CEO & Founder of Wheelhouse, Andrew Kitchell sits down with us on today’s episode.

Andrew takes us from the early days working in the tech metropolis that is San Francisco to today where his team successfully raised $16 Million for Wheelhouse, which they successfully spun out of Lyric via careful restructuring.

We talk about how entrepreneurship is a career path where you’ll struggle and fail but over time it’ll set you free and allow you to live the life you want. Andrew preaches the importance of looking at your failures as a learning tool rather than an outcome.

Everyone’s looking for the next all-in-one tech platform to bring them from point A to B, but we discuss why that might not be the way to go.

Andrew does not hesitate to give the Wheelhouse team the accolades they deserve and acknowledges that success comes from a good mix of drive, ambition, and the relationships you build along the way.

There’s so much in this episode, from a surprise houseguest to an insane bike ride… you don’t want to miss this interview!

https://www.usewheelhouse.com/blog/why-wheelhouse-raised-16mm-%f0%9f%92%b0/

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Entrepreneurship Will Set You Free With Featured Guest Andrew Kitchell

In season 2 and episode 22, we have an amazing guest. We’re going to dive right into it because we got a lot to talk about. We have the one and only Andrew Kitchell, CEO and Founder of Wheelhouse. Thanks for joining us. I appreciate you jumping on.

I’m excited to be here.

We want to go ahead and talk about Wheelhouse, big in the news, and exciting stuff happening. It’s been in the works for a while and behind the scenes. This has been a long time coming to get to where we are now. We’re going to let you tell your story. The big news is Wheelhouse officially spend out of Lyric and you have a $16 million raise. Congrats.

It was closed in January 2022. It was seven months of work to make it all happen because when you spin out, that’s a restructuring of an organization. It’s not a simple thing necessarily. There are a lot of moving pieces. We finished it in January 2022. I will be sharing a little bit more about what it looks like. It turned out to be an additive raise.

We’re super stoked to know that. I want to get into that. I look at your resume, and you have very prestigious experience if you are looking as far as looking at companies in the short-term rental space, Lyric, and Beyond Pricing as a Cofounder. Now, you’re doing something different. Before that, you have some interesting things for me that I didn’t know about, some marketing stuff, like this 30 Words thing. Everyone has this awesome story of how they stumbled into space. Coming to Beyond and from there moving to Lyric, how do you get into the short-term rental space? What was your trajectory? Tell us your story.

It’s a classic story of not necessarily what you know but who you’re lucky to meet along the way. I showed up in San Francisco, and then the company you’re referring to, 30 Words, was the first company I started. I started it in San Francisco. I had arrived here by bike down from the San Juan Islands in Washington.

Did you bike from the San Juan Islands all the way to San Francisco?

I took a bus for the last little bit because the bike I was on was old and broken. I came to San Francisco because I heard stories about entrepreneurship. I ended up arriving here and eventually moving in with some folks who were starting are building businesses. This was 2007, going into 2008. It was when a lot of these early-stage accelerators were starting up. I had a roommate get into Y Combinator. It was the class that had Brian Chesky in the class. I remember that there were five of us living in this home. There were four businesses being started. None of us had any money.

My friend came back from the 1st or 2nd YC class. He said, “There’s this crazy idea called Airbnb breakfast. It’s never going to work, but the guys who run it are great. Let’s help them out.” We threw ultimately one and then multiple couches on Airbnb very early because my business 30 Words wasn’t making any money. I was renting out my room on Airbnb. I would’ve Airbnb guests show up. I would go sleep on the couch down in the living room. It was that awkward.

The last crazy turn here was, through that, I met a team, which I eventually joined earlier through a technology company that illustrated the way of both technology and raising venture capitalists. That’s part one. Part two is I hosted Brian Chesky. I had him come over to my home. ABC News shows up and films the whole thing. By that point, it’s safe to say I was addicted to the category. I thought that the space was fascinating, and I still think it is the greatest unlocking of creativity in the history of hospitality. It is like, “Who are we to be able to take a few photos, set up a listing, and start making money to allow us to pay for businesses, small adventures, and stuff like that? It was incredible and very obviously a big unlock.” I love the industry from the perspective that it changed my life.

This guy rode the bike essentially from Canada to California. That’s huge. That’s the entire West Coast.

That’s a lot of time to think.

Kudos to you for that. That is a hell of an accomplishment because I love that area. I also love that your story is a pioneering one within that space. It seems like that’s your personality and who you are. It’s a large part of your story. Not to minimalize it at all, but being able to be a part of that creative cohort, I never knew that. I never knew that your origin stories go that deep. Talk to us a bit about that grind from there. How did it get from coaches from your vantage point? Being in proximity to San Francisco and around Airbnb, you have a parallel line. You’ve been able to see this from the frontline. How’s that been?

It’s been up and down every which way but fascinating. I fell in love with entrepreneurship pretty early in the notion that every day is going to look different. What ultimately what I’m optimizing for at the end of all these things is I want to have had a fun, interesting life and met great people. Through that lens, every up and down that we’ll probably talk about has been interesting. It hasn’t always been easy, but at least it’s been interesting like, “That’s a crazy story.” I like that. The break for me was most from this hacker house. I ended up meeting an individual named Eric Wu, who now runs a company called Opendoor.

In my opinion, he is one of the great young CEOs in Silicon Valley or anywhere. He is a super thoughtful individual. He was friends with a friend. He picked me up one day for a one-day project and talked to me about what he was building. By the end of the day we spent together, I was like, “I would love to join this.” Trulia was using this new notion of open-source data to start to inform home purchasing decisions. Their team was looking at everything from what crime levels are. We are starting to map it and visualize crime data, and then we are looking at transportation times and all these things. Our team as a team of six got acquired by Trulia. The one-year journey I had there before, Pinterest started out of this six-person office. Instagram was a stone’s throw away.

It was the glory days of Silicon Valley. How could you not get addicted to that type of thing and see this go from two people to a billion-dollar company in a matter of time? That was Instagram. It was fascinating. I ended up learning from Eric about the way of a little bit of the way of venture. Eric eventually was the individual who brought me in to run what was then called Beyond Stays and ultimately became Beyond Pricing.

It’s not necessarily what you know. It is who you meet and who you can call to get help or who says, “I’ve got something I’m working on. Why don’t you come and join me?” That ultimately led to this almost decade in the short-term rental space, building from a bunch of different angles. The ups and downs of it have been fascinating and fun. Ultimately, I’m driven by the love of the category and have been still in the notion. What gets me excited every day is it’s still a totally misunderstood category by what I’ll call Main Street. To me, that’s fascinating.

You talked about Beyond Stays, which I had no idea about, then went to Beyond Pricing, and now it’s Beyond. It’s a direct competitor of yours now. Can you talk to me about your relationship with Ian McHenry? When I came into the space and started many years ago, I became friends with Ian. We had some great times. I learned a lot about the space from him. When I came in, he was, at that time, the CEO. I’m confused. How does this timeline work? I’m curious how that all played out.

The original Founder of Beyond Stays that pivoted to Beyond Pricing was Eric Wu. He founded Movity. He’s left Beyond Stays to found Opendoor. There are parts of the story I’ll share and some things I probably won’t share. I was CEO brought in to be CEO of Beyond Stays. As you can probably guess, that’s not necessarily a popular decision for other people who had been there at the time. It’s like, “Who’s this young whipper snapper who’s going to come in?” It doesn’t necessarily know the category super well, but maybe arguably, in Eric Wu’s mind, kind of a hustler and a builder.

Within that company that had a little bit of cash from Eric, we probably had about $300,000 raised on debt vehicles at the time. Our investors had no true ownership of the organization. About three months in, we were managing Beyond Stays. It was a property managing company similar to Pillow, if you remember Pillow. What both those teams were looking at was this notion of, “Could you take a bunch of Airbnb properties in urban environments, slap a service layer and a brand layer on top of it, and start to create value?” Even though that was happening in the vacation rental space, that wasn’t yet happening in the urban environment.

There’s still a disconnect between a vacation and an urban destination.

There are a lot of differences in the businesses. We weren’t managing multifamily buildings yet. That wasn’t even a thing in the category yet but managing distributed properties. We are updating prices twice a week by hand. It was like, “Revenue management is a thing, but can we automate this?” To my knowledge, The First Automated Pricing Engine was written by a friend of mine, Zane, when we were sitting next to each other at a coffee shop on a Saturday morning in San Francisco. She ended up figuring out how to hit the Airbnb mobile API and update prices based on an algorithm. At that point, it’s like, “It works. Now, all we got to do is figure out how to layer in some very structured but still structured dynamic.”

I mean not necessarily look at temporal pacing. You look at weekend pricing. You might price in some holidays, but you’re still structuring a dynamic pricing model. Those were the early versions of the product. You can go back and verify all this. After using it for a couple of weeks, we said, “This is pretty cool. Let’s throw it up on a website, put it on Product Hunt, and see what happens.”

Explain to the audience what Product Hunt is.

Product Hunt is a website where people post new projects, and you’d be like, “How many new projects are there per day?” The answer is now there are hundreds. At the time, there were probably 10 to 20 software projects launching per day. Product Hunt was one of the sites you’d posted on if you were hoping to get some incremental traction. If you want a product of the day, it was a nice thing and everyone would spam their friends and be like, “Vote for me.” We posted on it, and it caught a little bit of fire. Within probably a week or ten days, we probably had 7% to 10% of San Francisco signed up.

We’re like, “What would it take to launch us in other markets?” We tipped into this thing that all of a sudden became interesting. It was like, “We’re not going to do the operations company anymore. By the way, if we were going to build an operations company to be a multi-city or multinational company, you need to build software first among the software you would build as revenue management.” I’m much more of a product person than I am an operations person. I ended up going back to those investors and saying, “Here’s a signal. Let’s pursue it.”

We started to put a fundraiser together. It was during that fundraiser that I found out a few things that ultimately led to the breakup of that working relationship. The data science team from there partnered up with three other guys from Y Combinator and started both Wheelhouse and eventually what became Lyric at the same time.

At that time, when the fire was caught and people looking at things and weren’t aligned on the executive level, you said, “We’re going to go do our thing. You could do your thing.” You went in two separate directions at that time.

For the sake of folks, that is correct. We had different opinions on a whole bunch of different things. It’s the depth of data science required for accurately pricing homes, the way you should run a business, and then other things that were discovered during the investors’ diligence in our organization that were not what you would want if you’re going to commit to building with someone for the next decade, which is what’s required of a big startup outcome.

Looking at this, let’s look at the trajectories there at that time that took off. You talk dynamic pricing, and it was that buzzword for two years straight. No one could get it through a conversation without saying dynamic pricing in the short-term rental space. It was all Beyond Pricing. No one knew what Wheelhouse was at the time. People knew what Lyric was, but it was a little bit different. We don’t necessarily want to talk about the Beyond Pricing trajectory here. We want to talk about your trajectory. What happens next? Let’s talk about Lyric and go from there into the Wheelhouse story.

Lyric was built on top of the Wheelhouse. We built Wheelhouse for about twelve months before we started to say, “What happens if you not only price properties? What happens if you use data science and look at the analysis of properties to start to lease and, eventually, design and manage properties?” The ultimate goal of Lyric, which is happening now was, “Could we leverage a full stack approach from data science all the way eventually to the development of assets and build a full stack.”

The three value creations long-term, in our opinion, in short-term rentals, are going to come from a brand that can connote data, design, service, etc. Lyric overinvested in a brand, for sure. That was a big overinvestment for us. We ended up hiring the former head of brand for Starwood to come in and build the brand with us.

We wanted to invest in data and software that would allow us to cut operations costs because if you could have a brand that attracted a ton of folks and you could leverage software and data to be able to cut your operational costs, you theoretically had a model that was much more scalable than a hotel model and more profitable. Lyric was like a multiyear vision around that. In my conclusion, even pre-COVID was that our space still needs 3 to 5 years from reaching its full fruition, which means spaces are selected and built from the ground up.

It’s expensive for folks in our space, but for others, it’s going to be a good investment. Every design decision you would make would be different if your average guest stayed for 5 nights as opposed to 1 year. You would think about everything from kitchen design to laundry facilities differently. We thought the data science and software plus a great brand would allow you to eventually compete against some of the best operating companies in the world, that being Marriott and others who are good at their jobs. Are they creating the sexiest brands in our minds? Maybe not, but are they good at the details? Absolutely. Hospitality is hard.

The way to attach tech-smart established well-financed businesses was to create a model that looked very different. Especially on the data and software side, we didn’t think the hotel codes, despite their capital stack, were well set up to build great software. I still believe that. That’s why I still bet on some of the up-and-comers in our category standing a very good chance of creating the definitive brands of the next generation.

Who are some of these up-and-comers in your mind?

Sonder gets the most press certainly, but there’s another generation that was coming up right behind. Sonder, Lyric, Stay Alfred, and others were all pretty exposed pre-COVID. We all had taken this space. There were no full floors or full buildings that were doing short-term rentals. It was hard to convince a multifamily owner to work with someone like us pre-COVID. We all spent time going into the boardrooms and convincing people.

People are like, “There’s something cool here. Let’s build this together.” When COVID wiped out the playing field, there are a bunch of super well-positioned people, some who had grown in smarter ways, to be blunt, who were ready to spring up. Those teams include Minim Homes, Sextant Stays, and Frontdesk.

Sextant didn’t get a lot of the stay-off for inventory.

Our team is well-positioned and not overexposed. We’re in a great position to buy pennies on the dollar from furniture to leases.

Is there some connection to Stay Alfred as well? Am I correct in that or wrong?

John deRoulet who leads our sales and revenue management team, in my opinion, is one of the best people at revenue management in the category.

What a smart. I’ve had some amazing conversations with John. He’s an amazing artist as well. I’m a big fan of John. You have a stud on your team.

John was the Head of Revenue Management at Stay Alfred. His entrepreneurial journey is also awesome. He’s come up and worked across a bunch of domains. We ended up partnering with John. Jordan Allen, the CEO, invested in his new thing.

Dorsey, I want to have them on too.

He’s a super great hustler. Ultimately, there’s a narrative of our competitors in the category. You’ve become friends with a lot of your competitors. Jordan is a friend at this point. Lyric, Alfred, and others are wiped out. The worst possible scenario is to be a venture-backed urban corporate travel-focused hospitality company during a global pandemic.

They went into the arbitrage model, not knowing that COVID was going to fuck you.

WeWork was the first punch when it blew up and, all of a sudden, the capital conditions changed. It went from everyone being like, “We will give you hundreds of millions of dollars to scale this as quickly as you possibly can,” to, “There are bigger risks than we realized.” That was punch one, and punch two was COVID.

There is so much to digest here. Our audience is going to dig into this. I want to get into the state of spinning out a Lyric. Let’s talk about this raise and everything that happened and where you’re going. I had a question for you. Was there animosity? Did you look at the success in the trajectory that Beyond was having early on in this space when you split? Did it drive you more to keep on that you knew you were going in the direction that you wanted to go, or are you pissed off? What was it like?

It’s depending on the day. They ultimately, to their credit, did some decent things to take care of me, when Beyond eventually did their thing with Bessemer. I thought that was well-handled. I thought there were some frustrating things that took place. I shared that I’m all about the journey. I do think there’s a right way to embark on the journey. I was frustrated about some of the ways they have taken place. I was also pretty in love with building Wheelhouse plus Lyric.

I was pretty confident that the pricing space in particular had years of evolution to go. Even that lyric, which ultimately moved towards this portfolio model, was going to push into a domain that unless you were operating in it, you probably wouldn’t figure out how to price the supply because it was combining short-term rental pricing with portfolio theory.

I ultimately thought Wheelhouse long-term had the competitive advantage for certain reasons. We weren’t investing in it like Beyond was. That was frustrating for me because I did spend 90% plus of my time building Lyric. Therefore, we brought up Wheelhouse in the boardroom. We might have to not even push it out the door as a consumer brand at some point. It might be too core competency. I was like, “The model turns your cost centers into a profit center. It turns software from a cost center into a profit center and eventually turns your operations from a cost center into a profit center. Turn your FF&E, Furniture, Fixtures, and Equipment from a cost center into a profit center by starting to have a brand line that people might purchase.”

The crazy way you would upset the hospitality space was to truly turn former cost centers into profit centers. I thought the growth of Wheelhouse was underinvested by the organization, but you start to build these businesses at scale in tandem with your team and with your investors. Wheelhouse was chugging along and had a decent growth rate, but Lyric was where we eventually raised north of $100 million of capital. When your investors are in the boardroom being like, “Let’s scale this. We gave you money to scale lyrics.”

I was like, “Okay.” There’s an incredible margin business sitting right here. It’s underinvested, and that was frustrating. That’s frustrating. You asked me what it is, and I shared the ups and downs. It was tough leaving Beyond. That was not a fun series. Ultimately, I felt great that a few folks from Y Combinator said, “We’ve heard this story. We want to build with you.” That was the biggest boomerang ever.

I can only imagine the weight off your shoulders like, “Thank God.”

It’s your word against others in a situation like that. I feel like I’m lucky to now have done many fundraisers so that I have a better investor network, but at the time, I had the trust of Eric Wu, who ultimately has come back and invested in our new orgs. I had the trust of others, but it was iffy for a little while there. That was scary.

In that situation, what we dig into here is we get to the core of the story, which is taxing, draining, and stressful. What did they see that proved that spark that there was something still to invest in? When you get down in those times, you get that tunnel vision, but others don’t necessarily see the same world that you do. They’re not burdened with the stress that you are. They’re not understanding the complex relationships and all of the things that go into that. Talk a bit about what pulled you through that.

Number one, you got to have faith in yourself, your abilities, and your ideas. It’s got to be magnetic to the point that others can see it and believe in that. There’s something there. They didn’t just trip over it and say, “Andrew’s still got it. We’re going to check in with him.” There’s something there that you imprinted somewhere with somebody and some people that were like, “This guy got it. We’re going to put our horses on his cart and roll with him.” What do you think that was?

For one, I don’t know. I would love to tell you that this is all a grand plan. The reason I share this tinier, hopefully humbly, is I want other people to know who wasn’t the Mark Zuckerberg, who dropped out of school and start their business. Entrepreneurship is a career path. You’re going to fail and struggle. Someone told me this very early on, “Ultimately, entrepreneurship will set you free.” That idea has driven me a lot. In terms of what people saw, ironically, this is part of the reason I love Silicon Valley, as much as you can make fun of it, I have to make fun of it sometimes too.

There is an attitude in this town, which is your struggles and your losses should you look at them through the right perspective have taught you more about how to ultimately build success. This town is forgiving, and entrepreneurship, in general, venture capital is ultimately in my mind. It’s forgiving because I know if I were to look at a young person building a business, I’d be like, “I believe in you. You’re probably going to fail anyway, but you’re going to start to get all the seeds of success that you need.”

What people therefore probably saw was I’m pretty hungry and work hard. I am eager to learn and be told that I’m wrong. I think those things are enough. I try to treat teammates well. I’m fortunate that I think people like building with me and like building with them. Enough of those components where when you’re betting on early-stage companies, you are betting on the individuals who run it.

I don’t take lightly that people have bet on me and re-bet on us with Wheelhouse after spinning out of Lyric. Part one, I don’t take that lightly at all. I take it as the greatest gift I’ve ever been given. I’m going to ultimately honor all those bets. That’s a goal. Part two, I hope to get to the point where I get to bet on others who are going through that same thing because if everyone only got one shot at this, that wouldn’t be the most exciting place. Multiple shots of entrepreneurship are essential for seeing all the ideas that we see out in the world nowadays.

How does that narrative not get told? Success is in the failures. We have this society that thinks, “Everything happens overnight. We don’t shine lights on the true struggles. We just see the mountaintop. We don’t see the journey to the top. We see that you rode your bike from here to there. We don’t know what that journey was, the bike broke down, and what you learn in that space.” That’s where the value comes in. How many times have people in Silicon Valley or anywhere anyone who’s been successful, anything failed along the way? As a culture, and I think broadly, not even within our industry, don’t focus on the value of that failure because we still create this attitude where failure is bad, “If you fail, it’s done. You can’t succeed.”

People break through those barriers. They don’t give up. People continue to try and work. Part of the things that they’ve learned through those failures is the ones that are set free through entrepreneurship. When you said that, it put an asterisk in my mind because it does set you free if you don’t give up. That’s the key to entrepreneurship. It is not giving up. It’s to continue to drive and bet on yourself, your idea, and your teams in pushing that through.

It’s the lessons learned. If one can go ahead and look at the lessons learned from these failures, those are the ones that are going to succeed. It’s the ones that look at it, “I failed again. I don’t learn,” and try to change their go at a different approach or pivot. Do whatever you need to do to go ahead and try it. It’s those that can look at it and look at it as a life lesson and as a building block to getting to where you need to go. Look at us, this, and other things. Look at how many times we’ve failed. Entrepreneurs, in general, are those that can accept failure as a building block and move forward but not accept it as an outcome.

It’s a little bit of framing. If people are like, “Your company failed,” but you’re like, “Yes, but I met 100 amazing people. I now know five people I want to build my next idea with and I’ve got investors who I trust.” Was that a failure right, or is that success? Part of it is framing. As an entrepreneur, I was insecure about 30 Words. I started a publishing company, and I didn’t go home for a couple of years because I was like, “I don’t want people to ask me about it because I know how exposed this is.” I found it to be so fun to learn how to build a business and all the things I go into and determine your days, but there were a lot of failures there. You got to be comfortable with the reframe.

Secondly, I think we’re moving towards a society where failure is more understood. Venture capital is predicated on the notion of, “Let’s take a bunch of risks and a bunch of the businesses we invest in are going to fail, but the ones who win are going to win big.” When I moved to San Francisco, there was Y Combinator starting. Now there are hundreds of accelerators everywhere in the world and most countries are on Earth. You have venture capitalists who focus on every single niche you could think of and hundreds and thousands of venture capital firms. Now you have angels who syndicate funds. People who are leaning toward the notion that these risky things or failures are more likely more risk and more failure is a great way. It might take longer to prove out these bets.

It’s a calculated bet based on drive, ambition, and idea. I have a question in the future going back to that. You mentioned angel. Tell us about your state and break. Were you able to spend out of Lyric? We know that this happened. You mentioned it earlier back in January 2022 and went live with it. Tell us about that journey. Was it accepted internally? Was it like, “Eventually, we’re going to allow this to happen,” or was it a struggle or a fight? I’d love to know this story.

I’ll speed up to the restructuring because that’s where it gets interesting. The relevant background is on March 1, 2020, a deal fell apart with a major OTA that would’ve probably allowed Lyric to survive COVID. I called my dad at the end of February 2022 and said, “We’re going to survive COVID. It’s going to be rough, but we’re going to buy up the whole industry on the other side.” That’s how confident I was. What was going to happen on March 1, 2020, when that deal fell apart, I had to call my dad back and say, “I was wrong yesterday.”

When that deal fell apart in Lyric, we had run-down scenarios in January or February of 2022. A board member had said, “Run a scenario where revenue drops 90% because China revenue was dropping 99% for some travel companies.” We were like, “That’s crazy.” The board member said, “Run it now. What would you do to survive?” By March 1st when the deal fell apart, we had a plan to survive. We had three plans, and none of them looked great.

How do you get by it?

The way to definitively get by without question, not knowing when hospitality would return because post-Katrina, New Orleans has never returned to the same travel levels. After 9/11, New York took five years of recovery. We’re like, “With the global pandemic, should we bet on 1, 3, or 10-year recovery? What is hospitality going to look like at the end of that? Would it be wise in any form to continue to exist as an operating company?” Our answer ultimately was, “No, cut to technology that is flexible, nimble, and can be built for the next generation.”

March 18, 2020, and this is not a glorious day, this is a terrible day, over Zoom because we couldn’t go to the office, we had to say goodbye to 135 teammates. The 15 of those 135, we had to say, “We need need to retain you for 2, 4, or 6 months to tear down Lyric. If we’re sued by any building we’re in right now, our company’s dead.” To the other 15 out of that 150, we said, “We’re a technology company again, and we’re building.”

That was tough and extremely sad. You can’t live in that world, unfortunately. There’s not a lot of time for grieving when you’re trying to save a company. We knew if we didn’t get serious about building back as quickly as possible, no way the team was going to stick together or investors stand by us, etc. We needed to get to the building. While we focused on two technology products at first, we honed in on Wheelhouse as being the one deep area of expertise. There’s a hotel technology built up for Lyric that hasn’t yet hit the market, a belief that even hotel technology was not super advanced so you could apply what we had learned about pricing Lyric to bring a new pricing platform to market.

The rallying cries quickly for our organization by necessity but also through passion as we want to be the team that took the ultimate punch, survived it, and built it out. We won every investor that was on the table. At that point, Lyric had a lot of investors and a bunch of cash. We wanted every single one of those investors when they had entrepreneurs who reached tough times to be able to say to folks, “You can do it because Wheelhouse did after losing everything.”

It’s a phoenix rising from the ashes.

In 98% of scenarios, we fail anyway and we never have a chance. In our minds, we haven’t achieved what we set out to achieve yet. We’ve raised capital. That’s different than a great outcome. The restructure was a critical stepping stone, and it took seven months because when you’re trying to restructure a $100 million investment, your cap table and Lyric had a debt that’s publicly known.

We had to restructure all of it and put our team in a position where we had the upside that was requisite of the talent. We’re lucky to have her on the table. If all those pieces didn’t come together, there was no-go forward, but the go-forward also had to be predicated on a real business being there. In Wheelhouse, we executed for twelve months and launched something called Wheelhouse Pro during our fundraiser. We got lucky to win innovation of the year. That was a big catalyst for us.

Congrats on that. That’s huge.

Thank you. Our teammates had no equity. We were sitting under $100 million of preference. All of it was predicated on the belief that we had a core crew of folks who should we rally together and build together, were going to be pretty unstoppable. Now when we ultimately were fundraising, which was hard, the list of noes was high. We had to keep bringing new like, “We’ve improved this aspect of the preference or the debt,” and keep bringing new structures to investors and ultimately ended up raising and having an oversubscribed round.

We had too much capital around the table, which is crazy. I credit it to two teammates, Matt and John, who A) Stuck with the company and B) Knew exactly how to pull off a restructure because I did not. They did. I learned so much working with them. It was a great team effort from the product team to the CS team that took care of customers when our businesses were wrecked to the business team that ultimately was able to pull off the restructure. It was a total team effort. It went through fire, and I wouldn’t trade it for anything.

We’re talking about these lessons learned and building blocks. You’re not going to trade this for anything. This is the fabric of who you are, Wheelhouse, and Lyric to some extent as well.

We reflect the strength of the category a lot.

It’s exciting. Technology is changing everything. The companies that have gone through this, we’ve filtered out. This is the reality. People aren’t here anymore. The industry is changing. Technology is still pushing forward. It’s still a critically important part of our business that’s evolving and growing. Where’s the future lie for your specific space as PMS grows? Property managers still want that one all-inclusive solution. It’s the mythical animal that is wished for broadly everywhere. Where do you see the push next for your space? Where are you running towards? Where are you pushing towards? Where are you bullish about?

We’re going deep in our category. Ultimately, even though people say they want a one-stop solution, I don’t think that’s the right way. I usually think about property management, channel management, revenue management software, IoT devices, potentially guest comms, and operational software are super difficult problems. I could keep going on the list of things where expertise is going to be required.

It is hard to build a data-driven pricing engine that understands each home and looks at every single booking in the market or property and knows how to translate that into an effective and accurate price for your home to build a software layer that allows you to interact and change the strategy because it’s essential.

That problem alone is hard. Would you want a team spending 10% of their time on that to deliver a revenue management solution for you? No way. Our space needs a couple of years away from having inventory design for the software systems. I’ve had a chart of the next generations of evolutions of the price engines. We are in gen 3 of 8, minimum. I’ve had this chart for a few years.

The loss of Lyric was tough, but now we get to execute this vision we’ve had because we didn’t think the category was moving fast. We did not think the leaders of the space were pushing the category in the way that it needed to be pushed. We didn’t think they were building transparently, which we think is important. You got to publish your research. It’s got to be unacceptable to not publish what research you’re doing when you take over pricing for someone’s business.

I agree, coming from the property management software sales and understanding that landscape pretty decently. There are two camps of thoughts for property managers. They want that all-in-one solution, but at the same time, they want an open API so they can go ahead and plug in their solution because as businesses scale, you want to be able to scale the business with the tools that will allow you to go ahead and scale it. Good property management software is not going to say that they are the best at everything.

They’re going to be good at a certain thing, whether it be accounting. Every property management software needs to focus on accounting as their core competency and in booking, having a decent booking engine that plugs into it and offers some great solutions but realizes that there are gold standards that are out there like Wheelhouse, Breezeway, these different companies that are the gold standard for their respective focus.

They know that they are spending 100% of their time focusing on their craft and putting 100% of their effort into making that one aspect of it better. How can property management software say, “We have the best of everything?” They can’t. A good one can put out a decent product that everyone can get decently scaled with, but then when you go on to go ahead and take it to that next level, bring in a pro, bring in a Wheelhouse, or whatever. There are other companies out there that are top-tier. You have decent competition. One is going to be joining our show soon and allow the experts and build that trust with them, but the open API and clean code are where it needs to be.

We work in a space where everyone truly believes their business is unique. Therefore, we don’t need to have some different software solutions out there for these very unique businesses that change much and are very multi-dimensional. The answer is yes. It’s the interoperability and the ability for people to easily move between systems, PMS channel managers, and revenue management when the time is right for their business. I’d like to see that become much easier, and it will. The depth of software in all the key categories is going to be required. You’re going to have fast-moving expert teams trying to solve everything from digital access to distribution to you name it for the next decade. I have no ambition of building a PMS.

With a mobile-first approach. I could think of two off the top of my head that is a great software that does a lot of things well. They are ultimately relatively open APIs. With that said, their mobile suck. If you’re going to go ahead and you want in this day and age with AI being what it is and with automation being exactly what it is in machine learning and everything out there, a company that used to be when you have 100, 150 and 200 units used to have a way more employees to go ahead and to make that. The operational side is still going to be the operational side.

You still need cleaning, housekeeping, maintenance, and that whole thing. At the management level, you need less people to go ahead and do that because of automation. With that said, you need to give those people that are wearing multiple hats running around access to their phone to do 99.9% of the stuff and not have to rely on a laptop or an iPad. You don’t need a tablet to run. It needs to be able to be done on your phone because you want to go in, get it done, and you’re on to the next thing. These people are busy. That’s where these premier software that is great software suck at.

I don’t think Wheelhouses get on mobile. I’ll share why. Everything we built, literally 95% of our product roadmap is aimed at large portfolios. That’s 100-plus listings.

Let me restructure my sentence. Take out pricing and accounting. Everything else needs to be mobile excessively. I get it. When you need to go ahead and you’re looking at spreadsheets or large things, I get it. That can’t be done well on mobile. We’ll take out accounting and pricing, but everything else needs to be on a phone.

It’s interoperable between desktop and mobile. It is interesting because sometimes we get called out for our mobile experience. I’m like, “You can use it, but when you’re making pricing decisions other than automation, sit down.”

I’m not trying to do my pricing for my phone. The customer wants seamless. At the end of the day, they want the same functionality on a desktop, phone, or car.

Andrew, this has been awesome. This has been a great conversation. I wish we could keep going. We have to button this up. Congrats on the raise and spin-off. Your whole trajectory has been super fun. This has been a great conversation. Thanks much for joining us.

It is super fun. I appreciate it all.

Do you have anything you want to leave with the audience?

If you had fun reading the story and you’re battling with your own startup struggle and you want to talk about it, give me a shout. I was going to share a little bit more about all the investors who came into the round, but because it’s a bunch of people from the short-term, vacation rental space, and hotel groups, I don’t think we have time to share the whole list. Remember what we’re talking a little bit about, “Necessarily, it’s not what you know, but it’s who you know?”

Therefore, part of building a business is building a network around your company that ensures it succeeds. I am excited about the network of folks who have come around the table. There’s a long list of folks. We are proud of the group of investors that we brought around the table and who from the short-term rental space bet on us.

It’s great to see that that team approach is done. Oftentimes the narrative gets sewn in a way that the person at the top did it and not wrapping their arms around everyone that’s holding them up. Shout out to you for doing that. John, it sounds like we need the show to get a couple of these guys on here and dig into the, “Let’s get into the meat of this thing,” and let people tell their stories. Let them tell it about that journey. We got some work to do.

Andrew, thanks so much.

It’s a great time. I appreciate it. Be well.

Important Links

• Wheelhouse
• Vintory.com/Nobs
• https://www.UseWheelhouse.com/blog/why-wheelhouse-raised-16mm-%f0%9f%92%b0/
• http://Megaphone.fm/adchoices