Adam Harris – No Office in the Cloud
2 weeks ago · 54:59
We sit down with the co-founder of one of the fastest growing companies in San Diego, Adam Harris. His company, Cloudbeds, just hit Inc’s list at number 75. Their software helps hospitality properties manage their business. This all started when Adam and his partner Richard – who are avid travelers – abandoned their previous consulting jobs and started a company with a unique model that they still follow today: Cloudbeds has completely decentralized staff in 35 countries. Their unique work culture has also won them awards.
Nate here from the opt out life joined as always, by the most interesting man in the world Dana Robinson. Hello. Hello, Nate.
That sounded very interesting. Well, today’s episode, we’re excited about this one, right? We’ve got Adam from Cloudbeds. Here, we’re going to be telling his opt out story. This was recorded here in the studio in San Diego. Adam Harris, the founder of cloudbeds, a company that is a software platform in the hospitality industry. And he is a traveler, a world traveler. And before we get into it, let’s, let’s let everybody know who we are real quick. Well, you and I interview people, and we interview people that most people have never heard of. And that’s a good thing because we don’t want to interview somebody that’s made it big, made billions of dollars because we don’t think it’s relatable. So we interview people that are making base hits. we’re interviewing entrepreneurs that are working in their pajamas and making great money or interviewing vagabonds that are digital nomads all over the world. And we’re looking for those stories that will inspire people but also give us a chance to teach that’s right side gigs, side
gigs that go big side gigs to stay small how these people fuel we call the opt out life the opt out life is our name for this movement of people who have an alternative approach to lifestyle and income and sometimes the other way around based on a book The Dana wrote called opt out if you’d like a copy of that book head over to optoutlife.com/Amazon and we would love to hear from you come over to optoutlife.com hop on our email list and if you want something that’s even a lower commitment than that we have a growing Facebook group where we chat opt out ideas we talked about people side hustle is how they can get the opt out life because ultimately we want to inspire you to get started on your opt out life. Well, and on that Facebook group. We do our best to answer questions. So where they’re interacting with you. If you want to get to know us and interact with us get on that private Facebook group. It’s free. It seems private and that might be intimidating. Just request and will approve you. We love to see you there. So without much further ado, here’s today’s episodes with Adam from Cloudbeds.
Most people love the stories of businesses that start small and grow into a billion dollar company. These are sexy stories that make headlines. They went awards from TechCrunch and the founders get invited on big name podcasts and end up featured in Forbes, Inc. and the Wall Street Journal. We love these stories too. But we’ve made it our goal to avoid them because those stories are rare, and the pathway from zero to a billion dollar company is fraught with risk. So you may be thinking that we’re taking a chance with this episode as we sit down with the co founder of one of the fastest growing venture back software companies in San Diego. Our guest is Adam Harris is company cloud beds just hit inks list of fastest growing companies in the US number 75 Cloud beds is the darling of the local entrepreneur community and has raised five rounds of funding totaling $21 million today. Their software helps hospitality properties like hotels and b&b manage their business from a booking engine to back office needs. They have 21,000 properties as clients
And over 170 countries. Pretty good, right? But let’s highlight the opt out part. This all started when Adam and his partner Richard had an idea to build software for hotels to better manage the customer experience. They were avid travelers and Richards wild experience. Trying to book accommodations on the fly during a trip to Brazil was the catalyst soon after the pair of fan in their previous consulting jobs and started a company with a unique model that they still follow today. Cloud beds has completely decentralized staff across the US and around the world. their unique work culture has won some awards and with remote workforce, it touches 35 countries. Let’s say that the entire cloud beds roster is living the opt out life so Bravo cloud beds, you’ve broken the mold. Here’s Adam story
opt out life is back kind of a snafu. There we got the we got the audio of it, but I spilled a beer from our guest Adam brought in
Adam from Cloudbed is here. Say hello. Hello. Hello, Adam. Thanks for bringing the beer. Kind of kind of slightly slow start as spilled it on Dana’s laptop. Dan’s laptop is dead. But the audio Griffin is still working. My laptop is still working. So we will try to get past this. Please don’t get mad at me Dana and get mad. Okay, I get even the opt out mentality. Still got half of you there. Ok. Ok. Ok. We’re over that we’re moving on. And we are in the studio with Adam from Cloud bets. As we have established he brought us beer he made the short drive over. He is the famous recipient of an Inc 500 award that just came out for his company, which if you are not aware of what that is, it’s awarded to some of the fastest growing private companies in the US and I don’t know let’s talk about that for a second because it’s recent news and it’ll kind of set the tone for I don’t know what you’re doing right now. And how the businesses and all that stuff Absolutely. So we ranked number 75, which was fun. that’s legit. that’s legit.
Yeah, some of our biggest shareholders never crossed 100. So I felt pretty good about that. My sign on the wall is like to 226. So yeah, maybe beat you by little bit late, late pointing to the wall in our office here where his Inc 500 Award is ranked 226. Yes, but you are number one in Missouri. That’s true. And you can’t claim that
you are in Missouri, I bet you would have been number one. But that’s neither here nor there. But no, congratulations on that. Because it’s a it’s a cool thing to win just as an entrepreneur. But it’s also I think it’s really good for the team to see it’s, it’s a really good feather in the cap to show momentum. That’s really what it’s saying is this company is doing really well the last few years, and there are a lot of reasons probably for that, and we’ll have to hear about that. But tell us what cloud beds is actually, I guess, as we’ve kind of cut you off there with the award. Why did you win that award? What’s going on over there and all those good things? Yeah, so cloud beds is a software solution for small to large hospitality providers all over the world.
world we basically connect the dots for a lot of the tools that power the back office so everything from checking in checking out guests to get shopping online at sites like booking.com and an expedient Airbnb and so on to the accounting and reporting we basically smash it all together in a really easy to use package and ship it through the cloud and have you know about 21,000 properties in 170 plus countries using the tool today which is absolutely spectacular given we’ve only been commercial for a short four years I think what’s cool about the award for Inc 500 going back to that is we actually want to awards this year that sort of from a purpose of us being leaders and what we think about we think about culture. And then we think about KPIs and so we hit the Inc 500 on the KPIs right. That’s obviously a revenue generating award. So the faster your revenue is the higher you rank in that list. We’ve heard 4500 and
Change in growth, which is crazy. And then on the other side is we won ink magazine and Forbes Magazine’s Best Place to Work and the culture side. So we got both sides of the equation which you know for, for founder, rich and I couldn’t be more proud of, because the financial ones is obviously team effort, but the culture side rich and I don’t get to vote on it. It’s really, you know, left to the team to say whether or not we’re doing a good job from a DNA perspective. And clearly we’re we’re doing okay, so clearly you looked to someone I like to help our listeners sometimes see what’s going on in the studio here we have our first silent guests in the room. Spooky a Halloween. Yeah, so somebody who’s probably making should happen in those culture and is nodding when you’re talking about the office culture is hanging out of the room with us. very fitting, very fitting, I’m glad you brought that up, actually, because I think that’s where we can start to talk. opt out in a way talk about the culture of cloud beds have
What’s unique? I mean, it’s cool that you guys work and travel. I mean, I’m just interested to talk about that anytime we can talk about that because your customers are, as you’ve described, these places where people stay when they travel. So that leads to a lot of cool travel stories, but talk about the culture first, because it’s a different approach to business and offices and all those things that a lot of people have been changing up lately, but you guys are kind of at the forefront of, yeah, so we take a fully remote or distributed workforce mentality, we truly speak opt out, right, we’ve opted out of everyone in the same place. We have four offices where we’re there we call them hubs. But those hubs are in you know, Kiev, Ukraine, South Paulo, Brazil, San Diego, California, the best city in the world and then Dublin, Ireland and then everywhere else. We have 35 countries where the staff rich and I believe that leveraging a global workforce was the only way to be part of a travel environment which is truly global and so we find the best and brightest minds he respectively
Geography and we plug them into the cloud buds culture. And it really stems from, again, trying to be universal, having people wherever our customers are, wherever our travelers are. And I think early on, we realized that the only way you make remote work is if you actually create parity between people who are working out of a hub, or people working behind their desks and creating that parody so that no one feels like they have a little bit less equality in terms of like, the resources that the provided the amount of face time to get with their leadership team, etc. And so what we did is we create a rules around all that everything is about people parody. So for example, if the four of us were attending a meeting, and there’s four people in this room, but yet a colleague john is in Ireland, all four of us would have to be scattered to our desk. We couldn’t use a breakout room and do that meeting because that would be unfair, because when we the four of us walk into the room, there’s an
opportunity for us to chitchat about the meeting or when we leave the meeting, there’s an opportunity for us to chitchat about the meeting again. And that leaves john on available to hear that chitchat. So we started small, we worked with meetings first. And then we expanded everything that’s documents sharing is all going into the cloud. And, and that way, everything’s asynchronous. You never turn off your collaboration. It’s always available. And that goes back to people parody. And so we built culture around that and we’ll stick to it and it works for us. A lot of people perceive good work culture to really be around environment. You know, do you have cafeterias Do you have ping pong tables? In fact, I think a ping pong actually because I had a relationship with a business that had a ping pong table and miserable work culture. No one ever played ping pong. No one ever was in the movie room because that just was not good work culture. But people think of that like how do you create work culture that’s good that everyone feels great about.
When you can’t control the environment and make it fun and playful, so I 100% agree toys in an work environment doesn’t create culture, I think it’s the personas in the approach creates the culture. My favorite part of my job is traveling to conferences or trade shows, or whatever it might be, where I get to interact with people from our team that I don’t get to see regularly. And every time I do that, I feel like I’ve been friends or have known them for years, even though I might see one or two times a year. And it’s because of the video culture, the video communication. So zoom, which is our video conferencing technology is our phone system. That’s how we communicate with everyone. So if I need to call Courtney, for example, I zoom her and and that’s how we get one on one interaction. You get mannerisms you can see if someone’s tired or upset or happy or sad. And you begin to learn how to use the technology to adapt to the human or the emotional
side of interaction. And so we never lose it. We just have to adapt to it. And because we stress zoom communication, we were like their 50th customer, or something like that. And we’ve adapted it. Since we are for people all the way to 200. It is our culture, we’ve embraced it. And we’ve just used that to sort of speak to more of the interaction. And so now, when people slack each other, it becomes familiar. We’re business family, and people know when someone celebrating birthday or had a baby because we have a Slack channel for that. And people are shouting out to birthday celebrations for newborns or, or a trip that they took and everything revolves around that asynchronous communication that we have to harness. We just don’t have any other choice because I don’t get to see Marshall who runs our channel distribution team who’s based in Dublin very often I see him three times a year. So our interaction has to be through that means and it’s not forced. It just has happened naturally.
The best part about is you don’t have rich and I at the top sort of cheerleading like what our DNA needs to be. We’ve let it sort of organically grow from the bottom and let them cheerlead it back up to us. And then we just sort of support it or course correct as as needed. How much is travel a part of the DNA as well. I mean, obviously distributed workforce, but a passion for travel and interest in that it’s the people that you’re serving, it’s what you’re building and is it built into the culture in any way as well where you guys are giving trips to people with access to some of the inventory you guys can plug into things like that? Yeah, so one of the things every one of our employees is encouraged to travel we had for a while until the owner of the building sold the unit we had a corporate apartment here in St. Louis in a corporate apartment Sao Paulo anyone could use them at any time it was really there to coordinate some camaraderie and and get out to where we had to have the largest hubs so that face to face interaction could happen there are six awards at the end of the year that are basically
thousand dollar gifts towards travel. And then there’s rewards that are throughout the year as well that sort of entice or sort of promote some travel. But the best part about it is we don’t even need to pay for people to get out there. We have a literally a dedicated Slack channel that just shows photos from people every single day traveling to some new place, whether it’s, you know, member of the Thai team, going to some remote mountains in in Chiang Mai on an elephant or doing Habitat for Humanity in Mexico. We have people naturally wanting to share their travel experiences. And then what I like is seeing some of the remote workforce take hold where you begin to see people picking up in relocating for a months at a time and working from like the south of Spain or in Vietnam or whatnot, as long as you have high speed internet and a quiet background. So you can do your video conferencing. We don’t care where it is. Yeah, they don’t even have to notify you right now. Well, they have to notify us
Fair enough. Yeah, that’s always sounds good. We’ll see on the video call. Okay. I want to talk about you said your business went from four to 200. I mean, that is many businesses are dashed on the rocks of that process. I mean, how did you do it? How did you survive? Did you flourish? What are the big challenges? So we went from four to 1414, 3535
to 200. So 35 to 201 from June of last year to today so massive hiring spree and the last 10 months basically and
it was one of those things where it was so fast you hope you didn’t make any mistakes along the way in your hiring process, but you kind of went off instinct you we were scouring 10s of thousands of resumes to place that many people majority of them went in product sales and support our retail
rate is 95%. So we have a very small turnover. Despite all of that chaos, intuition worked. Intuition works. Yeah, we have some pretty good hiring practices. And so here’s what we did, again, remote culture, we need to FaceTime it was impossible for us to interview all these people. And so what we did is we set up sort of filtered questions where we knew that some of them are culture driven. Some of them were sort of jobs specific, anyone who sort of past that initial sort of glance got sent out to a video interview. That was one way. And so we asked again, 10 different questions that were recorded on a webcam or on their phone or whatever, through software called spark hire. And we would then go to the two that actually mattered. And so the hiring manager the hiring lead at the time could filter down through thousands of resumes to hundreds of resumes really quickly, and then from there, we could watch the video interaction to see whether or not they had that grit that we were sort of looking
Four. And then from there, filter it down to leads who were in that hiring class on the sales side, we took it even further. And we use psychology and sort of behavioral quizzes that could get us down to filter into like minded individuals to our highest performing sales reps. And so again, it was all about technology and automation. But using our culture as a as a sort of guiding backbone to filter down people into what we felt were the best fit for cloud bets and retention is high and in our ambassador ships higher than ever, and obviously, we’re winning some workplace award. So I think we’re doing someone right. Can we do better? Absolutely. And I think that’s where I’m excited or next chapter is about taking what we’re learning in the feedback our employees are giving. So every every month, you get office five bought that slack shoe and goes Hey, how are you feeling? How’s your relationship with your manager, your peers, what could we do better as an organization and that feedback gets aggregated into a sort of anonymous result.
We can rank where we are against our peers as companies. And then we take that feedback, and we start adjusting our practices on how we can improve. And one of the biggest areas is learning management. And so what we’re going to do is look at tracks and how we can take members of marketing or members of sales or customer support or whatever, and start putting them on tracks where we can create operational leverage me we can get more out of them by training them further. And again, we wouldn’t have known that if we didn’t get that feedback loop that we had established early on. It’s a really smart process. I mean, that’s better than almost any companies want to call it HR than I’ve ever heard in my life. Where does that come from? I want to ask where a lot of this comes from that in particular, because I’ll frame it in that a lot of entrepreneurs probably myself included, I don’t really give a shit about that stuff. And it’s actually really important. It would be more beneficial if I did care about that stuff. And I would just have to work with someone who did, but I mean, does this come from a place of you and your partner working other places
saying, Oh, this is wrong, let’s do it better. Is there someone else in the organization that champions this, because this is like really well thought out with good systems about something that some people seem to overlook
is a little bit of luck. And then a lot of just intuition, both rich and I have never run a company the size before. And we’re fortunate to bounce ideas off each other. And then we have this amazing leadership team around us who have come from great environments and terrible environments. And you sort of pick from the great ones and in sort of pass them on the bad ones. It was us going out and trying to solve a pain point that I’m sure thousand other companies face every day. And we just piece it together and it worked. And now we’ve gone back and found ones that are seamless so that we don’t have to daisy chain a bunch of different technologies together, we can find ones that work and we’ve sort of graduated to that level. But it came down to a very simple fact as leaders. We have KPIs that we have to hit that’s because
We have shareholders and then we have environments that we have to create where other succeed and if we think about those two every single day and we try to put best practices towards those two areas we’re going to have a really successful company Dana my favorite quote in the first run here with Adam was toys don’t create culture gotta we’ve got a company here that we’re kind of explaining is opt out but somewhat opt in because they’ve raised all this money but I think there’s a lot of opt out components to it’s still a very cool story for people to hear if nothing else and they’ve created this culture that all the employees love and they’ve maintained it with people in 35 countries and now to 200 employees. I thought it was very interesting to hear about how they’re leveraging tools that we all have access to like slack and and tools like zoom and spark hire to kind of run this HR process and this beast that makes all these people feel connected to a thing that is really all virtual, very cool that they could do that and when big awards like Best Places to Work usually that only comes to play
Is that have toys and, you know, free lunch and all that shit that they’re pulling off in a real authentic way Are they all connect remotely and think they all kind of have a passion for travel and what they’re doing catching lightning in a bottle. But he’s telling us how they’re doing it. Yeah, I think it’s cool story for those that aspire to work at Google or Apple, or any number of thousands of startups that are well funded enough to get that ping pong table and to set up the movie theater that no one actually uses. Because offices tend to just waste time and in fact, create a conflict of cultures because you’re living in this a virtual culture with slack and email going back and forth. And at the same time, you’ve got this kind of interactions that are often in conflict and being dragged into meetings that are unproductive, so pretty cool experiment here. A little darian, I guess for Adam and rich and their investors to basically give this a go because I think all these big companies feel great.
Have all this tech stack. And then they force everybody to show up. And in fact, I have a personal example my brother worked for, I guess, you probably fortune 10 company and could do everything from home, but was never able to advance as a result of this sense that he needed to be at the office. And once he was at the office, it was the most unproductive thing it could do. And the culture was negative, because negative people tend to flourish in that environment. So really cool. A big focus on the quality of the people. And Wouldn’t that be great, right? If you’re going to build a company, if your company is starting to grow right now, as many of our guests have had businesses at 235 employees, and they’re teetering with that, should I have an office it’s a great example of how not to have an office and instead of focus on providing the mechanism to grow that culture. Yeah, well done, Adam. And he kind of comes off kind of nonchalant about it to like, you know, this isn’t something they had a grand plan for. They’re just logically using the tools that are there and focus
kissing on people. And you can tell, I believe we had a guest in the studio who works at Cloud beds and she you know, you can tell like just looking at them that their family and just awesome to hear. So definitely listen along go back and listen to how they’re pulling this off with the tools because it should be something that people should do the right way that as data is telling us and a lot of ways these tools are there and people aren’t doing it the right way. So well done cloud beds. And now let’s hear a little bit more about where this all came from where Adam and rich came from as professionals and as travelers and where cloud beds got started. I want to hear about who you are and why you enrich created this company like what led up to this what led to the interest in technology and why did you end up choosing to service this industry in particular, I think we realized that we are the customer at the end of the day. So our hotels are providing experiences to every one of their travelers every one of their guests every single day of the year. Well, I’ve been to 52 countries. I plan to try to go to more
Over the course of my life, I was very fortunate to have a father who traveled and spoke at conferences and around the world. And he would always sort of say, who wants to come with me on this trip and I’d be the one to raise my hand over my brother and sister. And as a result I got to have great experiences and bad experiences. traveling in at the end of the day was the great ones that got me ready for the next trip and Riche is the same way. Rich studied abroad twice. He lived in Tokyo for over three years. He lived in Brazil for over three years, speaks three languages almost four now. And really sort of embraces that sort of opt out or or abroad mentality, just like I i’ve never lived abroad, but I’ve been to double the countries that Rich has so like, I think we balance it out differently. He’s lived there experienced a different culture. I’ve been to more cultures to some extent and it’s it’s a different look as you sort of approach it but because we were
customers, we wanted to provide great experiences. And early in the day, I don’t remember if it’s him or myself or someone else. But it was more reservations, happier guests. That was the tagline that call beds live by. And it really was the guest experience side of that happier guests part that we’re like, Okay, if we build systems that free up the operators, time to go back to hospitality, where they’re spending more time promoting great guest experiences, that’s going to lead to better reviews, better reviews leads to higher placement and TripAdvisor higher placement. tripadvisor gets more reservations and makes sense that’s infinite. Let’s do that. Let’s build great solutions that make these guys better hospitality expert. And then they can worry about the fulfillment side. We can’t touch that. But we’ll let them deal with the fulfillment. And so I think it was a little bit of both his love and passion for being out there. My love and sense of adventure trying to experience something new and both of us worked at a company that we started
Built technology for other companies and we had a broad companies and we had domestic companies and the ones that we love the most for the hospitality clients, and they were the ones who were the most messed up because she had a bunch of tools that didn’t work together. And it was kind of jammed together. And it just didn’t quite work in when we saw that pain point and had this sort of moment of Aha, why don’t we build this, I don’t think we really understood what it meant to start a company, let alone to be part of like, point 00 1%
of where we are as a business today. But the great thing is, it was such a ride and everything that I learned in my past career, I did investment banking, and then I had this consulting practice. I did a little private equity, it was nothing prepared me for what starting a company growing into 200 people and hopefully 1000 at some point in the future. It was just a crash course of the Hard Knocks, and every day was a new day.
every stage of the businesses has been a new stage. But as you continue to surround yourselves with the best players to put on the field, you kind of learn and you take it, you get really thick skin, you lose all your hair, you gain a little bit of weight and and you celebrate the wins really hard. And you don’t let the losses bother you. And I think that’s the only thing that we’ve learned as recent. It took a long time to get there. Well, let’s do your Yeah, I want to like enjoy the inception. the inception of a business is always fascinating to me. It’s the most exciting time for most people. And it’s also followed by usually the most difficult time for most people, which is their practical MBA. Yeah, the realization that you didn’t realize how much you didn’t know. But yeah, let’s talk about you guys get together. You’re where you’re working at a firm together, you have a meeting of the minds and you say, let’s build some tech and sell it to these foreign hospitality operators. So it started with rich taking a trip to Brazil with his fiance at the time now.
Wife and they
were traveling north of real which is called Blue shows is beautiful, beautiful beach community. And along the way they were trying to book a reservation at a Posada Posadas equivalent of like a b&b in North America. And so they’re calling because none of these properties had websites that actually would allow them the book or secure the reservation they had to physically call so no one answer the phone tried about 20 properties. It didn’t matter where you stayed because they’re all real nice on the beach but phone call no answer phone call. No answer. And then eventually someone answered all Portuguese so Rich in broken Portuguese at the time or Tanya in Portuguese is negotiating trying to figure out what the rate is because there’s no published rates anywhere and so the guys like it’s a Saturday Sunday Monday Tuesday and thousand dollars
Well, that seems a lot you know, the guy down the street and you kind of had a little bit but eventually they were able to sort out and he goes great.
wire money to my Brazilian bank.
And I’ll make sure you have a room when you get there. So that’s what they did. They went to a bank, they put money in the bank bank account, move the money over there. They got an email saying, I received your money. And sure enough, a room was there. So rich tells me this experience and goes crazy. We did so much work in the restaurant community and in all of California was advisor to the California Restaurant Association. And what was interesting about that is they had open table a little widget on the website took you to a landing page, you’ve secured your reservation for your table and we’re like, Why on earth does this not exist in hotels? We knew about Hotels. com and Expedia booking.com. But why on earth are these hotels not taking direct reservations? And so we dug in and we surveyed we dug in little more the World Cup was coming in 2016. So this was circa 2013 at the time, and we realized that there is this catalyst in Brazil
LatAm we’re all these domestic travelers as well as foreign travelers. We’re going to visit Brazil for this massive soccer tournament,
6 million people would come when they’re used only 2 million. So they need to get all this this Phantom inventory, this offline inventory online and accessible. And so we started building Open Table for travel. And we built a lightweight booking engine, a lightweight place where they could rate put the rates and availability and we saw a little bit of early success but we realized was the tools that they were using to actually run the property were horrible they were built you know, 15 years ago they were only offline on one desktop so if you left it at at the office you couldn’t do in checker take a phone call at home and and so we said this is crazy. Let’s re engineer all of this let’s go deeper and and let’s build this operating system for these small hotels and see where it takes us.
And that was three of us at the time. And sadly, the three founders at the time when we became too, we let one of our founders go, and it was hard, but he’ll make our Well, if we ever IPO or get acquired, he’s still shareholders. Still a good partner and cheerleader on the sideline. But, you know, for rich and I was about a direction that we wanted to take it. And we didn’t see idi with with all parties. And it’s really important as an early company to have full alignment with leadership, if anyone’s going different direction is not going to work. And so we felt like we had something and so we dug in and raised a little bit of capital off that idea. People seem to resonate with the idea and it took us about 18 months to build it out, test it out, build it out, test it out before we finally commercialized in 2014. And from there it just took off at what point in the process of his narrative. Did you guys quit working at the consulting gig and go solo Yeah.
So it was probably about six months in, we decided that we had to spend full time we needed to hire some employees. So we sort of transitioned all the revenues from our consulting practice into fueling the initial build in taking our our product managers who are working on that our engineers who are working our consulting practice over full time talking about raising money. We haven’t had too many guests on here that have done fundraising and in their business cycle, what was the size of the raise? What type of investor did you approach? So at the time we approached angels, so we’re raising about a million bucks. And,
you know, what we realized is we needed a little bit of experience sort of coaching how you start a company because this was really our first time trying to raise capital and build it into sort of a traditional venture model. We’ve subsequently raised over 21 million today from professional investors, major VCs and whatnot and so it
Changes each stage of that’s a little bit of a different approach. The expectations are slightly different, the way they think about returns are slightly different, the way they want controls are slightly different. And again, that was a MBA along the way. And, and we really didn’t have any experience even from, from investment banking perspective, the the deals and the types of things I was seeing. We’re totally different. And I never structured a capital raise before, but we got tied up with really good counsel in town guy named Randy SoCal. From DLA he runs our corporate venture team. He was a huge advocate. Early on, he helped us connect dots and to some of the local angels. He was a big fan of it such a fan that deal as venture arm actually invested in us at one juncture. And having a guy who’s done it 1000 times was hugely helpful for us and so all the negotiations and all the structuring. He sort of taught us along the way of what to look out for, but we we try to cheerlead
Guys who were we knew we’re going to love us, we’re investing in us first. So like the series seed is guys who are investing in you as individuals. And they’re the ones who are putting a lot in line and they’re looking at it from the perspective of if Adam and Richard can be successful, then the business can be successful. We’re investing in those guys whether this deal or the next they’re going to make something work. And we want to be on their sides, the next series of investors of the guys who are thinking about it from a financial return and they’re looking at it, if I put this much money in, I need three to five x my money out and each time you go in, it gets more professional and more more control driven and whatnot. And so at some point, we’ll raise another very large round and give us more capital to continue to grow and some of that might be for m&a or you know acquisitions of our own and or just keep doing what we’re doing on a on a slightly you know, larger scale but when we
First hired our first sort of five employees. One of them was our VP of sales. Rafa and Rafa said I want 3000 employees, that’s our goal. And we said okay let’s figure out how to make that app I was like a lot of it depends on you so you better go out there and sell and but that’s the goal the goal is to get as big as possible and and continue to do great work great culture and hopefully one day cloud Bez lives on beyond us and I think that’s the real goal of this business is to know that it’s going to be in someone else’s hands a generation from now and whether it’s our own family or someone else that would be pretty cool to leave a legacy was that first round with angels difficult to me what was the offer was dead was it preferred chairs, you know, he was a combination of both it was convertible and it was straight equity. I don’t remember the terms to be honest with you. But it was one of those things where it took about six months, a lot of dialogue, you know, when someone’s interested and then it was sort of continuing to further
information to get them fired up the second round, which was two and a half million, that was more difficult. That was where you started to get some serious investors in play. They had a series of investments, you know, more than 20 an average. And they ask the tough questions like, oh, let’s see your financial model. Like, we don’t have a financial model. Let me see your business plan. Well, we didn’t write that business plan. Like that’s no one writes business plans anymore, right. And so it was a little bit of a different learning curve. And, you know, this past summer we were considering raising a very large round and we held off for a couple months and are a couple quarters actually. And what was interesting about that is the level of details that they wanted was like nothing we had seen today. And so each time I feel like we go through this we’re learning a little bit and it doesn’t matter who coaches you on what you think you’re going to see. It’s always wrong. It’s always something different. Okay. Dana, these guys I guess two things mainly to talk about there’s the
The great genesis of this the very classic genesis of where cloud bets came from Adam and Richard travelers riches on a trip, and he’s booking combinations in Brazil. And it sounds like when you hear the story, it sounds like this was 20 years ago or something. But it wasn’t. It was only like six years ago where he’s unable to book online and calling ahead and there’s no published rates. And it’s interesting to hear that there really was a lack of sophistication in the smaller accommodation places and in these other countries for these smaller B and B’s, and hotels even use a platform to allow them to do that. I thought that was all taken care of. And apparently it was not so cool to get their legit story. I love hearing about where these things come from, especially if there’s a travel tent to the story. So I like that. Yeah, cool. Here, the entrepreneurial sort of that light bulb goes off when you you sort of make a connection between a skill that you have and need that you see that’s maybe being on Matt and having the fortitude put that
into action. Yeah, I think that’s an important point to make, right? Like these two guys didn’t set out to do this, this kind of started as a side project they were building and their consulting jobs. And it just turned out that their preparation met this opportunity. And they didn’t know that they were even preparing to do this. But there they are smart business people. They know how to build technology. They’re doing it for a whole array of clients. Adam spent time working in the restaurant industry and his exposure to that. And so open table as a platform led him to see like, why not do open table for all these small B and B’s and hotels. And then they had the audacity to go out and do that and boy did they get it right, because they’ve got 20,000 plus people using this platform and, and so well down there and listen to that story that illustrates this thing where it’s like, if you’re out there, your eyes are open, you’re working on something, you’re developing a skill that maybe you’re going to use for your opt out down the road. You can always kind of have that in the back of your mind that whatever job you’re doing, whatever clients you’re working for, isn’t necessary.
The End, but it can be part of the means. So we try to highlight that and inspire people to think that way. Because all these stories show that that can be the case. The other side of this Dana’s these dudes have raised a bunch of money and we’ve struggled with that is opt out or opt in. But there are some opt out parts to it. Right? Yeah. And it’s worthy of some discussion. So people understand that finance can be a great tool to a flourishing business. I think a lot of people the mistake people make is to view it as the salvation that they have a great idea and if they could just get the sharks to invest, or the local version of that the local investment community to just give them money, that that that would make all the difference in the world investment. The investment community is a wonderful resource as long as you understand it as a tool. And,
and to exploit that tool. You have to dig into the local community and and network. And we mentioned several of the local, we bantered about the local meetup, San Diego venture group tech coast angels there’s a lot of energy
The vigil angels and they know each other, the legal and accounting and business consulting communities are all rallying around these investors and the companies that they’re trying to help get off the ground. And of course, cloud beds is one of the larger of San Diego’s current venture backed companies. And so their success would be our success, we certainly would see probably more investment dollars flow our way more interest in startups in San Diego if we have more companies that are able to make that big push Because ultimately, the goal for a company like cloud beds is a big exit. And that means going public and selling stock on what the public markets or it means selling to a larger company, a big travel company and other software business and, and paying their investors back. You know, 10 times what they put in and that hopefully would make Adam very rich will make the investors very happy and then they’ll be pouring that money right back into this ecosystem. Yeah, I love the local spin on this. You know, we talked about, oh, this isn’t the Silicon Valley’s.
stories and you don’t have to raise money to be successful and don’t chase $100 million exit. But in this case, it’s a cool story because they are keeping it local. I certainly encourage people who have ideas for side hustlers or for one need to do something different to go to those startup events. And to find out who those groups are locally, that are hosting these events and pitch events, and are the groups who invest in these companies. If you surround yourself with those people, you’re going to be in a good place to be an entrepreneur and to kind of create your own path and it doesn’t have to end in a story like cloud beds. But it is a cool one for the local scene here in San Diego and every smaller city that’s not the Bay Area or New York could use these sorts of things. And we definitely want to inspire and encourage people to do that. And I like to say this night I think base hits doubles and triples are awesome. We want people to get into business and not hold back thinking they can’t do it unless there is a bunch of money at the same time. If you get a business off the ground like knock around one of our guests right at the other Adam that
came in and told us that he really was launched when he took that investment. And it was only a few hundred thousand dollars. But that made the difference between him growing from a little side gig to multi million dollar business that’s on track for $10 million a year in sales. So I think people should have the power to dream big, but not be held back by the idea. They can’t do it unless they’re raising money. You know, we have pretty much the top investors in San Diego are all invested in cloud beds. And I hope when cloud beds becomes a you know, IPO or a big acquisition, the time they all get to celebrate alongside because then it just goes back into the ecosystem and more companies get funded from that new wealth that’s created and that’s what we want to do. I always look for deals and San Diego I get pitched all the time. I obviously don’t have that money to invest to be very small chunks today. But again, it’s giving back as much as we’ve received and I think that’s where we started but there’s absolute money out there and
One who says there isn’t that’s completely crazy and then from once you graduate you have more than a million in revenue or you’re nearing towards that 5 million so it’s zero to one is sort of first phase one to five the next and then 10 over and then you know from there it’s it’s the same investors there on out but it’s at one to five there’s a lot of activity in San Diego there’s a lot of really great companies that are up and coming and and what’s cool is is there so much competition for deals that a lot of the VCs are coming down inside so the ones who normally want to see 5 million and recurring there’ll be okay with for three and so some of these San Diego companies that are are feel like they’re getting closer should really be not shopping but getting out there and having those interactions which is where San Diego venture group and some of the other cool companies and Startup Weekend whatnot is driven but peaks band which is our our lead investor if five deals in San Diego now and that’s all within a year and so there’s
super active, they’re trying to do more. I heard there’s a couple more coming in the pipeline, which is kind of exciting. But you know, one of the things that we we never did, but we thought would have been fun is to apply to accelerator like TechStars or 500 startups or Y Combinator, whatnot. There’s 1000 of them there in different parts of the world. You spend three months in a intensive program you get a little bit of capital you meet a bunch of cool people and then you graduate and you go back to your hometown and so that’s an option I’d love to see San Diego Ian’s get out of the San Diego mentality which little casual laid back you know there was a reef sandals that open beers and whatnot know I mean, but there’s a a game and raising money. And sometimes it’s good to get out of this bubble and go experience the energy and in the Bay Area or the energy in New York or Santa Monica, but the money’s coming here anyway. So you kind of just have to get either out of that that seed stage where you’re pre revenue.
Or bootstrap it as long as possible. Either way works just fine. It’s interesting that you thought about those as I’ve had a bunch of friends go through Y Combinator, TechStars. And they were all 23 year old guys that were sleeping on couches. And I kind of have that picture in my mind of people that apply that just young, right up, though. Yeah. So anyone of any age, get accepted, can go spend a few months somewhere else. good learning experience in the connections are invaluable. invaluable. Definitely. Cool.
Let’s talk about your personal lifestyle. We’ve talked about the culture of the business itself. You know, you’ve talked about being a world traveler, beyond most people’s reach, or beyond the places that most people have ever been to as far as volume and it’s been that way since you were young, current lifestyle as an entrepreneur, how do you balance having a successful growing business with some of the things that you do outside of work? How do you think about all that and does it fit into the opt out life my wife my answer differently, but I would have to say it’s routines. For me. It’s about the same routine every day and it’s what I eat for breakfast. The
I wake up what I do in the morning, how I get to work. It’s literally the same routine every day. And I read along the way from some of the other sort of successful unicorn startups, the CEOs were doing the same thing. Their leadership team were doing the same thing. And now that really resonated for me, and I think it came back to just saying it, it’s just like when, you know, you sort of expect something, it’s a lot easier to sort of mentally prepped for the day. And that’s, that was a secret for me. It was like in high school, I had to wear a uniform every single day was easy. I knew what I had where I didn’t have to plan I got up, brush my teeth, go my hair at the time, and then put on a uniform went to school. And I think I’ve sort of taken that same discipline. When I show up to club it’s every day. It’s the same process. When I don’t stick to the process. my calendar blows up on me. I get sidetracked. I almost missed podcast interviews. And that’s a little bit of what’s going on. Right now. We’re moving offices and it’s complete chaos in my life, and I’m trying to get it back into routines.
So the first thing I did was build my desk, build my workstation and get all the things that I’m used to like. I listen to classical music in the morning. So I got my little headphones plugged in. I couldn’t find him there in a box. It was driving me crazy. last two days. But then when I come home, I completely turn off. I really try to disconnect from devices as much as I possibly can. That’s one of the things that I’ve had to work at. And I think that’s where my better half is really coached me is to be like, disconnect, play with the dogs go for a swim, let’s go for a walk. Let’s listen to music. Let’s cook doing the things that I love to do. Let’s go on trips. But you got it separate work in life. Otherwise, the days go by really fast, they kind of blur together and I kind of got into that about two years ago in cloud. That’s when we just started taking off, everything was blurring together and I wasn’t able to sort of separate the successes that I needed to do on a daily basis and let go of wanting to be
in the trenches in really do my job. And I’ve watched all of our senior leadership team who’ve been with us from the beginning go through the same sort of practice where they’re shorter, things are blurring together and now they have new roles where they’re managing more people their goals are a little bit larger and it’s becoming one of those things where they’re having a separate in we’re all sort of setting boundaries a little bit but for me it’s cooking it’s swimming tennis, things like that golf it’s just trying to make separation from phones that are always ringing the I watches that are going off at any given time so what countries are Next on the list so fun little trip in December with the wife we’re going to do the Christmas markets through Germany and Austria and kind of get out in the snow drink the you know warm you’ll I think here but yeah, for us. It was always something where you know, neither one of us really gets into the holiday season because we live in say
Diego and 72 degrees year round, but seeing cold and the spirit of the holiday seasons is something that’s really exciting. And we’ve never gone. So we’re going to go check that out for a couple days. That’s cool. That sounds like a fun one. Yeah, for sure. So you’ve kind of described what success looks like throughout what you’ve been talking about. Whether it’s cloud beds, is an IPO cloud beds as a sale and trickling back down into San Diego. That’d be a huge success for not just you, but the whole community and also possibly something that lives on beyond you whether in that iteration or in a long term run for the company and pass down to
others. I guess along those lines, as cloud beds does an IPO cloud beds doesn’t sell you still happy? What is happiness look like in that version and 15 years or something. I mean, if we had to keep doing this the rest of our lives and building a bigger business satisfying the guests at the end of the day. I think all of us will be motivated by that the money’s great
If you get it, but then you spend it or it sits there and you don’t spend it, and you pass it down to someone else who either spends it or doesn’t spend it. So I think all of us have a number in our minds, at least that’s somewhat motivating as an entrepreneur. But But I gotta say, it’s the freedom gets the fact that we’re fully in control. I’ve got an amazing board, we’ve got great shareholder base, they let us do our thing, they leave us alone. That’s pretty that’s pretty unique and coming to work every day, surrounded by your friends, surrounded by people who share a similar vision who are literally motivated to be successful. We take pride like wearing their shirts around and in taking photos and being silly. I mean like that, to me is the I think that’s the best form of success and I think that goes back to our goal, it’s KPI so making that shareholders some kind of return or doing something that moves the business in the right direction. But more importantly, it’s the ones that I really resonate with.
With is the creating environments where others succeed. That gets me off. And I love winning these culture wars. That’s where I put a lot of my time in. And if, if that’s all we did for the rest of our life, and I had smiling faces on company wides where I get to see, everyone’s listening intently, wanting to learn, like, I don’t need anything more than that. I think a lot of people run a business that’s on your trajectory and burn the candle at both ends. They differ life happiness and up in, you know, with kids that hate them, and spouses that hate them. And at the end of the day, if they flame out, level off, don’t IPO or don’t sell them been happy the whole time and they’re not happy at the end. It sounds cool because you’re doing what you want to do. You’re living that life so your employees within the scope of pretty traditional venture model business and yeah, it might go big and you hope it does and you’re shooting and aiming for that but all of your living the life while you’re doing it, yes, sir.
I was gonna say the same thing. Well let’s Let’s end it with one of our little fun games we haven’t done in a while. So we’re going to go to the airport. Hypothetically we could take these beers maybe an Uber all the way down and we have to fly somewhere we’re just gonna go to one city for one night This time you get to pick it Where do you want to take me and Dana if distance was no matter cost was no matter we just get to transport ourselves to a city the city in the world three of us for one night prior questions Oh okay. So what do you guys into food? Yes food Asian food okay like if we could eat five places in one night that would be cool
five places in one night
well you know it’s interesting I might not choose Asia okay well because you can get the Asian food in multiple different yeah so immediately I go to Berlin, Edinburgh Dublin or Amsterdam those are the four tough for nice maybe London been
Number five The reason is you get unbelievable environment walkable. I love the walk. So like being able to walk to city feel safe right now is the best time of year to be at any of those four because getting a little bit cool if we’re in Amsterdam you’re going to see the fall colors turn the leaves and that’s absolutely spectacular on those canals. The food scenes are unbelievable. You get every walk of life in terms of cuisine type, which we could hit your five, five different types. There’s probably some fun extracurricular things that you could do to get your, your evening going through alcohol. There’s a great beer scenes if we’re in Edinburgh scotches, you know, running everywhere, but yeah, for me, those are probably my top five Go Go to pick one loved Edinburgh. Let’s go with that. And I love it. I have never been there. It’s funny the way you described. It sounds perfect. Can we go we go all right to opt outs out to Edinburgh. Thanks for coming in. Adam. Great story.
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