By Branigan Mulcahy, Nadav Cornberg
2020 can be seen as a hugely challenging time to have launched a start up company – especially in the hospitality space, which has suffered massive dislocations as a result of COVID-19.
In spite of the challenges, our experience has been that the need for innovative solutions for hotels has never been greater – and there is a growing recognition that start up innovation is a key to both recovery and future industry growth.
We started Virdee with the vision for a solution to help hoteliers automate check-in, ID verification and payments. The past year’s experience of turning the dream into a reality convinced us that in fact, this it perfect time for start-up innovators to take the plunge.
We hope our experience provides some practical guidance for fellow entrepreneurs who wish to bring forward additional new solutions to help lead the industry into a new era.
Here is some of what we’ve learned.
Start with a broad vision – match solutions to market realities
The SBA reports that in 2019, the failure rate of startups was around 90%. 21.5% of all startups fail in the first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year.
Against the backdrop of the worst performance in the history of the hotel industry, the challenges native to launching a successful start up of any kind painted an ominous picture.
At the same time, it was clear that there is an urgent need for solutions to help hotels achieve operational efficiencies and cost savings in a contactless environment. The race for such solutions was identified as the top priority for the global hotel industry throughout 2020.
For the founding team, developing a new solution required countless hours of market research and data gathering; more than one thousand meetings with hoteliers and decision-makers in the space, fully identifying the pain points and contours of an emerging new technology to ease the pain; and endless product refinement to ensure precision, targeting and flexibility in the product features we were developing.
We were fortunate to have connected early on with a seasoned hotel leader, the former President of a major hotel chain who helped us match technological vision with the practical needs of hoteliers. The result was the launch of our company and its products with a meaningful Seed Round investment four months after we got started.
It was a long year, filled with ups and downs, and accompanied by the stresses and challenges that have confronted all businesses in a time of great uncertainty and dislocation – but here is Founders’ Lesson #1 :
Think big early on, and cultivate the biggest, boldest vision possible for your company – but match the vision carefully with the needs and exigencies of the moment to ensure practical application in preparation for lift-off.
Vision + industry focus = start-up success.
Expand the vision – surround yourself with the best people
It’s no secret that great companies are driven by the best people. We view this as constituted not only by a team of capable engineers, product developers and sales professionals, but by an ecosystem of partners and advisors that help stretch the boundaries of our thinking and expand growth potential at the same time.
Early on we created an advisory board that also included leaders from verticals adjacent to the hotel space – including top practitioners from multi-family, corporate housing, medical office and more.
We quickly found that our emerging solution set had applicability in each of these areas and that our advisors could help us develop a plan to penetrate them.
One result is that some of Virdee’s earliest client wins have been in areas outside the hotel industry.
Another is that the Total Addressable Market (“TAM”) for our young company’s products has expanded considerably – which promises not only faster revenue growth but along with it, a higher ultimate company valuation if we prove successful.
Lesson #2 – Match the breadth of your company vision with the high level talent that can help you nurture and grow it. Engage them and cultivate their association with your business. Great emerging companies depend on cross-pollination of big ideas, best practices and practical know-how that only industry leaders can provide. As Founders, it’s your job to provide the environment for that cross-pollination to flower.
Win early – win often
As in sports, success for start-ups has a lot to do with momentum. It needs to be generated out of the box and built from point to point at every stop on the road.
Being in the keyless entry space, we were fortunate to have announced a partnership with entry solutions leader SALTO Systems within weeks of our company launch.
The integration, along with a number of other leading lock companies, solidified our ability to support check-ins for 100 percent of hotel guests, visitors to multifamily properties, and more important, does so without the need for human interaction. Now, it does so in partnership with one of the most recognizable brands in the space.
Just prior, we announced a partnership with Reside Worldwide, a leading provider of corporate housing globally.
It’s a marquis brand in a fast growing part of the accommodations industry, and the announcement helped us strengthen our offering for the space and spur progress toward additional deals.
Corporate housing has now become a target for growth in our business and we see huge potential upside.
We expect additional partnership and client win announcements in the weeks ahead. Stay tuned to this space for details.
Lesson #3 –Embrace the power of aggressive public relations to communicate your company’s wins and growth in the industry. The right publicity creates positive attention, generates new leads and builds company morale. Everyone loves a winner, and momentum is self-reinforcing.
Bringing it home
Anyone who has worked in hospitality appreciates the industry’s focus on creating great client service, unique experiences and generating new opportunities – for consumers, employees and investors.
This foundation has been seriously challenged in the time of COVID, but all signals are that the industry’s resilience and enduring value will produce a strong recovery – maybe even an unprecedented one.
Among other truths to emerge, it’s clear that innovation will lead the industry forward post-COVID and that in large measure, innovation belongs to the start-up space and the Founders, investors and owners dedicated to propelling it forward.
With all the challenges, now is the time is now for entrepreneurs with vision, persistence – and a little bit of good luck – to step forward.
Let the games begin.
Branigan Mulcahy and Nadav Cornberg are co-founders of Virdee, www.virdee.co