Latest / Reframe First / Frederik Schwerdtfeger, Head of Product at Borrow A Boat | Scaling Boat Rentals Globally

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Frederik Schwerdtfeger, Head of Product at Borrow A Boat | Scaling Boat Rentals Globally · Reframe First

• Oleksij Rak: Hi guys, welcome to another episode of Reframe First. I'm Alexey, the host of the podcast. Let me welcome our today's guest, Frederick, head of product and growth at Borrowaboud. Hi Frederick, it's great having you here. Hi Alexey, thank you. So from what I learned, Borrowaboud is basically a web... Frederik: I always say thank you. Thank you for inviting me. Oleksij Rak: marketplace for boats and yacht rentals, it's your position yourself is kind of Airbnb of boats. So that's all I learned. That's a marketplace. I know something about marketplace. Let's travel. I know a bit about that. But still, could you tell us more about Borrow a Boat, what's the mission of the product is and what's the whole story? Frederik: Absolutely. Yes. So Bo Boat is what I would say is a hybrid marketplace. are hybrid. We are a marketplace and an online brokerage. So as you said, the comparison with Airbnb, it happens a lot, but we would rather compare ourselves to booking.com in terms of the business model, because our focus is not on peer to peer renters. It's rather on us being middleman between professional companies and the traveler. Oleksij Rak: It It Frederik: Boat was founded a couple of years ago ⁓ UK. We are operating all over the world. As are a brokerage, we don't own any boats. So we just sit in the middle between the owner and the traveler, as I mentioned. And this us easily offer boats anywhere in the world, even on demand. A lot in industry is done on a handshake basis. So even if there is a request that we cannot immediately serve because we don't have the inventory, we can just do our own Oleksij Rak: Thanks for watching. Frederik: research, find it and make it still happen. Today we are offering around 21,000 boats. majority is in Europe as Europe has the strongest charter industry in the world followed by the Caribbean and then we have a few more exotic locations as well. offer boats in Thailand, Australia and Brazil in Mexico and Cuba so anywhere where there is a charter industry we generally can offer votes to our guests Yeah, the last thing I would just say is we are a full service agency. So we do anything from the first contact with the client to the checkout of the client from the boat. ⁓ We are right there alongside the client. We are handling all the payments. We are handling all the back and forth between the owner of the boat and the client. if anything happens, then ⁓ can also always rely on us. Oleksij Rak: And that opens a lot of questions. Frederik: Yeah, absolutely. I can imagine. Oleksij Rak: Awesome, like 21,000 boats, that's a lot. what usually the size of the boat ⁓ and length of the vacation of the rental? Frederik: Yes. That's a good question. I would say the majority of boats, or the typical, let's say the typical boat, is a sailboat or a catamaran around 40 foot. That is something like 13, 14 meters. renters are bare boat, so that means they're rented by somebody who ⁓ or who has a ⁓ license. For example, the most common one in the UK, just as an example, is an RYA powerboat license or an RYA sailing boat license. ⁓ typical length is a week. So the most typical charter would be 40 foot sailboat, ⁓ week Saturday to Saturday in Croatia, let's say. You the boat in the evening of a Saturday. You spend the week on the and then return it the next Friday, check out Saturday in the morning. Oleksij Rak: So I need to have the license to be able to rent a boat. Frederik: If you want to rent a bare boat, exactly. call it, well, the industry calls it bare boat. That means there is no professional skipper on board. But if you book with us, you can always hire a professional skipper. then they would captain the boat for you. And in this case, you wouldn't need any experience at all. So ⁓ we a product for both first time sailors and then, of course, ⁓ sailors well. Oleksij Rak: ⁓ huh. I see. Like you mentioned, you provide the full service from rental, like from the moment people rent the boat until they leave the boat. What is packaged in there? Is it on the boat and some insurance or is it some itineraries? I know. ⁓ Frederik: Mm-hmm. Yeah, so from the typical type of boat, let's go to the typical booking funnel. You as the user or the client, you go onto the website. You type in the location of where you would want to rent a boat. We give you all the options that are available. It can be, ⁓ mentioned, a weekly charter, or maybe you just want to rent for a single day or just for a couple of hours. Maybe for an event, maybe your partner. ⁓ ⁓ anything that can be ⁓ on the boat. We tend to be able to offer it. Once you've found your boat, you can get in contact with us because often there are more questions than what is immediately available online. I to admit, it is not the easiest ⁓ product about Renter, especially if you do it for the first time. ⁓ So ⁓ we always try to get in contact with you. to answer your questions and then also send you an offer or a quote which you can then book or share with your friends and when ready to book you just go through the checkout just like booking your hotel on booking.com or your apartment on Airbnb Once it's booked. Yeah. Sorry. Go ahead Oleksij Rak: So it's kind of... No, no, no, sorry. not used to I'm sorry for interrupting. ⁓ Frederik: ⁓ No, it's totally fine. many people are not used to it. Just some background information. We have a 50-50 split. So 50 % first time sailors have never been on a boat before, have never booked a boat online. So entirely new experience to them. And the other 50 % are people that either own their own sailboat somewhere and they just need a boat somewhere else for a week, or they tend to go every year because it's simply their type of holiday, just like one person might spend their annual holiday in a hotel resort at the coast, others spend it on a boat and do this every single year. Let's assume that you booked your boat and you want to bare boat charter. That means you have your license. You would have to send us the license before it to the boat owner just to get the final confirmation. You are asked to fill out the crew list, which is very important. It just tells the owner and the authorities it's going to be on boat for the week or for the day. Then it's time for the check-in, you go to the marina, you sign a couple of documents. You can do your own ⁓ shopping for the week, or you can use services that do it for you. You get ⁓ full introduction to the boat, ⁓ proper handover, and then the boat is yours for the day, or for the week. And then it's ⁓ up to you where you're gonna go, what you're gonna do. Oleksij Rak: What a week. Frederik: where you're gonna spend the night, you know, if you're gonna spend the night ⁓ more than a marina or if you rather anchor in the bay, there are almost no limits to what is possible. everybody has their own preference of what they do. Some people enjoy marinas because it comes with the infrastructure. There's ⁓ there's toilets, obviously, restaurant, nightlife, and others say, I rather spend it at anchor in a bay because I'm there by myself. At maximum I have a couple of neighbors in other boats. Oleksij Rak: So basically like, yeah, when you mentioned that you are kind of you compare yourself, it's like you provide accommodation, but on the boat. So they users the boat and they do whatever they want. ⁓ And the users often come to you with like, and where can we go? Like, what should we do? Are there some... Frederik: Correct. Correct. They do, especially first time sailors that don't really have an idea of, they can't really picture it yet of how a week can be spent on water, ⁓ a boat. They a lot of questions, especially, yeah, what, so what do we do during the day? Where should we go? Most trips, when talking about a weekly renter, they are a round trip starting in the same arena and ending in the same arena. So they would want to get an itinerary. that clearly tells them like, okay, if you start in Split on evening, maybe you spend the night still in the marina to get settled. And then ⁓ Sunday you leave marina, you start sailing north ⁓ or south the Dubrovnik, then... ⁓ Oleksij Rak: Mm-hmm. Frederik: You should, for example, make a distance or cover a distance of 10 nautical miles. And then make sure you find your spot for the night. It can be an x, y, If you need a to have dinner, then this is where you could go. So they get fairly detailed itineraries ⁓ for day. And ⁓ thing is important in these itineraries is always you have to anchor somewhere or you have to moor somewhere at night, right? You cannot just continue sailing over the night. So you have to put the boat somewhere. ⁓ A non-sailing person would say, I need to park somewhere. you should always keep this in mind because distances on sea, they take longer to cover unless you're of on a power boat. But most people are so it takes time. There's always the weather is a factor. Oleksij Rak: Yeah. Mm-hmm. Frederik: you can't control obviously. a good plan of where you want to be by the end of each day is a very good starting point and then of course where you want to be the next day, the day after, until you're finally back with a full circle to where you came from. Oleksij Rak: Yeah, I see. And with regards like, since you have 21,000 boats, it's probably quite a lot of rentals. how you handle ⁓ all that operationally? Because from what you mentioned, like rental, making sure the person gets on board, providing itineraries, whatever, it's quite a lot of operational work. ⁓ Frederik: Yeah, absolutely. our industry is very seasonal. We a high season and a low season, not just when it comes to ⁓ when people are sailing, but also when people book. What we often is just after summer, when everybody returns ⁓ from their nobody's going to immediately book the next trip. So this is then our low season when it comes to bookings. And then towards the end of the year, December, January is when it really picks up again, because then people start ⁓ planning. Oleksij Rak: Yeah. Frederik: next holidays they put in the the holidays at work and this is when most bookings are happening until the very high season the switch is that from ⁓ towards high season in let's say June July The ⁓ of bookings they change a little bit So rather than booking the weekly rentals people tend to book more day rentals the closer we get to high season because then people book more spontaneously they know they will be in Athens for one day or in Santorini for one day. And they just want to spend a single day at sea. And these things are book very last minute, sometimes a day before, sometimes even on the same day. And so this is a general change in behavior. But in general, this also splits or it evens out the volume throughout the year. And we get to enjoy a little bit of downtime towards the end of high season, where we then focus more on product development, tech maintenance, and stuff like this. Our teams can focus on other things because there's less check-ins to take care of. general, we have a sales team. ⁓ ⁓ after sales team. ⁓ have an account management team. Everybody's working together to make sure that everything between client and both operator is fully covered. It is labor intensive. Labor is our biggest cost. Oleksij Rak: Mm-hmm. Yeah. Frederik: It's very difficult to fully automate this process, especially when you have a product that is Something unknown to most people or too many people right that need needs a lot of explanation a lot of Q &A and of course the high ticket for our products the high basket sizes Even if everything was fully automated if you spend five thousand for ⁓ five euros for a weekly renter Probably you want to speak to a person instead of just doing everything online on a, yeah, I trust you basis. It also happens, but most people prefer to have a proper human they can talk to, they can email back and forth, they can contact via WhatsApp or on the phone. And yeah, is our industry is very labor intensive and it's very difficult automate. Oleksij Rak: Mm-hmm. What is the most labor intensive? Which part of the process? Is it like the booking process? Is it like the onboarding process? Or is it the process of like... Frederik: is yeah, I would definitely say it's the booking process ⁓ for various factors. First factor is it's a thing about our industry specifically that I haven't seen too much in other mature industries like the hotel booking platforms. And that is that pricing is very flexible in our industry. ⁓ That means if see a price online, Oleksij Rak: I will do. Frederik: you might see the same price on our competitors website. You might see it with a couple percent difference, but people tend to know that price is up to negotiation. So this is one of the labor intensive aspects of our industry is the price negotiations with clients. There's real haggling going on. You know, there is ⁓ comparing quotes from different competitors. Oleksij Rak: Okay. Frederik: trying to get the best deal trying to have one outbid the other and Yeah, we see this a lot and so From requests to booking there is a window and in this window. Let's say it's 14 days There is just lots and lots back and forth lots of questions That is because a boat is it's a complex it's like a car right if you buy a car imagine where, well, if you rent a car, actually, you're not gonna buy the boat, obviously. If you rent a car and you're gonna spend a week with the car, whether it's for a road trip or whether it's to sleep in the car, a boat is that times 10. You need to know how big the fridge is. How many things can I put in the fridge? Is there a freezer? How big is the freezer? You know, it's all these types of questions. How tall are the cabins? Can I stand upright because I'm a tall person? It's all of these things. that you think, okay, if I answer it once, I can put it somewhere on the website for a user to find. But if you put everything online, then you end up writing an encyclopedia of every boat, right? And every boat is different, even though the models might be the same. You might have one in the same model, two different charters, but they have completely different specs on the inside. So data standardization, big topic, big challenge. I've been biting my nails for this for the past couple of years. It's very difficult be so open about information ⁓ the aim or with the goal to have everything available for the user at once. There's always something that you forgot. There's always another question that you didn't think of that a client might have, even if it's so far-fetched. coming back to the labor intensity. If you ask me, let's say I'm the sales agent, offering you a couple of boats and you have a question for a specific boat. Like, let's say, what's the specific type of chart plotter that is, is it a garment chart plotter? Is it a, know, whatever chart plotter? I don't have the answer. I need to contact the boat owner. The boat owner might not have the answer. They might need to contact the personnel at the marina who is maintaining the boat. Oleksij Rak: Yeah. Frederik: And then they need to wait for the answer. I need to wait for the answer. You as the client, you need to wait for the answer. But if it's important for you and you need to have this information in order to book, then what can we do? We have to ask, right? And we have to wait and we have to get this information. And if answer the first question, we tell you, hey, it's the Garmin XYZ chart plotter. Maybe then you come back, okay, and what about the depth meter? What kind of model is that? And the whole process starts again. And it's a daily occurrence. Oleksij Rak: I see. Do you see any way to standardize? Because like 21,000 bots, a lot. And since you mentioned like each of them is different, so... Frederik: is Each of them is different and we managed to standardize it to an extent. Like we can tell you, of course, the equipment that's on the boat and we can tell you what type of sail is on the boat, how deep, what the depths of the boat is, what's the width or the beam of the boat, all of these things. But again, the human is, they always come up with more questions that they're interested in knowing or they want to know before they book. there is a ceiling to how much data you can and want to collect. Because at some point, you go from high level, let's say, an outboard engine that you might need for the little tender that you have on the boat. Is it enough to say there is an outboard engine? For some, it might be enough. For others, they want to know the horsepower of the outboard engine. OK, for some, it's enough knowing ⁓ the of the engine. Let's say it's three horsepower. The next person wants to know the brand of the Outbound Engine. Okay, then you go there. The next one, you know, it goes on and it goes on. You can, at some point, you start collecting the weight of an item. when is enough enough, basically. some, they need to know everything. Germans, ⁓ German myself. Germans, when they go on a charter holiday, they want to know everything. No question can be left unanswered. Once you do answer all the questions, they tend to book. If you miss a question, they will tell you, they look, it's all fine and good, but I still need this information. Others, are quite easy. They say, oh, okay, it's a sailboat. I can work with that. I'm gonna book. know, it's, people are different. And we kind of opted for a, for of course, a bit more than minimum in terms of information, which may satisfy 75 % of users. But to get to the next level, let's say to get to 85 % of users, your work suddenly increases tenfold because there's so much more information you need to collect. Oleksij Rak: So where is the limit? Frederik: Where's the limit? Where's the limit? Our limit is where we think, okay, we cover most of it. There's always more we can do. AI definitely, I'm sure we're gonna come to ⁓ topic of AI in a bit. AI has been helping us a lot in standardizing and just streamlining data entry and ⁓ out what users are interested in based on all the questions we get, know, based on, we have so much data. So little, so few people that can analyze it and AI has been a big help, but I'm sure there is going to be a whole topic around this. Oleksij Rak: Let's jump to the topic. First of all, 21,000 bots, how do you book them? Are there major providers that you integrate with? And then where is the AI that comes into play? to standardize it and streamline it? Frederik: there are. Indeed. Yeah. So maybe talking a bit about who actually owns the boat. As I said in the beginning, we generally don't compare ourselves so much to Airbnb because we don't offer peer to peer. Sharing your boat is restricted in many countries due to insurance, the topic of insurances. This is why our platform, Borrow a Boat, focuses more on professional charter companies. Oleksij Rak: Yeah. Frederik: A boat being professionally owned by a company means it's guaranteed to be fully insured. Nothing can happen if you damage the boat. Okay, you might lose your security deposit, but nobody can ever force you to pay for the boat. ⁓ in case of accidents, there's insurance and all of this. And these owners, can own a single boat or they can ⁓ a thousand boats. They're very big players on the market that have been in the industry for multiple decades. are of course ⁓ many. There ⁓ not if you have ever heard of any of the names ⁓ Moorings and Sunsail they have been one of the first major ⁓ charter starting in the in the US as far as I know They became so big that they had so much ⁓ Purchase power for boats that they managed to get their own models developed specifically for charter Oleksij Rak: you Frederik: as a charter boat has different criteria or requirements than your own private boat. There's Dreamyacht Charter, a major company, Navigar Yachting, many big players. The majority, I would say, have less than 25 boats, the majority of our partners. So they could be family businesses. They started with one boat. They bought another one the next season. Now they maybe have 10 boats. Oleksij Rak: Mm-hmm. Okay. you Frederik: They maintain them themselves. They have a manager at the base that takes care of the boats. And there is no big company behind them. They can also, ⁓ in this case, it means they can't spend too much on marketing and not so much on ⁓ acquisition. And then this is, of course, where companies ⁓ ours come into play. As we do the marketing, we for the customer acquisition. there's very little our partners have to do besides making sure we have updated pricing, availability, and quality photos of the boats. Oleksij Rak: That's also a lot of work. if talking... Dividing numbers to 21,000 by less than 25 votes is like 1,000 partners. Frederik: It's also, of course, absolutely, I'm not downplaying the amount of work it is to me. Oh yeah, we have actually, we have 4,000 partners. Of course you get new partners almost every, every week you lose partners that, know, change businesses is always, yeah, we have a steady growth. I think in total we have 6,000 partner accounts and 4,000 of them are active. We offer our own booking management tool for them. It's a free SaaS. Oleksij Rak: ⁓ OK. Frederik: that they can use to manage their fleet. what we get in return is of course firsthand data directly from them, added from them into our database. It cannot be more accurate than it is when the owner adds it directly. We don't have to go through external companies that aggregate data. We know boats available when it's available, we know the price and yeah, gives us a bit a... Oleksij Rak: ⁓ So you got your own like fleet management system like in the real estate there are property management systems so you built your own for the Frederik: Yeah, exactly. Exactly. Exactly and we built the same just for boats allows you to manage your inventory on our website on borrowerboat.com It allows you in ⁓ just like as you said a real estate management system where you manage your properties or listings Oleksij Rak: ⁓ that ⁓ like a really big product that run. With regards AI that we mentioned, where does it have to play? Which kind of do they help you to streamline? Frederik: Mm-hmm. Yeah. So initially, and I guess this is everybody's first step of using AI was simply to use AI, know, to improve emails, to, to get data, use AI as a second, as a better Google basically. And this is also what we started, I think it must have been three or four years ago. And luckily we have a few people in our company that really drive the use of AI forward. Oleksij Rak: chat bot, so whatever. Frederik: ⁓ as I've also seen other companies where if there's not a single person really pushing it forward then get stuck using it just as ⁓ or write your emails and that's it. And so you only tap into maybe less than 1 % of AI's capabilities. What we have done is ⁓ out necessity we use it a lot for content writing because we have Oleksij Rak: Yeah. Frederik: thousands and thousands of landing pages, you know, for every location, for every boat type, every combination of location and boat type. And need And back then our content was written by, by humans, obviously, for most companies it was written by humans, which is a good thing. But since what you said, at some point, you know, Google changed the algorithm a little bit and tweaked its content algorithm specifically. And suddenly all the content we had, Oleksij Rak: Yeah. Frederik: It was just no longer performing SEO. was just the wrong type of content. It was too long paragraphs. It was the wrong questions. It was the wrong keywords, because people's search behavior changed from just keyword search. They now ask full questions. And ⁓ they to get the answer. And we didn't have the personnel, the people anymore. that could update content, let's say for 10,000 landing pages in bulk in a feasible amount of time. So what we did instead is we built a content pipeline together Claude or through Claude. And it helped us ⁓ first think 50 or 60 different iterations until we got the prompt right and building in all the... Oleksij Rak: Mm-hmm. you Frederik: All the fail saves, because obviously no AI is perfect, especially when it comes to content generation, I think, but also many other aspects. We built this whole system that allows us to generate And this is not just a ⁓ single or not just an SEO wall text. We can fill an entire page with very specific destination content. that is highly optimized for Yacht charters, highly optimized for search engines and other AI tools. ⁓ can do this on whenever we click and we want to upgrade a page, it does And the only thing we have to do is review it. We've gone now through a couple of more iterations because I guess single month ⁓ SEO changes a little bit and moves forward and has slightly adjusted requirements, right? And unless you keep up with it, some point, you will again have outdated content, which is an absolute killer for SEO. And you at the beginning, experience with the ⁓ drop in traffic, we experienced the same from one day to another. Our content just wasn't relevant anymore, and Google just didn't like us anymore. And we had to ⁓ reinvent our whole strategy. And we couldn't have it without creating this Oleksij Rak: With that, I go. Frederik: in bulk for hundreds and later thousands of pages. needs to be reviewed. I there is never 100 % trust in the content that's generated. It gets ⁓ very to being perfect, but it will never be perfect. And we've had our fair share of learnings that too trust is in the end hurting us. And so ⁓ we implemented strict review process, but it works. We managed to update. We are still every day updating a couple of pages. And let's not forget, we are not just talking strictly about English content. We are talking about, you know, Polish. We are talking about French, Italian, Dutch. And in the past, we needed to hire a Dutch native speaker, a Polish native speaker, or of course, outsource it to an agency that does it for us. Oleksij Rak: No. Frederik: But even that times wasn't successful because you need somebody who knows the industry. If you don't know the industry and the industry jargon, then the content you create might be, you know, might be accurate grammatically, but it doesn't fit the industry. It doesn't ⁓ fit right speak. And now very little money, we can least maintain and improve our content. And this has been a game changer for us. And that's just one of the truths. What we're working on right now well, have lots of questions that users asked us over years. If agent on a booking or on a request on an inquiry, they, on average, get five to six questions that they need to answer. Oleksij Rak: Mm-hmm. Frederik: Some of these questions have been answered multiple times. There's lots of documentation. There is hundreds of articles in our help center, probably thousands of articles in Confluence. There's even around our Google And with AI, we now analyze it easily without spending days and weeks on this. ⁓ And we can easily pinpoint the frequently asked questions. use this to feed it back to AI to create the proper FAQs for the right page, to ⁓ build our knowledge base and get user to find the answers themselves rather than having us to do the research for them. And the third project, or the third, not even a project, the third AI topic is coding and infrastructure maintenance. So there's a bit of back and the backstory to our company. We used to be an engineering team of up to 20 people, QA team with an infrastructure team, front end team, backend team, multiple product managers. And not because of AI, but we did downscale this team a lot to now actually just two people due to various factors, know. Oleksij Rak: Mm-hmm. Mm-hmm. Frederik: cost saving initiatives, simply leaving and then the wall not being ⁓ again. And we to a point where it was two people, my colleague I, we have to maintain our infrastructure in AWS, which is nothing we ever set up personally, right? We had a team that did it for us. So it's completely, ⁓ it's a dark hole we always say for us. ⁓ And... ⁓ Oleksij Rak: Mm-hmm. Yeah. Frederik: With an MCP and Claude, we can at least ask any questions and it can read at least something is doing what it does. And we no longer need to be experts in server or in AWS in general. We don't need to be experts in every single tool that we use because we got now. There's so many There's a new MCP coming ⁓ out almost every that is useful, the MCPs for Google Analytics, for any tool that we need, there is something that we can use to make our lives a bit easier and allow us to do more in less time. Oleksij Rak: And how much have you downscaled the team at the end? How much have you downscaled the team? By how much? Frederik: Pardon me? It's two. It's from a team of 20 engineers. We are two today. ⁓ And has its negative sides, obviously. Two people only have so many hours each day. So even with AI, ⁓ in end, you still need to write prompts. You still need to do stuff. You still need to test things. And even best unit tests, they might miss thing here or two because it's just as good as the test that you wrote. Oleksij Rak: ⁓ shit. Yeah. Frederik: And it's not easy doing it with two people considering the massive infrastructure that was built to scale the company times 100 almost. we have the capacities. But now, if something breaks, there's two of us that need to look into it. And we need to look into it as soon as And we need to stop what we are doing because it can affect the or it can affect our ⁓ SaaS. It can affect, any area of the business. it's very challenging, but it would be more challenging or it would be more or less impossible if didn't have ⁓ AI at our hands, whether it's Gemini Pro or Clo. in Windsurf or any of the other number of tools. Without it, it's impossible. Oleksij Rak: you feel it's risky? It's nearing the bus factor. ⁓ Frederik: Absolutely, absolutely. It's far from far from perfect and we wish we would have more people but we have to use what we have at hands today It has its positives just as it has its negatives and Yeah, I mean ⁓ eyes as good as the prompt you give it right that's what what I always say if you write shitty prompts Then ⁓ you shitty responses Oleksij Rak: Yeah. Frederik: And I think the only way or one of the big reasons this works for us is because ⁓ the two of us, we probably have something like 15 or 16 years combined in this company. So we have this very big domain knowledge about every process in the company, not tech processes, know, but we know, I know exactly how sales works. I know exactly how customer service works because I set up their tools. I know. everything about email setup. know everything about, ⁓ very little I don't know about this company and the stuff I don't know. I got my colleague and so I've been writing ticket as a product manager. I've been writing tickets for years. ⁓ know what you to write for an engineer to write good code. ⁓ Because an engineer it's similar. They are partly only as good. the description that you give it in terms of what you want them to do, right? If you just tell them, do this, then there are hundred different ways to do it. But it's your job to, with the engineer to find the best job. How do you define the best or the best way to do it? How do you define the best way? It's by giving them absolutely every corner describe every that... ⁓ that could happen or is expected. And it's the same with AI. If you give it enough information, which luckily with enough domain knowledge you can do, then at least you reduce the risk. can't get rid of the risk of the AI. Doing stupid things happens all the time. And I would never do it if we didn't have end-to-end tests in almost all of our services that at least act as a backup. At least when you do shit and when you trust AI a bit too much, then there are some fail saves happening or that come into play afterwards and they can still stop bad code from going to production. And this is to me, this among ⁓ all tiny little bit of requirements that need to come together to be so reliant ⁓ on AI make it still work. There's domain knowledge. Oleksij Rak: Yeah. Frederik: There is and end-to-end tests. There's good prompt writing, obviously. And you to know the business and the industry in and out. You need to know what to expect. And of course, need to be ⁓ to ⁓ not be totally, need to have of code. You need to understand code. You need to know code ⁓ and ⁓ need to able detect when the AI is trying to bullshit you. Oleksij Rak: Yeah, for sure. much do you think AI have cites you? ⁓ mentioned the creation and especially the ⁓ multilingual And then is answering all these inquiries from users. It's ⁓ maybe so the questions from users, but rather... Frederik: you Yeah. Oleksij Rak: using utilizing your internal knowledge base and trying to provide already predictions for the good answers, for the proper answers. How much do you think AI have said either? Frederik: analyzing it at least I guess. ⁓ Yeah. So I think that it's difficult to pinpoint an exact number. There are a couple of proxies that we can use to get to a number or to at least get an understanding of how big the saving is. So one of them is, of course, how many people do we need to do the same job that we did before AI. I told you the tech team, that's just one example. We had a very big team. But we also had a team for content. We had a. Oleksij Rak: because it sounds like Mm-hmm. Frederik: a team for social media. had a team here, a team there, many, people doing many, many things. ⁓ now, compared to let's say four years ago, the team size is maybe one third, if not one fourth. So at the height, we were 100 people, I think now doing the same job that we do with 25 people. So. Oleksij Rak: No. Frederik: Not everything is down to ⁓ AI. Obviously not. You just get more efficient over time. You improve processes. You automate a bit more. AI does play a role in ⁓ sense that if we didn't have it, we would have to hire somebody for content for sure. At very minimum, hire an outside agency to do the content for us. Because we be to hire one English content writer, but not a Polish one. Oleksij Rak: Absolutely. Frederik: Not a Dutch one. So that's one thing. Another thing is, say, ⁓ back to the of the Q &A, the frequently asked questions from users. If I at our customer service today, we also used to have ⁓ probably 10 just in customer service. And customer service in our business always mixed in with the after sales service. So it's actually not just customer service replying to emails or complaints, also organizing the after sales, making sure you have a good check in at some point. This to be done by 10 people, now it's done by two people. And that ⁓ largely due us just having a lot better, a lot better center. that goes into very much detail for absolutely any question you could have. It has a lot to do with the, the, what is it, FinAI bot from Intercom. So Intercom is our support platform and we trained this bot based on our website, based on our help center, based on our sailing magazine, based on lots of other content. And this bot today can already cover something like 40 to 50 % of questions. Oleksij Rak: Mm-hmm. Frederik: which would have otherwise gone to as a case to an agent. And due to that, we managed to reduce our response times. Nowadays, ⁓ we check the response times during active working hours, it's 10 minutes. So you write an email, 10 minutes later, you get your reply. And this wouldn't be possible if we set the same volume of support cases being opened every single day. So yeah, it's a mix there as well. Oleksij Rak: Yep. Frederik: And then we have cost savings in tech. As I said, we had a very complex or sophisticated server setup. And it set up by people that are no longer with us. So lots of knowledge was lost. But within MCP, we managed to just dive into our cost structures ⁓ in Amazon, in AWS, identify ⁓ services that legacy services that should have been turned off long ago that were no longer being used. Oleksij Rak: Mm-hmm. So. Frederik: or just a few days ago, I found that we were paying for two VPN endpoints that were used back then to log into AWS for specific people outside the office. And each endpoint cost us 10 cents an hour or so in uptime. And I would have never found this, to be honest. at some point. ⁓ AI makes it so easy to, you know, it... It gives me, even if it does the prompt itself, or if I want to be in full control, I at least get the Cloud Shell prompts. And then, of course, I do lots of copy-pasting between the terminal and Cloud Shell and let's say Claude. And then I still get my answer. And it says, look, zero hits for the past 90 days on these two VPN points. OK, let's go back six months. Still zero hits. Oleksij Rak: Mm-hmm. Frederik: Are they still being used? Probably not. Let's do an analysis. Let's create backups in case we need to bring them back. And let's kill them. Suddenly you save $200 a month that you quite literally re-based it for I don't know how many months. it's just one example. So yeah, sound like an absolute fan boy, but it really has allowed us do, again, ⁓ like I before, a lot more in a lot less time with a lot less. Oleksij Rak: Yeah. Frederik: expert knowledge in areas that we just. Oleksij Rak: Yeah, absolutely. I'm absolutely on the same page with you because like, and you dramatically reduce the amount of communication between the team members. Communication of 100 people and communication of 25 people is very, very, very different, especially when like most of you are in the same office. Frederik: Absolutely. ⁓ Absolutely, we make decisions faster you get your answers faster You you Oleksij Rak: And each of you acts as a team, you know, you don't need to handle the communication. ⁓ And what was the reason of reduction from 100 people to 25 people? Is it only becoming efficient or was there market pressure? Because it looks like... Frederik: Yeah, yeah, absolutely. There was definitely market pressure. hundred was just before COVID. ⁓ then ⁓ COVID, of course, ⁓ went into home office. ⁓ Oleksij Rak: ⁓ before COVID, I see. Frederik: Although at this point, most people came back and we had an awesome, successful recovery after COVID, which, know, in the online, was called the revenge travel. So everybody who couldn't travel for the years of COVID now suddenly just want to get out. And had of first time sailors because if you at home all day long and you scroll through Instagram, you know, and you see the few ⁓ people. that still get to enjoy travel for various reasons. And you can see how empty beaches are, empty city centers are. Suddenly really, they don't get jealous, but they get nostalgic almost. They want to get this back ⁓ and they're to spend even more to get the same feeling that they know from the past. And this was a very successful for us where... ticket size it increased. We had the bookings ever because it was really it was a rush almost a rush on ⁓ on ⁓ and course I was just being a niche of the whole travel industry we got some of that rush and it worked out well for us but ⁓ as good things also that came to an end and it it flattened and then we that we Oleksij Rak: Yeah. Frederik: Yeah, we just built a bit too much. We hired a few too many people we just didn't need that much anymore. The volume, it went back to normal levels. When everybody that, okay, everything's back open, we're gonna enjoy steady growth, ⁓ you know, foreseeable future. And the growth, at point it stagnate, but it was just not as much as everybody anticipated. And I think the entire industry has seen it, right? Many, many travel industries or travel niches, travel niche markets, they got to enjoy the same rush of people and of bookings and, you know, making money, making revenue. And then the growth went from 10 % maybe, suddenly it's just 5%, and then suddenly you're down to 3 % year over year. And then you have the next thing, you have Ukraine, the war in Ukraine happening. Oleksij Rak: There. Frederik: ⁓ with the initial spike in energy costs. That was a huge factor that heavily impacted us because Germany got so expensive. And the first thing that people tend to save the holidays, right? Instead of flying to Greece for the holidays, they stay within Germany. And back then, Germany was our biggest market. instead yeah, it's just everybody. So the booking behavior shifted. The corridors strongest corridors were Germany to Greece, Germany to Croatia, Austria to Croatia. And it was Germany to Germany and ⁓ we just didn't have strong inventory there. It doesn't such a big industry, a charter industry as the Mediterranean countries. And this is yeah, stopped growing and we to make decisions and face reality. Oleksij Rak: Nope. Frederik: and turn the business to what's, is actually realistic, right? How many people do you realistically need? And at that same time ⁓ when the AI boom started. And I guess this accelerated everything where you just get more efficient, fewer can do more. No, it's third time I said this now, but it's really true. All the labor intensive positions, content writing, customer service. Oleksij Rak: Mm-hmm. Frederik: For many, course, tech also, although I think tech is still one of the, even with AI and even with tools like Windsurf, tech is the tech product that's combined. It's still the more safer area because you always need people to still understand the code. You cannot get rid of that completely, at least not now. Oleksij Rak: I don't understand what's happening there. That's it for sure. Frederik: And so yeah, this allowed us just to no longer fill positions when people left and people always leave. They always look for new experiences and go somewhere else. And at some point we realized, we can do the same thing with a few people we have. people now work a bit more? Yeah, obviously. Everybody probably has to do a few more minutes or hours a day. And it would be nice to have, to have more colleagues, to reduce workload. But that's a whole different story, right? Oleksij Rak: Yeah, that's a business site is the question. Frederik: That's the, exactly, that's the business side, yeah. Oleksij Rak: Okay, and with regards to you managed that you were ⁓ with Google's algorithms, but by introducing the content creation and adapting to this SEO changes. what are other acquisition channels? ⁓ you still like mostly reliant on Google? Frederik: Yeah, Google. So we have a fairly steady mix of paid. Paid is, as you just said, is Google and Meta lately. We have been building up Meta and it seems to be working. It's a lot cheaper than Google, which is good. It doesn't have the same quality, undeniably. It is what it is. Will it ever be at the same quality? Probably not, because the intent is just lower. You're on Facebook, you know, to... Oleksij Rak: It's. ⁓ Yeah. Frederik: waste time almost, or any social media. And Google, have just higher intent because you're looking for something. have CRM. ⁓ the newsletters to our user base. have SEO there. And then, of course, there's Direct and a couple of other channels. ⁓ Our Magazine as a traffic driver also creates a bit of a fury Christian there. Google is big Oleksij Rak: Yeah. Frederik: because I just came out of a meeting ⁓ the morning, and I presented the ⁓ and March numbers so far. And had a comparison to watch March and February last year. And last we spent four times as much on Google. ⁓ And the was a lot higher. You could blame it on not optimizing enough, obviously. But this year, Oleksij Rak: Okay. Frederik: Partly we manage to spend less because our other channels are performing a lot better, our non-paid channels. this has been ⁓ biggest achievement, I think, over the last couple of months is that we can rely less on paid marketing. I think you always need to spend on pay. You always need to be visible because doesn't just drive paid clicks. It ⁓ drives organic traffic. And it just gets the brand recognition if you appear in the search results. And if you don't appear right, you're compatted as well. So can we completely get rid of paid? Probably not. we have managed to lower it a lot. And are happy to try channels, like social, meta. We have tried LinkedIn in the past. ⁓ We ⁓ have tried every that is ⁓ in the past. Oleksij Rak: Mm-hmm. Frederik: in the end, always end up with, course, unfortunately, the most expensive one being Google. We tried Bing a lot. But yeah, just Google is so powerful, has such good market position that you're almost forced to spend money there. ⁓ And I see changing anytime soon. Can we get more traffic from other sources? Absolutely. Oleksij Rak: Did I try to go to some social media channels with some influencers? ⁓ your scale is too big for that. Frederik: So one of our partner agencies is trying management. And we are lucky we have a few partner agencies ⁓ ⁓ in the same market we are. Others are in different niche markets of the charter industry. everybody can their own little things and we just share what works best. ⁓ We have for example, for us running ads on Instagram and Facebook works well. considering the low cost. ⁓ And partner, for example, they also do ads on Facebook. And for them, it doesn't work at all. So even within a channel, there's so many differences and there's so much optimization you need to do to cater to your specific funnel that Oleksij Rak: Mm-hmm. Frederik: offering the same product almost basically the same product, right? If I offer both my competitor or my partner offers the same boat they can be active on the same channel, but on site it could work on theirs. It maybe doesn't and the other way around. They have other channels like LinkedIn for us never really worked. Then there is TikTok. We haven't really done anything there. Our focus now is focus a lot more on technical SEO, make sure our website is first class. When it comes to ⁓ technical when it comes to cover vitals, speed and so on, to really grow SEO as our primary channel. And of course, SEO is so reliant on high quality content, ⁓ but also on site itself. And we are part... Oleksij Rak: They're optimized for LLMs. Frederik: started doing it, yeah, not ⁓ a clear focus ⁓ we would say, now this month we do LLM optimization or geo ⁓ optimization, whatever we do, we take it into consideration and at least we don't do anything that would hurt it. And ⁓ do components here and there to make sure, ⁓ and also to make sure it supports SEO and ⁓ geo, especially... FAQ, for example, FAQ content, which is very important. Length of paragraphs, length of answers, all of these things. Oleksij Rak: Yeah. And what keeps breaking as you grow and what prevents you from growing further? Because COVID times are over, spike is over, but right now it's steady growth should be as soon as you better on the market. Frederik: Yeah, is competition. Yeah, our there's so much competition in our industry in the charter industry. There's so many agencies like ours. And these 21,000 boats, okay, a chunk of it is absolutely unique inventory that you might not see elsewhere. But in the end, our competitor, they work with the same partners, right? Exclusive partnerships are not really a thing. Oleksij Rak: competition. Frederik: Because the boat owner, in the end, they want to fill the weeks. don't care if the booking comes from Boar or Boat, or from Boat Around, or from any other of the of agencies that are on the market. And obviously, competition at any market. But I would on us, in our market, it's very dense. Everybody's driving up the costs Google. We very high cost per acquisition due to the high tickets. also because there's just so much ⁓ bits on the same keywords, you know, ⁓ have to talk to Croatia You have to talk Greece both rental often something like this and driving up the cost and then you have the price war because you already paid for the lead you better make sure you close it right and even if it comes at a cost of your commission that you might drop In order make the price to the client cheaper, even if it's just a percent or two percent A drop is a drop. If you have a client who's shopping around, they will go with whoever is cheaper. They know it's the same boat. They know it's the same company behind it. Okay, they might have different quality of service or different speed of service, but even there, everybody's pretty much up there. They're much optimized ⁓ as as it gets. And so... Yeah, this is where growth is. Growth is spread among all the different agencies that are on the market, for the same customers, offering the same boats in the same locations, to the same partners, almost at the same price. Oleksij Rak: If it's not a secret, what is the net margin in percentages and what eats the most out of the net margin? Is it marketing? ⁓ Frederik: Yeah, get, let's say in general, ⁓ agency gets up to 20 % of the board rental price. ⁓ Oleksij Rak: And out of making this 20, 100, what is the cost of the 100? Frederik: Yeah, it's acquisition cost for sure. It's the labor for every company, every agency needs to hire, needs to have a sales team. Oleksij Rak: Thank you very much. ⁓ Yeah. Frederik: That is definitely. And then the second is, yeah, yeah. And the second is just running costs, infrastructure, all the different tools you pay for a sales CRM, you then pay for a customer service tool, you pay for your email SMTP, you pay for, mean, I'm just looking at my tabs. I have maybe 40 tabs open right now. Oleksij Rak: And then there is a lot of manual work that you mentioned, right? Frederik: probably every second or third tab costs, it's from a tool that costs us money. a little here, it's a little there, and it just sums up. then is, we managed to ⁓ reduce office costs, for example. You also this in the beginning, right? People are more and working from home. I'm working from home as well. So we managed to close physical office locations because they were just longer needed. But yeah, is, biggest challenge is, it's not just growing, but it's growing profitably, right? You make only so much money on the booking. And if Ethereum ⁓ is gone for the acquisition, and yeah, it's just, not much, I mean, there is a bit left, right? But ⁓ you have so many other ⁓ things to pay. Oleksij Rak: Yeah. Frederik: Nothing is cheap. think Yeah, nothing nothing is cheap. I mean, you know, you know the best if you run a website You have obviously your ⁓ hosting costs ⁓ there's then all itty-bitty little cost a little here a little there it all adds up all the tools exactly There's so much and Oleksij Rak: All the tools. How you pay for the Google infrastructure, 5 to 4, Amazon, in your case. You pay for CRM for everything. Frederik: Yeah, absolutely. And we already reduced our nice to have tools, like just to make our lives easier. We reduced them to almost zero because we really tried to be as efficient, cost efficient as possible. But some tools you just can't get around, right? You need to have them. You need to be able to send your email campaigns. need to be able to make phone calls. You need to be able to send emails, transaction all of these things. You need to be able to... Oleksij Rak: Yeah. Frederik: generate leads with ⁓ lead forms. Every tiny little thing costs money. Oleksij Rak: Is there a loyalty, is there a customer's loyalty in this domain? Does it tend to come back to run to go to do so? Do they go to a competitor? Does it care? Frederik: They are, they are actually. Yeah, that's a well, it depends the customer. ⁓ would say the majority does care. There are a few customers, always customers, know, that just shop around, they take the best deal on the market. And that's it. They have zero brand loyalty. They drink Coca Cola today and tomorrow it's a Pepsi. ⁓ Same us. They booked with us today ⁓ and they book even a second boat. Maybe they need two boats. They booked the second boat elsewhere because they got it. Oleksij Rak: Yeah, but in general. Frederik: They don't care about a different level of service. There's zero brand loyalty. Or at least we haven't convinced them to stay loyal to our brand. It could also be that it's just us not doing a good enough job to keep them. In general, I think in our industry, we enjoy fairly high repeat booking rates. Based on the months, we have between 40 and 60 % repeat bookings. So it's very high. We have a good customer lifetime value. due to the repeat rate. so in this case, it's it's working very well for us. Oleksij Rak: Yeah. And you probably work with your physical clients on repetitive basis. Frederik: Exactly and we also have because almost every client goes to a sales agent or through a holiday planner They come back to the same person the next year we make sure that it's always the same person so you build your relationships and actually ⁓ ten ago I started as a sales agent as well and ⁓ after ⁓ long moved to different positions. I would still years later get whatsapp messages ⁓ Oleksij Rak: Yeah. Frederik: from past clients, would say, hey, Fred, I need another boat. you hook me up? And would come every year. And it's many like this. It's a very loyal base. But of course, not everybody is like that. But the ones that are, they are super loyal. And unless you really, really, really mess up, they will stay with you. They will always come back to you every single year or multiple times a year. because they know how works, they know what to expect. it just with one booking, right? Oleksij Rak: a great LTV value for your customers. Maybe the last one, because we're already over an hour. I've had a couple of interviews in travel industry, and ⁓ I'm of fear of especially niche businesses of some big player coming and dominating the industry. ⁓ Frederik: Mm-hmm, Oleksij Rak: And it's really hard, got your recurrent customers, it's really hard for the new customer ⁓ to your value before ⁓ they with you. ⁓ And the fear on the market that some bigger players will start dominating the market more and more. Is it the same in your niche? Because from what I hear from you, that's a lot of players who are there and I'm not hearing about some major one who come. who could come and like dominate the market. Frederik: Absolutely. It's definitely happening. It's happening ⁓ two ways. First, there is consolidation happening. ⁓ are merging with each other nonstop. ⁓ it's not just agencies that ⁓ merging. It's agencies boat owners, with fleet operators. And then you might have another company that actually owns marinas. So they have the full vertical of customer acquisition through the agency. Oleksij Rak: Yeah. Frederik: They have the ownership of the boats because they own it. And then they also own the marina that the boats are in. So this is definitely happening. There are now, I would say, three or four big players on the market already that kind of own agency, ⁓ ⁓ operator with their own boats and a marina or other similar industry ⁓ that are important. On the other hand, the second way this is happening is there are definitely major players that are standing out in our market. they stand out for various reasons. ⁓ could be pure volume. They might have two times the volume, two ⁓ the that they do each month. And they're just bigger. They have bigger budgets. If you type in Yachtcharta, Croatia in Google, you probably see them ranking first on almost every single page. They have huge budgets. can spend a lot. They have huge reach. They have a good customer base. Now, does it come at the cost of service? ⁓ at some point, maybe it does. ⁓ can do your own search and just see ⁓ that is. Does it mean that they are running a good business, a profitable business? I doubt it. Not many. Agencies like ours can run a profitable business in this industry right now due to the huge acquisition cost. It's very, very difficult. I mean, in the end, it comes down to the euro. Not many agencies, especially the newer ones, the so-called only online agencies that didn't start as a pen and paper agency or brick and mortar that were just, know, because they saw a niche in the market. is the Oleksij Rak: Mm-hmm. Frederik: the supply of boats. Everybody has access to that supply and everybody nowadays can build a website in a couple of days and probably offer these boats, right? The entry is very low. Now getting customers, that's the tricky part, right? I've mentioned it a couple of times. A lot of it is done through paid ads, paid marketing, driving up the cost. So this is probably the only entry hurdle is getting your customers. Other agencies have, or the agencies that have an advantage are the ones that started 20, 30 years ago as brick and mortar. They've been on the market forever. They have the customer base. They enjoy repeat booking rates of easily 60 % and more. They have to spend very little on new customer acquisition. They can definitely run the profitable business. Every country has a couple of these agencies. Oleksij Rak: Yeah. Frederik: They are doing a good job. They are absolute experts. They are professionals. They have very high customer satisfaction rate, very good reviews. They have been doing this for a while. They know it in and out. Yeah, they, you know, they build up a business and probably it also wasn't profitable in the beginning. They developed it and they are new agencies coming into the market. They really have to fight. They really have to be like, they are way, way up there to run a profitable business. Oleksij Rak: So what they hear is like it's old agencies that own the market. Then there is ⁓ &A approach like margin acquisition. But it's not like ⁓ from ⁓ Google coming over dominating the industry. Because like ⁓ the industry, it's actually case. So Google is started looking into the industry ⁓ and can like take a piece of the pie. Frederik: Yep, absolutely. disrupt the market. Yeah, there was, mean, there was, were agencies that entered the market ⁓ also approximately 10 years ago. Some are bigger, some are smaller today. But was the goal back then, right? Enter the industry, enter the market, scale aggressively, ⁓ outside funding as much as you need. And Oleksij Rak: Yeah. Mm-hmm. Frederik: build through scale basically. Get your volume up, try to become profitable by having huge volumes. yeah, it might for some, doesn't work for many in this industry. Oleksij Rak: Awesome. Thanks a lot for sharing all your thoughts because we are beyond one hour already. That was ⁓ interesting conversation with a lot of details and thanks for that. Before wrap it up, is there anything you would like to add on top of that? Frederik: you Yeah, so I'm really, I can talk for hours and hours and hours. Well, maybe I didn't talk so much about the actual boat charters or the charter holiday. I'm going to keep it very short, but it really is. I'm sailing myself and I'm a sailor per se. I don't have parents that say, you know, at some I was on first sailing holidays and I absolutely fell in love and I tried to every year. And it's at least to me, in my opinion, it's the The most exciting way to do holidays is to spend them on the boat, from place to place, wake up in a different spot every morning, know, prepare your food on board. Nobody tells you what you need to do or where you need to go. Only the is in charge, obviously. And so ⁓ for everybody hasn't tried this yet, it is, it's amazing. It's It's cheap. It can be cheap compared to hotels because you always need to consider that you are dividing the cost by multiple people And you will spend an awesome day or week with your friends your family On a boat with a skipper or if you sell yourself and just give it a try if you do it once ⁓ The repeat booking rates I can confirm this you will always want to do it again. And ⁓ I'll never spend A full vacation just hanging out in the hotel again, will always be a boat. Oleksij Rak: Yeah, my friend is a big fan of that and so I'm hearing that like every season. You should come over with us, so probably one day I will. Frederik: You absolutely should. You absolutely should. I can promise you, ⁓ you will want to do it every, every, every year. Oleksij Rak: Awesome. Thanks a lot, Frederick, for this discussion and good luck with what you're building and have a great day. Frederik: Alright, I digsay. Absolute pleasure. Absolute pleasure talking to you and meeting you. We'll in touch. Cheers.