SPEAKER_00: I've been teaching people how to give maitre d's tips for the last 20 years because my dad taught

SPEAKER_02: me. You take the $20 bill or 50, depending on where you're going. You fold it twice. Now you got it in your hand. You put it between your thumb and your palm. So now you're holding a 20 or a 50. You go up to the maitre d station. There's 20 people around the table. You put your hand on the maitre d table behind the light, you know, where the book is. Say, I am so sorry. I may have met a reservation where I might've forgotten. If there's anything you can do for me, you know, keeping eye contact and you just turn over your hand halfway. Person sees the 50 and you say, oh, what's your name? Oh, Susan. Nice to meet you, Susan. I'm Jason. And you hand them the 50 or the 20. Boom. Goes right in the pocket. Let me see what I can do for you. I've done this a hundred times. You know how many times they gave me the money back and didn't get me a table? Once. Yeah. You know,

SPEAKER_06: a quicker way to do it is just go up to the, the, the, uh, the maitre d in your example and just say

SPEAKER_09: reservation. Yes. Jackson party of two. Yeah. Or Franklin. If it's a nice place. Oh, oh. Oh,

SPEAKER_14: I didn't know that one. Oh, this week in startups is brought to you by roots invest in the only real

SPEAKER_15: estate investment trust that creates wealth for you and its residents at invest with roots.com slash twist Squarespace. Turn your idea into a new website. Go to squarespace.com slash twist for a free trial. When you're ready to launch use offer code twist to save 10% off your first purchase of a website or domain and link squares life for in-house legal just got a whole lot easier from contract creation to execution. And more link squares is the go-to for all your legal needs. Learn more at link squares.com slash twist. Hey everybody. Welcome back. All-star summer

SPEAKER_18: continues into September. I gave my team explicit instructions. As we went into the summer,

SPEAKER_20: I didn't want to phone it in like other podcasters. I said, no, au contraire, my friar. This summer, I want the greatest guests in the world on the pod in July and August. Why? Because you entrepreneurs listening, you don't take a break. You're not screwing around in Italy for six weeks like other venture capitalists. No, you're entrepreneurs in the arena

SPEAKER_02: kicking ass. And so I said, I want an ass kicking lineup. You know what happened? Everybody said yes.

SPEAKER_20: Everybody loves this week in startups. Everybody wants to come on the program. And what a murderer's row we've had. CEO of Zillow, CEO of HubSpot, CEO of MongoDB, Rulof Botha, everybody coming on the show this summer. But something crazy happened. So many people said yes, that we had to spill into September. So here we are, all-star summer going into September, which, you know, listen, if you live in the Bay Area, September is the best month in the Bay Area. It's kind of like our August. And we know one of the things we talked about on this program over the last year is the massive impact that we believe AI is going to have on every industry. We haven't talked about travel all that much. And travel is a huge, huge industry. In fact, my greatest investment of all time, Uber, a transportation company. Now, there are so many tools for you to try to make itineraries like roam around one of the companies we just invested in. But this is not a new category.

SPEAKER_24: We have had great entrepreneurs doing travel for decades. One of the great entrepreneurs in this

SPEAKER_25: space is Steve Hafner. He is the co-founder of Kayak. He founded it 20 years ago, brought it public,

SPEAKER_20: sold it to booking.com. And he's joining us today. And we're going to talk all about the state of all the original OG travel companies, and then what they're going to do in the face of a post-COVID era, recession possibly, and of course, AI. Steve, welcome to the program.

SPEAKER_27: Jason, great to be here.

SPEAKER_28: Jason, great to be here. You're a part of this original group. I guess Dara Khazro Shahi was also, he did, was he Expedia? Expedia. Expedia. You did Kayak. And just a lot of y'all just cut your teeth.

SPEAKER_18: Rich Barton, yeah, he was also involved in the early days. You all saw sometime, you know, in the 99 to

SPEAKER_20: 2005, Web 1.0, Web 2.0, that travel would be changed forever because of the internet.

SPEAKER_02: And here we are, COVID and then AI. Let's talk about the state of travel today. When you saw AI

SPEAKER_20: appear on the scene, and you're running Kayak, and everybody's using you, you know, and Expedia and all these other services to book their travel, it's the best place to start. What happened in your brain

SPEAKER_02: when you saw a chat GPT 3.5 in November of last year, and how well it was answering questions. And of course, it does feel like maybe the interface of comparison shopping, which has been the cornerstone of your service and many others, is going to be changed forever by maybe a conversational chat room. Do you believe that? And what was your experience seeing this crazy change in AI?

SPEAKER_09: You know, there's, by the way, thanks for having me on. There's been a lot of tech revolution over the

SPEAKER_05: last 20 years. I think chat GPT may represent another shift, but it's way too early to tell. You know, so I'm not as hyped about it for the travel sector as others might be, although we're paying

SPEAKER_37: really close attention, because I could well be wrong. You know, I co-founded Kayak with a gentleman by the name of Paul English, magical CTO, who, when he told me he wanted to turn Kayak into an app for BlackBerry, I thought, what a ridiculous idea. Who's going to look for travel on a BlackBerry? And I turned out to be horribly wrong. So I might be wrong on, on, on AI, uh, right, right now the jury's still very much out. And, and by the way, I, I use roam around. It's, it's great for itinerary building, but that's, that's not the use case that I think people are looking for.

SPEAKER_39: So, so walk us through the, the argument for the search in a table format versus chat.

SPEAKER_20: What has to happen? Because I believe you made a plugin for chat GPT for, I used it. I'll be candid. Uh, the plugin architecture on chat GPT sucks. That's not your fault. Uh, but, uh, to the team over there, Sam Altman, everybody great that you got it out quick, but it sucks. I used the Canva one. I used the Zillow one Zillow unplugged it. Rich Barton said, nah, no bueno. And he turned his off. Uh, so you're the CEO, you're a product guy. What didn't work or, or what's lacking with the chat GPT for, uh, interface and the plugin architecture, what needs to change there to make it viable?

SPEAKER_05: Yeah. And by the way, our, our open table brand launched as well with the, with a plugin for chat GPT, you know, I, I think for us, it's more about having our developers play around with the latest toolkits, and then seeing if we get any signal from consumer usage that we could use to inform

SPEAKER_37: what we do next. And, you know, our plugin for kayak, for example, gets 3000 queries a day.

SPEAKER_05: Okay. You can trust, you can trust that with our, our, our website and our apps and, and we're doing 60 million a day. So it's, it's a tiny, tiny use case.

SPEAKER_02: Right. But what let's talk about this querying, it would seem to me that a lot of my processes,

SPEAKER_20: I want to find, I'll just take it through two processes. Cause you work on open table as well, right? I don't know if you manage the entire group, but my process, and I love open table major member

SPEAKER_02: is I, and, and love kayak as well. I will search the web and say, Hey, eater. Hey, yell. Hey, um,

SPEAKER_20: I like the guardian times of London for travel as well. I, there's some editorial sources timeout to a certain extent, uh, used to be Zagat was up there, uh, Michelin, obviously. And I go to those

SPEAKER_28: sites, Hey, best sushi, best new restaurants, best hotels, 2023, best boutique hotels. I find those.

SPEAKER_20: Then I go to your site. I try to find those things, find the best deal. Yep. It's like still a little bit of a process for me. What I want to do is I want to say, chat GPT, I'm looking for three to four star sushi restaurants while I'm in New York that, uh, you know, have omakase and I'm looking for, I have Tuesday, Wednesday, and Friday open at seven o'clock what's available. Now I can't do that on open table without a bunch of hunting and packing. And then I can't figure out which ones are the best. So I, as the power user who spends big money on your services, I'm looking for that layer above it. Does that concern you that maybe I'll start my search at Bard at chat GPT four,

SPEAKER_05: as opposed to on your sites? I don't think so. I mean, I, I perceive the use cases you just talked about as billing being relatively rare in the scheme of what dining really is because, you know, most dining is local. It's, you know, not New York city with 2,500 restaurants, uh, which is a new one opening all the time. You know, for, for most of our clients, they're in smaller locations where there's not that much turnover. So they, people know their restaurants are actually looking for a quick booking, not so much a recommendation. And then, you know, the, the brands you mentioned, either, et cetera, the reason you go to them is because it's curated, great editorial content that you trust. I'm not so sure you're going to get there with an interface like chat GPT, unless there's a brand behind it, that you actually have seen the recommendations of the past. You found them to be authentic and true. And as a result, you go back to that brand for another recommendation, you know, and the, and the reason people use eater versus open table, for example, is because a lot of great restaurants aren't on open table. So you wouldn't trust us to recommend a non open table restaurant, or if you saw a list, it was all open table, you wouldn't trust us as well. So I think there's, it's not, it's not an issue of capability of chat GPT to do some of this stuff for you or Bard or someone else. It's, it's actually consumer habit as a barrier and also consumer trust.

Chamath Palihapitiya: Hey everybody. Today I'm joined by Root CEO, Dan Dorfman. Dan, welcome to the show.

SPEAKER_24: Thanks for having me, Jason. Tell everybody here in the audience, what is Roots? And what makes it different than the other real estate investing platforms? I'm a complete neophyte.

SPEAKER_60: Roots is a REIT with a little twist. Sorry, I had to do it. We are the first real estate portfolio

SPEAKER_61: that we know of that builds wealth for both our investors and our residents. And we've created a unique win win model that creates partners and not tenants. We built this model because I've spent my entire career in real estate investment, 13 years. And what you always hear from people is, Hey, location, location, location, but location at the end of the day, doesn't actually pay your bills. And location doesn't let you know when there's a small leak that will create mold in the future. The people do. And the people who rent your properties are really the people who generate your profits. And when those people are your partners, it really creates this amazing scenario. And it's this model that's helped us grow our fund over 36% in the last two years.

SPEAKER_63: Fantastic. How can people learn more about this opportunity, both on the tenant side or on the investor side? Check us out at invest with roots.com backslash twist.

SPEAKER_24: All right, everybody go to invest with roots, no spaces, no dashes.com slash twist to sign up and

SPEAKER_02: start investing today. So let's talk about just interfaces in general, going to open table and doing a search. Do you think you'll add a language model where I could talk and I know that you probably have

SPEAKER_20: some hooks into like Siri, let's say, the Siri hooks are terrible right now. You know, if I asked Siri to play something on Spotify, it gets it right two out of three times. If I ask it to call an Uber,

SPEAKER_02: I don't trust it. It's just doesn't work as well as chat GPT-4. So I think it's your responsibility to build this into open table and the top level of kayak and let me talk to those interfaces in the

SPEAKER_20: way I want to, as opposed to clicking a bunch of dropdowns. So are you going to build it into these

SPEAKER_28: products you think? And have you started that process yet? And what's the early testing looking like?

SPEAKER_37: Yeah, look, it's not a technical challenge, right? Voice can be done. And if anything,

SPEAKER_05: AI makes it easier to do voice for everybody. Yeah, right. But I think the bigger question and how we allocate our resources are, is it ready for consumer adoption? How many people actually want to speak to a device to make an open table reservation, or to make a flight booking? What we observe, based on our usage, is the answer is not many. A lot of people are in meetings, making their lunch reservations, or they're in the back of the car with plenty of free time and interacting with an app or texting away. And it's the same was true on the flight side, on the travel side of the business. You know, there's just so many entry fields to consummate a transaction and travel, that voice is really not a good mechanism for it. And that's why you know, even even with our sister brands, uh, booking.com and Priceline and Agoda, and Agoda is an Asian brand, by the way, you would think if

SPEAKER_70: if voice was going to be the vehicle by which people interacted with our services, you see it there first,

SPEAKER_20: we're, we're not seeing it. Yeah, that's, that's fascinating to me. So you have to, as someone running

SPEAKER_02: an at scale service, as opposed to a startup, startups are like, we can make this thing fluggy, it does, it can hallucinate. Nobody's got any expectation of our brand. You're at this, you have this tremendous gift that your brand means something to somebody. Open table means you got your reservation,

SPEAKER_20: you don't have to worry. It's consistent. It's perfect. Kayak means you're getting the best price. It's perfect. You're not going to have a mistake. And you spent 20 years building up over 20 years, uh, building up that trust. You can't go crazy with these features. They gotta be bulletproof,

SPEAKER_06: huh? I think so. And I also think that, uh, we have plenty of time to course correct if we get it wrong,

SPEAKER_05: right? So, you know, we, we pay a lot of attention and startup land to what's the latest, greatest. Cause a lot of these are, are companies that create features that we can easily copy and scale. So I, you know, I think, you know, you, you quoted a couple of examples earlier that as we see good ideas, they're out to get traction, we pounce on it, we improve on it, and then we scale it. And that's, that's historical across Silicon Valley days. That's how the big keep getting bigger is cause they, they're able to do that. I think we've fortunately reached the same point in our life

SPEAKER_82: cycle where we can do that as well. Uh, what's ha what happened during COVID to your business,

SPEAKER_20: both on the shutdown side and how difficult that was. And then on the, let's call it, I think the

SPEAKER_02: three Yolo summers, did we have three Yolo summers, 21, 22, and 23, right? We had three Yolo summers. Take us through exactly the pit of despair and how brutal it was. And then the absurdity

SPEAKER_83: of the Yolo summers. Yeah. Look, I think if you had picked two industries,

SPEAKER_05: the worst industries to be in would be travel and dining, um, you know, in the COVID years. So it was a total show. Um, but you know, fear, thankfully we were well capitalized. We had a very strong balance sheet, billions of dollars of cash on the balance sheet. Um, and we could do the right things and the right things for us were in this order first help our customers. So the people who were actually traveling and all on itineraries, we reached out with the kayak surface and said, here's ways to get home, right? Here's things you can still do, um, for on the restaurant side, restaurants literally closed, right? So, you know, we, we waive our fees. Um, so open table charges, restaurants fees to use our software. We stopped doing that. We thought it was going to be a three month waiver. It turned out to be almost two years, which was, you know, hundreds of millions of dollars that we put back into restaurant pockets by not billing them. And then the third thing we did is we, we, we wanted to make sure we took care of our employees, you know? So, you know, unlike a lot of other companies, we didn't, uh, have massive layoffs or anything like that. We kept the team, we didn't replace churn, uh, involuntary or voluntary churn, but we kept the team in place and, uh, and, and we made it through and we emerged stronger than, than we entered it. I mean, we did have some hiccups along the way where like kayak, you know, when you couldn't travel, the, you could use the kayak, um, website in our app to look for toilet paper. Remember when like

SPEAKER_85: looking for toilet paper was actually a thing, we actually did, we did meta search for toilet paper.

SPEAKER_06: It was, you know, we made no money doing it, but it was fun for our developers to work on.

SPEAKER_90: Uh, let's talk about the economics of the, of the travel business. My cursory knowledge of this from

SPEAKER_02: seeing startups in it is you make very little money per airline ticket, couple of dollars. You make 10% or 20% booking a room. In other words, a two or $300 room, you could be making 20 or $30 a night restaurants. You make a buck per seat or two bucks per per seat. You get a table of four,

SPEAKER_90: you make four to eight bucks. Is that about right in terms of what you make on open table hotels and,

SPEAKER_06: and, and restaurants? I'm sorry. Yeah. I think the, the way to think about it is airline tickets are low margin of business always have been, uh, hotels, um, rental cars and activities are in the

SPEAKER_70: 15 to 20% take rate and restaurants are sub 2% take rate. Now restaurants run on a very thin margin.

SPEAKER_98: It's what is open table a dollar per head. I don't remember that from like 10 years ago. What do you

SPEAKER_05: make? What is the, where are you? I wish, I wish we still made a dollar per head. No, it's, it's, it depends on the market, but it's about half that these days. Oh, wow. So you've had to,

SPEAKER_00: to compress that. So if you, if you see the table of six, you might make three bucks. That's a,

SPEAKER_13: that's a razor thin margin, huh? Yeah. Which makes for a great competitive mode. If you get the scale.

SPEAKER_18: Got it. Um, and the restaurants are now experimenting with other modalities. Uh, I, uh, signed up for

SPEAKER_00: something called Dorsia, which I guess is named after the restaurant from that crazy movie with Christian bell, uh, where he's a serial killer, uh, uh, America psycho, um, Dorsey is like his favorite

SPEAKER_20: restaurant in that. And so with Dorsia, this is for like crazy rich people. You, you basically can get a reservation at hard to get at places for, but you have to guarantee you're going to spend 500 a person, 300 a person. And then you, you kind of knock money off of that. It seems to be working for certain high end restaurants. What do you think of this model where you're it's beyond surge

SPEAKER_02: pricing? It's rich people cutting the line. Let's call it what it is. What do you think of Dorsia? And you must've had this idea before. So why didn't you do it or are you considering doing it?

SPEAKER_05: Oh, this is a perfect example. Going back to what we were talking about earlier of a new startup coming out with a business model that we pay careful attention to. And then we figure out how to make it better and scale it. So there, there actually aren't that many people in the world, uh, who are willing to pay that kind of money for a reservation, nor are there that many restaurants who have that kind of oversupply of demand, you know, more demand than they actually, actually see people. Um, so the, the real insight there is how do I change consumer behavior and get consumers to think about making a deposit or prepaying some amount when they make a reservation. So, you know, it, it, it shouldn't be $500, but maybe it's a dollar. Maybe it's the first $10 you put down. So you have a deposit. It's no different than these installment payment plans, right? Which is if you go to a website, you don't want someone to abandon a cart. You want any, any way to get an attachment to a consumer airlines do this too, with courtesy 24 hour holds for, for fares. So if I can get you, even if it's a dollar, um, to collect your name, to have a deposit towards a transaction, to have that hook in you, then that's much more important to me, uh, and across the 55,000 restaurants that are an open table, then getting into the, the 10 hottest restaurants on a Friday night in Manhattan, because that is a really, really small niche. Yeah. But you know, if, if, if I can affect all the people who will on all their dining occasions and, and get them into the mindset of when I make a reservation first, I need to make it online and I need to put a deposit down for, for a benefit, which is the restaurant knows who I am, or I get a discount on the actual tab, or I get a pet or table or a better time or loyalty points. Since we have a loyalty program, these are all reasons to do

SPEAKER_06: this. It's not, it's not the Dorsey's of the world. That's a, that's a really small idea.

SPEAKER_18: Yeah. So the having more skin in the game from the customer, that's very appealing to restaurants

SPEAKER_106: who what's the average no show for, you know, or cancellation with an open table reservation or

SPEAKER_05: just in the industry at large. So the industry at large, no show rates can be 25% or higher. Wow. At open table, we're about a third of that rate because we know the person who's making the reservation and it's a three strikes in your route rule. So if you know, show three times, Jason at a restaurant without telling them in advance, uh, you get blocked from using open table.

SPEAKER_103: Oh, wow. And so, yeah, that is, uh, and there's no way to make up for it. You can't,

SPEAKER_110: you can't get back in good standing or something.

SPEAKER_06: Uh, a lot of people do the workaround of creating a new Gmail account.

SPEAKER_05: Yeah. So, you know, there are workarounds, but it's, but it's inconvenient.

SPEAKER_90: Yeah. I, I, you know, I, I love using open table for a couple of very specific restaurants that

SPEAKER_20: are hard to get into. And it, I don't mind making the reservation and losing a certain amount. So have you implemented that yet where I can put a hold on something and if I don't show up or I

SPEAKER_28: have to cancel with a short time, I pay 10 bucks. Does that exist in the app?

SPEAKER_05: That exists on the app. It's, it's on a restaurant, um, discretion on what they decide to do. So the rest of the software has the capability, a restaurant can say, look, it's a prepaid dining experience. This is what it costs, or you need to pay $25. For example, if you're in the Hamptons, which is everywhere there. Now you, you have to pay 25 bucks or more to reserve a table. They can all enable that. And then they can choose whether to make it refundable to you or not, or have that reservation fee apply against your check or not.

SPEAKER_02: I like that. Now, what about bidding for spaces on premium nights? That is something that I've seen. I get pitched on that. I do all the time. You, again, uh, since you're at scale must get this is the concept of bidding for a table on Thanksgiving, mother's day, do you receive? Has that come up, uh, or pre-selling it? I guess pre-selling you have that option. You've enabled them to do that. So what about that? Like bidding surge pricing? How do you think about bidding and surge

SPEAKER_05: pricing or discount pricing? It's, it's premature in, in the restaurant industry because right, right now what we're trying to get people to get to is first, it used to be a walk-in and phone behavior to make a reservation. Now we've cross divide more than half of reservations now booked online. The next one is to get them into the habit of doing it in advance and putting their wallet into the equation bidding. I think is just another hurdle down the road when, you know, maybe 90% of all activity is now online and half of all restaurants are, you know, asking for a monetary, uh, deposit of some sort, then perhaps you can have a bidding mechanism. So we slowly have to change consumer

SPEAKER_120: behavior, get people comfortable with the idea that, Hey, you, you, if you, if you blow off the

SPEAKER_02: reservation, there's going to be a reasonable price to pay for that. And you actually, as a consumer,

SPEAKER_20: if you want the table saved for you, it's kind of reasonable for you to pay 25 bucks or 50 bucks if you blow it off because the restaurant could, could have, could have used that table and you burned it

SPEAKER_05: on them. Yeah, that's right. So I look, I think, I think the restaurant industry is going through the same evolution that you're seeing in live events. Uh, so I'm on the, I'm on the board of a company called Siki, amazing company. Um, great company, great company. You know, there's, they're taking

SPEAKER_126: it. Flows company, Jeff Flores company. Did he do where he did the, no, no, no, Jack, uh, Gretzinger

SPEAKER_06: and Russ D'Souza are the co-founders there. Yeah. So they're there. Yeah. They're taking it to

SPEAKER_05: Ticketmaster and what, what they're basically doing is they're going to venues and sport teams and say, don't you want to know who's in the stadium and don't you want to have to have a mobile first ticket, uh, easy transfer process, you know, get a scrape on every transaction that happens because,

SPEAKER_37: you know, tickets go through multiple hands. So who you sell it to the first time and who actually shows up could be completely different people. Yeah. So I, you know, restaurants are just getting

SPEAKER_05: to, Hey, let's, let's book everything online to actually know who's in your venue and what, when Jason sits down at a table, what Jason likes to order, what his average check size is, what other, what other venues he goes to and with what regularity, these are all gold, uh, for restaurateurs.

SPEAKER_20: And that's, uh, the platforms generally obscurify that, right? They want to own the customer.

SPEAKER_02: So there is something about sharing that. So does open table, share the names of the guests and their contact info or how do you, what's the philosophy there? Yeah, we absolutely do. Um, with the, with the

SPEAKER_05: diner's consent. So, you know, our view is the person that's in the restaurant is actually the customer of the restaurant. We capture the data on our front end and we pass that if the consumer gives us consent to the restaurant, which almost all the time they do. The sensitive part is if, uh, restaurant tours are, are very competitive, right? So the steakhouse doesn't want to share its data on how often a consumer comes in with the, with the seafood place next door. No, we obviously see both. So, you know, what, what most platforms do who are adept at this is I give you a rating. So, or I tag you. So, um, you know, when you go into that steakhouse, I can tag you as

SPEAKER_58: a regular or a local or a high spender or a wine lover, tag you the restaurant can, but so can open

David Friedberg: table. Oh, and we do cause you know how much I spend. How do you get that? Oh, you are the

SPEAKER_140: point of sale system, right? It, it, it depends on the restaurant. I know for, I know your frequency,

SPEAKER_05: but also if you're, we, you know, we have point of sale, uh, connections with lots and lots of providers, uh, including toast, which is seems to be the, uh, the POS du jour of the moment of the moment. Uh, so, you know, when you check in, we actually have read, write capabilities so that we know exactly what gets ordered and it sent that check. And we can also update in our software where

SPEAKER_105: you are in your meal so that we can release that table for the next diner. If your landing page is

SPEAKER_24: terrible, I'm out, right? Most consumers are it's 2023. You can't have an ugly website. Stop selling for okay or good and have great and great means you're using Squarespace. It's out of the box. Beautiful. These websites have templates made by the world's greatest designers that are going to engage your audience, let you sell anything. And Squarespace over the past decade has just added feature after feature on top of the gorgeous templates that are designed for mobile and the drag and drop web design with their fluid engine is just perfect, easy to use. And you get built in analytics, marketing channel analysis, sales data, all that stuff that, you know, goes beyond page views and site visits and time and all that. And with Squarespace, you can create an online store or you can start a blog, click of a button, right? Easy peasy lemon squeezy. You can create a subscription business for members only content. You're seeing a lot of that out there. It's simple. It's cost effective. It's gorgeous. And they keep adding feature after feature after feature. That's when technology is at its best, isn't it? When you pay one price, but the product gets better and better and better. You get that with your Tesla, you get that with your iPhone, you get that with Squarespace. These are the legendary brands of the internet of this era, go to squarespace.com for a free trial. And when you're ready to launch, I want you to go to squarespace.com slash twist. And they're going to give you 10% off your first purchase of a website or domain, go to

SPEAKER_145: squarespace.com slash twist because they know we sent you. So that would argue for you having a rating

SPEAKER_20: system for diners like Uber has, and Uber decided to start disclosing that to both parties, both the driver, etc. I would very much like to have the restaurants know what a ridiculous absurd tipper I am.

SPEAKER_18: And so that when I come in, they're like, Hey, this guy tips 50% often or 100% or 35%. That's basically 35,

SPEAKER_00: 40% is my floor. So is there a way for me to like, uh, be gold or elite in the system and then have

SPEAKER_20: that be public knowledge? Cause I, I've never had that communicated back to me. Uh, so yeah. So

SPEAKER_09: diner rating is something that we've, um, been aware of for a long, long time. And as opportunity,

SPEAKER_05: uh, we actually have that capability internally. We do, we have not crossed the Rubicon of exposing that either to the restaurant or to you, our user, um, for a whole set of reasons that I don't, I don't

SPEAKER_20: want to go into right now, but it's, it's a little divisive. It's a little divisive, right? It could, I think just, I would only share exceptional, uh, guests because then you leave out the bad guest part, which people don't like, right? Like they wouldn't want to be known as a cheap tipper or

SPEAKER_05: a minimum tipper. Yeah, that's, that's right. I mean, but we can, we can solve a lot of that with badges. So we, we have an open table VIP badge, for example, and when we use that to communicate to restaurants, Hey, this is someone you should be more attentive to. Um, if, you know, if, if you

SPEAKER_37: care about, uh, VIPs returning to your restaurant, do you have an exclusive rating? Do you have like

SPEAKER_25: an, the equivalent of Amazon prime or Uber one for open table? I've never seen it in the interface

SPEAKER_106: where I pay you a hundred dollars a year and I get some elite status or something.

SPEAKER_05: Uh, we do not, uh, enable that you have to earn your way to our status levels, either by the frequency of using the app, making sure you have a, a great no show, um, rate and then some of these other attributes on your, on your spend profile. Fantastic. You mentioned toast. Um, you know,

SPEAKER_20: I grew up in the restaurant business. I love waiters, but then I had three kids and man, do I appreciate when they destroy some appetizer and I can just open my phone and reorder it. And I'm seeing in California specifically where we have an inability to hire service people that they've gotten rid of the concept of waiters at what I'll call, you know, three and a half, four star restaurants. Like there are some nice restaurants now with toast. And I was shocked. Like, huh, this is a, you know, we have a nice beer hall in San Mateo that we like to go to. That's not cheap, but it's not a Michelin star place, but it's, it's higher end. And they use toast. And I was like, huh, this is interesting. Only runners. And I was just talking to them and they said, honestly, J Cal, if we could find waiters, we wouldn't be using toast. This is not because we

SPEAKER_00: think customers love it because some do and some don't. It's pretty polarizing. In fact, this is because we can't just hire staff because unemployment is at a 50 year low. So maybe talk to me a little bit

SPEAKER_20: about your thoughts on that. And, uh, you may be adding that as a feature set, because that does seem to be like a feature set and the, and the POS kind of functionality that maybe you should get into

SPEAKER_106: as a brand extension. How do you think about ordering from QR codes?

SPEAKER_05: Well, it's, it's great. I mean, this is, this is one of those, um, areas where the technology has existed for years, actually is the restaurateurs themselves who out of habit or out of desire, don't want to implement it. And, and as you said, there's a lot of consumers who agree with those restaurateurs. They like paper menus. They like the presentation of the menu. They like the interaction with the waiter in terms of recommendations and what's popular. They like to tool around and wait for a check to come and buy some extra time and stretch out that, um, experience versus, you know, other folks who like being transactional, like to use their phone to see what's a popular dish, what's been ordered, how many times today they like to pay that way. They like to get the recommendations from friends versus a server who, you know, some people just don't trust what the server is going to say. Um, so the technologies existed, um, open table, as you, as you noted, we're, we're not a POS. We don't intend to become a POS because that's a very fragmented market. Um, there's lots of different players. Uh, it's a harder B2B cell and nobody's making money at it, including toast by the way. Yeah. So it's, it's another of these verticals where we prefer to be the, the front of house software layer with the, so what's guest facing, but with the direct

SPEAKER_00: connections via API to, to the back of the house. My understanding for open table was that that device

SPEAKER_20: where you could put the floor plan and seat people was invaluable to restaurants and that hardware and that service, they pay something like 500 bucks a month for, I'm not sure what the pricing is, but that SaaS business, um, really is what captured a lot of the, a lot of the, the front of house. And they became sort of addicted to it. They hire people who understand how to use it really well. And then the marketplace became the second business. Maybe you could explain how that business developed and what drives it revenue wise and what drives it adoption wise. Is it the marketplace and the customers in the app, or is it that SaaS solution? Uh, yeah, so you're right. The components

SPEAKER_05: of our revenue stream are right now. There's two pillars or two, um, two stools, if you will, and we, we, by the way, we need three. And we'll talk about the third in a second. Uh, the, the first is that subscription fee, right? Which is just to use the software. That's the SaaS product. People will pay anywhere from $79 to $350 a month for that. And then there's the, the cover fee or which is what you call the, the network or the marketplace. So that's pay for performance. If we actually get people from open table into your restaurant, you pay us, you know, you reference a dollar per, per, but, uh, it's, it's about half that. Um, so that's, that's, you know, the, the bulk of our revenue comes from that. But the third stool, which is now what we're very eager to see happen is as consumers move to actually opening their wallet, when they make the reservation, that's where we have the ability now to, to take a dip into the take rate of the actual

SPEAKER_132: transaction. Yeah. And that's, that's, that's actually our, our fastest growing part of the business is as we evolve, uh, consumer habits evolve. And as our restaurateurs start charging for

SPEAKER_37: services that were previously free, we can actually pick a scrape.

SPEAKER_20: I would love to see the chef's table or the wine list be included so that I, as a baller consumer,

SPEAKER_02: and this is what I have my assistant do. This is a secret I'm giving to everybody in the audience. I'll have my assistant call. You know, I want to go to the best places. I go on a quick trip. Listen, I earned it. I'm 52. Now I got to spend this money. I was broke my whole life. I have my assistant call. Hey, Jake, how's going to be in town? I understand you're sold out. He

SPEAKER_20: really would love to try your restaurant. He's read all about it. Um, he was wondering if he could order two bottles of wine in advance. He likes this nice wine. Uh, and I looked on the wine list and, uh, if we could order this wine in this dessert wine, and then if there's any cancellation,

SPEAKER_02: if there's any way you can do that, please call me back and she'll write a nice email, whatever.

SPEAKER_20: So now I've pre-ordered a $300 bottle of wine and a $200 bottle of dessert wine. You know what happens? Nine out of 10 times a reservation opens up. I want to do that in an interface. You offered the wine pairing with it. Then all of a sudden, you've now filtered out who are the great customers who can avoid the wine pairing and, you know, maybe who's going to drink water all night and they make all their money on the wine

SPEAKER_100: pairing anyway. So anyway, that's my tip. It's, it's, it's a good idea. We, we already do do that,

SPEAKER_05: by the way, by bad, by badging you a VIP, you get a better view into availability at the, at those restaurants. And by the way, if I was your assistant, she's the one that should be worried about chat GPT and Bard in your scenario. Yeah, that's true. She actually uses it and

SPEAKER_20: she's incredible at it. It's just, it's really a matter of, you want me to tell you how I bribe

SPEAKER_00: to get into restaurants? This is my big secret. I've been teaching people how to give maitre d's tips for the last 20 years. Cause my dad taught me, you take the $20 bill or 50, depending on where

SPEAKER_02: you're going. Uh, you fold it twice. Now you got it in your hand. You put it between your thumb and your palm. So now you're holding a 20 or a 50. You go up to the maitre d station. There's 20 people around the table. You put your hand on the maitre d table behind the light, you know, where the book is say, I am so sorry. I may have made a reservation or I might've forgotten if there's anything you can do for me, you know, keeping eye contact and you just turn over your hand halfway. Person sees the 50 and you say, Oh, what's your name? Oh, Susan. Nice to meet you, Susan. I'm Jason. And you hand them the 50 or the 20 boom goes right in the pocket. Let me see what I can do for you. I've done this a hundred times. You know how many times they gave me the money back and didn't get me a table

SPEAKER_20: once, once in New York at the China grill, they were just swamped and they couldn't do it. The woman literally gave me the 40 bucks back and said, I thank you so much for the tip. I really can't do

SPEAKER_02: it tonight, but I will get you next time. And there are seats at the bar. You just go take a seat at the bar. So there, there you have it folks. There's how to tip properly, but nobody likes to tip the major day anymore. There's no cash anymore. Well, here that we live in a cashless world.

SPEAKER_06: Yeah. You know, a quicker way to do it is, is just go up to the, the, the, uh, the major

SPEAKER_09: D in your example and just say reservation. Yes. Jackson party of two. Yeah. Or Franklin.

SPEAKER_199: If it's a nice place. Oh, oh, oh, I didn't know that one. Jackson party of two. Did you,

SPEAKER_201: have you used that? Yeah. It, it, it works better with Franklin. And then you show them Franklin. I would say it probably works better with Franklin.

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SPEAKER_208: start streamlining your contract management process today. Let's talk about hotels and trends over

SPEAKER_20: there. Sure. Um, I, uh, stayed at something called citizen M. I don't know if you know about this yet, but I like stylish hotels. I always had an affinity for the W hotel. When they first came out, they were very well-run, hip. And I just couldn't believe that like the W hotel, wherever I went was 300 bucks and had the hippest bar downstairs. And then when I stayed at a nice hotel or a nicer four or five-star hotel, five, 600 bucks, but the, you know, bar was old and stodgy. So I, I really got into my SP, uh, what is that? SPG points for a while, which is your bonvoy, I think. And now I'm seeing citizen M.

SPEAKER_02: And I'm seeing some other ones where you don't go to the lobby anymore. You just simply pay 200 bucks, 250, 179. You come in with your phone, you scan your ID, you go right to your room. Let me talk about how hospitality is changing in hotels. And then on the other side, I am a super fan of Amman hotels. That's my favorite hotel in Tokyo. This is like 1500,

SPEAKER_20: 2000 dollars. So I go high, low. I either do citizen M I'm in and out of a city two nights, or I'm, you know, bringing the fam and I want to have something really nice with, with Amman. What are the trends now in, in the hotel business here? There's a bunch. Look, I, that there's a lot to

SPEAKER_09: unpack there, by the way, I think you're, you're probably the oldest guy in the lobby at a citizen M.

SPEAKER_18: I think I, well, you know what I love about it is I go in there, I get recognized and people are founders hanging out in the lobby. Uh, the citizen M movement is incredible. You, I, I see all the

SPEAKER_20: founders who are on a budget and that's who I want. And also ace hotel in New York is also super

SPEAKER_00: affordable. And the ace hotel has a lobby where everybody works and co-works. I like to run into founders. That's how, you know, I found some of my best investments. So walk me through the, the,

SPEAKER_216: the hospitality trends in hotels now. Yeah. You know, hospitality is an interesting industry

SPEAKER_05: because you've got a couple of counterparties involved that are very different and have very different incentives. So you've got the actual owner of the building, right? Then you've got the operator of the hotel, which is usually not a brand. It's some name you've never heard of. And then you've got the flag, the actual brand of the hotel. So you've got three different parties involved. Uh, citizen M, um, is an example of a, of a new trend of the hotel brand actually operating the hotel too, and having a brand new tech stack and re-imagining the actual hospitality experience, which is trying to take labor out and putting as much of the functionality into the app and into the palm of the guest. So if, if, if, if you notice with your citizen M booking, uh, you probably got a text message. You interacted with them via text, right? Amazing. Probably checked in in advance by scanning your ID and submitting your credit card. And they told you when you showed up and they, and then know when you show up because they can locate your phone, right? Uh, and they'll tell you, Hey, your phone is your room key and this is your room. Right. And you can, you can converse with them via chat. You can order extra pillows, all that kind of stuff. It's amazing. Contrast that with a Marriott, um, which, uh, is a, is a great company, the brand, right? Um, but they don't actually operate hotels. They contract with lots of other management companies operate at those hotels and they don't control the, the equipment that's on the property. So if you went to the Marriott in, in New York, pick one, you know, pick, pick the one in times where, uh, you can't get into those doors with your phone. And there's a reason for that because the landlord doesn't want to, the owner of the building, the landlord doesn't want to spend the money putting in new door locks. Uh, right? Yes. And then the hotel management company, uh, doesn't want to strip out staff either.

SPEAKER_58: They don't mind having front desk staff staff, because typically a hotel management company

SPEAKER_20: bills you at cost plus. Hmm. Oh, so cost plus means that they ha their incentive is to increase

SPEAKER_106: your spend. That's right. Not lower the spend and make you addicted to their brand and take longer

SPEAKER_05: vacations. That's right. And then, you know, at the high end of the spectrum, the Amon's look, the, the luxury properties, this is a great time for them because so many people, um, are willing to spend money on experiences and there's a lot, but a lot of wealth, despite the COVID-19 pandemic, a lot of wealth has been accumulated over the last five years and people are looking to deploy that Amon's a beneficiary of that. And that's another place where they don't want technology. They want personal service, right? They want your guests. Five people meet you at the door. Three people,

SPEAKER_02: there's no reception desk. They just take you to a little seating area. They open a valise, uh, and then they pour you some soda, put out some snacks. They have a conversation with you. You sign a couple of pieces of paper and then three people walk you to your room and your bags up

SPEAKER_05: there and it's been unpacked. Exactly. Already, already. So that's, that's a staff heavy model. Yeah. Uh, and you're, and you're seeing that in the roommates you're willing to pay, but those are also the most profitable hotels. Yeah, by, by far. The, the, the thing I really

SPEAKER_20: love is we have an investment in a company called any place. Um, and this is really interesting. They are renting apartments. Then they design the any place hotels. Uh, and I think it's anyplace.com. Yeah, it's anyplace.com. Um, they put in gigabit speed internet. They put in a working desk with a giant monitor. They put in a pot, like basically camera podcast kind of studio. And, uh, you know, we, we incubated this company, we invested in it and it's really making people super productive and

SPEAKER_106: they do very long stays, you know, this is like 30 day stays two weeks. So if you're a nomadic person,

SPEAKER_20: so is, is that longer stay thing and the, maybe not Airbnb, they got their own thing going, but there seems to be something getting filled in between the kind of randomness of Airbnb and the predictability of your Marriott. Is that something you're, you're covering as a trend?

SPEAKER_05: Yeah, look, uh, you know, again, I can, I can go into lots of interesting trends in hospitality. That's definitely a segment that's growing because you do have these nomads and more companies are flexible about where you can work and for how long. Uh, and there is a little bit of a gray area. Historically hotels couldn't, you could not book a hotel for longer than 30 days. And that was by regulation. Ah, so, you know, you've got folks who are now 30 days or more and exploring some, um, loopholes in the law, but it's still a very, very small segment of the population that actually chooses to stay this long. Um, but if you're in that business, it's a great product offering, but none of these companies, and I, I think any place is probably, um, just not the exception to this. Can't do it profitably. No one's actually figured out how to, how to open these new hotels. And that goes to citizen M2 or Sonder or Vakasa or Selena. I could go on and on of these companies that were venture funded the last four years came out with great tech stacks, uh, great experiences for when you're actually on property, but have not figured out how to make

SPEAKER_132: money. And these companies have all, you know, for the ones that, that, uh, went out via spec lost, call it 95% of their value. And some of them trade for less than what's cash on their books.

SPEAKER_20: It's an operationally hospitality is a business that requires operational excellence at a deranged level. I just read unreasonable hospitality. I don't know if you've read that book. It's just such a great book because you realize you really need the front of the house, the back of the house, and then you need the third stool. Somebody's gotta be watching the books and really thinking about like, is this worth it or not? And you're absolutely correct. The Anyplace team has had to really think through, Hey, if we're putting in this laptop desktop station with the monitor, how much does that cost? How much does it cost to furnish it? How much does it cost to maintain it? And what is the actual real price? They, luckily they figured it out, you know, cause they're probably charging $7,000 a month for that, you know, studio apartment with everything built in and maybe their cost basis is for, or something for that studio in Manhattan, but it is not easy. You, you really have to think when you're doing asset heavy. Um, well, listen,

SPEAKER_110: this has been incredible. Uh, I love your products and services. Thanks for the crazy insight into all

SPEAKER_20: this. I hope you keep going down this rabbit hole with, uh, open table. I'm going to try to get my elite

SPEAKER_02: status going. I wish you would just charge me a hundred bucks so I could just be elite. And I, man, put a button in there where I can share my tipping, share what a baller, or maybe put my tip in advance,

SPEAKER_20: any of that, anything where I can get an edge on getting a table I want. Um, and just congratulations

SPEAKER_110: on the success. And I appreciate you sharing all the knowledge from inside, uh, the, the hospitality industry. Uh, you're hiring right now. You need some positions filled. I take it. Uh, we are not hiring

SPEAKER_06: right now because we're seeing this huge productivity, uh, benefit from AI, which we didn't

SPEAKER_93: talk about, but yeah, yeah. Say more in running the company. I'm having the same experience where

SPEAKER_110: people are getting 30% more efficient. So explain where you're seeing the gains customer support. I

SPEAKER_58: would think. Uh, no, customer support isn't that big, uh, line of business for us in terms of expense,

SPEAKER_05: but where we're really saying we're a technology company. So we're seeing in developer productivity for sure. And we can, and the best developers now are far and away better than our junior folks, but our junior folks are a lot better too. We're seeing it on the marketing side. Everybody's leveling up. Yeah. Marketing side and our, uh, press releases, our financial discussion, you know, you know, as we, as we look through where we're performing, that's much better. The search results, the product are, are much better. That's where we're actually seeing AI transform. It's not actually, I think on the, on the user interface side.

SPEAKER_20: Fantastic. So basically in year zero of AI in the enterprise, it's making people,

SPEAKER_54: what would you say? 30% more efficient in those functions? 20%, 40%. Everyone seems to say 30%.

SPEAKER_260: Yeah, me too. That's what I'm experiencing. Everyone seems to say 30%.

SPEAKER_28: I don't know why we all say that because it's not 10 or 20. It's more than that. Now it's not 50. We know that. So I think you just wind up at 30 because it's more, it's really noticeable. That's the key.

SPEAKER_132: Yeah. Yeah. Well, I think, you know, it's just like when Google docs came out, everyone who could collaborate got a lot better than the early adopters, uh, performed,

SPEAKER_05: but I think it will normalize. What's, what's great for us to see is the disparity between some people are really good at using those tools and they improve by a lot more than 30%.

SPEAKER_37: If I can get my highest paid, best developers to improve by 50, man, I can let go a lot of junior

SPEAKER_02: folks. Yeah. Yeah. I mean, you just don't, you don't need as many people and having less people means you go faster. So if you can build more elite teams, and this is really just an important message for young people getting into the workforce, either learn these tools or be at like the gap between

SPEAKER_20: people using them. That's really the important message, isn't it? You have to commit to use it. I literally did it today because we, some people hadn't done PR or marketing before. And I said, just literally go into chat. You're a PR person advising a company, trying to accomplish this task in public relations, make a plan, step-by-step plan. It built a 20, I was like out of my mind. This is like, see, 20 point plan and then copy editing, you know, writing copies, one of them said, make me a sub plan for copy for somebody who's never written copy before. And it gave me like a 12 part subsection because the person felt they were inadequate at that. I'm like, this is like a $10,000 consulting job that chat CPT just did in 10 minutes or no, two minutes. Unbelievable. The gains unbelievable. What

SPEAKER_09: it's going to be like in year three. You know, pretty, pretty soon we'll have AI talking to AI though. So we'll, we'll, we'll still need humans to navigate all this stuff.

SPEAKER_20: Steve, this has been great. Please come on again next year. Uh, and we'll talk some more

SPEAKER_90: about the AI revolution and all this great stuff that is happening in the, uh, in the hospitality

David Friedberg: space. Are you going to the skip conference? I'm having dinner with you next week. Oh, are you going to be at that secret dinner? All right. We'll be at the secret dinner together. Uh, you know, Raphat, uh, who runs a skip. He's one of my first employees. Is that right? That's cool. Yeah. He worked for me at Silicon Valley

SPEAKER_93: reporter. He was one of my best journalists and then became this incredible entrepreneur. And I'm a tiny investor in skiff. So I will see you at dinner next week. And we'll see you all next time on this week in startups. Bye. Bye.