Creating brands that are guest-centric, destined for growth, and above all, ones customers actually love is no easy task. It’s even more difficult to understand how to prioritize your own companies challenges over your customers’ issues. In this talk, StaySense co-founder, Wes Melton, addresses the importance of scaling the things that “do not scale” and putting customers first. This talk was originally given at the 2018 LiveRez Partner Conference. Below is a full transcription.
When I was 12 years old, I was upstairs in my bedroom playing with toys, when my dad busted into the bedroom Kramer style, with this huge goofy grin on his face. And, the thing you have to understand about my dad is that, he never got excited about anything. And I do mean anything. And so, there’s dad, just staring at me with this big, you know, goofy grin. And so, I’m on the defensive already. He’s like, “Guess what buddy?? I’m thinking, “What weirdo?” He said, “I just booked us a trip to Rice Lake, Ontario, Canada.”
[Audience: Whoo hoo!]
We got some representers here? Whoo hoo. Said, “It gonna be a father/son fishing trip. And it’s gonna be just us. It’s gonna be fantastic.” And I know what you’re thinking. “Oh. How thoughtful of your dad.” But you’re wrong. Because what my dad had forgotten was that, I hated fishing. I still do.
I love that gif – it’s the gift that keeps on giving, isn’t it? And so, dad could tell I wasn’t buying into it. He was like, “Listen buddy, this isn’t like the fishing we’ve tried. There are so many fish in this lake, they are literally jumping out of the boat, I mean, outta the water to get into the boat.” And now as you might imagine, when you’re 12 years old, if dad wants to go fishing, that’s what we’re gonna do.
So for us, it was about a 14 hour drive, and, dad decided we were gonna drive all through the night to get there. And so, ladies and gentlemen, I am very happy to tell you, that even though we did have some close calls, we did actually make it safe and sound.
So, as we rolled into town, uh, we saw a grocery store on the way. It’s a very small town. And dad decides he wants to stop in, get a few essentials on the way, and then get to the cabin. So, as we’re walking in, dad stops me, says, “Listen bud, I’m exhausted. So, here’s what we’re gonna do. We’re gonna split up. You’re gonna go to the left, and you’re gonna get some milk. I’m gonna go to the right and get some bread and peanut butter. We’re gonna meet back in the middle, and we’re outta here.”
So, a few minutes go by, and Wes hasn’t returned yet. So, Dad, very frustrated, comes over the cold section to find me just standing there staring at the milk. And he walks over and he said, “Buddy, what are you doing?” I was like, “Dad. What’s wrong with the milk?” He’s like, “Whatta you mean?” I said, “Dad. Why is the milk in bags?” I may have only been 12 years old, ladies and gentlemen, but I had serious usability questions. How do you use milk in a bag? How was I going to eat my Fruity Pebbles? When you’re 12 years old, this is critical information. So, we finally get there, and it was, uh, it was actually a really amazing time. It’s very beautiful. As time with dad went, it actually was, uh, very memorable.
And so, one night in the cabin, we’re just playing cards, passing some time, and dad asks me a very fatherly question. He say, “So, have you thought about what you wanna be when you grow up?” And I said, “No. Not really.” He said, “That’s okay.” He said, “You got plenty of time.” He said, “I wanna give you some advise that I think will serve you very well in life, regardless of what you choose to do.” He said, “Son, in this life, people will try to tell you that there are short cuts to success. They will sell you five secrets to becoming rich overnight. 15 tips to a better you.” He said, “But the thing you need to understand, is that, in this life, there are no short cuts, and there are no secrets to success”
He said, “If you wanna be successful in this life, you need three things.” He said, “One. You need to be willing to work harder than anyone else.” He said, “Wanting it badly is not enough. You have to do the work.” He said, “Two. Always remain a student of your craft. As soon as you think you’ve learned everything there is to know, you will fail.” And lastly, he said, “When you do fail, you have to be willing to learn from it.”
And so, today as we talk about creating brands that people actually love in the hospitality industry, you may be wondering why we’re starting here with this story. Because one thing I know to be a constant, when I’m in a room of incredibly talented entrepreneurs like I am today is that, we all have a really firm grasp of where we are, and where we want to be. We’re constantly on a journey. But a lot of times. there’s a gap. There’s a gap between where we are and where we want to be and we’re not quite sure how to bridge it.
And so, five years after this fishing trip my father passed away. And I thought about his advice a lot that day. I’ve been thinking about it a lot ever since, because I truly believe that if we’re willing to work hard, if we’re willing to remain a student, and if we’re willing, that’s what we’ll talk about later in the presentation, to learn from our failures, we really can achieve everything it is we hope to achieve in our businesses.
And so today, this afternoon, I don’t have any tips, I don’t have any growth acts, if that’s even actually a thing. But what I do have is, five principles for the future of the industry to help us create brands that people actually love, that I believe we can work at the rest of our careers, and never truly master, but benefit from greatly. So, let’s dig in.
Principle One: Focus
Principle one is all about focus. The best brains in the world are those who have mastered focused. And now illustrate this idea that, uh, this, this afternoon, I’m. I decided to take a risk and do something incredibly nerdy. So, uh, we’re all going to suffer together for a few minutes. Okay?
Elon Musk last year shared an idea about this. Uh. He’s the founder of Pay Pal, Tesla, Space X. And he said that, if you really want to get really good at focus as a company, you have to think about your people, your vendors, your employees as vectors. You have to think about your people as vectors. And, now I know, I’m hittin’ you guys with math after a lot of drinks last night. This will be quick and painless. If you don’t know what a vector is, a vector is simply a quantity having both magnitude and direction. If you’ve ever seen a graph with an arrow, you know, kind of pointing one direction, it was likely representing a vector.
And so, As Elon explains, what you do is, you think of every person on your team as a vector. Okay. They’re all going in a given direction. And now let’s say that all of your employees are vendors. They have a given number of work units, they can actually give towards the goal every day. Let’s say the max is ten, but no one really operates perfectly every day. So let’s say that on a given day, the average is nine. So everyone is given you nine out of ten of their best effort every day. And as I mentioned before, everyone is on this journey from point A to Point B. Once you get to Point B, that becomes the new A, and you start over.
Ultimately, your company’s progress on actually accomplishing the goals you set out, is the sum of all vectors. So what does that mean? What does it mean that your progress is the sum of all vectors? It means that if you have one employee, employee A is moving to the left with all of their effort, employee B is moving to the right with all of their effort. Right? They’re moving in opposing directions. It means your progress as a company actually sums to zero. If you have two people working in opposite directions thinking they’re working towards the same goal, their total progress is actually zero.
And that is exactly why what we observe, is that the least successful companies are the ones that are horribly misaligned. No one can agree on the direction. No one can agree on the strategy. You have meetings and think you agree, but then people go away and do their own things anyway. You have people con, constantly dissenting, causing, uh, frustration, friction in the organization. It’s very difficult to move forward in the right direction when everyone isn’t moving the same direction. And so, it should be no surprise that the most successful companies are those that are most aligned. Where everyone generally agrees on the strategy, the mission, the values, the idea, the why, the how.
Peter Thiel who helped, uh, Elon Musk, found and grow PayPal, wrote a book called, Zero to One. About his observations of the startups that actually achieved success on the goal they set out to achieve. And what he observed was that, when you look at startups that are actually successful, they all share one trait. And that is, that they are hyper focused. Hyper focused on three things. The first being, a singular idea. They all agree on what it is they’re trying to accomplish. They agree on the best strategy. The group of really talented people, they all know what their roles are, they know what they’re trying to accomplish, they agree on the strategy, they don’t waste time rehashing the same decisions over and over and over. And lastly, and I would say most importantly, they are never distracted. They recognize, there are nearly an infinite number of shiny objects, any one of which could actually make you a lot of money. But they are laser focused on what it is they set out to do and nothing else.
And so, as you might imagine, it becomes critically important as entrepreneurs and business owners, that you determine employee fit early. If your whole team is moving in one direction and you introduce someone to the team, who right away, it’s just evident that they are not moving the same direction, they are not putting their effort in helping the company move towards the same goal, you need to determine whether they’re actually a good fit. And this actually goes for your homeowners as well. If you sign an owner, and they are super high maintenance, you think that you are spending way too much time every week on the phone explaining to them, “Why no, actually I am doing a good job. It did make sense to do this for the customer.” If they’re not very profitable cut ’em loose, because they’re actually keeping you from being successful.
And so why, why did we start here today? So, I wanna answer that with another question. If we polled room like this and said, “Okay. As, as a company what really is our most valuable assets? What are most valuable assets?” I think we would agree, it’s reasonable, that maybe we would get a list look something like this. Maybe would say it’s capital. We have a ton of cash on hand. We have very little debt. Hard times come we can make it. Maybe it’s our employees. We have done an incredible job hiring really talented people. Maybe it’s your customers. Maybe you have a very uniquely loyal customer base, very unlikely to take another lover. Maybe it’s your processes. Maybe you’re so SOP driven at this point, that if a bus hits you today your company would continue just fine. Or maybe it’s your reputation. Maybe reputation market a second to none.
But the unfortunate reality is, is if this is the list we came up with as a group, we would all be terribly wrong. We would be terribly wrong. Because our most valuable asset, and the asset we tend to least value, is our time. It’s our time. Time is the only asset with an infinite scarcity index. Said another way, time is the only asset you can’t get more of. You can’t buy it, you can’t borrow it, you can’t make it, you can’t steal it. But if you know how to leverage your time correctly, you can get more capital, you can get more customers, more processes, better reputation. Even Chipotle made a comeback. Right?
But so frequently, we value our time less than all the other things that time will actually give us, if we value it correctly. And that is exactly why the least successful companies have the least focused teams. The least focused businesses and the most successful are all moving the same direction, and that does include your home owners. They have to buy into your vision or it is never going to work.
Principle Two: Un-scale
Now last year, I stood on stage and I said that every repetitive process in your business that can be automated should be. And I still agree with that. But I want to taper that opinion just a little bit because, what I feel like is happening right now in our industry is we have a lot of really great technology coming in. A lot of processes are now being able to be automated in meaningful ways. But what I’m also seeing is, a tendency to automate the wrong things too fast too soon. There are a lot of areas of our business that are providing the last meaningful touch points to our customers, that we are simply automating away because it feels like the most logical decision when we think about how painful our day to day is as property managers.
But last year, I saw, following a conference that Focused Right had shared, a statistic that said 70% of travelers who stay in vacation rentals, do not remember the local company they stayed with. Now, when I first heard the statistic, I thought that there was no world that that was true. I thought, “How in the world could that even be in the right ballpark?” And so then, not long after, I was at the park with my kids, and there was a gentleman there with his kids. And I struck up a conversation, and, it turns out he was vacationing, uh, in our, in our home town. And so, I asked him, I said, “Well hey. Where did you, uh, you know, where did you book your stay?” And his response floored me. He said, “Aw man, you know. I just got on Home Away, and I booked me one of those Air BNBs from one of those VRBOers.”
I didn’t even know we could do that. But this is the reality we’re now living in. The multi-billion dollar goliaths are so huge, and have penetrated the market so well, that customers don’t even remember which one they booked with. Yikes. That is a big issue. Zappos is the leading etailor of the world. World renowned for their customer service. When they were first starting a growing quickly they, uh, they primarily sold shoes. But the process to actually shipping shoes to customers was outsourced to a company in Kentucky. And now, if you were to walk through the warehouse, and the inventory management system would look just like you would expect, if you’ve ever been to a shoe store. It was organized by brand, type, size, color.
And so, as they were growing, for them, this did, uh, this shipping company was basically an automated solution. As orders would come in through the site, the fulfillment portion went straight to the company, and as far as they were concerned it was completely automated. And because Zappos really is such a great company, and because they were such a great company, they were growing so fast, that the automated solution started to break. And one day, Tony Shea, the CEO, was looking at the numbers and he realized they had an enormous issue. Customers were getting the wrong shoes. Because it turns out, that in volume, storing shoes the way you’ve always seen in any shoe store, actually becomes very error prone. It becomes really easy to grab the wrong size shoe. And Tony knew he could never grow the company he wanted to grow, if customers were getting the wrong shoe. And I know we’re all thinking, “Well, duh. Of course your shoe company, if people are getting the wrong, you don’t have a business.
But as the story follows, what happens next, to me, is truly remarkable. Tony goes to the company, he says, “We’re taking it all in-house.” And then he goes to his team and he says, “We’re going to do things a little different. I’ve come up with an inventory management system that I really think is going to solve this.” And this is what he did. He invented a new inventory management system, uh, system for Zappos, and as shoes would come in from suppliers for them to sell, he decided they would store across the warehouse completely random. Can you imagine going to a shoe store and trying to find a shoe if they were stored completely randomly? The remarkable part was that the solution worked.
Become it becomes a near zero probability that you will pick the wrong shoe if they’re all stored randomly, because the other shoes are around it like the shoes you’re trying to look for. But the solution wasn’t the part that actually impressed me, it was the mindset that produced the solution. Because this was not easiest for Zappos. This solution was not easier for them. This was actually a lot of work, a lot of headache at first. It’s actually more work for the employees to walk around the warehouse picking all the shoes. But that’s because Tony understood the solution he needed wasn’t about making his day to day easier, the solution he needed was about solving the customer’s problem first. And this is the heart of un-scaling your business. Is scaling your business for the customer above all other internal priorities? All other priorities.
Andre Morys runs a conversion optimization company in Europe. And few years back I saw him speak at a conference, and I’m so glad he was willing to share the story about a, a, a pretty, uh, pretty massive failure that he had in his career. He was actually working with another etailer in Europe that also sold shoes at the time. And he woke up with, one morning with an idea that he was just convinced would work a getting more people to buy more shoes. So he went to the board, he pitched it to ’em, and they bought in. And the results were incredible. Their cart to completion rate went up 30%. 30%. That is 30 people out of 100 whipping out their wallet and actually deciding to buy shoes who otherwise would not have. And if you are in the conversion optimization game, you are running around the office like a boss. You do not see uplifts like this. You do not see 30% gains on cart to completion. You are a freaking rock star. And everyone was happy the end right?
What happened? Profits tanked. Profits tanked, and the executive team had any number of appropriate responses. Because it turns out that when you incentivize customers to buy as many pairs of shoes as they want, and tell them you will pay for the return shipping at actually, uh, absolutely no cost to them. Then what happens is that, people start buying six, seven, eight pairs of shoes when they only actually need one, and they ship the rest back. And when you factor in all the return shipping, the damage, the employee expense to restock ’em, they were losing money hand over fist. And when Andre was telling the story, he said his number one mistake, that he will never forget, and use for the rest of his life. Was that he forgot that customers aren’t metrics or numbers. He got so obsessed with the metrics, he just wanted to see the metrics go up that’s his job, and he completely forgot that there was a person on the other end of that transaction.
He said he forgot that customers are actually people. He forgot that he was supposed to solve for the customer first. Building a great brand isn’t about ADRs. It’s not about heads in beds, or net occupancy. It’s about understanding that you are interacting with real people that have real preferences, real expectations. And that we can try to push the metrics and think we’re getting somewhere and completely alienated the customers that are supposed to love us. And so, what happens time, and time, and time again, it’s almost the narrative of our industry when you ask someone, “How did you get into being a property manager?” They’ll say, “Oh well, you know, I owned a vacation rental in a given market, and I just really wasn’t happy with the companies I tried, so I decided to get into and prove that I could do better.”
And for a time they actually do. That’s the amazing part. They do actually have better customer service. They do actually manage rates better. They do actually keep the property more clean, the customers the owners happier. But then what happens? They start to grow, because they’re such a great company. And as they scale, as they start getting overwhelmed with the day to day operations, the parts of their business that actually made them special, at the flip of a switch get automated away. And then we’re left with a question. [inaudible 00:22:06] as me, “Why did you automate that? “Oh, because it doesn’t scale. It doesn’t scale.”
And so, the question that I truly believe everyone in this room needs to obsess about every single day is, how do we scale the things that quote unquote don’t scale? How do we actually keep those truly remarkable pieces of our brand that really did make us great in the early days? And I promise you. If you get to work figuring out what the answer to that question actually is, you will have a unique selling proposition in your market, in this industry, that is second to none. No one in your market will come close to what you can do, if you can figure out how to scale those things that quote unquote, simply don’t scale.
Principle Three: Authenticity
Principle three is all about authenticity. Authenticity. As brands, people really want to feel like we genuinely care about what they want and what they need. And so, one of the things we do at Stay Sense is, we’re building a growing list of regional listing sites. Our first site smokeymountains.com, last year produced millions of bookings for our partners. And as a result, we see a lot of guest reviews. But we also see a lot of property manager responses.
Guys, I want to share a view with you this morning that, that I saw the other day that, uh, you know, really wasn’t the review that caught my attention, it was really the manager’s response. And so, here’s the review, it’s one out of five stars. Unhappy is the title. The customer said, “This cabin was not appropriate for an older couple like us. We arrived without reservations after difficulties, we were given wrong directions. They would give us a refund. We’re forced to stay.” And can you imagine ladies and gentlemen, they were then told they would have to, you know, supply their own toiletries.
Now if, if you’ve ever been in the industry more than a day, you already know that most likely, this guest had never stayed in a vacation rental before. They didn’t know the experience. They showed up without a reservation. I mean, who even does that? One out of five stars. Unhappy.
But we’ve seen this. Right? This isn’t the part that’s new. It was the response that got me. And here’s the response. “Thank you for staying with us and sharing your feedback about your experience through a rental company. We apologize for the inconvenience caused to you during your stay. You’re information is greatly appreciated. Be very helpful, and gra, create a more positive stay in the future. We appreciate you, and hope you enjoyed your stay to the area.” Seriously. This guest just said they were miserable, and we’re all out there like, copy paste, hope you had a great stay.
This is not new though. I have seen this type of interaction over, and over, and over again. Someone torches you online for something that you feel is 100% certain is not your fault. And so, we just put this templated garbage as the response, thinking that we’re winning. Hey, I end up with something positive, that, I hope you enjoy your stay. No. you sounded tone deaf and like you didn’t give a rip. It is imperative that this response should have been different. The response to this should have been, “We are so terribly sorry that you interacted with our company and felt this way afterwards. We read this out loud to our team this morning and we were all deeply saddened that anyone would interact with our company and feel the way that you did. Will you please call us. We want to make this right. We want to show you what it’s like to really have a true experience with our brand.”
But here’s the kicker. That response isn’t actually for this person. We all know they were trying to be a jerk. They’re never coming back. The response is for the thousands and thousands of people who are going to read this interaction forever in the future in these public forums called listing sites. Are we making sure that our responses to stuff like this looks genuine? Like we really actually give a rip. It doesn’t matter who’s right. It doesn’t matter what the facts are. But when we do this stuff, we’ve got customers out there like, “Really? Really? So they’re miserable and you’re all like, hope you had a great stay. Really?”
So, last year I was researching a, uh, trip to, uh, uh, to Europe, and I was looking at a, uh, vacation rental in Paris. And I came across this photo, and I was, uh, sitting in my chair with my laptop, and I, I just started laughing.I just started laughing. It’s like, there it is, beautiful day, perfectly literally, the grass is green, Eiffel Tower in the background. But there’s just one problem. This photo is a complete lie. And how can I say that? Because we all know there’s no grass in front of the Eiffel Tower. But we share these area marketing photos, trying to sell the dream. And we’re actually setting ourselves up for failure.
Or what about this photo? I actually stayed in this place. This was in Venice last year. Great photo, of beautiful high ceilings. It was even in the description, very spacious. I only know I had to duck every time I walked into the kitchen.
If you want your customers to love you, be real about your marketing. People want to know what it’s actually gonna be like. And yes, I did hit my head on that at least once.
Last spring we did a, uh, quick trip to Charleston, South Carolina for five nights. Beautiful town, incredible food. Well, on the fourth or fifth night, we’d had so much fun, that we for, we’d completely forgotten to do towels. We’re trying to throw our kids in the bath. And so, I pick up the phone to call our property manager for a few extra towels. And now, I want you to keep in mind, the unit was clean. No issues. I’d never contacted the, uh, property manager. But this was the very first non-automated human interaction I was about to have with this company. And so, I picked up the phone, called ’em, and said, a very nice woman answered. She said, “Hey. How can help you?” And I said, “Ma’am, you know, we’ve been having such a good time, we, we forgot, you know, to do towels. And, and I know there’s a washer and dryer here, and you even gave us starter soap, and we really appreciate that, but we just forgot. Is there any way you can send three or four towels up?”
And very professionally, very nicely, she responded, and said, “Sure. But now, I do need to let you know that’ll 35 dollars.” And I was like, “What did you say? What? That’s the first time I’ve even asked you guys for anything. It’s first I’ve talked to you, and you’re asking for money.” I mean. Really? Really? But I’m in the industry. I had just sold my property management company. I knew that this was probably their actual expense in running ’em up. But man. it felt terrible as the first interaction with this company. And it got worse, because then I shuddered. Because I thought about every single call just like this, where our response was exactly the same. And now I knew exactly what it felt like. And I realized that we had been stepping over dollars to try to pick up dimes.
Principle Four: Unique
Principle four is all about being unique. We are called to be unique. Now I really think that this principle has two applications. And the first is that, we need to realize we have unique customers. And so, there’s a quote that I think really highlights this well, and it says this, “Guest want only exactly what we have to offer.” And you know who said this? No one ever. You start a business selling only exactly what someone wants, Amazon is going to look like a dot in your rear view mirror. You’re going to look at Amazon like, “Bye Felicia.” But that’s not the reality we live in is it?
Guests want specifically what they want. Nothing more, nothing less, and they want us to understand that, they’re not like everyone else. A lot of us run volume based businesses with thousands of guests every year, and every single one of them are saying the same thing. I want you to notice that I’m different. I want you to realize, that yes, my expectations, and my ideals, and my goals for this vacation are absolutely different and unique from everyone else you hosted this year.
So on the flight out here for the conference, uh, flew out on United. I’ve flown on United for, uh, a lotta years, lotta flights. But friend, on Sunday, United was having a rough day. They pushed us late, and they set us on the tarmac. Flights into Denver, you know, you, you are just 100% convinced you’re gonna miss your connection. And so, I’m running through the air pac, uh, airport with my backpack on. And then, it hits me all the sudden, like, “I’m that guy now. I’m the guy that runs through airports.”
But I told myself, if I can just get on the plane, I’m going to be just fine, because all I want is an ice cold Coke. So we get the air, everything’s going great, flight attendant starts the, uh, the service. And he looks at me, and he says, “Hey man. Can I get you something to drink?” And I was like, “Yes. I would love a coke.” And would you believe it, that guy had the nerve to look me right in the face, and be like, “Uh. Pepsi okay?” And I’m thinking, “No. Pepsi is gross. It tastes like bad Coke.” And now yes, I know, if you’ve flown United much I know they do actually serve Coke products.
But the reason I told that story is, because I wanted to highlight how divisive this simple slide actually is. Because half of us in the room are like me and love Coke, and the rest of you are just weird. I want you to think about this. This is a minor preference. But every minor preference we ask someone to sacrifice, will sum to the total of their satisfaction with your offering. it’s reality. You can feel it.
The second application is, that we have unique companies. We run unique companies. We don’t always think about that. In January, Matlin Dow was gracious enough to post an, uh, article that I wrote called, Property Management is Dead as We Know It. And, basically in the article, I shared a lotta my views about kind of the current state of the industry, where I really believe we’re going. And in general, what I shared was, that I think that historically we have primarily competed as a service based businesses. We’ve primarily competed in our markets based on how well we could clean, how well we could maintain, how well we could service the owners, and that in general, if you could do those things customers would pick you. But then I said, that I genuinely believe the future of the industry was that, it’s calling property managers out. It’s calling us forward to start creating true brand experiences that can truly stand on their own. And since that time it made me so happy to see that Marriott actually lost a competitor to Air BNBs experiences.
Roll, rolling out now at, uh, uh, hotels around the world, you can actually participate in bespoke experiences that you can custom tailored to yourself. They have whiskey tastings, culinary tours, wine tastings. They even have some things they’ve, they’re marketing as events guaranteed to exhaust the kids.
And it just made me so happy to see them do this, because even one of the largest hotel brands in the world are starting to realize that just having a reliable room that people’s, people will generally know is clean, is no longer enough. There needs to be something a little extra. There needs to be something unique. And it needs to be something that customers can tailor to themselves.
But one of the things I wanted to stress today, because I know there’s been a lot of discussion around this topic in the industry, is that I do not believe the future of the industry for property managers, is that we are called to be the new tour guides. I do not think this is the equation we’re trying to run. And I think that if we try to just become the new tour guides, it will be a bad experience. But I think right now there’s a question that’s forming. And I think that question is this. The question is not, how do we do it better? Because if you’re in a competitive environment, it is already a foregone conclusion that you are doing it better. The question is, how do we do a different? How do we do different? How do we create a brand experience that is so truly unique and special, that people are going to be coming out of the woodwork to come experience what we have to offer? And be no surprise that this quote was actually said by Steve Jobs.
Well, maybe. Okay. Maybe Steve Jobs said it. Because actually, it was Ashton Kutcher playing Steve Jobs.
But I really love the quotes, I put in the deck, deal with it. Okay. What are our unique selling proposition is with an emphasis on being unique? What are those truly unique experiences? And the good news for all of us in the room today is that, a lot of us already have a lot of unique resources to pull on, we just don’t realize it. Because, for everyone in the room the answer is almost exclusively going to be people. People. It’s the people you employ. It’s the people you hire. It’s the vendors. It’s everyone you interact with that you can leverage for your brand. Everyone in your organization has something unique to offer that you do not. And as entrepreneurs, it is absolutely our job to look at our team, and then mine, farm, figure out what those unique gifts and abilities really truly are that everyone can offer, and then figure out how to leverage on together to create a brand experience that is truly one of a kind. That truly stands alone. That you can’t just go out and buy, that you can’t just go easily replicate if you have enough money.
And so, as an example of this, David Angotti and myself were business partners, he spoke here last year. We are black and white different in what we bring to the table. The talents and gifts he has, I don’t. The talents of gifts I have, he doesn’t. And we actually see that as a benefit. And so, recently we actually use this algorithm to help make properties better for customers. This is helping us figure out how to put properties at the top of the list that are more likely to be the properties people want to actually book. And for the vast majority of you in the, in the room, your eyes just roll on the back of your head. And that is exactly the point. You are not supposed to care about this. But you need to figure out, who on your team has unique gifts, and abilities, and passions that you do not share that you can actually leverage for success.
Because the reality is, that unity does not equal uniformity. You can actually have a very diverse set of skills, talents, personalities, all working towards the same goal, and I would argue you would have a better brand for it, that customers will actually love. But a culture of uniqueness must be cultivated. You have to create room for it. If people have passions, if they have ideas on your team, and they come to you really hungry to try things, you have to be willing to empower them to do it. And I know that one of the risks when you’re, when you’re a seasoned veteran, you, you truly believe that you’ve seen it all before, you pretty well know what the right calls are, and so if people have new ideas, you’re already convinced it won’t work, and so you never give ’em, you know, the ability to do it. But I know for a fact that none of us actually have it all figured out, because I’m a millennial, and I don’t even understand SnapChat. I mean, what is it? Why is the logo a ghost? And what is a snap?
We hired a young lady when we had a property management company, and she told me she had a thousand snaps, and I was like, “I don’t know what that means.” But I think more often than not, what happens when someone comes to you with a radical new idea, that they’re really passionate about, is, we’re not so much convinced that it won’t work. We’re more concerned with what happens if it fails. What happens if it fails? Can we really bear the burden if it fails? And that’s principle five.
Principle Five: Failure
Principle five is all about failure. Because the best companies in the world, regardless of size, fell early, fell often, fell intentionally, and then they do something incredible. They learn from it. And so, Mark Rober runs a, uh, a pretty big YouTube channel. He was a, a former NASA engineer. Millions of, uh, followers. And earlier this year he did experiment that was incredible. He reached out to his followers and he said, “I wanna learn what the likelihood is, that someone who has never programmed in their life, could actually use basic, basic logic to build a solution to a puzzle.” And so this is exactly what it looked like. 50 thousand people participated in this. And here’s a video of me doing it. So basically on the right, you have these logic operators, so when the game runs repeat this loop forever, move the car forward, if the squares blue, turn the car right. If the squares green, turn the car left. Looks great. Hope Dave’s not watching, ’cause I don’t know if I got it right.
Oh. There he is. He’s watching. There it is. All right. Turning left. Turning right. Got it. 50 thousand people went through this exercise. Only little did they know, that they were actually being randomly bucketed into two groups behind the scenes. Now in variation one, they saw exactly what you just saw. Only if they got it wrong, there would be a little popup that said, “Oh.You know, you got it wrong, but no worries, just try again” The game would reset, and they could try again. But variation two, look just the same, except when they got it wrong, the popup changed. The popup changed and said, “Oh no. You got it wrong. We’ve deducted five points from your total score.” And down the bottom right corner, you can see that the total score went down five point. Now in variation one, no matter, uh, no matter how many times you failed, you would never lose points. In variation two, you would be penalized five points every time. And here are the results.
For those that saw the penalty, on average, they only tried five times to solve it. But those that had no penalty, they tried twelve times. And now here is the truly remarkable result. Those that were penalized for trying only tried to solve it, only, only accomplished solving it 52% of the time. But those that saw no penalty for trying, were 68% successful in actually solving it. With a sample size of 50 thousand people, that is a 27% relative difference. That is a huge difference. And so what’s the application for us? What does this have to do with failure? It’s that the truly great companies understand that we have to get ahead of failure, we have to use it as fuel for success. And so, what does that look like? Well, it looks like a process.
You sit down with your team. You do a huge brain dump. What are all the ideas that we have on ways we could truly improve the guest experience in a unique way? You filter through ’em, and you pick a really good idea. This has merit, we’re going to try it. It may even cost us a little something. And then, you test it. You actually do the thing. But the next step is the really, really hard part. Because, the next step is when you fail. Sometimes you fail. And unfortunately, this is the part where everyone gives up. This is the part where everyone stops. But if you will just push forward a little more, this truly magical thing happens.
You get back together with your team. Get out a Word document. Here’s the idea. Status. It failed. Now, for 15 minutes. Why did it fail? Why did it fail? What did we just learn about our customers> What did we just learn about our company? What did we just learn about what our customers actually want? Why did we think they wanted something different? What else about our company are we believing incorrectly that, based on this test? And then, you take all of those incredible learnings that no one else has by the way, and you go back to the ideas. You filter through ’em, get rid of all the ideas that you know now are , are debunked.
And then you pick another idea, and you do it again, and you repeat this process over, and over again, and this other incredible thing starts to happen. And that is, that you start to win. You start to win You start to really figure out the things that will work that you haven’t tried. And that is exactly why those that tried the most times were the most likely to actually solve the problem. Because we have to take risks to find gains. And if you’ve heard me speak before, I use this word all the time. It has to be cultural. You have to create a company culture that allows people to try things and fail, because inside the right box, inside the right process, it can actually produce huge value. Because the least successful companies treat failure with punishment, but the most successful see them as valuable learnings.
And so, how far are we willing to take this? How far do we go? I’m so glad you asked. As I mentioned before, we run a listing site in the Smokey Mountains region with millions of visitors. Dave and I had an idea for a feature that we were really excited about, we really thought would work. But we’re a small team, so we have to really guard our time well. And so, we did the unthinkable. We launched a button on our website that did absolutely, nothing. Did absolutely nothing. You can watch the heat maps. People clicking on it, trying to figure out why the button didn’t work. But we tracked every single click. And we knew there was risk, little bit though. We knew the people would be frustrated. We knew it wasn’t a great experience. But we knew the exposure was small. And so, why would we do that?
Because we understood that our most valuable asset is time. Our most valuable asset is time. The last thing we wanted to do was invest big time, at the cost of big distraction, at the cost of big money if we brought in outside development. Because we knew if we missed the mark it could be a huge failure. But instead we decided to invest small time. The cost a small distraction and little to no money. And we learned something really valuable about the millions of visitors that hit our site every year. And we do this process as a company all the time. What is the minimum amount of work we can do to actually test whether an idea has merit? Because I promise you ladies and gentlemen, if you will commit yourself to this process. If you will take the risks, and you will go through the process of investing small amounts of time, in small distractions, at the cost of small money, over, and over, and over again, you will find a huge win. You will find a huge win. And you will understand your customers and your market better than anyone else.
So wrapping up. Five principles for creating a brand that people actually love. The first one is all about focus. It’s all about focus. Is your team aligned? Is there a lot of friction? Or does everyone generally want to move the same direction> Principle two is about un-scaling your business for a time. Don’t just automate something because it’s painful to your day to day. Make sure you’re considering what the customer impact actually is in the long run. Be authentic. Be genuine. Your customers will love you for it. Be unique. Be unique. It will set you apart. Celebrate the things on your team that actually make you unique.
And failure. Be willing to fail. Be willing to try. Because that is where you find your huge wins. That’s where you find your huge gains. But you have to be willing to take risks. Ladies and gentlemen thank you so much for hearing me today. LiveRez is truly the best conference every year.