STARTUP STAGE: Frontdesk manages short-term rentals in urban apartment communities

Describe both the business and technology aspects of your startup.

We are not strictly a technology company. We are an experience-driven service company, with technology being the biggest tool in our tool belt to serve our key stakeholders. Ninety-percent of our tech stack is built from scratch and is proprietary to Frontdesk. Our technology is purpose built for better serving our employees, our guests and our property management partners.

On the business side of things, we’re similar to many other professional short-term rental brands. We partner with residential apartment communities to offer enhanced guest experiences. We serve both leisure and business guests who are looking for a hotel alternative that feels more like home.

We’re enhancing their overall travel experience by offering our unique suites. Apartments are an amazing opportunity to provide this home-like experience. And where we fit in is bridging the gap between the guests who are looking for apartment-like stays and the apartments who are looking for secure and professional management companies to diversify their income stream and tenant base.

What inspired you to create this company?

Kyle Weatherly, co-founder and CEO, sold his medical device business. He traveled the world with his wife and stayed in over 50 Airbnbs. They loved the extra living space and the local experiences, but they also experienced firsthand all of the major pain points associated with Airbnbs, which heavily relies on inexperienced hosts.

From the key handoff to cleanliness of the linens and towels, almost everyone across the board missed the mark. They viewed their rentals with profit as the focus rather than guest experience and hospitality. At the same time, we noticed that our hometown of Milwaukee was overbuilt with apartment buildings in highly desirable travel destinations. We saw the opportunity to merge the two worlds of real estate opportunity and hospitality demand by leveraging technology to enable the complex operations.

By sheer frustration with experiences in the home-sharing marketplace and by the conviction of this being the next wave of hospitality and consumer demand, Frontdesk tried one unit. It worked so well that we’ve been on a mission to grow our unit and city count ever since.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths – We believe we best serve our guests and our property partners in a superior way based on our proprietary custom-built technology, our value-driven culture and our flawless execution. We’ve internally developed our pricing algorithm, our website and booking engine, our property management system and our design, furnishing and cleaning processes with W2’d employees.
• Weaknesses – We are not the type of host that greets our guests and show them around town, but we are accessible via SMS, chat, email, phone and if desired, in person. We leverage technology to create a seamless and efficient guest experience.
• Opportunities – There’s a very large opportunity for further expansion into multifamily communities in downtown urban areas across the United States. These communities look for long-standing, professional, reputable short-term rental companies who understand the dynamics of apartment communities and the importance of being a good neighbor. We strive to always do the right thing and that credo reverberates through all departments in our company.
• Threats – We may not be able to sustain this growth for the next five years. This is a land grab, market share dominance scenario where first mover advantage is real. At some point, we’re going to run out of urban markets and face the decision to offer our technology as a spinoff, expand internationally or another form of travel innovation.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

• Customer - We combine the best of both worlds: home-like apartment suites with the consistency and cleanliness of a hotel. We provide a comfortable living situation for somebody who might need to stay for a week, a month or longer.
• Industry - Frontdesk is growing the supply of alternative lodgings in previously untapped markets. The vacation homes market is filled with single family residential homes in suburbs, with decision makers who are looking to make extra income. We are expanding the pool of desirable locations with high quality inventory, elevating the options and experience of all online travel agency customers. In a sense, we’re growing the OTA platforms.

So you've got the product, now how will you get lots of customers?

We already have lots of customers! We’ve had 16,000 stays, 11% repeat guests, and we’ve been hosting for two and a half years.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

It’s clear that our model works. We’ve expanded to eight cities housing 190+ suites and thousands of customers per month.

How and when will you make money?

We’re already making money. On a per unit basis, we’ve been profitable from day one. We are pouring every dollar net profit back into the company, which is why we’ve grown from one suite in one city to sixty employees with 190-plus suites in eight cities, in just over two years. We are on an aggressive growth path to gain market share. Our investors are not in a hurry to get paid out dividends when their paper value is doubling twice over every year.

What are the backgrounds and previous achievements of the founding team, and why do you have what it takes to succeed with this business?

Kyle Weatherly, co-founder and CEO, took over and ran his family-run medical device business from five employees to 120 employees. He eventually exited and sold to a German-based conglomerate. He has managed growth before in the exact phase we are in today at his previous company.

Jesse DePinto, co-founder and CGO, has previously worked in the hospitality and travel industry for the past seven years, planning strategic directions of product and engineering teams with a strong engineering and tech background.

Ask any of our 60 employees why they are taking a leap of faith to work and grow with us. The growth of this company is infectious and the values, culture and integrity that are core to this business are not ordinary.

What's been the most difficult part of founding the business so far?

Hyper-growth. Going from two to 60 employees in just over two years comes with many organizational changes, and happened quicker than most anybody can really wrap their heads around. We have gone from the hobby stage to the family stage to the tribe stage and now approaching the village stage, faster than most companies can even get halfway from one stage to the other. The culture in our organization has had to shift rapidly with that pace. Like any organization, we’ve had a fair share of bad culture fits who have had trouble keeping up.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

We already feel like we’re incredibly lucky to have the opportunity to serve thousands of guests, dozens of employees, property partners and a handful of investors. They see our vision and are eagerly supporting and awaiting our next steps.

How do you differentiate from the large and also rapidly growing STR national brands?

We believe we differentiate in terms of location. Guests are looking to travel to a specific destination, not travel for any one specific brand. We are simply the conduit to help them enjoy the optimal experience in a real neighborhood in the city where they’re traveling to. Because of that, we offer the most diverse locations in any city compared to our competitors.

In Charlotte, North Carolina, a competitor twice our size is only in four buildings, within close proximity to each other. We’re in 13 different buildings throughout Charlotte. We offer more options to allow our guests to choose both the location and stay they want. Additionally, the only way this works in a sustainable way is with safety and security as a top priority. We wouldn’t have the best options if we didn’t respect the integrity, safety and security of the community.

Our strong security guidelines include TransUnion FCRA-compliant reservations screening with a dedicated security specialist, NoiseAware noise-detection monitors with a dedicated noise-monitoring specialist, integrations with the leading smart-lock providers like Yale & August to change codes after every stay and so much more. We believe we differentiate on location diversity and security as a top-of-mind priority.