Latest / GAIN Momentum / Tech Buyers, Users and Market Validation | with Ira Vouk
Transcript
- GAIN Momentum episode #3 - | with Ira Vouk === Jason Emanis: Welcome to the Gain Momentum Podcast, focusing on timeless lessons from global industry leaders about how to grow and scale a business in hospitality, travel, food service, and technology. I am Jason Emanis,, joined by my co-host Adam Mogelonsky. Adam, how are you doing? Adam Mogelonsky: I'm doing great. Jason Emanis: Today our guest is Ira Vouk Gain Yeah. Hi, how are you? Ira Vouk: Great. I haven't had my coffee yet, but I'm all excited about the Jason Emanis: Well, you need to let me get through your whole long introduction. Ira Vouk: I'm gonna take a nap while we do that. Jason Emanis: I know, and it's too long. Author. Business founder, consultant. Long time in the hospitality industry. Professor. Yes. Well, that wasn't, that didn't take too long, did it? Ira Vouk: Yeah, there's Jason Emanis: really condensed it. Ira Vouk: that's a good summary. Jason Emanis: But thank you for joining us and thank you for joining us before your coffee. Ira Vouk: Thank you for having me. I'm really excited about this conversation cuz that's what I love talking about. Can't stop me. Jason Emanis: Cool. Well, Adam, let's get going. Adam Mogelonsky: So era, our podcast is focused on timeless lessons. So not just specific to hotels, travel technology, but things that might apply for everyone, be they seasoned business professionals, young 20 somethings, just starting off, looking for some bits of wisdom to get ahead. So with that, we frame them around four questions. To distill some of those lessons that you have for people about how to grow a business, how to scale and gain momentum. So with that, I'll dive right into the first question, which is, ira. When it comes to scaling a business, what is the single piece of advice you would give entrepreneurs from your perspective as a professional in hospitality? Ira Vouk: That is a great question. So, the way you phrase it, you phrased it about you're asking about scaling a business, which is different from starting a business. So if we're talking about scaling the best piece of advice, I would say Would be understand your target audience and understand the decision makers and the end users. And when it comes to our industry, I know you mentioned that this is, we're not specifically only concentrating on the hospitality, but in our case it's even more complicated because our industry is very complex and very convoluted and very, fragmented. So in our case, what it really comes down to is understanding the industry and understanding how to navigate in it. If we're talking about businesses like vendors, especially technology vendors that are trying to sell their products into the hospitality and scale their businesses, it's crucial. It's very important to understand what you're dealing with. And, during the last 10, 15 years of my consulting practice, When I was talking to these startup companies young businesses, I realized that majority of them are not from our industry. So, and they, they come from, you know, different segments like FinTech or, a real estate or other sectors, and they don't really understand what they're dealing with when they come here and when they start their business and they try to scale it. And I think one of the most important advices that I would, things that I would recommend to do is just become familiar with what you're dealing with. whether through, you know, consulting or just reading or attending conferences or, just understanding your audience better, understanding who you are really addressing. in the, in our sector. Like which part of the sector you're addressing specifically? Jason Emanis: Yeah, that's good advice. Because it, it can get it, can you, there's some turns and corners. You start talking, like, I've talked to the GMs and I'll, you know, I'll ask them like, well, who, you know, who owns this product? You know, well, I'm the user and I own it, you know, but we're part of a management company, so you know, the vp, blah, blah, blah. And then you're like, oh, okay, well then you gotta go over there. Like, what is he most con or what is she most concerned about? You know, is it. What that product's doing at that property level or is she got something else on her mind? Ira Vouk: Yeah, don't get me started there because like when we start talking about the, one of the. The weirdest examples of the fragmentation of our industry is what we call a three-legged stool situation, where something that I talk to my students about all the time, and they don't even realize this, many people in our industry who are practitioners don't realize this. We have, when it comes to acquisition of technology, have three stakeholders, at least three stakeholders in the picture. We have the brand, we have the owner, and we have the management company. Which are three different organizations and they're actually in conflict with each other. There's just one example of how convoluted our industry is, and if you come to our industry and you sell, try to sell your products or services scale your company and you don't understand these things, it's really hard to scale. I've been in those shoes. I'm a founder, I'm a tech founder. I started my company 13 years ago. And I did not know what I was getting myself into. And I had to learn from my mistakes. And it was really hard. I thought it was, oh, we just gonna build this cool RS system. It's gonna have machine learning. Everybody's gonna, is gonna sell like hotcakes. Everybody's gonna be all over it, not how it went. And yeah, we learned, and I learned also as I was talking to these other. Startups and other companies and other hotel companies. And I learned and learned. And, I've learned a lot from my mistakes and mistakes of others. And those who are listening you don't have to make the same mistakes. Just talk to someone who have already gone through all those things. Adam Mogelonsky: Well. Ira sort of, took it right in here. And going on to our second question, which is what are some of the common pitfalls or failures you have witnessed that business owners should look to avoid when scaling their business? Ira Vouk: Great question, and it's of course tightly related to what we just discussed. The, I would say number one. By far is not understanding who the end user is. And I'm talking about businesses like, you know, vendors, they're trying to scale, to sell products into the hospitality indu industry, to you know, hotel companies vacation rental companies, cruises and whatnot. A lot of different organizations. So, I'm kind of in this part of the industry. I most, my consulting career has been sort revolving around. Vendors When you build a product or service and you just start selling it and you don't understand who the user persona is, like that's the worst thing you can do to your own business. You have to really clearly define as a rule number one, is this a property level user? Is this a corporate user? Is this going to be a person at the front desk, or it's going to be someone in the back office, you know, down to like the age group. Is it gonna be a male or female? Not trying to discriminate, but th these things are important so you know how to build your product or service and, you know, how to market it and how to sell it. And then number two is understanding who the decision makers are. Or rather not understanding. That's like the biggest issue that I've seen with the companies that I work with, especially the younger companies, they don't really know who, who to approach when selling their services. back to this three-legged stool situation, they're not really understanding that if they walk into the front desk of a hotel or walk through the doors of the hotel, I talk to a front desk clerk and try to sell them a property management system. That's not gonna work, cuz that's not the decision maker, right? That's the end, one of the end users, of course the key end users for that type of software. the decision makers could be either property management company, the owner. Or the brand or an asset management company. And you just need to clearly understand regardless of what you're selling or what business you're in, you need to understand who the decision makers are. And many companies, young companies just don't, unfortunately, and this is the big one of the biggest mistakes. They are, they're always making when trying to scale their business. And that what makes them fail In many cases, and we know a lot of startups fail. Unfortunately. Jason Emanis: yeah. Know that customer. Say it a lot, know, but you gotta talk to them and then you gotta ask them. who else is involved and understand, you know, the three or four people that are gonna be involved in that decision. Who, Ira Vouk: for three and four organizations who are in conflict with each other, which also happens. Jason Emanis: Yeah. And find out what motivates them and work it that way. Adam Mogelonsky: I want to drill down a little bit further there. you mentioned that, startups or companies don't fully understand trying to sell into hospitality, which is very difficult. And I'm wondering, without casting too much of a crystal ball here, why don't they understand and what can they do to improve their understanding? Ira Vouk: yeah, so partially, what I mentioned in the beginning, the main reason in my understanding why they don't really, know how to navigate very well in our environment is because they don't come from our industry. And they, 90% of them come from. Again, FinTech, real estate healthcare, really like whatever background they have. They're not from hospitality because it's really hard to find kind of business tech, data oriented people from within the industry. we just not, we could be an exception and there are many people, for our exception, but majority of us in our industry. We come here because we want to build memories. We wanna provide great customer service. We're not really business people, so they come from somewhere else. And when they come here, they're not locals. So they don't really know the rules of the game yet until they learn from their mistakes 10 years later and kill their business and kill one, kill two. Maybe the third one's gonna be successful after they learn, but. Again, they don't have to go through these hoops. They can talk to people who already know what they're doing, who have made all those mistakes and learned from them. And they just need to start, immersing themselves into this environment, going to conferences, talking to experts, hiring consultants, reading materials that are published, listening to these wonderful podcasts To start understanding what they're dealing with. So that's, I think that's reason number one is just because they're just not native to the industry and they just need to be aware of the fact that our industry is very unique and the way it's composed and structured, no other industry is structured that way. And that's a very important factor to consider when you're trying to scale a business. Adam Mogelonsky: Wow. We're gonna move on to the third question, and actually we're looking ahead, which, you know, we're talking about the past and the three-legged stool of hospitality, but really that applies to the future because that element is not going away anytime soon. So what do you see as the key opportunities and challenges for hospitality companies in 2023 and beyond? Ira Vouk: I think the three legged stool situation, it might get a little bit better because the industry is somewhat consolidating, but it's definitely not completely going away. I would say the key opportunity is technology by far. I'm the biggest fan of technology. I promote tech adoption in our industry everywhere I go, and we know that our industry is somewhat mildly speaking conservative when it comes to technology adoption, but even us, even our industry, even our sector, we're starting to finally understand that it's just necessary to adopt, to innovate, to adopt tech. Especially after the pandemic, everybody's talking about it. How the pandemic took us through 20 years of evolution in two years. It's true tech adoption rates have skyrocketed. And with AI and machine learning with these tools like chat, G P T and VR and AR and meta and this and that, there's just so many wonderful new, emerged technologies that. We're born in the last couple years and we just can't ignore those things. We have to embrace them, even though we're conservative. But we have to embrace, we have to be open-minded and not say that AI is gonna kill us all and we are gonna be slaves. And you know, those things, which I hear all the time, especially in academia, but in hospitality as well. because that's the biggest opportunity for us. If we don't embrace it. We just gonna keep being behind the, what are we competing with hunting industry right now? Like we are literally out of 20 industries based on the recent research in terms of technology adoptions. We are number 18 and we are like around the same. We're like where hunting is, so we just need to really. improve in that area. And the biggest challenge at the same time is also gonna be technology. And the reason why I'm saying that is because there are a lot of legacy companies in our industry that have very old legacy tax. And for them it's much harder to innovate and to adopt new tech and to upgrade. that's gonna be a challenge for them. So they are gonna have to make a decision whether they wanna invest and they will have to invest huge amount of amounts of money because of their old databases, old tax and ways of doing things and writing their businesses. They all have to make a decision whether they want to invest in these upgrades. Tons of money. And if they don't, then they're just gonna die. Like that's just no question about it. So this is the decision that they will be making in the next couple of years, and we will see how some large organizations will just. Fall behind and be disrupted by others, and they will no longer be leaders just because they, they made the wrong choice at this point of their lifetime. Jason Emanis: I can't help but think that the hospitality decision makers have got a lot on their plate. A lot of, do I look at this? Do I invest in that? I got 20 different technology vendors and it kind of makes sense. It seems like there's a lot that they're gonna have to deal with two. Bring in technology if they're willing, if they're open-minded to help with some really serious problems. Ira Vouk: Absolutely. Yes. as much as our industry is convoluted, our tech ecosystem is even more complex. If you look at the map of vendors that some companies publish every once in a while when I show it to my students on the big screen, the names of the vendors are so small you can't even read them because there's so many, there are hundreds, there's thousands in. 20 different categories that have subcategories. It's very complex. I absolutely agree. So, that's why hotel companies or hospitality organizations who are looking to upgrade their tax stack, they can't do it themselves because it's not a very trivial task, male speaking. They have to hire a team of professionals to help them with that. They just have to, and it's. Very wise decision to invest in this process and find the right team, the right people to do it, rather than attempt to do it themselves and completely screw it up and find themselves in a very, in more convoluted tech stack a few years later than they will require more investment. Adam Mogelonsky: You know the term I've heard that sort of encapsulates what you're talking about is shoppers paralysis. There's simply so much that you end up doing nothing because you can't make a decision Ira Vouk: I do that at Costco all the time. Like every, almost every single time. Adam Mogelonsky: that's why you need a list. You need a shopping list. Right. Yeah, no but I'm wondering though, is there's so many different things hotels can choose from in terms of not just vendors, but areas to explore to expand their technology in order to. Drive the top line, drive the bottom line, and grow. What advice would you give for narrowing that down? Ira Vouk: That's a loaded question. So my other area of expertise is revenue management and profit optimization. And, I think one of the things that hotel organizations, hotel companies are, or hospitality companies are missing right now. Many of them, not all, but many, is that they're ignoring the the profit optimization part of the revenue management discipline because we've been concentrating on RevPAR for 30 years, not really understanding that RevPAR and profit are two very different things and they can actually go in different direction. for those who are listening at RevPAR means revenue per available room. That's the metric we use to. kind of assess our performance in our industry of hospitality organizations. So, we are just in the beginning, even technology and revenue management is just in the beginning of understanding how to maximize profit because we've been actually maximizing the wrong thing for 30 years. So I think that's one of the areas that is a key area of opportunity for, hospitality companies. Who have assets, who manage assets, hospitality assets to concentrate on, because we are in the business of, you know, we're here to make money. Like hospitality companies, they all want to be profitable except for the brands. They have their own thing. But if you are an ownership group, you own assets, profit is important. So those are the things that you need to start looking at in addition to what you've been doing, and revise your strategies every once in a while to understand whether the things you're doing, you're just doing them out of a habit or do they actually work Because many things changed after Covid, like we are in hospitality 2.0 as I call it. It's a completely new reality, and which you can't continue doing business the same way that we did before. Adam Mogelonsky: Yeah, it's the focus on profit and using the r m s. There's another acronym there, the revenue management system to really know the customer, going back to it and to understand which are your more pro, more profitable customers. And that's another piece of technology where you just have so much convoluted data that you can't. Identify that simple barometer that owners are really interested in. Ira Vouk: Yeah, and ideally these things are gonna start being automated more and they will require less of user involvement, maybe just on the higher level from strategic point of view, but, All of that analysis and number crunching and data crunching that is supposed to be now delegated to machines. And we're not there yet as an industry in the revenue management discipline. But, with these recent developments and emerging Technologies and AI and machine learning algorithms that are becoming more and more robust and popular. there is a very good chance that very soon we'll get to the point where, humans won't really have to be dealing with trying to understand, okay, who is my most profitable customer? Or, you know, how do I shift business? It's all those things should be delegated to machines. And then humans should be involved on a higher, more strategic level where, you know, they look at. The what machine generated and make higher level business decisions with that information in mind, that's how I see it at least. Adam Mogelonsky: So the fourth question, era. What are the key things innovative leaders and entrepreneurs should prioritize and focus on to gain traction for their business? Ira Vouk: Let me think. Prioritize I think the main thing that they need to understand, and now we're talking about gaining traction, meaning kind of like in the beginning in building their business. I would say, understand the problem first, that you are solving and build the product or provide the service that solves that problem. Don't open a business just because you think it's a good idea. And that's one of the mistakes that a lot of businesses also make. If a business doesn't solve a problem, it's hard to gain traction. So before you are in, before you invest your time and money and or somebody else's money, as in Jason's case, make sure that you clearly understand, if there is a problem that exists. With the target audience that you're trying to pursue to target and make sure that your business is solving that problem. So get market validation before you start investing, and that's something that is very simple and basic. But for some reason, a lot of companies don't go through that first step of market validation. It's very important. Again, there should be a problem that exists and your product or service should be able to solve that problem. And if you're doing it, optimally, and if you're doing it right, then there shouldn't be any issues with getting traction or scaling your business, then everything else will follow. Jason Emanis: Would you add urgency to that? Like there's certain, there's cer, there's problems, there's a lot of problems, but there's a list in. You know, we'll just take hotels for example. I mean, if the problem's way down the list. I think you as a business owner entrepreneur someone trying to scale up, you've gotta understand as best you can, where does the problem you're solving, where does it lie on the list? If it's down here? I think you gotta plan accordingly. It's just gonna take longer. Ira Vouk: Yeah, that's a very good point. Yeah, I think that's definitely a very good element to also consider. that would require kind of a deeper insight into the life of your, of your potential customer to understand the urgency as well. But yeah, that, I would say that's definitely an important factor to consider when you're making your business decisions. Adam Mogelonsky: Well. Thank you. That's just fantastic answers. I'm still digesting them myself, as you can probably tell, jumbling my words, but a lot of times I'll go back and listen to an episode once more just to get the full gist of what everyone is saying, which is Oh, so critical. So I can't thank you enough for coming on and. Just giving great answers to some questions that have timeless applications, so thank you. Ira Vouk: Thank you very much for having me. It was a pleasure. Again, my favorite topic. I love talking about it, and we'll be happy to join again if you have more questions. Jason Emanis: Thank you.