12:49 Find out how many customer AirDNA is serving today
9:16 Amount of capital raised to date!
10:35 Cash burn
4:33 How much it is costing AirDNA to acquire a customer (CAC)
12:42 MRR & ARR (Recurring revenue)
7:35 Employee count
2:25 Gross churn
1:23 ARPU (Avg. Revenue Per Person)
14:47 AirDNA 2018 Annual Revenue
Airbnb Analytics with AirDNA
We have built the following transcript from this discussion with AirDNA’s CEO Scott Shatford. We have made edits to the transcript to remove some irrelevant words, so keep in mind that this transcript must be referenced against the video if you plan on quoting ur using these statements in another article.
hello everyone my guest today is Scott Shatford he is the founder of air DNA which is basically a leading source of vacation rental data looking on obviously scaling now he’s got 15 years of experiences data analyst which is obviously leveraging in the new company Scott you ready to take us to the top let’s do it all right so you came on the show well gosh it must have been about a year and a half ago now at this point right
yeah I think this is about just about a year ago yeah maybe it’s a little bit over
yeah I remember my big thing with you as I love the product cuz I own air BnB properties but from a company perspective you’re journalists through the roof talk to me well first off update everyone so what does air DNA do and then talk to me about churn ever even able to that down
sure yeah so air DNA we are you know large provider short-term rental data air B&B data VRBO home away whatever it is we track every vacation rental around the world every day .
And try to analyze it like a hotel property trying to figure out how much revenue is generating what its occupancy rates are when its average daily rate is charging is and so you know we just felt built out a lot of technology
to understand how to do that at scale and so we provide that data to vacation rental managers or real estate investors or hotels trying to figure out who’s eating their lunch in their backyard hedge funds and a bunch of other folks that are interested in how sort of short-term rentals are disrupting real estate and hospitality and what opportunities it’s creating and are they still paying on average call it 75 bucks a month.
yeah somewhere around that probably you know we have a sort of a flagship product market minder which is our SAS product you know we’ve you know over 6,000 subscribers that product ya paying in a train sixty to seventy bucks a month
yeah like you mentioned you know to turn is uh isn’t an issue for any sort of real estate product we found is because a lot of people real estate they’re making a one-time decision right they’re trying to say hey should I buy this property or that property should I buy and Breckenridge or bail like and so a lot of it is sort of a one-time big decision that they’re wi
lling to spend a bit of money in to make sure they get that decision right once about keeping them around you know for the next year or two is the tricky part like how are you helping them set up that property are you helping them price that property how are you helping them benchmark their performance versus their peers right.
and so you really got to take them on a journey and so you know what we’ve been trying to solve for the last year is how do we make sure we can solve the you know the our journey for our customers which is not just buying the property but setting it up pricing it monitoring it and optimizing it over time.
so when you look at over the past 12 months churned what is it what is that now man we don’t even look at you’re on a let’s get Gary awfully turn is a little under 20 percent right now and so that annualized something is probably you know closely there’s about 60 percent annually.
when we’re looking at sort of our our annual return you know once we get sort of a three month mark you know people stick around right so we know this is sort of the use case we want something that’s actually operating properties is monitoring competition making daily pricing changes to their listings and so that’s the customer that sticks around for a while.
yes give me that story though real quick let’s actually break this down because you you see this pattern you know if people stay past month three their turn drops significantly so it’s unfair for me to ask you like a weighted average churn number so let’s break this down first 30 days you know all your sign ups on the SAS product churn is what probably pretty high right forty percent
h and then if they make it past day 30 the churn between days 30 and 60 drops to about what
so we’re gonna get about the average churn of about 20 per cent at that point in time okay and then if they make it a past month for how low like 5 per cent
see so that’s actually not I mean it’s not bad it’s good that you know that though so you can make smart decisions about getting more customers right right
AirDNA offers Airbnb Market Research Tools for Airbnb Investments
and we’ve been fortunate that we can you know we can replenish our the people who are losing every month and more right we’re getting you to know 16 1700 people a month coming in to subscribe and we’re you know losing whatever it is 13 14 hundred people out the back door but
you know over time we still sort of evil to add net new subscribers each month but you know there are two ways to solve it either you’re throwing more people on the top of the funnel you’re trying to close the bottom of it and then not letting him escape.
so you’re trying to do both at the same time but we know there’s a lot of consumers out there there are over 3 million Airbnb hosts there’s a lot of other people kicking the tires on getting into the game a little bit so you know a lot of our efforts are around sort of just marketing and freezer acquisition
okay tell me more about that so today when you look at your total expenses on marketing and things like that what are you spending fully weighted to get a $75 a month or $70 a month customer.
I it’s it’s uh it’s good we don’t spend much on and alright so we might spend a hundred bucks a day on hard words and we don’t spend much else right it all comes through direct traffic SEO and free referral sort of traffic tell me about an SEO term that you rank really well for that brings an audio organic traffic sure
just like occupancy rate fill in eighty thousand cities around the world right Airbnb occupancy in Nashville and surprisingly like all of those longtail terms that have sort of a geographical component along with occupancy revenue whatever it is I mean that is sort of the long tail that we dominate right so we have maybe
maybe is eighty thousand visitors a month that is coming in I’m pretty you know unique you know really targeted sort of SEO keywords
now you are auto-generated and I can tell because when I put in Airbnb occupancy rate Austin the metadata under the headline it says like sixty-six point six six six six six six six to six per cent like it’s clear there’s a formula it’s driving this thing have I mean have you figured a way to put human touch on these things to you know maybe get up above patch calm and inside Airbnb calm that’s a good question you know it all depends on the search term um you’re right we have dynamically generated eighty thousand unique sorts of keywords or meta descriptions
you know Google it’s a bit of a mystery owner like exactly how Google is tracking that how they’re rendering the page how you can sort of make sure that they don’t dingy for duplicate content and so you know we’ve got a full-time guy is he’s trying to work through how do we make sure we’re getting these crawled correctly and that we have it ranking his house pause
well what’s his name and did he come from real estate or did he come from like marketing and SEO I can’t give you that oh you don’t know where he came from no he’s really just more of a front-end developer that sort of as landed in this sort of this niche the talent is just really hard to find for this technical SEO town we’ve looked how really
we’ve looked all around the town of people that specialize in SEO and nobody’s been able to sort of doing what we’ve done with sort of the in-house talent so what are you what tools are you using there’s a lot of tools that will help you dynamically launch thousands of landing pages for longtail keywords
do you know what you use um I think it’s all a built in house I don’t think there’s any sort of tool were u
okay but I could be wrong when that starts again that’s technique okay but that kind of search term combination of kind of you know city name occupancy rate Airbnb that drives about 80,000 you need to use per month into the site yep yes right that’s great okay what’s the team size today how many people we’re pushing about 50 people.
no ok 5-0 and how many are engineers a dozen okay well there’s you know how many salespeople with quota good questions with quota when we’ve got about seven what we would call sort of our closers and we’ve got about five out bounders how to do you I mean I actually I’m asking you you feel good about the model on the sales folks do you feel like you have the right ratios of kind of quota target to you know full OTE you know comput Cetera
I would say you know so that that team is based out of Barcelona and so I try not to think too hard about how that structure is and try to defer that to kind of our cheaper a revenue officer you know there’s always room for improvement and as you’re scaling this thing you know you’re always trying to figure out the right balance of who’s the account managers and the closers and you know how are you thinking about nurturing and customer success like it’s calm
I mean it’s really complicated we’re supporting 506 you know enterprise customers you’ve got you know 50 to 100 inquiries coming in every day you know what’s the right way to do that you know I think we have over-indexed to close and deals and getting stuff done and now that everything’s up for renewal and then you know that churn is high you sort of reassess right is it easy or to get people to sign up for year two.
is it easier to get that person to sign up for their first instalment and I think we’re quickly realizing that renewals are is the easier way to make money and obviously make sure you’re sure numbers go down so it is it optimal I think everybody is always tweaking with what optimal is is it is it good enough
probably forever are you sure have you raised capital or you still bootstrapped still bootstraps still be strapped and um
I mean don’t really plan on changing that no no no reason to at this point I’m so children you’d only change it if you saw a direct path to spending more money to make more money right if you don’t understand you wouldn’t raise money
this sort of a lot of different you know you know competition whether it’s sort of acquisition and whether it’s sort of a new business line there’s always things that we’re thinking about but growing our core business there’s not really a need for additional tab all right now
if you did buy another company would it be one like inside airbnb.com oh they’re free service right so I wouldn’t give much value out of a buying a free service but um no it would be somebody that would be it’s a bit complicated people not in the industry but its sort of more of a another vertical acquisition to be mortgage to never expanding our services.
And the more options right which is more connectivity to Airbnb and booking calm and home away it would be more of how do we do more for an end-user than just do market intelligence and pricing what else would they do right are they monitoring check-ins or they scheduling services like what can we add in is exhilarating services that could be so we could be sort of a one-stop-shop for people yep so again you’re bootstrap so unless you’re putting in your own money to cover some gap you guys are cash flow profitable correct we are we are
you hesitated there and look deep into your desk what does that mean cuz I figured what’s coming next from you I remember our last commerce when I asked last time I think you got all the goods from me right you got the revenues you got the churn and you got all the secrets out of me.
no no I mean by the way it’s so fun for me when CEOs do open that up cuz then what I do is I run like pattern recognition across the thousands of other interviews and I’m like oh man if you did this they would do this and then we brainstorm on it sometimes fun that’s why I’m pretty transparent
I know right and so h I mean we’re we’re highly profitable running over a 30% margin you know and you know close about 700 K and in sort of a revenue that’s that’s good where is the so where is the extra juice coming from on the 700 so if I take six thousand customers times 75 bucks a month.
it’s four hundred fifty grand a month where are you getting up to seven hundred from yes that’s our enterprise sales team right so all of that sort of six thousand subscribers is is falling in our lap there’s no sales process they’re coming into a tool there’s a freemium component and we email the hell out of them until they they buy the product.
right and the other revenue is much more of a traditional enterprise sale right so maybe they started in the cheap tool we see what they’re doing and then we sort of offer package deals right that’d be like more raw data API access you know allowing them to get more granular information or information that can Delayer into other data sources to create a you know additional value from it so you know we work with a lot of different types of customers like DMOS.
destination marketing organizations that have a different need it’s more of an excel sheet with a bunch of summarized information and so you know we have a sort of a product suite that’s what it speaks to real estate investors a DMO or you know a really massive vacation rental management company that has their own data science team and just wants the firehose of data sent over every day so there’s some things that the enterprise team sell so last month over $700,000 in mr.and that is true sticky revenue Craig no big one-time purchases in there that’s right
that’s good and then 6,000 that fall in your lap and you mentioned earlier casually about 500 at our price clients correct yep all right so it’s fair to say I’m an MIT those 500 enterprise clients are making up call it 250 to 300 Rand a month of your revenue about 30-40 percent of your total revenue
you got it it’s great it’s a good I mean look it’s a good business model makes a lot of sense high the wood thing I love about your space even though don’t be a fan of it but you are like your churn sucks you’re in a really great space right because like as long as you understand the churn and as long as I mean the thing is you’re not paying a bunch to get customers.
so as long as you get some portion these guys to stick right especially in an enterprise-level I mean it works for you there’s nothing wrong with it it works I mean that’s exactly right if you’re contacted acquisition is you know basically zero but it might be like three dollars per user and we’re getting to 250 out of them you know it’s fine right
ask you if somebody wanted to compete with you why wouldn’t they just go by inside airbnb.com hire designer cuz it’s trashed right now looks disgusting put a better skin on it and at a pricing page
the science behind it is a bit more complicated than maybe you can foresee right the real what we provide is um we have a lot of data scientists that are really good so when you can aggregate the data like inside air B&B does anybody can look at a calendar an air B&B and say hey it’s available on this day and it’s unavailable on that day but actually deciphering is that unavailable day is that because the owners staying there for the six months.
Or is that because it was actually booked for you know two thousand dollars right and so we have built out an algorithm to understand how every property operates how different markets operate so we can get a high level of accuracy of what properties are earning inside can be really focusing on the supply of the properties so there’s a property over here somewhere and we actually figure out exactly how much that property’s permit so there’s a lot of sophistication sort of bridging the gap between what is on the market and actually what is the revenue generated by those properties.
interesting all right north of 700 grand a month today where were you a year ago I don’t know you have the podcast we’re about a per cent growth year of year sort of a company
oh yeah back in September of last year so a little less than a year ago you said you were at about but what was at 450 or 4.5 in terms of the run right yes I mean double and you over a year
that’s great okay good growth so I mean let me ask you a question as a smart business guy right anytime a company like this bootstrap great company you’re spinning off cash flow you have the tough question of at the end of the month I mean what do you do with the extra 200 grand that sits in your bank account like do you pay it out as a employee rev-share or a dividend.
or how do you reinvest it you pay yourself in the five years of hard work you put into it to get to this point right there’s nothing wrong with that either but then you personally have it you pay taxes on it and you have to forgot to reinvest it anyway
that’s true I mean you don’t really want to be running a massive profit right we want to be reinvesting if you’re not reinvesting in sort of your R&D and your future product roadmap then you know eventually it’s gonna catch up to you and your competitors gonna catch up so there’s not like a massive amount of capital at all that.
you know we aren’t thinking about how to put to work for your DNA itself right and so you know I think we you know we were pulling a little catch-up cuz you’re running in a pretty negative pace for a couple of years and so it’s nice to make a little bit of an extra cash put your pocket but you know we’re playing to making a million dollars a property year that just pays our bills.
then you’re trying to figure out how to reinvest the rest of it into the business no that’s good in our bills if I remember correctly it’s a family operation Rancic you and your dad or something
I mean my dad and co-founders in the business and he’s still involved in the business as a sort of VP of engineering I know sort of another partner in the company as well so smarter you’re your dad in different ways my dad is definitely way smarter than me okay smart answer all right good stuff man um the last question here I mean are you in right now I mean if you’re generating cash flow and you’re trying to expand tech stack faster you go buy companies are you close
I mean do you have it are you in due diligence with any companies to buy um I would say we are in the courting relationship with people to see if there’s any interest on their and but there’s no nothing like actively sort of getting a draft at the moment how do you like make sure that like they don’t know because you just told the world on this podcast that you’re not making so much money so that they ask for a higher price like how do you make sure you appear smaller or less resourceful than what you actually are well you know I
I think there’s a there’s a gluttony of providers in this space which plays for advantage right there are 50 people that potential you know acquires for us and not very many of them are hard are doing well so I think you know we would be looking for sort of a fire sale rather than so you know we are buying and up and up company for the technology and connectivity they fire style code for less than 1x revenues I would think that would be
that would be accurate guys there you have it if you have some unique data in this space and you’ll sell for fire-sale prices you can give me five per cent I will give you Scott’s phone number and you go from there Scott let’s wrap up with the famous five number one what’s your favorite business book my favorite business book I forgot about these men you guys put me on the spot the one that comes to mind in mine is the first one I read that I really liked was the hard thing about hard things I guess by ben Horowitz
Airbnb Software CEO Favorite Airbnb Tools
you got it number two is their CEO you’re falling or studying no that’s okay number three what’s your favourite online tool for building the company favourite tool for building the company right now
what is it my tech stack man I’m a nerd so everything is analytical amplitude right now so I can track users and figure out exactly what they’re doing and how to replicate good users
good choice number four
how many hours of sleep each and every night?
uh I mean I got two young kid it’s pretty minimal I’d say probably five okay not horrible so two kiddos
Married or Single?
married for five years and two in a four year old oh that’s a busy man how old are you 39 39
last question what do is your 20-year-old self ?
new good question uh take more risk and add value
I don’t know I was always focused on success but then when I started focusing on adding value success quickly follow Scott guys there you have an AirDNA this is a great example of where churn can be through the roof but if you keep your CAC and basically zero you can still build a seven hundred thousand dollar a month business up from three hundred fifty thousand dollars a month just a year ago
and pulling twenty to thirty per cent and II bit two margin of the bottom line every month for call it north of a million bucks in profit annually
there currently got about let’s say they’re serving sixty-five hundred customers again giving them data related to air B&B a fire hose really of data launched in 2012 now today fifty people on the team bootstrap which I love.
12 engineers seven folks quota-carrying sales reps as they look to continue to scale Scott thanks for taking us to the top pleasure to be here man thanks a lot.
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