How Guesty Reached Over 1,000 Property Managers and Nearly 200 Employees by 2018 (Interview with Co-Founder and CEO Amiad Soto)

Introduction and Company Overview

Nathan Latka

00:00Hello, everyone. My guest today is Amiad Soto. He's the cofounder and CEO of a company called Guesty, a cloud a cloud based SaaS platform established in 2013 designed to simplify the short term property management process. With Guesty's all in one solution property managers can operate listings across multiple accounts, including Airbnb, Booking.com and others from one centralized dashboard. I mean, are you ready to take us to the top?

Amiad Soto

00:23>> Yeah, I do for having

Nathan Latka

00:25You bet. Thanks for coming on. So are you kind of, you know, used to be a real estate investor and then you said, wanna do software now and that's how it happened? Or tell us tell us when you launched Guesty and how you got there.

Founding Story: Students Renting on Airbnb

Amiad Soto

00:34>> No. Not at all. So the story was that I was a student, a university student with my brother, my identical twin brother, and both of us, you know, were 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, you know, while we were traveling, being the poor students that we were. So we decided to open you know,

00:59>> 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.

Nathan Latka

01:09And so how is so how is Guesty different than Airbnb?

How Guesty Differs from Airbnb

Amiad Soto

01:13>> Yeah. So Guesty is the platform where you put all your properties on. It's designed for property managers that are on Airbnb, booking.com, and their own websites or HomeAway and all the rest. And, basically, we are connected to all these channels like Airbnb, and we provide them with the inventory, and they provide with the the guests and reservations. They market those properties. We provide the tools necessary to manage the business, the the the cleaning, the owner relationships,

01:43>> the accounting, the reporting, everything, the automation.

Software Platform and 20 Products

Nathan Latka

01:46And and so is this a SaaS platform, or is this more like kind of consulting professional service It's a software platform.

Amiad Soto

01:54>> We do have dedicated account managers that provide some consulting services for these accounts, but we do our major product is obviously just the software 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.

Nathan Latka

02:11And 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 property manager pay you per month for this?

Pricing Model: Percentage of Reservation Value

Amiad Soto

02:21>> Yeah. So 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.

Nathan Latka

02:36Okay. Yes. Give me describe the average customer you have. One property manager, five five properties. Give me the It perfect

Amiad Soto

02:45>> goes the average will be a 50 properties property manager. We have as low as five and we have as big as 2,000. Right? So it's we have multiple types of different property managers, but the average is in the 50 to a 100. Yeah.

Nathan Latka

03:00Okay. So let let's just I wanna really understand that your customer. Right? So let's say a customer property manager with 50 properties. What would you charge me to manage my 50 properties?

Amiad Soto

03:10>> Well, again, I cannot quote you on anything because each quote is dependent on

03:17>> business. I mean, you cut out. It depends on on what doing a demo on you doing a demo with one of our account executives and choosing your your own products that you wanna use. And it really depends as we have a scaling figure as as you grow, it's becoming cheaper per property. I

Nathan Latka

03:35Yeah. But I'm asking, Amiad, what I'm trying to understand here, I we do we're eliminating these variables so we can get to an average. So there's 50 properties. So it's not gonna be more. It's not gonna be less. It's

Amiad Soto

03:43>> Nathan, if if the point is to get me to quote a price, I would not do it.

Nathan Latka

03:47It's not a price, but I have no idea if it's a dollar property or 10,000 per property. I have zero idea. So my audience is gonna be completely lost. So either help us out or we'll move on.

Amiad Soto

03:58>> Okay. So it's percentage based, as I mentioned.

Nathan Latka

04:01Percentage of what? Of rent or of the

Amiad Soto

04:05>> reservation. So each each reservation could be $1,000 And then you'll pay off somewhere between two to 5%.

Nathan Latka

04:11I mean, so just to be clear, just so I understand this before I move on to more of your story. So you know, 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 10% to do things like renew leases, make sure the toilets are fixed, things like that. You're essentially doing that at scale.

Amiad Soto

04:30>> So our customers are property management companies who do short term rentals, and the the average payout 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 5%, depends on how many products they use and how big their company is.

Nathan Latka

04:51Yeah. Again, what I'm what I'm breaking, I wanna go back to the owner of the 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 10%, right, of a thousand bucks It's a term.

Amiad Soto

05:08>> 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, 3% or 4%, depends on their size and the products they use.

Nathan Latka

05:21Okay. So let me walk through an example. I own a property. I make they're gonna make me a thousand dollars this weekend. I'm gonna pay the property manager $200 for that 20% based off your data, your numbers. Of that 200, they're gonna pay you 2.5%.

Amiad Soto

05:36>> No. So that will be out of the thousand. So they will pay us like $25, for example, out of the 200 that they made.

Nathan Latka

05:42I see. I see. Okay. And then for you in terms of in terms of growing the business, I wanna kinda put this on a timeline to understand history here. So when did you launch the company? What year?

Amiad Soto

05:50>> December 2013.

Nathan Latka

05:52Just okay. So it's been a while. Have you guys decided to bootstrap or have you raised capital?

Funding History: Seed, Series A, and Series B

Amiad Soto

05:56>> So we raised capital 25,000,000 to date.

Nathan Latka

05:58Gosh. 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 did you decide So to

Amiad Soto

06:09>> we were Y Combinator back in winter fourteen class, and right afterwards we raised 1,600,000 as our seed, then we raised 3,000,000 as our A, and only now we raised 20,000,000 in April in series b.

Nathan Latka

06:24April this year? Yeah. And and where's why why make that $20,000,000 raise? Why take that dilution? Where where how's it gonna drive growth?

Amiad Soto

06:32>> 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 make our product a lot more 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.

Team Size and Office Locations

Nathan Latka

06:55Mhmm. I I wanna understand more about how you're signing up new property managers right now. Before I do that, though, paint more of the picture here. So a team size today is how many people?

Amiad Soto

07:05>> Almost 200.

Nathan Latka

07:06200 folks. And based in in Israel or San Fran, or where's everyone based?

Amiad Soto

07:12>> So our headquarters is Tel Aviv, Israel.

Nathan Latka

07:14Okay. And that's your only only location, or are you guys spread out?

Amiad Soto

07:18>> No. We already we already have three more locations, and we're opening six more starting next year. So we're gonna be at Atlanta, LA. We already have LA. We just opened LA. We're gonna open in Barcelona, Paris, Rome, Berlin.

Nathan Latka

07:34And why is it why is it necessary for you to take on all this additional kind of office rent, opening up new locations? So did you have to have feet on the ground to sign up new property managers?

Amiad Soto

07:44>> 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 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, kicked out. And obviously

08:06>> 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.

Nathan Latka

08:19And and why did the inside sales playbook work for you? If your salespeople are connecting with me and I'm a property manager with 50 properties, what is the pitch sound like? Is it that you're gonna help me make more per property, so paying you two to 5% is actually well worth it?

Amiad Soto

08:34>> 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 five x. So we will take you on with 15 properties, and within a year, you'll be at 70. We'll take you on with 30 properties and a year later we'll look at you and you're 120 or something like that. So we help

08:54>> a lot of these companies scale dramatically and you know, free free a lot of their time to focus on growing their business and improving their scalability.

Nathan Latka

09:02And just to be clear, those are that's from year one to year two, or that continues year two to year three, you keep 5x ing?

Amiad Soto

09:08>> It it continues to grow, obviously, as as the the rules of big numbers as you grow, the numbers get smaller, but we definitely help a lot of companies grow to the 300 ish 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.

Nathan Latka

09:33I'm just wanna name a bunch of functions of property managers. I understand if you help with it. Toilet fixes.

Amiad Soto

09:39>> So a toilet fix 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 the operational software for you to run your maintenance team.

Nathan Latka

09:54So it's task management software?

Amiad Soto

09:57>> Of products. That component is.

Nathan Latka

10:00Yeah. Okay. Mowing the lawn.

Amiad Soto

10:03>> It's another tasks. It's all these operational things or tasks that you can either assign manually by a trigger, like once a month or by specific event that happened.

Nathan Latka

10:14The renter leaves damage and the property manager needs to bill them for a refill, like for damages?

Amiad Soto

10:21>> Yeah. Yeah. So claims, either by insurance claims or by your own security deposit are also a feature that's possible. Since we also do the payment processing for the reservations themselves.

Nathan Latka

10:34Great. Talk to me about where you're finding these, and how many property managers are you working with today by the way?

Amiad Soto

10:40>> Over a thousand.

Nathan Latka

10:41Okay.

Amiad Soto

10:42>> Like a couple of thousands.

Nathan Latka

10:43And how are you so walk us through kind of a bit of the playbook here. How are you finding these folks?

Customer Acquisition: SEO, Paid, and Outbound

Amiad Soto

10:48>> Yeah. So we get almost 50% of our traffic through organic. You know, we have tremendously good SEO scores. If you look for property management software, for short term rentals, Airbnb management software, all these terms, you'll find us among the top three results most likely. 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 have pretty much nailed our traffic to all of

11:19>> these three different funnels.

Nathan Latka

11:21I imagine obviously one of the reasons you would be okay taking dilution on a $20,000,000 raise is because you know these numbers and you know what 20,000,000 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. I'm curious if you'd look at it on a per property

11:44manager basis, how aggressive are you being a CEO to acquire one of those new property managers in terms of paid direct paid spend?

LTV to CAC Ratio and Payback Period

Amiad Soto

11:53>> Yeah. So for us, it's a lifetime value versus cost of acquisition calculation. And we find out that we make more than six to sometimes even as much as 30x on our type of customers, depends on their size. And we therefore are enabling ourselves to spend that much on PPC and outbound reach. But a of the money goes back to technology. So we believe that if we will be the best of kind, you know, then we'll win

12:23>> a lot more customers and we will retain them longer too. So it's not just about, having the best sales team, but also having the best product.

Nathan Latka

12:30I mean, I've had a lot of CEOs on that are in the kind of 60 to $80,000,000 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 LTV 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

12:51you two years to make back that money, you can get a huge cash gap. So help me, you know, six x is great, but it doesn't mean a ton. Right? Mean, how are you willing to spend, like, first year kind of contract value on getting a customer?

Amiad Soto

13:03>> 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. As a late. So we we don't need too long to get back our our, you know, invested fee.

Nathan Latka

13:17Okay. That's great. And if you and that was kinda direct paid spend. If you take that from a fully weighted approach, so it includes salaries of these people?

Amiad Soto

13:24>> Fully weighted.

Nathan Latka

13:25Okay. So that includes the content writers, the inside sales teams, any customer success reps, any on the ground people?

Amiad Soto

13:31>> Including the events that I'm doing too. So all

Nathan Latka

13:33Oh, yeah. I mean, that's marketing.

Amiad Soto

13:36>> No. It's actually if you look at, CAC 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, CAC calculations.

Nathan Latka

13:50When I talk about fully weighted CAC, I've never seen anyone not include sponsoring a conference.

Amiad Soto

13:56>> So and many of the big ones, definitely approve that. So I'm just telling you that we do take What approve what? Approve of, different, you know, methods of calculating CAC.

Nathan Latka

14:08Well, course, Brian, what I'm telling you is I've never heard a CEO, when I say what's fully weighted CAC, not include event spend.

Amiad Soto

14:16>> 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 directed connection to CAC.

Nathan Latka

14:26I see. I see. Okay. Well, by the way, hell really healthy payback period. So with additional money or as you look for additional growth, you are generally pushing that up? Are you comfortable going up to six, twelve months, or are you trying to just keep it right at three?

Amiad Soto

14:40>> A good question. I haven't had the, you know, the

14:45>> the time to think about it actually. I'm 100% comfortable with expanding my sales team through these offices that I mentioned, and will definitely have some effect towards our LTV to CAC ratio, but I feel like it won't get to twelve months anytime soon.

Nathan Latka

15:00Yep. 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 property managers or number of properties or kind of gross transaction volume coming through? What's kind of the key metric for you?

Key Metrics: Properties and Property Managers

Amiad Soto

15:17>> 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 if we bring in on board a property manager and they have a 100 properties, we know to predict how much revenue they'll make pretty, pretty accurately. 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

Nathan Latka

15:41>> the same.

15:41Okay. And and how many properties are you are on your system today?

Amiad Soto

15:45>> Tens of thousands of properties, north of 50,000 closer to the 100 ish.

Nathan Latka

15:50Okay. Okay. That's great. And across again, 1,000 to 5,000 property managers.

Amiad Soto

15:56>> That's great.

Nathan Latka

15:57That's great. Very good. Who are you competing with? Who do you come up against in some of your sales calls?

Competitive Landscape

Amiad Soto

16:03>> Well, you know, this industry is still super fragmented. There are more than 600 different software tools, but all of them are focused on niche specific solutions. Like I'll give you just a channel manager. I'll give you a 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

16:29>> competition objections, we know how to handle that. We just show them the product and people are sold on it very, very quickly.

Nathan Latka

16:35Okay. It makes good sense. If somebody lists a property or property manager lists a property with your group of 50 properties, 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?

Amiad Soto

16:52>> Yeah. So for us, you know, we cannot guarantee lift or anything like that. It really depends on their industry as well and their geographical location. There's also seasonality aspects of this business. It senses hospitality industry. 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 the ground, repetitive tasks all the time. Like for example, replying to

17:17>> guest communications. If you booked an Airbnb in the past, you would know it's a lot of back and forth communications, and we can save tons of time for them either using our guest communication service or by automating much of it through 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.

Nathan Latka

17:37Last, 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 churn today?

Churn: Revenue vs Logo and Industry Context

Amiad Soto

17:44>> Yeah. So we actually have experienced very, very low churn. And the reason why to use these products, 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. So there is a lot of sticking points throughout this process, throughout all of the 20

18:07>> products that we give our customers. And therefore we have experienced very low churn and we're pretty lucky at that.

Nathan Latka

18:13I mean, are you talking low churn? You're talking 1% a month logo basis or per per per annum? What do you what do you mean low?

Amiad Soto

18:20>> So we we focus on the revenue churn and not logo churn. Whenever we count logo churn, it's also taking into account, you know, customers that shouldn't have been sold because of 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 churns we're talking about. And looking our investors

18:45>> have been investors in many, many SaaS companies and especially in the Italian industry, and we we all get told that our, churn numbers are drastically below industry standards.

Nathan Latka

18:55Yeah. The purpose of the podcast though is educate my audience on key things like this. What what like, what is low churn? So I can tell they're all thinking right now. What does he mean low churn and how do we compare? So like less than 1% or

Amiad Soto

19:04>> So that will actually make sense if you're talking about enterprise sales, you talk about two or 3%. If you talk about SMBs, you're talking 10 to fifty, ten to 20%. It really depends. So you need to focus even if your audience care about specific metrics, they need to, you know, make sure that they fit their industry and their size of customer.

Nathan Latka

19:27Yeah. Mean, they'll understand that. Again, the purpose of the show is I have thousands of SaaS CEOs on to get all the varying of viewpoints. What I'm trying to understand is where are you positioned? Are you saying you're enterprise and you're two to 3% revenue churn per year per month?

Amiad Soto

19:40>> So actually, SMBs, 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 of what you Okay.

Nathan Latka

19:49Got it. So so it's fair. 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 3 to 5% revenue churn per month.

Amiad Soto

19:57>> Something like that.

Nathan Latka

19:58Alright. Let's wrap up.

Amiad Soto

19:59>> More than that.

20:00>> Sorry. I thought so 3%, you said per year is enterprise and per month is SMBs. We're in the middle of that.

Nathan Latka

20:10Sorry, you're making this very confusing. Can you just be direct? So you're between 3 to 7% revenue churn per month or per year?

Revenue Churn Confirmed at 1 to 2 Percent Per Month

Amiad Soto

20:17>> So we are between one to 2% a month.

Nathan Latka

20:19Okay. Okay, that's helpful. Good. So one to 2% revenue churn per month. That's great. And and I it sounds like based off five x ing the number of properties folks are with you, you're driving significant expansion. So net revenue retention, I imagine is over 100%. Is that accurate?

Famous Five: Books, CEOs, Tools, and Life

Amiad Soto

20:33>> Yeah.

Nathan Latka

20:33Okay. Very good. Alright. Let's wrap up with the famous five. Number one, what's your favorite business book?

Amiad Soto

20:40>> So for me, the my favorite book was the hard thing about hard things.

20:46>> Can you hear me?

20:47>> Yeah. That's great.

Nathan Latka

20:48No. That's good.

Amiad Soto

20:49>> Yeah. Ben Horowitz.

Nathan Latka

20:50Number number two, what is your who's your favorite CEO right now to follow or study?

Amiad Soto

20:54>> Jeff Bezos.

Nathan Latka

20:55Number I really go ahead.

Amiad Soto

20:56>> Sorry. Go ahead.

Nathan Latka

20:57Number three. Well, just because we're out of time. Number three, what's your favorite online tool for building a

Amiad Soto

21:03>> Online tool for building a business?

Nathan Latka

21:05Your business.

Amiad Soto

21:06>> So I guess that people should start 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.

Nathan Latka

21:19Yeah, Amiad, so again, what do you use?

Amiad Soto

21:21>> So we've changed four CRMs throughout the life of the company. We started with Streak, then went to Pipedrive, and then went to Close, and then went to Salesforce like everyone else at our size.

Nathan Latka

21:34Number number four, how many hours of sleep do

21:36you get every night?

Amiad Soto

21:37>> Trying to get eight, sometimes I only get six.

Nathan Latka

21:41Fair I

Amiad Soto

21:42>> aim for that range.

Nathan Latka

21:45And what's your what's your situation? Married, single, kiddos?

Amiad Soto

21:48>> Married, no kids yet.

Nathan Latka

21:50Okay. Married, no kids. And then how old are you?

Amiad Soto

21:52>> 31.

21:53>> 31.

Nathan Latka

21:54Last question. What do you wish your 20 year old self knew?

Amiad Soto

21:57>> So I would definitely, give advice to my 20 year old self to join a start up company as early as possible. You would be surprised the amount of things you can learn just by watching other start ups go through the process. I'm a 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.

Nathan Latka

22:19Guys, join a startup faster. Guesty 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 a 100,000 total properties. The way they make money is they charge those property managers anywhere between two, three or 4% depending on how many kind of Guesty products they onboard of whatever kind of short term rents they're bringing in.

22:46Again, that's the value Guesty brings. They've raised about $233,000,000 bucks to do this. Economics pretty sticky. So one to 2% revenue churn per month, but net revenue retention well north of a 100% because of really great aggressive kind of expansion opportunities that they drive from year one to year two, where they're typically 5x ing the number of properties a property manager is serving because the time they save. Alright, Amiad, thank you so much for taking us

23:08to the top.

Amiad Soto

23:09>> Thank you. Thank you for having me.