GuestSpan Speaks!

I have been reading a lot of marketing articles, blogs, white papers, and books lately. All in an effort to become better equiped to bring GuestSpan’s solutions to market and make the customer want to buy. We have conducted market research, spoken to hotel owners and travelers, attended trade shows and conferences, and pretty much talked to everybody we could to promote our concept and gauge market reaction.

It has occurred to me in all of this that all of the time and effort we put into cleaver marketing schemes and research is really an effort to get back to the days of the country general store. We’ve all seen them in movies. And some of us have even lived in small towns that still have something like them. In early America the general store was the hub of economic activity in small towns. Everything happened around the store- mail was delivered there, telegrams were sent and recieved, and every good imaginable from animals to household cleaners were sold there. But the centerpiece of the general store was the shopkeeper.

The shopkeeper knew everyone in town, knew what they bought and sold, knew who the sent mail to and recieved mail from, knew where they lived and what they did for a living-He knew pretty much everything. It wasn’t this knowledge, though, that made the shopkeeper so good at what he did. He really knew his customers. He lived with them. He knew, for instance, that Mrs. Jones hosted a party every Thursday and liked to serve carrot cake. So he made sure that he had it in stock and fresh for her when she came into the store. He also knew that the Smith children didn’t care for licorice, but liked horehound. So when Mr. Smith came in for the groceries there was always a package of horehound sent home with it. It was these little personal touches that made the shopkeeper indispensible.

Modern technology and the supermarket essentially did in the little shopkeeper, and ever since then businesses have been trying to get as close to their customers as he was. Technology has come a long way in helping business accomplish this, but there is still a great deal of distance between the business and it’s customers. I think that when we truly start to understand our customers one an intimate level, for instance, knowing which hotel guests like to order extra pillows, and which restaurants the most frequently visit when they stay at our hotel that we will truly be closer to the kind of relationship the shopkeeper had with his customers.

This is something GuestSpan is striving to deliver to the hospitality industry. I don’t know what the end game looks like at this point. But bringing guests, hotels, and the surrounding community closer together makes things better for everybody.

Chris and I attended the Hitec trade show in Austin, TX last week. It was a very interesting experience after being severely spammed for the previous two weeks by seemingly every technology vendor in the hospitality space. It seems that technology is trying to creep into every space in the hotel. Whether it be using your cell phone as your room key, video concierges in the lobby, new and improved room safes and mini-bars, or super control centers for the entire hotel room there are companies trying to automate every part of the hotel experience. And that doesn’t even begin to cover the number of backend operating, management and tracking systems we say at the show.

Attending this show one might be convinced that the modern day hotel was the bastion of technological advancement. However, reality is quite the opposite. For instance, the hotel we stayed at in Austin offered free internet and even had a digital city guide in the lobby, but that was about the extent of the technology offered. The room key was still a plastic card advertising Pizza Hut, the room safe was still fairly basic and that’s more than I can say about the TV service. All in all hotels are still slow in adopting new technologies. I think that is changing, but not as rapidly as I or my colleagues in the industry would like to see. Our role is going to have to be identifying “stepping stone” technologies that allow hotels to advance technologically without biting off more than they are ready for.

A good example of these technologies was services delivered through the television. Ten years ago this was an innovative approach to guest services. The problem now is that guests are more technologically advanced than their hotel rooms and TV is not where it’s at. With services such as Netflix downloadable movies on demand guests no longer need the TV in their room for entertainment. Not to mention the usage rates are very low. It is now time for the next step in the evolution of guest services technology. This may seem self aggrandizing, but that is exactly the mission of GuestSpan. We are offering a solution that is more on par with what guests are used to and something that hotels can implement and embrace without having culture shock.

It is going to be interesting to see the evolution of hospitality technology. GuestSpan will be there as a part of it for sure.

Yesterday Chris and I attended a coaching session put on by FundingUniverse in preparation for their speed pitching event on June 4, which we will be participating in. Kent Thomas, CEO of CFO Solutions, made a presentation on how to handle deal specifics and offered his 10 Tips for Raising Capital. I thought they were good so I am posting them here for your enjoyment.

1. Use Your Own Money First-even though the prevailing thought for some time has been to build a company on other people’s money it is a sign of confidence and preparation to investors that the entrepreneur has some skin in the game as well.

2. Friends & Family- If mom won’t invest in you why should others? Now, there may be many reasons that friends and family don’t invest ranging from their financial situation to holding dilution to a minimum, they should at least be approached.

3. Act Like It’s Your Own Money- Kent said that during the dot come bubble entrepreneurs were spending large sums of money irresponsibly. That is the reason the bubble burst. Being able to give investors a detailed report of where any money to date has been spent will tell them if you are treating the money as your own.

4. Market Research- This is a big, big problem for entrepreneurs. Know your market. There are many free or cheap options out there to allow companies to conduct some basic market research that will give them valuable insights into their market. For instance, Chris and I have launched a survey to travelers asking for their feedback on our idea and have spoken to and continue to speak to hoteliers to get their feedback.

5. Cash Flow Projections- If someone were to invest, how long would their money last? Knowing your monthly burn rate and how long money will take you is key. If you are wrong or worse, don’t know, then it is likely these same investors are going to have to put more money in or help you raise more much sooner than either of you expected.

6. Valuaton-Get Real- Something Kent said repeatedly was “Put yourself on the other side of the table.” Investors are looking for a 10x return on their money. To achieve that they are going to need to end up with a substantial enough equity stake so that even if they are diluted by future rounds of funding they still hold enough to realize that return. He said the sweet spot for most investors is between 20% and 40%.

7. You’re Responsible- In running a company entrepreneurs can delegate a great many things. But one thing they cannot delegate is fundraising. Investors want to see a dedicated, passionate entrepreneur behind their investment.

8. Smart Money- Look for money that comes with more than just dollars. Investors that bring expertise or insight into your particular industry are the best ones. Also, just as investors will be checking you out, make sure you check them out before accepting anything.

9. Accounting Records- Know your books. It is very frightening to investors when entrepreneurs are in the dark when it comes to accounting. There are smart people and services out there to help out those who aren’t financial geniuses, but don’t neglect this part of your business.

10. What’s the Offer/Instrument?- Come to investors with a deal in mind. They aren’t going to negotiate against themselves so don’t ask them for a number, they will just move on. Know what amount of equity you are selling for their money or what type of instrument you are looking to use to raise the funds.

According to an article in Hotel Business Magazine, Kimpton Hotels is making a big bet in what many would consider a bad market. Kimpton has raised $800 Million in funding for new projects to be invested in the next three years. The article states:

While much of the hotel investment community awaits further clarity on where true asset values currently are before making another move, Kimpton…has made a bold statement of faith in the market, the boutique sector, and more significantly, its own brand.

Indeed Kimpton’s strategy is bold. I think it also speaks to the real state of the market. Companies that are nimble such as Kimpton can benefit from the lowered asset values and expand their hotel portfolios. Kimpton CEO Michael Depatie is quoted in the article as saying,

“while there isn’t a lot of current activity, we expect that will change in the coming months. We’re very bullish.”

He continues,

“So in 2009 and 2010 there will be a moderation of new supply and if the economy comes back at that same3 time, that will bode well for asset values.”

It is as simple as buy low sell high. Kimpton is poised to take advantage of a lagging market and, what’s more important, they have the confidence in the resurgence of the market to do so. Further elaborating on how the company is approaching this, Joseph Long, Executive VP of Acquisition said,

“No one knows where the market is on the downward scale and whether it’s down 20%, 30% or 50%. And there is a dearth of deals getting done because the values are not being validated due to the lack of financing. But at some point that will change and it may be in about six months.”

I like Kimpton’s confidence in both their brand and the status of the market. In an era of negative media about the economic outlook it is good to see a company with a lot at stake taking risks to further their brand and their market position.

The Cornell Center for Hospitality Research recently hosted a roundtable discussion on the risks and rewards of technology service innovations. Some of the topics hold a particular interest here at GuestSpan. Particularly in the area’s of using technology to create a better experience for hotel guests and improve the performance of hotel staff. A point one of the panelists made was:

“Regardless of how the innovation is implemented, it must be embraced by staff and management, and guests must see the changes as valuable.’ When innovations are meant to cut costs, for instance, both employees and guests may need an explanation of the innovation. One example that roundtable participants cited is the addition of self-service kiosks in some hotel lobbies. Employees regarded these with suspicion and guests were slow to adopt kiosks in some cases. Several participants suggested that the moral of that experience (and of other technological innovations) is that technology needs to be balanced with personal service innovations.

This is a good bit for any company or hotel looking to technology as a solution to service. If you are going to roll something new out you need to have the entire staff involved in educating guests on how this new technology will improve their stay.

Another are of discussion where GuestSpan shines is when it comes to ROI:

Measuring the return on the innovation investment presents an additional challenge. One logical approach is to measure customers’ responses to the change, typically with focus groups or surveys. Roundtable participants who have used focus groups said that they are not always reliable. Moreover, many customers do not want to be questioned.
Instead of taking surveys, managers could observe customers’ actual responses to the innovation-what they do, rather than what they say. Observing customers’ loyalty, or, for that matter, employees’ loyalty, could be one gauge of an innovation’s success. Other participants suggested that financially oriented measurements, such as share of wallet, might make more sense. In many cases, the most successful innovations are based on customers’ suggestions.

If you instituted a technology service solution that was aimed at increasing the orders in room service wouldn’t the best way to measure that be whether or not there were an actual increase in room service orders? I think that results will ultimately be the best gauge of success for any service innovation.

We have had a busy couple of weeks meeting with people and raising funds. I thought it would be appropriate to provide an update on our activities:

Kent Millington: Kent Millington has become a mentor of sorts for our venture and has been an invaluable source of advice and direction as we move the process along. We have had several meetings with him revising and editing our business plan based on his feedback. He helped us become a lot more specific in some of our projections and estimates.

Larry Stevenson: We met with Larry Stevenson last week at his office in Provo, UT. He works for the LDS Church in the Employment Services Department. If you have not checked out this resource we highly recommend it. I was surprised at the level of resources they are connected to for budding entrepreneurs like us. He put us in touch with a number of resources provided by the SBA such as SCORE as well as the Utah Technology Council.

In addition he gave us some great council on using a business plan as more than a large brochure for investors. He used an interesting analogy, he said it would be more powerful if when somebody asked for a copy of your business plan you reached into your bag and handed them the old dog-eared copy you have been referring to over and over again. That shows that you use it often and live by it. A very good bit of advice.

Business Ignitor Event: We attended a recent Business Ignitor Event put on by Grow Utah Ventures and featured a panel discussion on “How to approach Angel Investors.” The panelists were Alan Hall, Brad Walters, and Brad Angus. The discussion was good and provided some good insight into the thinking of the investment community in Utah.

The event also provided a great opportunity to reconnect with past associates as well as make connections to new relationships. Networking and relationship building are really the key to what we as entrepreneurs are doing. Whether it’s relationships with customers, employees, or investors it is those connections that will largely dictate how far we go. I firmly believe that if you can forge key relationships and deliver results there is no limit to what you can accomplish.

Fundraising: We have also been busy on the fundraising front. We have received commitments for $320k in funds so far and are seeking an additional $280k-$500k. These funds will carry us to through the first 12-15 months, through beta and to our first few installs. We are grateful to those who have shown their confidence in us and our ability to execute on our plan to make this leap of faith. Perhaps equally as important as the money is the expertise and experience these gentlemen bring with them. Both have successfully started and operated profitable companies an their advice and council will be invaluable.

In summary, things are moving forward at a breathtaking pace here at GuestSpan. We continue to seek investment as well as talent to help us make this venture a success.

Stephen Denny, in a post on Marketing Profs Daily Fix blog writes a very thought provoking piece on whether a brand driven by a company can achieve the same kind of emotion and feeling that will “ignite a spark in our collective imaginations that continues to fire other imaginations long after we’re history” as some of the cultural movements of recent history have done.

Says Denny:

“Can a brand become a movement?

More importantly, can a brand become a movement on purpose?

If you were launching a company and aspired to a unique, relevant and ownable brand, could you plant the seeds of a movement within your messaging architecture and outbound communications? I think in some cases, the answer is ‘yes,’ although clearly not in all. If you sold great ball bearings, you could have a great brand but I think moving towards “movement” status might be impossible. What would you stand for that wouldn’t just be “branding”? You need to have certain prerequisites that define what constitutes a movement – here’s a draft:

• You must be replicable, in spirit if not in form.
• You must have transparency in your mission so that your ‘branding’ is clear and easily adaptable to related works by others. There must be a consistent ‘arc’ to the story – a movement must have internal consistency.
• You must be willing and open to not just release control of your ‘brand’ but to acknowledge that your brand and movement are owned by a collective group of people who may never actually meet.
• Importantly, for a brand to become a movement, there must be something deeply emotional and communal that connects users, providers and influencers to a degree that transcends simple functionality. There must be something to it that is “right.”

It is just this kind of movement that GuestSpan seeks to embody. I believe that certain brands evoke within its customers a kind of zealot like feeling. These would be what Guy Kawasaki refers to as “Thunderlizards.” Every brand needs them to survive. I believe that if you solve a problem that all or a large number of people experience you have the immediate potential to become a “Super Brand” and when users or customers begin to use your product in a new and innovative way or begin to build other products and services off of your idea you are very close to becoming a movement.

A friend of mine recently relayed an experience he had while traveling to a new city on business. He’d been there for an entrepreneurial conference that went most of the day, but by 7 pm that night he found himself sitting in his hotel room with nothing to do. He was visiting a city that was well known for it’s great steaks so he decided he would go down to the front desk and find out where to go for steak. When he asked the young lady at the front desk all he received was a shrug of the shoulders and an “I don’t really know.”

My friend was undeterred. He asked, “You live here don’t you?”

“Yes,” she replied.

“So where’s there a good steakhouse?”

“Yeah, I just don’t know, sorry” And with that she went back to her work and my friend? He ended up at some cheap diner across the street because it was convenient to the hotel.

If that experience sounds familiar to you, you’re not alone. More and more travelers are reporting dissatisfaction with hotel staff, service, amenities and a number of other areas. In fact, in many economy and business class hotels its almost as if the guest has become a nuisance.

Now to be fair, some of these problems are not the fault of hotels. Hoteliers live in a difficult world-they can only charge so much for their rooms and are finding it increasingly difficult to find competent and friendly staffers to put in front of their guests. Add that to increasing competition from boutique hotels and other lodging options and it all piles up into one big bad experience all the way around.

Enter GuestSpan. GuestSpan is a company that believes technology can be used to make the hotel experience positive for both guest and hotel. By giving guests quick access to a number of amenities in the hotel as well as the surrounding communities and opening a new revenue channel for hotels GuestSpan will help both meet their respective needs.

This blog is going to be dedicated to our journey through the start up phase and into the industry. Over the coming months we will post updates on our progress along with thoughts and information relative to what we’re doing. We invite you to take the journey with us and leave your feedback as we venture to improve the hotel experience for all of us.