Big Ways Platforms Are Optimizing Small Businesses
Division President of Kigo
July 17, 2019
Big Ways Platforms Are Optimizing Small Businesses
According to the SBA, 99 percent of all businesses in the United States are small businesses...and platforms play a major role in their development and growth.
In this episode of Platform Players, Kigo's Division President, Matthew Hoffman shares some inside tips for attracting SMBs and growing their businesses on your platform.
Yapstone presents Platform Players – the sound of platform innovation at work. Small and medium business owners rule the nation. And they are also the major target users for platforms across all industries. So, how do you win their attention with so much competition?
Kigo’s Division President, Matthew Hoffman, is here to enlighten you.
But first, this is your platform player FLASHBACK!
Matt Hoffman busted through the doors of the mess hall and spotted his two pals, who were in their usual corner, nursing their usual cans of Red Bull.
"Last final COMPLETE!"
"Exams had been particularly brutal this semester."
"Gentlemen, I am so ready for spring break."
"I haven’t even thought about it. What are we going to do?"
"We’re going to Panama City Beach!"
"No way. We can find a hotel. Too last minute."
"So, we’ll get one of those vacation rentals! Come on you guys. We’ve got to get out of here."
It was indeed last minute, but Matt was sure he could find them a place to stay. Soon they’d be on their way to Panama City for the most epic spring break of 2007!
Matt did a pretty lengthy search and found only one option for a vacation rental – but the location was good, the price was right, and hey, at this point in time, beggars couldn’t be choosers. So, he sent an email to reserve. And he waited.
It took the owner two days to get back to him.
"What did he say?"
"We have to go through a screening…."
So, they did. And another day went by….no response from the owner.
So, the Matt followed up and finally, the owner sent an email asking to have a phone call screening.
"Too late. Spring Break’s almost over!"
"Matt, I’m sorry man. This is too ridiculous."
It was ridiculous. And it should have been disappointing. But this bizarre back and forth was causing Matt’s entrepreneurial mind to work overtime.
“Okay, so spring break is a bust. But, guys, there is clearly a business opportunity here. What if we created a listing business that made it easy for vacation home renters to get approved instantly?”
It was a billion-dollar idea. And he knew it.
So Matt didn’t wait until he was out of college. Hell, he didn’t even wait until spring break was over. Instead, he used this experience to catapult him into the hospitality industry and later became one of the vacation industry’s most successful entrepreneurs.
Today, Matt is the Division President of Kigo, a global (SaaS) platform offering a full suite of products and services for short-term vacation rental managers, multifamily owner/operators, and their guests. As of this recording, Kigo generates $2.2 billion in booking volume and has had over 10 million successful stays.
Let’s get down to the NITTY GRITTY.
It’s all you, Kurt Bilafer!
SMBs are a huge target demographic for platforms in a variety of industries – maybe most notably, the vacation space. Looking forward to this conversation with Matt Hoffman, Kigo’s Division President, who has some great insights about winning over the SMB crowd. Matt, good to have you here, my friend.
First of all, tell us a little about Kigo.
Absolutely. Kigo is a SaaS company that originally started to build solutions for vacation rental managers in the U.S. We also have a sister company out of Barcelona. Over the last few years, we evolved into a platform where we're looking to bring together vertical solutions that are empowering the platform ecosystem with what it means to be a vacation rental/hotel rental management company.
What makes Kigo unique in the marketplace for short-term vacation rental properties?
That's a great question, Kurt. I look at Kigo as a neutral player. We are Switzerland if you will. A lot of the platforms out there are dominated by some very well-known brands in this space. Where we feel Kigo fits into the picture is for the brand empowerment of the short-term rental manager.
If you look at hotels, Marriott, Hilton, you've got a lot of big brands and brand recognition there. If you transfer over to the world of short-term rentals outside of Wyndam and a few others, it's still very much a burgeoning sector of professionals that are working very, very hard to deliver what they define as a hospitality experience. That's really where Kigo comes in.
Kigo is the platform to level the playing field. Technology is the great equalizer, and we want to help empower those companies to build their brand and help establish those brands over the long-term.
These are SMB companies that you're dealing with; the property management companies. What's interesting is, for SMB companies, typically, they're not the most innovative. Not because they're not capable, but because they just don't have the time. As you said, they don't have a staff. How do you help them understand the benefits of what Kigo does?
You're not just a simplistic help me get eyeballs, or you're not just helping them with payments. You're a full end-to-end staff that helps them monetize the experience, but make sure they're getting the right distribution and experience with their customers from the moment that they book all the way through to when they checkout. How do you sell that to SMBs? I think this is a problem that lots of marketplaces have is, getting the SMB's attention to understand the real business benefits.
You're spot-on there. For technology to be a real driver for innovation, for growth, it needs to position itself as flexible, while also still being able to leverage the best in class around it.
So, I said, if a customer asks at a panel, "Where do you see Kigo over the next few years?" I'd say, "It's a platform that definitely is providing you the vertical solutions that are the standard best practices, but then it's also empowering meaningful connections." There are other great companies out there that are solutioning developments of this ecosystem.
To get back to your first point, how do you articulate that value? It's like if you're going to college and you also have a fulltime job, there's only so much you can focus on. A hospitality business is 24/7. You don't clock out. The guest demands are always going to be there.
Part of what I articulated during KigoWorld is this decision fatigue. Decision fatigue is affecting the space today because there are over 1,000 vertical solution providers. There are multiple ways from many different directions from which they're told, "You need to be able to do this," or "you don't need to be able to do that."
The average person has to make about 35,000 decisions every day. Five percent of those choices are actively made. Yeah, we're conscious of those, but the other 95% of those are autonomous. Their choices become harder and harder as these professionals are shifting with an industry that's growing exponentially.
These are the things that technology will help when working correctly, will help mitigate, and help them to then determine, "I can then educate myself on those next Best Practices because I can raise up from having my head down. I can look up and see forward and say, "Where do I see my business three years from now? Not just the 30 or so guests that I'm worried about all checking out or checking in at the same time today."
Platform Players is brought to you by Yapstone, the premier payments provider for the platform economy. Just so you can fully appreciate the strategies Matt is talking about, we just wanted to pause the conversation here to give you an idea of the sheer size of the vacation's rental industry.
So, here are your five fast, fun facts:
1. In 2018, there were roughly 23,000 vacation rental companies in the U.S., according to VRMA. Worldwide, that number quadruples to 115,000.
2. VRM Intel notes that 30% of vacation property owners and 32% of investment property owners plan to rent their homes as short-term rentals in 2018. This is up from 25% and 24% respectively from the previous year.
3. Skift found that in 2017, celebrities and the wealthy increasingly preferred vacation rental homes to hotels. And there seems to be an upward trend in alternative vacation homes.
4. Lodgify saw a 40% increase in houseboat reservations in 2017 as well as a 30% jump in treehouse listings. Barn bookings were up 55% the same time the previous year.
5. A Statista study discovered that 64% of vacation home renters found the rental kitchen to be the leading amenity.
And those are the facts. That was fun. Now, let's get back to the conversation at hand – Kurt, back to you.
With B2B enterprise sales, these big corporations, in theory, shareholders and profits rule that world, but when you get SMBs theirs is a different decision-making framework and a different set of decisions and tradeoffs. How do you think you help them understand that?
First and foremost, they're very cost-minded in the decision-making. They're in a position where they really need to be conscientious of that fact. In our position, the great debate we say is the technology cost versus value debate.
The price is only a problem in the absence of value for any consumer, so how do you ensure that the benefits that you are articulating to them and how you can help all boats rise with the tide in that service layer to come up through technology because it is an investment. It's an investment of time. It's an investment of money to come into the services and technology.
That is something depending on the time of the year, there's a right time to do it based on their season and where they're operating, and it's definitely a time commitment to make sure that they can get through not just adopting new technology, but relinquishing some of the practices as well that they've gotten used to that's helped them achieve and get to where they are today.
It might not mean that those same practices in SMB as you are scaling – you're going from an incubation phase essentially, kind of look at that ego and tech companies to the expansion phase. As that growth starts to happen, you find that the processes that you have in place, the way that you communicate to your staff or to your guests, those will tend to lag behind with the growth.
It's important that that's where the technology can come in because it can help offset and ensure that you can both not just adopt technology to help scale, but then your operational practices in facilitating to your point, the instant gratification that's happening in the space today. That five-minute golden window they call it at hospitality to not necessarily solution the problem, but just to let someone know that "We're looking into it for you."
These guest expectations, mark my words, they're rising year over year in technology through all its efficiency gained is also creating expectations definitely right around how fast we expect service to be delivered to us. This is where it's important that SMBs make those investments to help ensure that while they're relevant today, they also are doing the things that they need to be able to do to competitive tomorrow.
The interesting thing is you have this added challenge let's call it or opportunity because you're so globally focused that what this means to each different geography because there are these cultural nuances is a huge challenge. What do you see as the biggest challenge to a global marketplace?
I think the biggest challenge to a global marketplace is that a platform is not just technology. It's also service. Software as a Service, SaaS, I think the challenge is that because you are also service, you are having to understand nuanced details and complexity in global markets.
We are based out of Richardson, Texas, which is a suburb of Dallas as our headquarters. We've got the heart of Richardson Kigo is in Barcelona. That's where Kigo originated.
In order to understand those nuance differences and walk a mile in your customers' shoes, you really have to be in that market to be able to do that. When you're building technology to serve a global landscape, on the service side of it, you're supporting different languages, different currencies, regulatory shifts that are happening.
There are nuanced details in markets where there might be a piece of the technology that you just don't support today, but now are going to need to. Take PCI Compliance as being last year a great example of that. I think that is our challenge is to say to think of a platform not just as a technology, but as a service and all the products that help facilitate both sides of that coin.
All right, everybody. It's time to raise the stakes. Since we're talking about growing global platforms, the team at Yapstone wanted to give you a little expert tip about how to best convert your customers from other countries, and it has to do with the methods in which your customers pay.
Unsurprisingly, people in different geographies pay by different methods, and that is why it is so important for global platforms to accept APMs, which is short for Alternative Payment Methods. APMs are also known as LPMs, which is Local Payment Methods, and they include bank transfers, eWallets, and cash, and solutions.
According to WorldPay, over half of all online transactions will be made using APMs, by 2021. Oh, and according to PPRO, 50% of customers will abandon their purchase if their preferred payment method isn't available, which is not something that you can afford to do.
Think about it. If you're going to a foreign site, and you didn't accept the payment method you were comfortable with, how much would you trust that site? Ah, yes! APMs are just another way in which payments build trust for global platforms. If you're smart, you'll start accepting them ASAP.
Now, let's get back to our conversation.
One of the things that we talked about in KigoWorld is APMs, these alternative payment methods and how important they are more for the global travelers, for people outside the United States and how you support those.
But then how do you trade that off with some of the other things that you need maybe to make it easier for your property management companies. Obviously, you want guests and want to ease the friction of payments, but there are probably ten other things that are higher on their list because it would make their life easier. How do you go through making that decision process?
Good questions. You come fully loaded today, Kurt. Fantastic. I would say what distinguishes a technology company is, does their product allow them to move faster, more flexible, at greater scale than their competitors? You really need to be flexible and be able to scale.
Today, you've got a lot of systems in place where the IT is cumbersome. It gets in the way. Can you have a strategy where you're an enabler and driver of continuous innovation and adaptation? That is really critical.
So, behind the brand and technology that you're providing is really the strategy that you have as a company because that competitive advantage for tech companies is organizing the technology in sort of a set of modular, vertical solutions that can be accountable to many different areas.
That is what's going to really help in my belief to enable them to accelerate and innovate with Kigo and how we're driving this. We're looking at ways with which we can get these products to market a hundred times faster. We want to look at ways to empower others in those markets because every market is different. There are going to be local players that are providing value on one side of the solution, and we have to go to work with those companies as well because you can't be everything to everyone.
At the genesis of marketplace was a real challenge around payments, and that is what brought our relationship together was looking at we can chase building API integrations around the globe because every single market we go into, they've got a bank they've been working with for ten years, or they have a payments company they've been working with for five years.
We could just decide that we're going to build that forever, or we can come up with a way to provide a vesting-class solution that solves for that to put a big check in the block because it's e-commerce at the end of the day. But if they still want to go outside of that, then you need to be a company that's open and flexible enough to be able to allow them to make that decision themselves.
It really becomes a your-brand and other brands that help-benefit-me discussion, not your brand, and that's it. Then you have no other options available because if you take that approach and you're not open with your API and your ability to play with others, then I believe you'll fail very fast.
Platform Players is brought to you by Yapstone, and we're just in time for Tick Tock where Kurt has 90 seconds to get up close and personal with our player. The clock is ticking. Better start talking.
Matt, what's your favorite smell or sound?
Favorite smell is anything Italian food. I would eat Italian food every single night of the week if I could. When we travel on business, and they ask, "Where are we going to eat tonight" or I ask, "Where are we going to eat tonight?" Everyone always responds, "Anything but Italian." So, they've taken that off the list of options for me. But definitely the smell of Italian.
For music, anything music; anything up-tempo that keeps emotion, creates emotion, helps music. Definitely what I love is going over to Barcelona and to Europe, the ??? capitals of the world so to speak, the world over there. That is the favorite sound.
What's your favorite book?
Favorite book would be Timothy ???. I'm definitely someone that – I've got a big imagination and creativity.
What's the best piece of advice that you've ever gotten?
Less is more. Less is more is really an approach where if you can keep it simple, there's just more that you can do.
Very interesting conversation today, Matt. I think you've given other platform leaders a lot to think and strategize about as the needs and demands of SMBs evolve. Thanks so much.
Kurt, thank you very, very much for having me today and the opportunity to have this great podcast and be able to share a lot of what we've been doing. It's been an absolute pleasure.