Rudy Ganesh: 09:28
Sure. So in the beginning it was, can we be a simplified Shopify for budget hotels to build their website? So this is pre AI. So we just started before I became a thing. So the idea was you go on our app, you, you know, plug in your Google profile, upload some pictures and you will in 2 to 3 minutes, you would get a fully functional website where your hotel customers could come see your rooms, select a room, go to the checkout page, make a payment and make a booking. Our idea then. And that’s the booking engine product where you’re on, right? Can we make that as simple?
And I think the thought process then was that there are so many hotels who want to find it difficult to make their website, that other agency spending thousands of dollars, and then they don’t know if it’ll work out. But can we build something customized which has abandoned cart recovery, price intelligence, a single page checkout? It has a promotion engine. So you can say that, hey, if you’re booking 20 days in advance, I’ll give you an extra 5% off if you’re booking the next day. And our rooms are empty, let’s say you wanna book tomorrow and half my rooms are empty. I’m giving you another 20% off. So very specific to the hospitality industry.
What we understood building it is that there’s so much more to do. So why stop at that? And then we expand it to driving traffic, which is where marketing came in. So can I be more efficient in marketing and get you more relevant traffic so that your ROAS or your return on ad spend is optimized? But from a hotel perspective and hotel marketing is different because in hotels for us, our target audiences change based on seasonality. We sometimes have multiple different target audiences which have no correlation to each other. So if you’re a brand like a retail brand, you typically have a certain set of customer groups. You might be Gen Z focused, millennial focused, city focused. But with hotels, the same hotel has, you know, people who are taking a pit stop while they’re going on a holiday. And the same people are also stopping because they are transporting cargo across the country. Very different, you know, personas. One’s a family, one’s probably traveling alone. So understanding based on seasonality, who you have to target and ensuring that your return is optimized is where our marketing system came in.
We run campaigns across Google Meta today, WhatsApp, emails as well. So that I think is where we got marketing in and the months we got marketing in, we got more leads, we saw conversion rate. You could get to like, let’s say 5% is where we typically average out on the booking engine. We realize the next opportunity is, hey, some guests there was like, I want a book, but do they have parking? And while it might be written on your website and you’ll say, oh yeah, I made it. I wrote it on my website, it’s clearly mentioned. Not everyone reads everything, right. I think we’re a society today which wants answers instantly. We also think what we’ve noticed is people want to ask for a discount. So these are things that an agent can do. It can support multiple languages if someone calls. And I think we’ve seen this in all the hotels we work with, at least 20% of calls get missed, right? So that is a revenue opportunity.
Dr. Jeremy Weisz: 12:39
That’s a lot.
Rudy Ganesh: 12:43
Because most hotels have like, if you look at the budget segment, especially the one, two, three, they have one staff who’s doing check in getting you in like they are going to miss calls. And if you look at the premium segment, what we’ve noticed is they sometimes pick up calls. And I’ve seen this in the J.W. Marriott in Phoenix, Desert Ridge. And there was a time when there was an event happening there and there were about 20 people backed up, you know, checking in and the phone was ringing consistently. And the receptionist at that point was trying to check people in, just took the phone and banged it back down because she was backed up. She had somebody to check in. And I don’t blame her. And she’s human, right? She has only this many people to do what she can. And, and that’s where we saw that the concierge and not only are the property, but even on our website.
So we realized that if our website was converting five and ten, we had the concierge in the five was becoming seven just by chat. So you increase about 25%. And then the seven became about 12 when I added the call agent. So I was getting better returns on my marketing spend. And that’s how the journey came to the concierge and we moved there. And then now we’ve also built out a revenue management system because we realize, hey, pricing is a big challenge, right? Sometimes you have the best website, the best marketing, but the customer is like, hey, that hotel is cheaper and the ratings look very similar. So pricing intelligence became part of our fourth module. So what we’re trying to do is every time we try to add revenue, if we face a new problem. We solve that problem initially in a very in a way that will not scale. It might be as much as me picking up calls and trying to convert guests or chatting with them. But once we see that, yes, it’s adding value and we’re able to monetize it, then we, you know, build out an agent or a module that will help assist there.
Dr. Jeremy Weisz: 14:28
It’s interesting to see how it started really as a Shopify for hotels and getting them a website. Right. And now it kind of feels like it’s all in one solution. How did you early on maybe get the first client and price it in the early days?
Rudy Ganesh: 14:57
I think when we did our first launch, this was, you know, I was just not raised any capital then as well. So we just basically doing it. We went to some hotels and said, hey, can you use it for free? So the first five hotels we actually set free. I mean, we said, hey, if it works for you, great. And we said, after three months, we’ll charge you on a commission. So typically in our business, travel partners like Booking or Expedia charge you about 15 to 20%. We said we’ll charge you only 5%. We’ll if it works for you, great. And you’ll have that price locked in for life. So you, you know, no matter what our price increases globally, you will always be on that price as a token of appreciation for them taking that chance with us. And I think the sales strategy then was a combination of cold calling and door to door. We did do a lot of cold calls as well.
Dr. Jeremy Weisz: 15:46
Who are you targeting? Like, what kind of. I mean, I’m sure you weren’t going to like the premium hotels and offering it like. Yeah. How did you kind of segment it on who you were going to go after in the beginning?
Rudy Ganesh: 16:00
So in the beginning, I was doing small hotels, Airbnbs, vacation rentals, people who I knew did not have hostels, for example, as well, who I knew did not have the technology available, who would also be okay to try it out on a pilot basis, because we were also not the best sellers back then. We’re much better now, but that was our target audience. Even today, a large part of our focus market is the one, two and three stars. All right. So that’s the mid segment and the budget segment of this place. That’s where we kind of really focus because that’s where we think there is labor shortages. They don’t have the ability to have staff to do a lot of things. Owners are overworked and overburdened.
Dr. Jeremy Weisz: 16:42
I think of Rudy, I don’t know if you watched Schitt’s Creek, that show, Schitt’s Creek, that’s what I. That’s what I think of when you.
Rudy Ganesh: 16:50
Yeah, yeah. That’s a perfect that’s a perfect. Yeah. The motel they stayed in. Right.
Dr. Jeremy Weisz: 16:53
Yeah. It’s like the person’s cleaning the rooms, they’re checking people in. They’re basically doing everything that needs to be done.
Rudy Ganesh: 17:00
Yeah. That’s, I think our ideal customer profile. We do do slightly bigger hotels now, but a lot of our hoteliers are exactly to that.
Dr. Jeremy Weisz: 17:10
Well, it’s interesting because I could see as you add these features, more hotels like anyone would be interested in using it. Right. But in the beginning, if it’s just to do some of those early features, not as much, but like if you look at when I was looking at the, you know, the marketing function, those meta searchers, hotel ads or search ads, there’s SEO, there’s, you know, TikTok, you know, Facebook, all these things. Any hotel can use that. Right? But it seems like the ones that, it’s interesting if you someone goes on Yelp and you search, okay, like two stars or three stars or one star, you’re like, hey, like we could boost you. You know, it seems like there’s obviously a need because they’re getting not great feedback, right?
Rudy Ganesh: 18:02
Yep. I agree, I think you, I think what we realize is that what was the segment where you can enter quickly? A lot of times when we were trying to do the like the branded companies in the enterprise businesses, the sales cycles are not necessarily as quick and you need to play to your advantage on what you are able to close at that point. I think as a startup, initially we were just looking at, hey, how do we get in and put our foot in the door and who’s going to give us that opportunity? So we didn’t really plan it, to be honest. We just happened on its own.
And today we do have some product, you know, which are used like the marketing one, which you mentioned is used by this luxury property chain, which has about 25 properties globally and very different customer audience. You know, they, they per night is about $1,000 a night. So very different from the initial audience we had focused on and worked with. But I think you can always scale it because technology on its own is quite scalable in the sense that if you’re building it, it’s only some rules you need to set in, right? So if I’m a higher budget, I take more risks with the marketing engine and try out, you know, I can do more. If I had to put it right, you can run more campaigns, target more audiences. But I think the fundamentals still remain the same. Find your right audience, focus on them and see how you can convert.
Dr. Jeremy Weisz: 19:22
Rudy. I’m going to, when I was looking at your site, you again, you were mentioning you have an interesting journey. At one point it looks like you decided to take on investment. So talk about that decision.
Rudy Ganesh: 19:37
Yes. I think we raised a small pre-seed round in. And the idea then was just that, hey, can we get some capital which will help us with the developing the platform itself? Because obviously that was a key focus. And we realized, you know, we are a tech company and you do need great talent to build something good. So that was one of the reasons we wanted to raise.
We raised around through which we’ve been able to reach a point today where a profitable. But I think the idea for us is just that, that we needed a good technical team to be able to build a product that we can take to scale at the market. Right? So when we were doing it pre raising, your products not bad. It’s crappy though. Like it’ll still need to be made more modularized, more.
Dr. Jeremy Weisz: 20:24
You’re used to Amazon and JPMorgan. So it’s a little, it’s a little bit there’s a high standard I guess there.
Rudy Ganesh: 20:31
Yeah. Fair enough. Yeah. I think I think that that probably is where it came in. And then yeah, we raised from a few great investors. TBO.com in fact, a travel company and their founders came in as well. And that kind of and I think they if I’m not wrong, there are a couple of billion dollar IPO recently, but they’re a big player in the travel space. So having them.
Dr. Jeremy Weisz: 20:54
Which one was it?
Rudy Ganesh: 20:55
TBO.com.
Dr. Jeremy Weisz: 21:00
Oh TBO. I gotcha. Yeah.
Rudy Ganesh: 21:01
So I think having them, their founders on our side where we could talk to them, understand how different markets operate, was really helpful and has been still. So I think we’re really appreciative of that. And then I think investors have also been able to teach us how to be financially more resilient as a company. What strategies to pick in because I am a product and dev person. So obviously you need to pick out what help you can get. And that’s been a very good, positive sign for us and we’re really appreciative of them.
Dr. Jeremy Weisz: 21:33
Yeah, it looks like TBO, All In, GTM Ventures. What’s some good advice that you’ve gotten from your investors along the journey? Obviously, they’ve contributed money, but I’m sure they contribute expertise as well.
Rudy Ganesh: 21:53
Yeah, well, quite a lot. So let me try to remember a few of them at least. But I think first was, I think understanding which market you want to focus on initially as a founder, I think I was very enthusiastic to say I will do everything right. Like no matter where it comes in the world. And that’s great. I think the enthusiasm helps initially, but what happens very soon is you start draining yourself out because you’ll have certain markets where maybe you just don’t make enough, right? And your margins are really super thin and they’re demanding markets as well. So you need to figure out which markets you want to focus on. It doesn’t have to be one, but at least you could have two. But focus and stay there long enough. I think it was their experience and their feedback is when we had actually started looking at, you know, how do we scale in the US was something that they had given me.
The second feedback, I think that I’ve got, which I found very useful, is very simple, but I think you need to work on your MIS every month. And this has to be a ritual for every founder. You need to know how you’re doing as a PNL. What’s your cash and bank? Where are you losing money? And you need to do this every month. Spend three days with your co-founder. Even if you know he’s a technical person, it doesn’t matter. But you and your leadership team after your ten people, even your leaders who are involved, should be involved so that everyone’s aware because the minute they know what I’ve seen that’s amazing is they take decisions more in line with the company goals. Or whereas before, if you just say, hey, let’s hit this target, the why is not clear. But you know, when you start sharing that and doing it yourself, I think you become a lot more financially resilient.
And that’s a story we’ve had. I think we were cash guzzling startup till about November of last year. Just last month we closed at 30% EBITDA. So I think that learning of building that out, especially for non business founders, I think a lot of us here are engineers and you know, who’ve kind of said, okay, we know how to build a cool tech. But being financially, I think resilient is important.
Dr. Jeremy Weisz: 24:03
I want to share a specific example because you’ve talked a little about the journey and how it works. I was looking at your site here, Rudy, and maybe we could walk through what we’re seeing here at OYO Hotels India.
Rudy Ganesh: 24:18
Sure. So yeah, OYO is, they have about 15,000 hotels globally. They have 3000 hotels in India. They recently acquired G6 Hospitality, which runs the brand Motel 6 and Studio 6 in the US. And we’ve kind of scaled with them right from when we started in India with 2000 hotels to all 15,000 hotels that they have globally in their portfolio today. What we did with them is they have budget hotels across the globe, right? So everything is in the budget segment, price sensitive consumers, good conversion rates because these consumers typically need a room and will book whatever’s the best priced. So high intent users, the challenge for them was that managing 15,000 hotels marketing with a human. And that human cost on it was just too high. And the second was they were not efficient enough because they were operating in multiple time zones. So your marketing team really couldn’t be available that long and make changes.
What we had built as an internal product for ourselves, and this is very similar to what Amazon does, I think where we built the AI ad engine for our hotels to help us run ads for them. We did this so well that I think OYO found out and then reached out to us twice over email, and the first one was missed by my team. But thank God we got the second one to say, hey, why don’t you run marketing campaigns for us? Because today we run all 15,000 hotels are campaigns for them, and all we have is a WhatsApp group where their team puts in what’s needed in terms of budgets.
We have an AI agent which picks that up and then makes changes on their Google Ads dashboard and changes the bid, spends the bids the marketing spends based on different regions, understands also things like, hey, these, you know, like there’s a question they’ll ask, hey, why is these properties not doing well? And then it would check and say, hey, these properties are not doing well because your price on your direct channel is higher than what it’s on Agoda or Booking or Expedia. So we build out what we build internally now works on them. It’s doing a it’s giving them a 11x ROAS, which is pretty good because they have a $10 room average night in India. They have about $25 in Europe and maybe in the US, about $50. And they’re doing a at a 10% cost of acquisition, that’s a very good return for them. Because if they had to otherwise acquire a consumer, they were paying 20% on average, right? So you’ve already half that. And all that savings that we make for them adds to their bottom line. So as a company, it’s also very beneficial. And all of this automated, we still have 14 people. There’s just one agent which does this. I don’t have any extra staff to run 15,000 hotels of marketing for OYO. And yeah, we basically run the Google ads for them.
Dr. Jeremy Weisz: 27:01
It’s pretty incredible. How do you decide? Because I’m sure you get a lot of requests from clients, customers, and also you have ideas of what could be next. How do you decide internally what is the next feature you’re going to create or work on?
Rudy Ganesh: 27:20
Oh, so two rules. One is if the client is someone who is high revenue because customer for us, unless it’s requires too much effort, we tend to do it because we think it’s important to keep those relationships. Sometimes it comes at the cost. And I’m a product manager also that hey, the production only have this. But I think you should not be too rigid. I think my view is, you know, especially in an AI world, tech is not definitely going to always be your only mode. There’s also a mode of how quick you respond to your clients, how much you listen to them, and how much they feel heard. If it’s going to impact my conversion rate, though, that’s when I push back. And they also know it. Like if you know, Rudy pushes back because he thinks we’ll do lesser business, then if it’s something that I think may work may not work, we try to pick it.
The second thing I think we do is if we think there’s a module that we build can be given to all our clients, and it’s actually an opportunity. So, you know, we always try to go for that and build those and prioritize those over the others. And I think we typically have one week sprint cycle, so a little quicker to give them what they want. We don’t want any client who’s in our top 50 clients waiting for more than two weeks to get something they need. Luckily, most of our clients are very good. I think they are reasonable to understand that, but on average, we ensure in two weeks we’re able to give them what they want.
And I think one example of a platform we built was the call agent concierge. Right. So some hotel I was on saying, hey, I’m getting calls, I can’t pick all of them. And they told us, hey, why don’t you get someone who can take my calls and route them to whoever’s needed? And then it’s like, okay, we could take the calls, but that’s going to cost. Am I going to be able to maintain my experience? Can I ensure that my person on roll? Because obviously, if you’re a hotel and you trusted me, you will assume that everyone who calls my team will pick it up and do their level best to convert. It’s easier said than done. Like, it’s great to see it as a pitch.
Dr. Jeremy Weisz: 29:12
It doesn’t sound easy at all, actually.
Rudy Ganesh: 29:14
Yeah, yeah.
Dr. Jeremy Weisz: 29:18
But as you see, If you’ve seen Rudy, it’s like getting someone to pick up the phone sometimes doesn’t happen, let alone pick up the phone and then conduct like a perfect call, you know?
Rudy Ganesh: 29:31
Yeah, exactly. And I think that’s when we realized that, okay, I can probably have it only human. And then we build out the AI agent through that. And yeah, I think, I think listening to your customers builds out your product line. A lot of our product roadmap is based on that, like listen to customers, add them on our Jira. I think any given time in our Jira, we’ll have about 100 to 200 tickets of customer requests. And we just sit every two weeks, go through that and find what makes sense. We also have a cloud skill now connected to it, which kind of helps shortlist for us. But I think fundamentally, I think that’s our product roadmap always like largely build. You mean you need to have a central thesis, like we have that we want to be in the space where we are adding more revenue for hotels. That’s our key focus today as a company. But anything in that, we always try to add those features.
Dr. Jeremy Weisz: 30:19
What is the, you mentioned a couple of things there with Jira and Claude skill, what is the tech stack look like that you use?
Rudy Ganesh: 30:29
Oh, okay. So our SaaS tech stack is pretty simple. It’s a React or Next.js on the front end. Node.js on the back end. For our AI models, we also use some Python. So basically to help crunch numbers better, especially a marketing agent. And then obviously with our call agents and chat agents, it’s a lot of, it’s three basically modules that come in. There’s a text to speech which is converting text to speech. So your agent is able to say it in this. We actually built our own custom voice, which doubled conversion rates. And it doesn’t sound. It’s actually me, my co-founder and another teammate of ours. We mixed our voices and built it out. So it doesn’t sound like AI, in fact, sounds a little rude, but it helped in conversion rates, which we learned later. We have an LLM in between which you can plug.
So based on our client’s requirements, we typically switch between Claude and ChatGPT. But you know, if it depends on what they want to run and if they already have credits on one, they prefer that. And then last is the speech to text. So every time you talk on call, that speech gets converted into text. So what we have done in our layer is built an intermediary system where you can plug and play what you want so that you as a hotelier, say, my budget is X, I could build according to that budget.
The second advantage is given us is really control the experience a lot more. So if you want a custom line to be set at the end or the start, or you want us to connect your CRM to get guest details before you talk to the guest. So let’s say you call, I call your CRM, I realize, oh, it’s Jeremy coming again. The call said, hey Jeremy, would you like me to book the suite for you again this weekend? Right. So you can really personalize your experience. But we’ve kind of made that modular that’s also built in Python today.
Dr. Jeremy Weisz: 32:13
How do you use the custom voice?
Rudy Ganesh: 32:16
So we actually built it ourselves in house. And the idea was what challenge we felt was every AI voice that these companies give us sounds very nice. Like humans do not sound so nice. Right?
Dr. Jeremy Weisz: 32:32
Well, it’s if you call Minnesota, They do?
Rudy Ganesh: 32:35
Yeah, they do actually. That’s fair. But I think it’s just consistently I think what we realized was.
Dr. Jeremy Weisz: 32:43
You trained the AI voice like, yeah, someone calls it midnight, like sounds tired and grumpy. Like.
Rudy Ganesh: 32:49
Yeah, yeah. So it’s like, I mean, in fact, one of our AI agents we tried out says at the end of the call. Hey, shall I end the call now? And I’m like, oh, okay. Like now everyone’s like, oh, thank you so much for calling. Have a great day. And, and it’s not bad. But what we realized is that when the agent was too nice because everyone has tried out these AI voice agents and seen their demos, they realize it’s a voice agent and they would immediately say transfer. They wouldn’t even want to talk. So we were trying to think about, hey, if 50% are transferring the call, how do I make them talk? Because we heard them transfer. And you know what they would ask? Room availability, price. And we’re like, no, the agent knew it. Why didn’t you ask it?
And changing the voice helped because they’re like, oh, this must be a really disgruntled employee who’s tired of working. And yeah, I mean, you have to try out different things. And I’ve also learned this from another friend of mine who runs a restaurant, voice agent, where to reserve a table. So the agent is not very nice. And when it’s rude, they actually convert it more. So I think this is just things you keep trying out and experimenting, but you need to build more realistic voices, I feel. And there are platforms which help you do that. So, you know, using those platforms and building something in-house is good. Like at least for now, at least I’ve realized that. Yeah, definitely. Because the guest is like, I’ve not heard this voice. Maybe it’s real.
Dr. Jeremy Weisz: 34:01
I did have an experience. It’s super interesting. Rudy, for one, that’s hilarious. That’s the ruder one converted. But I did have a recent experience with the hotel and it was like the voice was very good and I didn’t. I was like, you know, I kind of thought maybe it’s AI. It sounded like a real person to me after like a couple minutes based on how they were responding, I was like, okay, this is the best one I’ve heard. But I could kind of tell. And that person was, the voice was super nice, so maybe if they were a little meaner, I probably would have been like, oh, this is an actual person.
Rudy Ganesh: 34:41
Yeah. There’s a fine line between being mean and not too flowery and nice. And I think if you’re able to build that as a voice agent, that’s a good place to be because you have to. People want to see the human emotion come out and humans have variable emotions. And I think if you’re able to at least bring out some of those facets, it does help consumers today.
I also think five years from now, we’ll all be very comfortable talking to AI. In fact, all of us will even know how to talk to AI. And there might be Instagram reels of influencers telling us how to trick an AI and get extra discounts. But I think today that’s the need of the market. And, you know, as a company, we want to kind of fit in what the market needs today.
Dr. Jeremy Weisz: 35:22
First of all, I have one last question before I ask it. I want to encourage people to check out Hotelzify.com to learn more. You know, it’s really just interesting the what you’ve built over these years. My last question is just resources. It could be mentors that have helped you in your business career.
It could be distant mentors. I mean, you know, just like books or podcasts that have helped you in your journey as well.
Rudy Ganesh: 35:51
Oh, okay. Yeah. You want me to mention a few people or?
Dr. Jeremy Weisz: 35:56
Yeah, yeah. Go ahead.
Rudy Ganesh: 35:59
Yeah, I think I’ve obviously seen the podcast a lot because I think a lot of the trends that they pick up, the world picks up very soon. So they’re a good one to start with. Anytime. I think watching them kind of gives you a good insight. I think Sequoia also has a good one that I listen to while driving.
Dr. Jeremy Weisz: 36:16
Which one is that?
Rudy Ganesh: 36:17
Sequoia Capital.
Dr. Jeremy Weisz: 36:18
Oh, gotcha. Okay.
Rudy Ganesh: 36:21
YC Podcast. It’s also pretty good. So these two I listen to. The YC one I watched the video. I don’t know why, but it’s like while I’m eating, I watch YC, and if I’m driving, I listen to Sequoia’s podcasts. In terms of mentors, I think had a few. So a couple of them, in fact, invested in us as well. One of them runs a company in Bangalore today, which is, which also was a startup I worked in, was acquired by Amazon. His name is Abhinav. So he’s been someone who’s inspired me to start from day one. And I think apart from that, I watched a lot of hotel podcasts specifically just to kind of because get used to industry. So there’s a few that kind of, I watch once in a while. And I think that they’re quite useful as well.
But in terms of books, I think where I do have a few that I read recently where, yeah, I think The Lean Startup by Eric Ries I think I love that that was of all the books I’ve read, I think there was something that really resonated with me on how to again, be financially very intelligent on how to find PMF. Because that’s the toughest part of the journey, I think. You know, really figuring out and not spending too much capital and conserving it to find PMF. I think he’s kind of mastered that really well. And then Hooked by Nir Eyal is a book I just generally like. I think it’s very good in terms of if you want to just understand how products to be should be built.
There’s one by, for anyone who just likes building apps, there’s a book called Actionable Gamification. It’s by this Taiwanese-American entrepreneur and author called Yu-kai Chou. I think if I’m pronouncing it right, but very interesting book and how human beings think about what a product means to them. So it’s just how do you bring gamification in apps? How do people is it he’s an experience designer. So I think very interesting way of how to build apps that look good and the advantages it has in terms of, you know, the business output you get.
Dr. Jeremy Weisz: 38:28
It’s interesting. I just got an email from Nir the other week and he has another book coming out Beyond Belief, so I’ll probably have him on Rudy for that one. So you’ll have to let me know if you have any specific questions for him when he comes on. But yeah. Hook, is it Hooked? Yeah. I’ll have to look it up. It is really good. Yeah. It’s Hooked: How to Build Habit-Forming Products is a good one.
So Rudy, first of all thank you. Everyone check out Hotelzify.com. Check out more episodes of the podcast. We’ll see everyone next time. And Rudy, thanks so much.
Rudy Ganesh: 39:09
Thanks, Jeremy.
