The Authentic Homeaway Story With Featured Guest Carl Shepherd

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Mateo, it’s Season 2, Episode 11. We are here.

We are definitely here.

How are you?

I’m doing fantastic. How are you?

Good. Our 41st episode. This one is a big one. I’m pretty excited about our guest. I think everyone is going to be a little surprised about who we’re able to snag. We appreciate him joining us. I’ll go ahead and let you give an introduction. I want to get right into it, so we get to the meat and potatoes of this interview.

We’ve been excited for this. Our industry is made up of unique individuals, as you can see. We’ve had a show running through 41 episodes. Having some amazing interviews with people who have truly impacted our industry from a business and cultural standpoint. We’re lucky to have a pioneer. Someone that continues to do both. I’m going to keep this introduction short because I want to dig in and get directly into talking with our guest. The one and only, the never duplicated or replicated in this space, Carl Shepherd. Welcome to the show.

Thanks. Is pioneer another way of saying really old guy?

I wasn’t going to say that.

No, because pioneer is about the impact. It talks about timing in your impact in the space. You could be a young pioneer.

Could be. Many years ago, I could have been a young pioneer, but it’s good to be here.

Carl, many years ago, when you came into this space, at that time, you weren’t a pioneer yet because no one really knew what the hell was going on. Maturing and basting over time is what makes you a pioneer.

Thanks. Brian Sharples, who started HomeAway, which is now Vrbo. We’re not the real pioneers here. The real pioneers were people like Dave Bollinger and Hunter Melville in Vermont. Jan and the late Pat VanVoorhis in Michigan. David Clouse and his wife Lynn. Brian Robb and his wife Lisa and Richard Coundley over in London.

The real pioneers were people who looked at this online in the mid-’90s and said, “There’s got to be a better way to rent a vacation home than having to go to the Chamber of Commerce of each city and find somebody to rent it.” That history is a pretty interesting one, but most people don’t understand the ground zero for the vacation rental industry. It is not Vrbo. It is CyberRentals. CyberRentals in Ludlow, Vermont is the ground zero in the online vacation rental industry.

That’s Ludlow, Vermont, Okemo. I know Vermont. I actually graduated high school in 1996 from Rutland, Vermont. I know Ludlow very well. I used to ski up at Killington. I teach skiing and snowboarding up there, so I’m very familiar with that area.

You would’ve loved the CyberRentals offices. They had a room that only two people were allowed in at any one time so that you didn’t fall through to the basement.

They’re called CyberRentals.

Yeah, and the technology was done by two guys out in Washington. These two guys shared an apartment, and the MacBook was CyberRentals. They were guys that liked to be outside a lot on mountain bike and ski. If they were gone for 2 or 3 days in the server that they’re on, CyberRentals was off the air. It was just gone.

That went on for years, but it is ground zero of how you rented a vacation rental. The first time I walked into those offices, it was a little house on this main street of Ludlow and it was absolutely covered in Post-it Notes. You thought the wallpaper was Post-it Notes because of, “Do this, do that. Get this guy. Check this. Get this piece of information.” It was amazing.

That’s so interesting. I thought you were going to go that was their tape chart.

This was their to-do list. They would write stuff on Post-it Notes, and they’d stick it on everybody’s computer. It was great. Hunter is a Dartmouth grad, and his best friend from the time he was five years old is Dave Bollinger. They started the online vacation rental industry.

How long from that CyberRentals until your involvement and start of HomeAway? How does Carl Sheppard say, “This is what we’re doing?”

I had been the Chief Operating Officer of a company here in Austin called Hoover’s Online. I had 25 years previous experience in publishing, but publishing with paper, ink, and printing press, that whole thing. We had taken this company called Hoover’s business information, and we did for $9 a month what Dun & Bradstreet charged $300,000 a year for it. We were renegades, and they didn’t like us a whole lot. We took that company public and sold it in 2003 to Dun & Bradstreet because they finally figured out they couldn’t beat us, so they might as well own us.

Speaking of, you’ve done that a few times.

I’ve done it a few times. I had a kid going into Dartmouth. At that time, a five-year-old with Down Syndrome going into the public school system. I thought that the best thing for me to do right now is to be a thorn in the side of the AIM school district. I realized after a few months that I was a good thorn in the side, but my wife was a frigging monster. The best thing to do was to get out of the way.

She also explained to me one day casually, because I was at home, she said, “If you’re not going to work, you can’t keep the nanny and the maid.” I thought that was real work then. If I’m going to have to take care of Jack, that’s a different thing than being able to say to the nanny. I started looking for some things to do. The whole idea was it could be part-time, and I met Brian Sharples.

We were put together by Austin Ventures, which was a large venture capital firm that is no longer funding new things. They’ve been in the wind-down process for a while now. Austin Ventures was one of the first venture capital companies to do things in Texas. I knew all those guys from way back, and they put in contact with Brian.

They were looking at something for Brian, who had done a similar path. He had followed a similar path where he’d taken a company public, he’d sold it, and he’d taken two years off because he had little kids. He had a 12-year-old, but he also had an 18-month-old and a 3-year-old. They had traveled. The business that Austin Ventures picked out for him was an information business.

They called me to ask me to go look at this information business with Brian and see if it was a good business. We had coffee at Starbucks. I’ve read the white paper. This is just dreadful. Every day, you’d have to wake up in Houston, Texas. There’s nothing more painful than that combination of a dreadful business in Houston, Texas. I don’t care how much money it makes.

He said, “Thank God. Yes, it’s a horrible business, but what do you really want to do? I’ve been noodling with this.” He had done a test on his own dime to start a business called Elysium which he never got off the ground because Steve Case beat him to it with exclusive resorts. Brian had done all this research on the vacational industry. The reason was that when you have kids as disparate as ours were, my kids were twelve years apart from top to bottom. I used to make the joke that I had to have the Sesame Street on one television and the PLAYBOARD channel on another. I had to bridge that gap.

We have a ten-year gap on ours. My oldest is 19, my youngest is 9, and there’s 4.

There you go. You can deal with it. I also had the problem that if I put Jack, the baby, in the same room with Kevin and Connor. There was a 50% likelihood that I would only have two children in the morning when I went to get there. I decided that this traveling and keeping Jack in our room was not good. We started using vacation rentals.

Long story short, Brian and I talked about that. We both liked vacation rentals. What we decided to do was apply the Hoover’s method of data collection and reporting to the vacation rental industry, which we knew nothing about, but we knew it was kind of disparate. The best data that was available at that time came from the Gaylord Enterprises public filings because they owned ResortQuest. When they bought it, that was the last time that there was any independent information about the industry because as soon as they bought ResortQuest, they stopped reporting on it. They just consumed it and they didn’t need to report it.

The ResortQuest stuff that we looked at said there were $250,000 second homes available for rent in the United States. ResortQuest had about 10% of them. That was the industry. We looked at that and said, “That doesn’t seem like it’s the industry,” because we were looking at all these little websites. We saw Cyberrentals. We saw Vrbo. We saw these sites.

We didn’t believe any of those companies made money. How can you make money doing what they did? They were so badly done. The websites were all, except for Great Rentals. They were all badly done. We thought that can’t possibly be good. True, that there’s only one that’s winning. We realized that what we wanted to do was have the cover editorial.

The 50,000 most interesting companies of vacation rentals in the world, and then you could rent them. We were going to talk about them very much along the lines of Hideaway or Andrew Harper or something like that. It was going to be a quasi-publication. The thing that made Hoover’s work was that, at Hoover’s, we needed to have an answer for every company in the world, even though we knew the public was only interested in about 15,000 companies. On that rare occasion, someone wanted to find out about Toms Texaco on the corner of Shoal Creek. You needed to know something about it. We licensed that data from Dun & Bradstreet.

We then turned around and looked at this at HomeAway and said, “We need to have an answer, even if it’s not one of our houses. Let’s go license the content of all these little websites and we’ll send them traffic because they can’t make money anyway.” We’ll just go license them. We met them in Depoe Bay, Oregon.

They happen to actively meet once a quarter, Vrbo, Great Rentals, Cyberrentals, and A1 Vacations, and they’d play poker all weekend. Wives would shop, they’d stay in one vacation rental, and they’re all super people. We went out there to meet them. Brian had a pitch deck, and Brian is central frigging casting if you want to see it.

He’s tall, good-looking, got great teeth, is well-spoken, and he’s well-educated. He gives our presentation, and one of the women begins to cry. In the middle of his presentation, she starts crying. I’m going, “This is odd.” I asked the woman why she was crying. She said, “Because I realized it was all over, that you had found us. Our life of making just money and rocking along had ended because now money had found the vacation industry.” We had $50 million at our disposal because that’s what Austin Ventures had given us. We could do anything we wanted to. We told them we had $50 million. These guys had all bootstrapped. This was all heavy lifting over ten years.

This is obviously the first capital they had seen thrown their way. Everything was 100% organic, bootstrapped, and now they’re like, “Holy shit.”

Right. The only reason the four of them knew each other is there was a bank called Robertson Stephens. You guys are too young to remember it, but all the old people will remember Robertson Stephens. Their claim to fame during Web 1.0 was that they would go get disparate companies, they’d put them together and take them public. They were losing shitloads of money.

Robertson Stephens had planned to take these four companies, combine them and take them public. That of course had fallen through when the web collapsed. That’s why they knew each other. They all did the same thing, and they all did subscriptions. During that meeting at Depoe Bay, we asked them if we could talk to them about licensing. It’s hysterical to think about it.

We had to go outside. It was the only private place on the Coast of Oregon would that wind coming off the Pacific. It was 50 degrees. We were in the backyard talking to these guys. One by one, they said, “We’re not interested in licensing the content, but if you want to buy us, that’d be fine.” I said, “We’ll think about that. Can you give me your top-line numbers?” The first one, I’m not going to tell you which company.

They said, “We do about $4 million in revenue.” I said, “What’s your EBITDA?” They said, “What is EBITDA?” “How much cash do you get at the end of it?” They said, “We do about $4 million revenue. I guess we do about $3.5 million in cash.” I’m going, “What?” My mind was totally blown. Each one of them was saying that. We get back. We meet all four of them. The only one who isn’t interested in selling is Dave Clouse at Vrbo. His numbers, which I won’t share, I’ve never heard numbers like that.

Vrbo, their numbers were exponentially higher than the other three?

Yes, exponentially because they did nothing. They just took your subscription. They had no staff. They had no marketing. They didn’t even keep the email address of the person who inquired. They’re just a total pass-through but they made shit tons of money. We get back in the car to go back to the airport. We’re driving down the highway. Brian was driving. We’re going, “Holy crap. We completely misjudged that this is what the industry wants.” This professional industry doesn’t like these guys, but they cheat and advertise on them because they have to. The public documentation has completely missed the fact that people who rent their homes for less than 50 weeks a year.

In other words, the IRS thing was, you buy your second home, you can use it 2 weeks, 50 weeks a year if it’s for rent, you get to deduct it. That’s the way it works. None of these people were doing this because they wanted to use their homes as their second homes. That was the difference. We had no idea how many there were, but we could look at the growth rates of these companies.

We couldn’t do it at that point in time, but we eventually were able to and say, “We don’t know what the top number is,” but it’s growing at Vrbo at 85% a year. CyberRentals are growing something like 70% a year. They were just on, and they were not duplicating. This is people finding them. Brian pulls off the highway, he turns to me, and said, “Carl, let’s buy those guys.”

That was it. We got back in the plane. We went back to Austin. We went to meet our venture capitalist overlarge. We said, “We got good news for you. We’re not going to be starting anything. We’re just going to buy these companies.” We went out and bought three of them, A1 Vacations, Great Rentals, CyberRentals.

Three for now.

Three for now, and then we found Holiday Rentals in London. Holiday Rentals had technology. Everybody else did not, but the guy in Holiday Rentals had. It was written on a piece of crap software, but it was logical. It was good. You could stress it a little bit. It wasn’t going to work for us long-term, but we could get started with it.

We bought those four companies on the first day of HomeAway. A fifth one that we quickly realized we had a problem with because it was focused on the professional industry. We didn’t know at that time about The Hatfields and McCoys. We didn’t understand that the professionals hated the people that made it possible for them to be in business.

This is 2005.

2004.

2004, but officially March 2005 is when you got five companies that are all under your belt now. You have some tech that’s decent, at least enough to get you going, and you’re off to the races.

After that, we put a plan in front of the VCs. It had a five-year plan. We beat the 5-year plan about 7 months into our life. We said, “Hell with this, we’re going to have to run the table.” I started buying everything that wasn’t nailed down. We hired a guy to be a Chief Operating Officer. I got on an airplane and started flying around the world buying websites. I bought 23 of them all doing the same thing.

Looking back at those 23 acquisitions that you did. We know about Vrbo, but outside of Vrbo, what was the biggest, most instrumental acquisition that HomeAway did? In that first seven months, you already meet your goal, so we already know you’re making crazy numbers.

We were profitable the afternoon we closed on all the companies.

When you’re looking back now, there are always things like, “That was amazing. We did some amazing things,” or like, “We shouldn’t have done that.” Of those 23 acquisitions, which one was a surprise to you that worked so well or didn’t work?

I think it wouldn’t be a surprise, but Vrbo was the one that worked very well. We just had done a deal to buy Abritel in France. We had looked at another company called Homelidays in Paris, but there was this little company in France called Abritel. I walked into that office in Marseille and it reminded me of Cyberrentals. That was one where we were realizing that we could grow into different languages quickly. That was one that I’d mark.

We had the deal to buy them when Dave Clouse called me one day. He said, “Carl, you said one time you would like to buy me.” I said, “Yeah, I’d love to buy you.” He’d say, “Will you pay X,” which was a big number. I said, “Sure, Dave, I’ll pay X.” He said, “Great. What’s the next step?” I said, “I’ll send you a term sheet and we’ll get the lawyer started, but yeah, I’ll pay X.” I walked into Brian’s office and I said, “I have good news and bad news. The good news is I have a deal to buy Vrbo for X. The bad news is we don’t have X. We don’t have that money, so you need to go get me X.” X was a big frigging number.

That was a hard acquisition to do because as I mentioned, these companies were not companies really. Vrbo was in five different LLCs. There were no financial statements, there were no records, only tax returns. Nothing. We had to create three years’ worth of financial statements out of whole cloth and send in forensic accountants to do all that.

I knew that because of how Vrbo was, every bit of their profitability would drop to our bottom line. We didn’t need to hire another person. We didn’t need to pay anything. We just bought that. The most consequential acquisition was Vrbo. The next ones that I’d say we’re the most strategic were the software companies. The software companies is a little-known fact, but the professionals hated us. My memory of my first VRMA meeting is that I went to meet with the board before VRMA started.

When was this, just to put a little time set?

2005.

Who was the president back then?

I can’t even remember, but I remember that I made the presentation saying, “This is who we are. This is what we do.” They said, “You don’t understand. You are empowering our owners to cheat us.” I’m saying, “No, but without your owners, you’re nothing. If your owners are advertising independently, it’s because you’re not doing a good job.”

“If your professionals are not meeting the needs of their owners, that’s not my problem. I’m the messenger telling you that I am 50 times bigger than you, and I’ve only been in business for 5 months. You guys are sitting here talking like I’m scum.” I make the presentation, leave, and then get into an elevator with one of the board members. You can’t miss him. He’s a very big guy. I get into the elevator. We’re the only two people in the elevator. He turns his back to me and looks in the corner. That was my reception at VRMA.

Was it a kid that doesn’t want to talk to you turned like he was pounding?

Absolutely. “I don’t like you.” We went through a few years with VRMA, and they could not understand that technology was driving this and that the users were driving. The industry was being driven to owner-managed properties. They didn’t have the wherewithal to look internally to say, “What are we doing wrong? Why are we delivering such a bad service that our owners believe us?” That’s the question they should have been asking. The question that they were asking was, “Can we shut down HomeAway because it competes with us?”

Instead of putting the guests and experience first, you’re going to go ahead. That brings us back to that whole Hatfields and McCoy mindset that you alluded to earlier. They are professionally managed, and then these independent homeowners do their thing.

It was the prejudice that was amazing. I would say to them, “We have done surveys.” I don’t know what the surveys would say now, but I’m out of it. The surveys at the time said, “If people or travelers expressed a preference, they preferred an owner-managed property. Why is that?” It’s because an owner-managed property is managed by a family. Are you all married?

Yeah.

A wife and mama were not going to live in a dump. It’s going to be nice. They were a lot nicer. Owner-managed properties were just nicer because they weren’t done for profit. They were done for love. That’s what was driving this industry is that people were saying, “I’ll share my house with people 8 to 12 times a year. No offset, my cost, but that’s my house. I go a lot. If I don’t go, my in-laws go or my brother and sister go.” They didn’t want to rent it 50 times a year. The property managers were saying, “It’s a 50-week contractor, you can’t be here.”

Utilizing this technology and this new tech at this time was the key to go ahead and for the homeowners at that time to use their very literal vacation rentals in the way that they want to do it. Offer it 6, 7, or 8 weeks a year out to other people, and recoup some of that cost.

What was important about the number of times is that the industry reported availability based on 50 weeks a year. They would say, “We’re only 25% occupied.” Someone who only rented eighteen times a year. That’s only if she wanted to rent. She could rent all eighteen of those weeks on HomeAway. That’s 100% occupied. She was thrilled.

Eighteen weeks a year would not have been worth it to a property manager, so they were at war. They said, “You’ve got all this stuff that was going on.” When getting to the consequential acquisitions, I don’t think people understood at the time. That the software companies that supported all the professional industry, there were only 2 or 3 of them, they were all precarious.

Escapia was hours away from being shut down, and being shut down in such a way that this property manager who uses it, it’s gone on the morning. None of your data’s there anymore. Escapia was on fumes. They are wonderful people, had bet wrong and had the wrong venture capitalists who didn’t see this industry was growing and they needed to keep going.

We got a great guy out of Escapia. One of our leading managers came from Escapia. The other business was Instant Software. Instant Software was a good group of people basically. They had some idiosyncrasies, but a good group of people. Their biggest problem was that they could not say no to their customer base. They had almost infinite versions of every piece of software that they had, and they had eight pieces of software. The House of Cards was just teetering. Both of those companies because there was no way to maintain the software base at Instant Software.

Is the the birth of HASP then?

The HomeAway software, yes, that’s true. Strategically, Brian and I were talking one day. I said, “If these companies go out of business, we’ll never get the professional properties on our services. We can’t do ones and twosie. They can’t come in and just put a listing up. They have to put 100 listings. We have to be integrated with the software.

We bought those companies because they were not profitable, they were not good businesses. They were wonderful people, but they weren’t good businesses. We had to buy those because if we didn’t, then you would have almost the entirety of the professional vacation rental industry without software instantly. I think that was critical. I don’t think the industry ever knew how close they were to implosion. That was one. I think those were the two most consequential.

V12 was in there at some point?

It was a myth. V12 was not released. V12 had been under development for centuries. I’m being sarcastic, but it still hadn’t been released. We didn’t get it released until eighteen months after we bought them, because we had to eliminate over a million and a half lines of code from V12.

You got some real clean code there.

Yeah, but you couldn’t stop because half of their software’s base was using first resorts, which was DOS-based, literally on a floppy. At night, they turned off their computer and you couldn’t book a property.

It’s insane.

It was insane. This was in 2010. If you look at what happened to the industry, those were the most consequential acquisitions.

You started a tidal wave with what you were doing. We talk a lot about the journey that the industry faces from becoming cottage and homegrown. This family-oriented, family-driven business escaped the laws of business physics and everything else and survived. For generations coming into an era that is, what we’ve been talking about this whole time. That’s data-driven, that’s technology forward, that purports that it doesn’t want to lose the parts that make our industry great. That piece, but uses technology every day from this function to make that process smoother.

I call it a tidal wave because hearing you say everything from hearing that woman cry to these house of cards that stood up to businesses that were bought and not profitable. These are themes. We can go back and look at even in the past six years that I’ve been in the space that are pillars that I hear again. Venture coming in, throwing in money to businesses that are not putable.

People stand back and are like, “What the hell’s going on? Why is this happening? How is this happening?” Data, which I really want to dig into the value because that’s what I don’t think people are understanding. Hearing your story and how you came in, data was the key, the goal, and the value in that space. Looking at your background and where you come from, that was not my idea of where this was going to go. Where do we go from here? How do we get this part? Where does this clean up?

I think data is certainly part of it. Knowing where your customers are going, how much you can charge, and all of that stuff is the professionalism of the industry. I had a very interesting experience. My wife and I popped the other day. We just got crazy and we said, “We’re going to go to Palm Springs and hike at Joshua Tree.” We’ll stay in Palm Springs. We’ll go at Vrbo, we’ll stay there, and we’ll hike every day. I went online. For the first time in my life, Vrbo was more expensive than a resort.

Is that after fees? Is that after everything that goes into it?

Vrbo was about 50% more than I could stay at a resort in Palm Springs. A dirty little secret about one of the founders of the industry is that we don’t use a kitchen, except barely. My wife says that if she has to cook, it isn’t a vacation, so we do not cook and we do not use a kitchen. We did use it for breakfast stuff so that the kids could wake up and eat. Without us, we eat out.

You have to take that as a given that the kitchen isn’t important to me. What was always important to me was the space and the quality. When it’s just two of us, a two-bedroom or one-bedroom house in Palm Springs is going to cost more than staying at the Omni Mirage. I stayed at the Omni Mirage, which worked better for me right now.

I think that’s one of the things that’s happened over the last twenty years in the industry. Data is moving this more expensive. The other thing that data is doing is bringing different types of operators in. They are operators who are trying all sorts of things. We all saw how Zander tried to make their model work, and they’re still trying.

I don’t know what their model is now, but I think that’s what the data-driven young Millennials are trying to bring to this industry. How do we choose the right place? At the end of the day, this is still an industry that requires you to have a license, and pay taxes. It requires infrastructure that data does help on, but it’s still a hospitality industry. I’m wondering if we have now crossed over the industry to such a point that we are competitive with hotels. We got to say at HomeAway when I was driving it up. Not only can you have a house, a pool, and your own space, it’s cheaper than going to a hotel. We got to say that. You can’t say that anymore.

I think there are lots of different pieces to that, too. I hate to bring this up in most episodes, but you can’t oversight what COVID and the pandemic have done. Looking at travel uncomfortably, most families that there was a time when hotels are fine. Now, it’s changed again. Obviously, we’re post-pandemic, we’re coming out of it. There are still issues, but I think that there was a big trend towards vacation rentals obviously at the beginning of this pandemic. That trend is still staying that way.

True. the other thing the pandemic did is it eliminated the ability to go overseas. In the travel industry, I don’t think people realized what was going to happen when the pandemic started. I was on the board of turnkey at the time. We had a meeting, an emergency meeting and said, “What in the hell’s going to happen here?” The cancellations were flowing.

People began to realize that their kids had come home, and then they began to realize that they could go to a vacation rental. If they were going to work someplace, they might as well go work on the coast because they were social distancing. If you live in an apartment building in New York City, you could go to a vacation rental in Vermont, even though it was cold.

Your kids were safer in Vermont in a vacation rental than they were in the city. That was one thing that was happening. You had the fact that you can’t leave the country. So Vrbo did amazing. Airbnb did okay, because remember, Airbnb’s largest inventory mass at that time when the pandemic started was cities. People didn’t want to go to cities. They wanted to stay as far away from the city as they could.

Vrbo did amazing, and I think it was all in-country travel. It needed bigger countries. You could travel within Germany, so they did fine. You can travel within France, they did fine. You could travel within England, they did fine. The smaller countries didn’t do so well. Of course, no one went to Italy because even the Italians didn’t want to be in Italy.

I think we all have to look at 2021 and the first half of 2022, and say, “This really doesn’t matter. It doesn’t matter.” You can’t look at it for projecting in the forward. What it did do is it may have increased occupancy a little bit. At this point, 80% of travelers have experienced the vacation with them. They’re going to keep going. Will they keep going to resorts? I wouldn’t make that bet.

I think when things get going again, I think Disney shows us. Disney hotels are full. They’re the right thing to do when you go to Disney. If you can afford to stay on campus at Disney, there’s no experience like that. A vacation can’t duplicate that, so I think we haven’t seen what’s going to happen in 2023, but my advice to any travel business is. I’m on the board of hostile world as well. You can’t look at 2021, or 2022 as anything other than, “Damn, that happened. What does it mean going forward? I don’t know.”

You talked about the end of 2022 and you’re talking about 2023. What companies or what movements do you see are making a splash in the right direction in your eyes as far as where things are going? What should the industry be looking out for?

If people can travel again, there are lots of things being thrown out there. I personally do not believe that business travel is dead.

Agree.

I think that the first time a sale is made because someone didn’t do it on Zoom and actually flew to the client’s office and took him out to lunch. That will be back to people traveling for business because business people want to win. If every meeting has to be held on Zoom, so be it. If someone’s going to come and take you to a Lakers game, that guy’s going to get the business.

That’s the way it’s always been, and that’s the way it’s going to be. I believe business travel will come back in 2023. I think hotels will come back in 2023 because there is something to the idea of staying for couples, especially. The hotels are wonderful. Vacation rentals are great for families and groups traveling together. There’s no better thing.

I was looking at these vacation rentals on the outer banks of North Carolina, and some of them are in Florida now, which are 28-room houses that can be rented all together. Screw that. I’m never going to do that. That’s the worst of all worlds. I don’t know what trend is going to develop. I think hotels is going to come back. I believe you may see a flattening of our industry, the vacation industry.

When people have more options, again, they’re going to have more options. One of the boards I’m on has an overlap with a guy who is with Ryanair in Europe. Ryanair, we can shake our heads about it, but it’s the way Europeans travel. It’s the way they get to Spain. It’s the way the taxi driver in London can afford to use his flat in Spain. It’s Ryanair.

They are the leading indicator to me right now. As Europe opens up, Ryanair is opening up and they’re sending out full planes. I believe you’re going to see a return to some sort of normalcy. If you couple that with this decision that the United States is making and we’re not alone, we don’t care anymore. It’s over. We don’t like to say the second part of it, which is that unvaccinated people are dying.

That’s their choice, but it really is what we’re saying when we say it’s all over. I think that’s going on all around the world. Will 2023 be a normal year? I think it will be headed that whether it will over-index on any one thing, I don’t know. I don’t think it will over-index in our industry though. I think our industry is going to suffer a little, but not a lot. If people can go stay in a 4-star resort or 5-star resort in Aspen, Colorado, they will.

You have to look at it in a way. When I traveled by myself for business, I never go stay on a vacation rental, even though I work in this space because it’s not easy for me. I want to be able to go get quickly in and out and have things done for me because time is precious. There are a lot of positives with the VR space, of course.

Anytime I go with the family, that’s where we always go. You got a great point. When you’re going to Palm Springs, if it’s 2 of you or even 3 of you. A hotel or a resort, you’re going to have those amenities and all that there, and it’s less expensive, is that going to go ahead and cap that pricing? Are we going to see prices seem equilibrium?

More index of demand, John. Everybody who can travel to the United States would travel to a drive-through location that they could get to within a day. Stay in a vacation rental because it was the safest. I’m sure that 90% of those people liked it. I’m also sure that at least 10 %or 15% of those people did it because their only option was to do that.

There’s a beautiful resort in Hawaii that we usually would book in. Whenever we would go to Hawaii, we’d stay in a vacation rental for 7 days. We’d stay for 10 or 12 and we’d bookend it with a resort because they had all the stuff the kids like to do. That was empty because people didn’t want to stay there. It’s not going to be empty anymore.

I think our industry needs to look at this and say, “We had a great couple of years. Thank God, we got the benefit and make money during the pandemic, but our price is too high. Time will tell.” Data, to Mateo’s point, says that they are. In my point of view, there’s a lot of inventory out there right now. A lot of people came into this industry in 2022 because it looked like the right place to be. He came into this industry thinking this was our year. This is a typical year. What if this year is overinflated by 20%?

You got people like Chesky that were out there saying, “We don’t have enough inventory.” It’s drawing more people saying, “Wow.” They need us and they need more, which is happening on the back end of it. Hotels are learning. You’re seeing all kinds of hybrids in the space. John and I go back and forth about urban versus traditional vacation rental. Taking tips from both sides and the morphing of this. You talk about the work world, what does that even mean? Coming out of 2021, and going to 2022, what is that going to be looking like? You have all that’s going on there. How are people working? Where are they working? Offices close. All of these things play into our space now.

I would say let’s look at a couple of other trends. Here in Austin, Google will open soon a building that houses 3,000 people. Oracle is moving a campus here. Apple is opening another building. The campus that they’re saying is going to be here will be 15,000 people. They’re not investing in buildings because they don’t expect people to be at their desks.

You can read all these people saying they’re not going to go back to work, but it’s a very highly-specialized person who can really work minimum as an individual contributor. I’m going to add that in place. An individual contributor doesn’t have a wife. When you can’t take a family, unless you’re going to homeschool. You can’t take your kids around the country as nomads.

We could do that in 2021 and 2022 because the schools were closed. The schools aren’t open. The soccer teams are on weekends. That’s going to change back the pattern. If you’ve got young kids, I grew through it. Thank God, I’m done with it. On my weekends, I slept from game to game. That’s what I did. I drove. I think that we have forgotten normalcy. Normalcy will come back to us.

There will be adjustments. People will work from home, and it won’t be the end of your career. This notion that you don’t have to show up, be seen and contribute to business, that’s a big notion. When no one is showing up, it’s okay. We all know the brown noser who will show up every day. He’s going to be there.

It’s Mateo.

It’s happening. Not on your life. You’re crazy if you think that’s me. That’s the anti-me. It’s interesting because the same thing happened in Atlanta. Airbnb just built a huge hub. Google’s building a huge hub. Microsoft has built a huge regional hub here. The building is going crazy. The one thing I do notice is, I haven’t seen commercial real estate ringing the alarm.

I’ve heard their worries, but I see the cranes. I see the cranes and the building, but it’s not on par with the messaging. I know people that work for these two, and they’re like, “Google’s extending its work-at-home policy, but it’s building a huge skyscraper in downtown Atlanta.” I feel there’s going to be this point where they’re going to turn that switch and be like, “We do need you in the office.”

Mateo, I don’t even think the switch has to turn. I just think that human nature is such. I’ll give this example. Hostelworld is a great little company in Dublin, Ireland. It’s totally virtual for two years now. Our new employees are adrift. They don’t feel part of anything. When we do our employee surveys, they don’t think that any of this thing has changed.

In Ireland, you have a very unique thing that we don’t have in the States, but you stay with your family until you’re married basically. You don’t go out and live on your own. These kids are 23 years old living with their mom and dad in their room working for Hostelworld. What has changed for them? We have a real problem, as a company, of how we assimilate those people into the mothership and how we make them feel part of something that’s bigger because they’re not.

That’s going to need to be important. That’s not going to be isolated to the Hostelworld. New people are coming into the job market every day and they don’t want to be adrift. They want something in their life to change. I don’t think we can predict how all this is changing because all you have is current in-the-moment anecdotes.

Long-term, I think we’re going to see and travel. Business travel is going to return. We’re going to see a more equitable distribution between hotels and vacation rentals. Will it go back to what it was? No, because too many people have experienced a vacation rental, and they are the absolute perfect thing for families and groups traveling together. That’s not going to change. I can tell you, and this isn’t out of school. When a market in Europe opens up, Hostel sell out. You don’t get more socially distant. They sell out as soon as you can get to them. The human desire to travel, experience, and do things is limited to a single category of lodging.

I completely agree with that. It’s who we are. Even on the work side, I don’t like working at home all the time. It’s cool. I know that I’m just speaking for myself, but if I don’t leave my house, I’m going to go damn crazy.

I tell my kids that I feel very fortunate that I don’t have to have the life that they have.

Carl, I know we’re at time. I know you got someplace you want to go. Thank you so much. I would love to make a part two. We didn’t even talk about your special purchase acquisition company. We never talk about SPAC, and I know that’s your favorite topic. We’d love to have you back on soon. We can do part two. We can talk current moving forward in some of that stuff you’re doing if you join us.

As I say, I’m an old retired guy. When I’m not traveling, I’m available.

We’ll get you on soon for part two of this. Thank you so much for joining us.

You guys take care.

Thank you so much for taking the time, Carl.

I appreciate it.

Important Links

• Vintory
• Carl Shepherd – LinkedIn
• Vrbo
• Dun & Bradstreet
• Austin Ventures
• Great Rentals
• Robertson Stephens
• Abritel
• Homelidays
• VRMA
• Escapia
• Zander
• Ryanair
• Hostelworld
• http://Megaphone.fm/adchoices