Guesty Revenue & Funding (2024)

hello everyone my guest today is amiens soto he's the co-founder and ceo of a company called geste a cal a cloud-based sas platform established in 2013 designed to simplify the short-term property management process with guest's all-in-one solution property managers can operate listings across multiple accounts including airbnb booking.com and others from one centralized dashboard amiado you're ready to take us to the top yeah thank you for having me you bet thanks for coming on so are you kind of uh you know used to be a real estate investor and then you said i want to do software now and that's how it happened or tell us tell us when you launched gusty and how you got there so uh the story was that i was a student uh university student with my uh my brother my identical twin brother and both of us you know we're living in tel aviv where rent is quite expensive and you know our experience was that we were traveling quite a lot and we didn't want to lose the rent uh you know while we were traveling being the poor students that we were so we decided to open you know to try to rent on airbnb and since our experience was too cumbersome we said like there should be a tool that does this for you making it super simple and that's why we created the company and so how is uh so how's gasket different than airbnb yeah so ust is the platform where you put all your properties on uh it's designed for property managers that are on airbnb booking.com uh and their own websites or home away and all the arrests and basically we are connected to all these channels uh like airbnb and we provide them with the inventory and they provide with the guests and reservations they market those properties we provide the tools necessary to manage the business the the the cleaning the owner relationships uh the accounting the reporting everything the automation and so is this a sas platform or is this more like kind of consulting professional service revenue it's a software platform we do have dedicated account managers that provide some consulting services for these accounts but we do our major products is obviously just the software platform it's a it's con it's including like more than 20 different tools in this platform that helps them with their daily day operations and what would a property manager pay on it i know i'm sure you have a bunch of different variables but on average what's the property manager pay you per month for this yeah so um each property manager has different needs and use different amount of products and to different extent and also they have different number of properties so the pricing is percentage based and it depends on how many products they use and how big is their company okay yes give me describe the average customer you have one property manager five five properties that you give me the perfect it goes the average will be 50 properties property manager uh we have as low as five and we have as big as two thousand right so it's we have multiple types of uh different property managers uh but that is in the 50 to 100 okay so let's just i want to really understand that your customer right so let's say a customer property manager with 50 properties uh what would you charge me to manage my 50 properties well again i cannot quote you on anything because each quote is dependent on the on you doing a demo with one of our account executives and choosing your your own products that you want to use and it really depends as we have a scaling figure as you grow it's becoming cheaper for property yeah but i'm asking i mean what i'm trying to understand here we're eliminating these variables so we can get to an average so there's 50 properties so it's not going to be more it's not unless it's it nathan if the point is to get me to quote a prize i would not do it it's not it's not a price but i have no doubt i have no idea if it's a dollar property or 10 000 per property i have zero idea so my audience is going to be completely lost so either help us out or we'll move on okay so it's it's percentage based as i mentioned a percentage of what of rent or of the of the reservation so each each reservation can be a thousand dollars and then you'll pay off somewhere between two and five percent um i mean so just to be clear just to understand this before i move on to more your story so you know typical i think my audience really clearly understands if they own a piece of rental property they might hire a property manager and pay that property manager five to ten percent to do things like renew leases make sure the toilets are fixed things like that you're essentially doing that at scale so um our customers are property management companies to do short-term rentals and the the average uh health for property management companies is about 20 there are some companies that go as much as 35 or even more and these property management companies would use our software and they would pay somewhere along the lines of two to five percent depends on how many products they use and how big their company is yeah again when i'm when i'm breaking i want to go back to the owner of the property and then understand property manager and then understand where you fit in so going back to the property owner the property owner i own real estate i know what i pay i pay my property manager ten percent right of of a thousand bucks it's a long it's long term yeah on short term it's 20 so you would pay your property manager 20 and then the property manager will pay us two and a half percent for example three percent or four percent depends on their size and the products they use okay so let me walk through an example i own a property i make they're going to make me a thousand dollars this weekend i'm going to pay the property manager 200 bucks for that 20 based off your data your numbers of that 200 they're going to pay you 2.5 no so that would be out of the thousands so they will pay us like 25 for example out of the 200 that they made i see i see okay and then for you in terms of in terms of growing the business i want to kind of put this on a timeline to understand history here so when did you launch the company what year december 2013. just okay so it's been a while have you guys decided to bootstrap or you raise capital so we raised capital 25 million to date gosh i mean i liked you i liked you so much and now you tell me you've gone to the dark side and you've raised i don't like you as much anymore apologize i'm kidding why'd you decide your race so we were y company or backed back in winter 14 class and right afterwards we raised 1.6 million as our seed then we raised 3 million as our a and and only now we raised 20 million in in april uh in series b april this year yeah and and where's why why make that 20 million raise why take that dilution how's it going to drive growth um so for us we already had product market fit we were growing pretty rapidly and for us it was just how we can push the gas pedal for scale both in product wise and and you know make our product a lot more uh scalable and a lot more sustainable and also produce new functionality and the second part of it was how can we scale our sales team distribution and get more customers i want to understand more about how you're signing up new property managers right now before i do that they'll paint more of the picture here so a team size today is how many people almost 200 200 folks and based in uh in israel or san fran or where's our own based so our headquarters is tell me of israel okay and uh oh that's your only only location are you guys spread out no we already already have uh three more locations and we're opening six more uh starting next year so we're gonna be at uh atlanta la we already have la which is open way uh we're gonna open in barcelona paris uh rome berlin and why is it why is it necessary for you to take on all this additional kind of office rent opening up new locations so do you have to have feet on the ground to sign up new property managers it depends on what size right so for us there's a lot of property managers who aren't super tech savvy and aren't going online to find their new software provider and and if they're big enough it makes a lot more sense to also meet with them in person and if they're small and getting started they would prefer to meet with someone in person to do a demo and getting you know things like that kicks uh kicked out and obviously until now we were only inside sales so we have managed to grow quite tremendously with having only our sales team here however over time we do believe that they will play out pretty well with our on-site locations and and why did the inside sales playbook work for you if your sales people are connecting with me and i'm a property manager with 50 properties um what does the pitch sound like is it that you're going to help me make more per property so paying you two to five percent is actually well worth it yeah for sure so we not only will help you make more per property we'll also help you scale dramatically so almost all of our customers the average they grow in one year is more than 5x so we will take you on with 15 properties and within a year you'll be at 70. or we'll take you on with 30 properties and a year later we'll look at you and your 120 or something like that so we help a lot of these companies scale dramatically uh in you know free free a lot of their time to focus on growing their business and improving their scalability and just to be clear those are that's from year one to year two or that continues year two to year three you keep 5xing it continues to grow obviously as the the rules of big numbers the numbers uh get smaller but we definitely help a lot of companies grow to the 300ish size and then they slow down a bit because they need to start spreading into different cities and that's a different operation skill that they need to develop the software is already built for that and we have many customers who are at multi-city uh i just want to name a bunch of functions of property managers i understand if you help with it uh toilet fixes so the totally fixed is a maintenance task and we help with creating the tasks either automatically or manually and then assigning it to a person of your team to to go do it so we don't do toilet fixes we will create the operational software for you to run your maintenance team so it's task management software one yeah that component is yeah okay uh uh mowing the lawn it's another task it's it's all these operational things are tasks that you can either assign manually by a trigger like once a month or by specific event that happened the renter leaves damage and the property manager needs to build them for a refill like for damages yeah yeah so claims um either by insurance claims or by your own uh security deposits are also a feature that's possible we since we also do the payment processing for the reservations themselves uh great um talk to me about where you're finding the these pr and how many property managers are you working with today by the way over a thousand okay like a couple of thousands and how are you so walk us through kind of a bit of the playbook here how are you finding these folks yeah so we get almost 50 of our traffic for organic uh you know we have tremendously good seo scores so if you look for property management software for short-term rentals urban b management software all these terms you'll find us among the top three results most likely um we also get a lot of our traffic from you know paid campaigns that we run or from outbound reach that we do so we we have pretty much nailed our traffic to all these three different funnels i imagine obviously one of the reasons you would be okay taking dilution on a 20 million dollar raise is because you know these numbers and you know what 20 million could do for the business so ignoring ignoring the channels that are cheapest for you which i imagine is kind of the organic inbound and seo where you've identified that you can spend a dollar to make whatever a dollar 20. um i'm curious if you look at it on a per property manager basis how aggressive are you being a ceo to acquire one of those new property managers in terms of paid direct paid spend yeah so you know for us it's it's a lifetime value versus cost of acquisition uh calculation and we found out that uh we make more than six to sometimes even as much as 30 x on our on our type of customers depends on their size and we therefore are enabling ourselves to spend that much on uh ppc and outbound reach but a lot of the a lot of the money goes back to technology so we believe that if we will be the best of of kind you know then we'll win a lot more customers and we will retain them longer too so it's not just about uh having the best sales team but also having the best product i mean i've had a lot of ceos on that are in the kind of 60 to 80 million arr range and they tell me early on when they were when they were measuring cac and build confidence in their cac based off a l2 to cac ratio they got in troubles because of payback periods so they had really healthy churn numbers which means ltvs were through the roof but if you just take a multiple and it still takes you two years to make back that money you can get a huge cash gap so help me you know 6x is great but it doesn't mean a ton right i mean how aggress are you willing to spend like first year kind of contract value on getting a customer or so for us it depends on the size of customers but the the medium and large ones pay back within a month to three months okay at the late so we we don't need uh too long to get back our our you know invested fee okay that's great and if you and that was kind of direct paid spend if you take that from a fully weighted approach so include salaries of these people fully weighted okay so that includes the content writers the inside sales teams any customer success reps any on the ground people including the events that i'm doing too so oh yeah i mean that's marketing no it's actually if you look at uh calculations sometimes branding events and participating in trade shows do not are not part of it especially since they're not directly generators but we do include them in our call calculations when i talk about fully weighted calc i've never seen anyone not include sponsoring a conference so ey and many of the big ones definitely prove that so i'm just telling you that we do approve of uh different pro you know methods of calculating well of course what i'm telling you is i've never heard a ceo when i say what's fully weighted cac not include event spend yeah and neither neither are we i'm just saying that a lot of companies take that into a separate branding bucket that is not the directed connection to cac i see i see okay well by the way health really healthy payback period so uh with additional money or as you look for additional growth or you're generally pushing that up are you comfortable going up to six twelve months or are you trying to keep it right at three a good question i haven't had the you know the the time to think about it actually i'm 100 comfortable with expanding my sales team uh through these offices that i mentioned and will definitely have some effect towards our you know ltv2 cap ratio but i feel like it won't get to 12 months anytime soon yep okay great and then you mentioned many thousands of property managers when you guys look and you kind of talk internally and you kind of toast each other when you hit metrics is do you really care most about number of proper managers or number of properties or kind of gross transaction volume coming through what's kind of a key metric for you so there is a strong correlation between number of properties and revenue therefore if we can we can do any one of them it doesn't really matter if we bring in on board a property manager and they have 100 properties we know to predict how much revenue they'll make pretty pretty accurately um so for us we can either measure the number of properties on our system or the number of property managers or the revenue it's all the same okay and and how many properties are you met are on your system today tens of thousands of properties norfolk 50 000 closer to the 100-ish okay okay that's great and across again one thousand to five thousand property managers that's great that's great very good um who are you competing with who do you come up against in some of your sales calls well you know this industry is still super fragmented there are more than 600 different software tools uh but all of them are focused on niche specific uh solutions like i will give you just a channel manager i'll give you property management software i'll give you a crm i'll give you an in communication tool or all that we took the approach of building an end-to-end platform and we are pretty unique in that spectrum so whenever we get uh competition objections we know how to handle that we just show them the product and people are sold on it very very quickly okay it makes good sense if somebody lists a property or property manager uh lists a property with you or a group of 50 properties um should they be i mean it's obviously different based off location but generally what kind of lift do you sell them on over what their old method is yeah so for us you know we cannot guarantee lyft or anything like that it really depends on their industry as well in their geographical location um there's also seasonality aspects of this business it since it's hospitality industry uh what we do guarantee for them is the time saved so we focus on helping them focus on the things that matter more to their business rather than doing this on on the ground reputative tasks all the time like for example replying to guest communications if you booked an airbnb in the past you would know it's it's a lot of back and forth communications we can save tons of time for them either using our guest communication service or by automating much of it through uh proactive messages that go out by triggers and things like that so there's a lot of automation that saves them tons of time enabling them to focus on what's matter elastic we're out of time here last economics question before we wrap up churn's critical in this kind of business obviously what's your turn today yeah so we actually have experienced very very low turn and the reason why to use these products um you cannot really go back whenever you give your homeowner a tool that they can see their reservation they can see how much money they're making they can log in to change their occupancy or availability of their property you cannot take that away from them and so there is a lot of sticking points throughout this process throughout all of the 20 products that we give to our customers and therefore we have experienced very low churn uh and we're pretty lucky at that i mean what are you talking low churn you're talking one percent a month logo basis or per per annum what do you what do you mean low so we we focus on the revenue turn in our logo turn whenever we count logo churn it's also taking into account you know customers that shouldn't be installed the wrong fit or things like that to the product so we focus on customers that have paid something and are a good fit to the product and therefore we can see the revenue much more clearly estimates of the insurance we're talking about and looking our investors have been investors in many many sas companies and especially in the italian industry and we we all get told that our uh churn numbers are drastically below industry standards yeah the purpose of the podcast is educate my audience on key things like this what like what is low churn so i can tell you they're all thinking right now what does he mean low churn and how do we compare so like less than one percent or so that will actually make sense uh if you're talking about enterprise sales then you you talk about two or three percent if you talk about smbs you're talking 10 to 50 uh 10 to 20 percent it really depends so you you need to focus even if your audience uh care about specific metrics they need to you know make sure that they fit their industry and their size of customer so yeah i mean they're they'll they'll understand that again the purpose of the show is i have thousands of sas ceos on to get all the varying kind of viewpoints what i'm trying to understand is where you position you are you saying your enterprise and your two to three percent revenue churn per year per month so actually for smps it's two to three per month and not per year we are we are in between the the smbs and the enterprise and therefore we're experiencing somewhere in between what you said okay got it so it's very i'll put a big range on this to keep it vague but it's fair to say you're doing somewhere between kind of three and five percent revenue term per month something like that all right let's wrap up a little more than that sorry i thought so three percent uh you said per year is enterprise and per month is smbs we're in the middle of that sorry you're making this very confusing can you just be direct so you're between three and seven percent revenue turn per month or per year so we are between one and two percent in months okay okay that's helpful good so one to two percent revenue return uh per month that's great and and i it sounds like based off 5xing the number of properties folks are with you you're driving significant expansion so net revenue retention i imagine is over 100 is it accurate yeah okay very good all right let's wrap up with the famous five number one what's your favorite business book so for me the fa my favorite book was the hard thing about hard things um can you hear me yeah that's great no that's good you have ben horowitz number number two what is your uh who's your favorite uh ceo right now to follow or study uh jeff bezos number really go ahead sorry go ahead number three what just because we're out of time number three what's your favorite online tool for building the business online tool for building a business your business so i guess that people should start uh using a crm as quickly as possible it helps with standardizing data much earlier in the process and i definitely recommend to start using a crm as soon as possible yeah again what do you use so we we we've changed four crms throughout the life of the company uh we started with streak then went to pipe drive and then went to close and then went to uh salesforce like everyone else at our size number number four how many hours of sleep to get every night trying to get eight sometimes i only get six i aim for that range and what's your uh what's your situation married single kiddos married no kids yet okay mary no kids and then how old are you 31 31 last question what do you wish your 20 year old self knew so i would definitely um you know give advice to my 20 year old self to join startups company as early as possible you would be surprised the amount of things you can learn just by watching other startups go through the process uh i'm a first time founder i never worked at startups before i guess i made tons more mistakes than i could have if i joined other startups throughout the process guys join a startup faster gusty founded 2013 now today over 200 people between their tel aviv and other remote locations opening up additional locations aggressively they're helping over a thousand many thousand property managers manage between 50 and 100 000 total properties uh the way they make money is they charge those property managers anywhere between two caught three or four percent depending on how many kind of gusty products they onboard uh of whatever kind of short-term rents they're bringing in again that's the value guest he brings they've raised about 23 million bucks to do this economics pretty sticky so one to two percent revenue churn per month but net revenue retention well north of 100 because of really great aggressive kind of expansion opportunities that they drive from year one to year two where they're typically 5xing the number of properties the property manager is serving because the time they save all right amead thank you so much for taking us to the top thank you thank you for having me