation. Do you offer him equity in exchange? I did. I did, but he said, no, it's fine. I really like that you're on it. Everybody else pays late and then calls me. He's like, nah, it's fine. Keep it. And then like a year later, shit, I shouldn't have taken the equity. Yeah. Because how much would that have been worth? Have you guys raised money? Have you put a valuation on this thing? No. So it's the funniest thing. I never raised any money for the business.

19:04I completely bootstrapped it. However, I had a bunch of employees before and we raised like$12 million for the old business and we had a payroll of$250 ,000 a month. And the thing is, when you start a business, you need to be as agile as a freaking judo artist. It's because you got to go with the flow. You got to see what are the customers. You might have an idea, but maybe part of it is correct. Everything else is just crap. And then you need to do what the customer wants to do. When I had a big team that is agility goes away because you have a project lead and developers. And they said, we just defined this four weeks ago and we're currently in the sprint of doing this and we can't just change it all the time.

19:45so I said you know what I'm gonna build the first prototype all by myself and I haven't coded in 10 years before that so I sat down and I'm like okay how did that work again and so I just I then ended up buying a server on eBay because AWS is so goddamn expensive it's really nuts it's insane how expensive it is so I went on eBay and I bought like a four-year or five-year-old server and I literally I screwed it together by myself my wife was looking at me and I was doing this. And then I called my, we lived in a high rise and they had fiber in the high rise. And I called the guy because I somehow met him before.

20:22I said, hey, dude, can you put a fiber line in my apartment? He goes, why? I want to run a server. And he literally put a 10 gigabit line into my apartment. And I put this big server on the ground next to the washing machine and turn it on. And this thing was just screaming in our closet. And then I built a software. And ironically, because my cost infrastructure was so low, we were, we at least didn't lose a lot of money relatively quickly. And I had another 10 grand that I put in there or 15 that kind of held us over water. But then I was two months late on my rent and I didn't tell anyone what I was doing and everybody knew me.

21:05And then this buddy calls me and he's, dude, what the fuck are you doing? I want to know now what are you doing? Yeah. Okay. hey, I would just turn first revenue. He said, first revenue. Okay, what is it? And then I showed him appointment trader and he goes, fuck, that's cool. I can basically buy my spot and can I buy into this company? And I didn't show him with that intent. I'm like, well, I really need money. Yeah, that would be awesome. But you're going to have to buy my equity because I'm going to sell you my equity. The business is fine. It's running on its own, doesn't have any employees and per transaction it works and then he bought 25 of my equity for 62 500 and last year i sold like point something percent for 250 grand second secondary in one transaction right so his stake his stake is now worth well over 10 million wow what what what timing does to yeah but if he what's the funny thing he sent me 60 grand and i remember i paid the landlord and if he didn't pay me that money appointment trader wouldn't be there today i just wouldn't be there i just just wouldn't be there but the funny thing is ever since i only sold secondary equity the whole time around and actually some of the investors were able to resell some of their equity was it's unless you really need money to build a business it's a cool way of taking a little bit home before you sell the whole thing that's what a quintessential entrepreneurial success story congratulations that's a big deal it's not that exciting yet well it's it sounds like you've come a long way i want to get into a little bit more about how the business work.

22:50So if I'm going on and I buy somebody's reservation, it's in their name, right? So if I go on OpenTable and I get one of these fancy reservations, it's under my name. So I list it on the site and somebody buys it. And then do they go and say my name when they go to the restaurant? Most repeat customers do that. Most new customers use a service that we call transfer service. You buy someone's reservation and you can buy, pay 25 bucks and, or depending if it was a more expensive reservation, it goes up to 75. And then a concierge of that city where you're in will call the restaurant for you and change the name.

23:29However, some restaurants don't love what we do. So that's sometimes a reason for them to cancel it. And it generally creates more trouble than it solves. The thing is new customers are always so worried like, oh, but my name's not Pierce Brosnan. But the reality is you walk up to that desk and they ask, what's the reservation for? And he's Brosnan. Oh, great for two. Okay, sit down. And then most repeat customers, and we have people who use us literally hundreds of times. You can see that on the website. And they actually then report back and say, yeah, I love this because these restaurants can't send me emails.

24:06Oh. Oh, yeah. So it's a privacy feature. So we actually do have some celebrities that we see using the service. And I think on the buy side or the sell side? No, on the buy side. I think they don't need to. They only do that. So they don't use your own name.

24:29Hold on to your wallets. Money Rehab will be right back. and now for some more money rehab

24:42i read an article about one of your traders alex eisler is a college kid who earned a hundred grand in a year and a half which is wild what is he just like on these websites calling these places non-stop to get all of these reservations how is he doing this i know alex but i don't know exactly how he does it. The success of appointment traders that we're actually a marketplace and not just pretending to be one because there are many forces that are trying to prevent what we're doing. And because everybody does it different, you can't turn it off. So Alex has a different strategy than the 15 ,000 other sellers that there are.