GAIN Momentum episode #16 - Finding a Sweet Spot as You Scale Up | with Luis Segredo
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[00:00:00] Welcome to another episode of the Gain Momentum podcast, focusing on timeless lessons from global industry leaders about how to grow and scale a business in hospitality, travel, food service, and technology. I'm Jason Emanis here with my co host Adam Mogelonsky. Adam, how are
[00:00:25] you?
[00:00:27] Doing fantastic.
[00:00:29] That's good, that's good. Our guest today is Luis Segredo, CEO of DataTravel, maker of the Happy Integration platform, Hello.
[00:00:40] Luis, how are you?
[00:00:41] I'm doing great. Thanks for having me.
[00:00:43] You bet. Adam, take it away.
[00:00:45] So our podcast, we focus on timeless lessons. speaking to senior business leaders to really show what we they can guide businesses and aspiring professionals to guide their business forward in A series of incredible ways. So we're so delighted to have Luis on and we know he's going to give some great guidance according to our four questions that we have.
[00:01:14] And those are, Luis, when it comes to scaling a business, what is the single piece of advice you would give entrepreneurs from your perspective as a professional in hospitality technology?
[00:01:28] Well, if I could cheat on this one, I would give you an answer that's all encompassing. Um, like establishing a strategic plan. Uh, or do what we've done. We've, we've implemented, EOS, the Entrepreneurial Operating System, which gives you kind of a guiding set of principles to run the business and drives you through a process.
[00:01:45] but if I had to pick one, and we're talking about hospitality technology, what I'd say is that, entrepreneurs need to know why people buy what they're selling. They need to have a really before, and really we should probably start off with the definition of scaling, but just to finish the thought there, we're talking about scaling, you're, you've got a product or service, you started selling this, uh, and you want to just sell a lot more of it. I think the first to understand, the first thing to, to understand before you can scale it is really understand why people are buying it.
[00:02:13] Um, which creates a need around or need to understand what the product itself is, the services. and then with that, the value that goes with it, and then, and then you can start to think about how you can make them repeatable. Uh, and you start to delve into, you know, the market sizes, et cetera, that you're addressing, but you need to start with that one bit.
[00:02:31] If there's no point in having a chance, you know, raising, scaling, think about scaling, uh, what's the step to, uh, bring in funding, bring in, create a large sales team, create a large operations team. If you don't know what you're selling or you don't know what you're delivering, either one of those groups are destined to fail.
[00:02:47] Yeah, the understanding why they buy, like I find myself working with a lot of scale ups. Companies that have been around a year or two maybe, maybe they've got 25, 50 clients and they're ready to take that next jump. But everyone's talking a different language. Using different words, different methods for marketing or selling or having conversations with potential customers.
[00:03:12] They may think they know, they probably know why their customers buy, but they don't talk to their customers enough. So the first thing I do is like, go give me 5 to 12 customers and let me go talk with them because you start to see a trend. Because they'll start to say the same language. You know, 8 of the 12 will have bought it for the same reason.
[00:03:33] And then you're like, aha, that's it,
[00:03:35] And interestingly, it may not be all in perfect alignment with what the entrepreneur was originally intending to do.
[00:03:41] right?
[00:03:42] So, and that's, and hence, that's where the, where the issue comes along, or part of the issue.
[00:03:46] wondering if you could lens this through happy. In terms of how you identified the need in hospitality technology to help integrate all these different systems that have emerged in what is seemingly an endless field of vendors that are out there.
[00:04:07] it's something I still deal with, frankly, we do an awful lot. Perhaps more than we should as an early stage company or an early company, it's been a bit of, uh, of, um, testing on our side of, hey, we'll engage these customers to, to solve this need for them.
[00:04:20] We'll see if it really sticks. We'll see if this is a pervasive need. That we could scale up, and then we're, we're still going back. So it's, it's a, it's a bit of a trial and error. Uh, and we found certain patterns, it's taken us some time to find certain patterns and really find, you know, when we started as an example, we said, well, integration is a problem that, uh, that occurs for everyone.
[00:04:39] But the reality is that there's products out there that have already created integration. So that's kind of solved already. Uh, we look to do it for, as a marketplace where we're, we're the integration provider for other startups. They also lack customers, so it's not a really easy way to, it's a great way to, to, to grow a business with a network effect, but they need to have enough of them to, to make, make it sustaining.
[00:05:01] So we kind of settled on is that we need to really, , create, uh, the flows of data for the enterprises, hotel enterprises or hotel groups. And that's really where the pain is also felt. Because the pain as we come to see it is that, the groups don't have good visibility into what's happening in their own properties in a real time fashion.
[00:05:21] And that is really their differentiating point. Because an OTA has lacks of visibility also, but this is one spot that they can win. so this is where we've kind of honed in on and we're delivering a lot more functionality for, or solving a lot more pain for larger groups.
[00:05:36] And just for reference, how long do you think that took to really find that sweet spot?
[00:05:41] I, uh, I, you know, I, I call this out, because it's something that we're still challenged with. Honestly. Like in the large enterprises, we've been able to, in the large major groups, we've been able to find where we're solving a pain in the medium sized groups, what we've done is we're still experimenting.
[00:05:59] Uh, we, we see some wins. We're winning in CRM. We're winning in data consolidation, but we're yet to, to really hit on, on the last little bits of, Hey, this is, everyone needs this. And this is, so we're still working on it. It's an, it's an evolving thing. it's a wide problem that we're solving.
[00:06:15] So, um, the, the opportunities are great. we're still experimenting, and thankfully, um, doing so as we scale, we're, we've been growing really well, but it's not something that we, we can say we've claimed, claimed victory over.
[00:06:26] Wow, and I guess last follow up for the first question, you talk about experimentation and being a part of the, I guess, the hapi and data travel culture. how do you, if you're always experimenting, how do you then transform into another type of culture, which is might involve a cultural change?
[00:06:46] there's different schools of thought on this one. Uh, you're, as an organization, if you want to, if you want to have continued growth, You always have to have experimentation going on, but they do call out, and I don't recall the, the, uh, there's a, there's a, um, theory on this, uh, that you essentially break the business in two, and there's the four quadrants where, uh, you break it in four, it's really in two, where you, you have the, the side of the business that's all about perfecting it.
[00:07:13] Thank you. The, uh, this processes and the things that you know that you're selling today, and then you have the experimentation side that's doing R&D and then taking the market early to then hand off. To the scaling side of the business, so you split the two and it's the whole notion of, uh, disruptive innovation that you can't do it from within.
[00:07:31] So if you want to, if you want to have continued growth, you'd have to split the two organizations. As an early group, it's really hard to do. If you're a small group, it's very hard because you're still, you, it's hard to discern experimentation from, from production. But as you get to the scaling moment, that's when you really have to start splitting the two so that you have folks that are, that are skilled and focused on building repeatable process.
[00:07:54] You have folks that are, that are skilled and focused on, uh, experimenting and finding the next great thing.
[00:07:59] Yeah, I forget the exact term for that fragmentation. I guess it's skunk works, I guess, but that's more of an old term.
[00:08:07] Louise, we're gonna move on to the second question. What are some of the common pitfalls or failures you have witnessed that business owners should look to avoid when scaling their business?
[00:08:18] as you're growing, your, the team is obviously growing, so you need to be able to communicate the, your why, and that, that notion of creating a vision that you can communicate to the team, and really focus on, uh, or, or enable them to understand why you exist, gives them a kind of reason for being.
[00:08:36] And, uh, that's, something that if you don't have, the teams as they grow, especially today where you have a lot of distributed teams, you lose the, you lose that common drive. Uh, and so I think that's one of the pitfalls. Another one is interesting one, kind of goes a bit to what you were saying before, trying to grow with the wrong people, trying to grow with people you have.
[00:08:59] You have people that, uh, that are well suited to start an organization, to, uh, uh, be masters of, uh, jack of all trades, to do a lot. But when it comes to the moment to, to really step it up and excel in one area, specialization, they can't do it. So the notion of, of getting the right people into the right seats is something that, uh, is really paramount, and oftentimes people don't do.
[00:09:19] I've, I've experienced this in the past. I've grown a couple companies at this point. as you're growing, you, you have the person that was a great friend, and really standing by you as you're, as you're growing a particular part of the business, but when it gets to, to grow, they were handling a number of things for you, but when you need to settle in and do that one thing.
[00:09:37] You realize that they're great at doing what they do, but they're not great at being, uh, fulfilling that need in a large organization.
[00:09:44] Yeah, I've seen that too,
[00:09:46] multiple times.
[00:09:48] there's another one, uh, which I think is, , this, you see a lot of, especially on the scaling, and that is not understanding the addressable market, uh, or the selling process.
[00:09:57] You see a lot of this, this, this kind of addressable market into, in projections by a spreadsheet. Thank You know, there's 60, 000 hotels out there and I'm going to multiply that by how much I sell. And, uh, and, uh, and that's what I'm going to, this, this is my potential revenue. And it just doesn't work that way.
[00:10:13] You need to have an understanding of what your true addressable market is, uh, what the selling process is, what, what you can really penetrate, how you would penetrate. Because you may not be able to sell into the major chains. You may not be able to sell into the independents. So really understand that addressable market.
[00:10:26] And then setting yourself up to scale to that, , and that is something that I've seen more than once where, where it just, it's failed, unfortunately. And then, on the scaling side,
[00:10:42] So, um, selling processes, just operational processes in general, for delivery that you can make something that's repeatable so that you can build success. It's, it's really easy to create success for 20 customers, or 10 customers. It's more than twice as hard to do it for 20.
[00:10:58] It's more than twice as hard to do it for 40. You need to have yourself well documented. Once you do. then it actually becomes easier because you're not reinventing the wheel every time, but you need to have the processes in place to do it. And then the last bit of that would be to, that you're measuring, that you actually know if you're succeeding or failing.
[00:11:15] So, um, having the right KPIs around the business, to track that you're scaling, you know, are you bringing enough leads? Um, do you have enough resources? Do you have enough technology capacity, you know, to, to deliver for, for the needs? Uh, and that you're succeeding. I've had this issue as well.
[00:11:29] Uh, you could be doing, uh, fantastic work, but continuing to lose money, uh, which is not a great outcome. You need to be measuring along the way. I
[00:11:36] I wanted to circle back to the first point you made about, uh, these distributed teams. Because I, even with the return to work, I don't see that going away. We, we have global companies,
[00:11:50] And I'm wondering if you could add a few tips to make sure that even as you have distributed teams or you're working out of multiple offices, how you maintain that cohesion to make sure you're all working towards the same goal and in an efficient way.
[00:12:07] Again, we're continuing to learn here. I find it super interesting that the world is returning to offices, especially in tech, especially in tech companies. One of the things that, since our inception, Data Travel Hapi has been a fully remote organization. So, um, it's, Well, almost fully remote. We have a handful of offices around the world, but it's co working spaces that people can optionally go into.
[00:12:31] So we've had the blessing of being able to hire the best people we could find no matter where they are. And oftentimes in cost effective markets areas. So it's been great. The, the downside to that is that to bring them together is either incredibly expensive, if not impossible. So we've, what we've done is, we've worked on different, really different approaches.
[00:12:56] Um, we're using the collaboration tools, a lot of, a lot of Slack. You know, minute to minute communications and some asynchronous social communications. So there'll be like, you know, what are you reading, um, dad jokes, um, things of the like, just to create a level of engagement. We encourage these, these smaller teams to, to come together.
[00:13:16] And have some of that, um, just in a personal time, to, and we'll start meetings off with just a bit of time on, uh, hey, what's, uh, what's going on in your lives. Say, say something great personally and say something great professionally, which is part of EOS. I think I find that to be really helpful.
[00:13:33] And then the one that we're continuing to work our way around is, how do we create engagement at the overall group level? We communicate our values, we can live our values, kind of exhibit how we're living our values, but that interpersonal relationship is really hard to do at scale. We're, just recently, we're looking to take more of that just asynchronous.
[00:13:57] That, creating, uh, where we come together on a weekly basis and we've got, calls where we're, we're, we're. communicating what's happening in the business to everyone, as well as, uh, giving an opportunity for folks to speak. We're going to turn that more into, uh, one way communication, uh, in an asynchronous, uh, pattern, like a, uh, company missive.
[00:14:18] Uh, we'll do a video, uh, on a weekly basis, broadcast that out. I think we'll get better, reception. To that and then encourage in an asynchronous fashion, a dialogue around it. Uh, and, and AQ and a. It's, you know, we're spread across like 10 different DA time zones. So it's really, it's impossible to get everyone together.
[00:14:38] Like we, we say, well, we'll do a lunch and learn. Uh, we might learn something, but there's no way we're all gonna have lunch at the same time. It's, uh, but we barely eat together. We're trying to move more of it asynchronous and then take the synchronous, the online pieces and drive them to smaller groups that can be more engaging.
[00:14:56] I guess we have to rebrand.
[00:14:59] it's a really long winded way of saying you need to communicate, uh, you need to maintain communication, uh, and with that you're, you're sharing the behaviors which drives the culture, the behaviors of people. I'm a big believer that uh, you don't create a culture.
[00:15:14] The company has a culture. You can guide a culture. Communicating out the behaviors that, you think are great and, uh, encouraging more of that, then communicating the values and communicating what's going on in the business and what's expected. It's all about communicating, which is what would you, will be happening in a more natural fashion if you're within, a single set of walls.
[00:15:31] That's a really good point. I was just going to add that maybe we should rebrand the Lunch and Learn to an Eat and Educate. So no matter which time zone you're in, you know, you're eating something. It might be dinner, might be breakfast. Luis, we're going to move on to the third question. What do you see as the key opportunities and challenges for hospitality technology companies in 2023 and beyond?
[00:15:55] this short version of this is I think that, AI is going to have a big impact. And that's both positive and, and I won't say negative, but creating challenges for some of the, some of the companies. Incumbent companies are going to be, uh, are more likely to be challenged.
[00:16:12] By startups that have the various entry dropped, and this has been going on for a while. when I wrote software at the beginning of my career, I didn't write software, but when we were building software, you'd have to run it in someone's environment, and you had to build and install tools, and you had to, and then we moved it to the internet.
[00:16:28] And, well, then you took all of the deployment side of the problem out from the premise, but you had to run your environments, you had to scale it, you had to run it. And, uh, as time passed, you saw more of the, uh, open cloud infrastructures that you can pass that off to. So that was one less thing you had to do.
[00:16:47] And, uh, we saw technology consolidations and, uh, that was one less thing you had to do. And today, you don't even have to write the code in some cases. You're kind of guiding it along. So I think that, um, with each of these waves, we've seen the various entry drop for somebody to enter the market. And we'll see that, uh, we'll see that continue.
[00:17:07] It's not necessarily a scaling issue, but it's just, uh, it's just an understanding of what's going on. I think that, that you'll see folks that are, can disrupt, uh, solutions with bringing, uh, um, generative AI or, or, or machine learning to, to play better than anyone's done it before. That's the challenge on the one side, I think that for the incumbents, it's also an opportunity to embrace it, and take advantage of it, uh, and really have the opportunity to take the next step forward in building and making their solutions stronger and better, uh, and, and much more engaging with, the guests, the opportunity for them.
[00:17:38] One to one communication is, is really upon us, So there's a world of opportunity. I think if we're thinking about challenges, uh, or opportunities, I think that hotel companies, in general are fatigued by buying from a lot of vendors. their preference would be to buy from fewer vendors or it's not necessarily fewer vendors.
[00:18:01] They're becoming more aware about buying a feature. And oftentimes, and, uh, when you're a startup, you're solving a single problem. So, uh, as, as you scale, and I think it's a whole topic. So as you're looking at scale, you need to understand that. You know, do you have enough to build a large enough solution?
[00:18:20] So I think that if you're, if you're looking, it's one of the challenges that they have. Do you have the, the, are you future proofing yourself? Do you have a pervasive enough problem that, uh, that you're solving that people are saying, Hey, I will buy this day in and day out, or is it something that, uh, if Amazon were to give me something that's, you know, 10 percent is good, uh, I would just take that or Salesforce or whomever.
[00:18:40] Um, so I think that's a question that people need to ask, and that's kind of a drive towards creating more comprehensive. platform type solution. something that's larger, which is a little risky because you need to make sure you're making the right bets, but it also helps you scale. It
[00:18:55] creates a larger offering that you're, that you're selling.
[00:18:58] yeah, has AI changed how you're
[00:18:59] hiring
[00:19:01] people?
[00:19:01] I'm hiring?
[00:19:02] Yeah, like the, uh, uh, skill set.
[00:19:05] Not yet. What we're doing today is that we're growing resources internally. And offering them the abilities to scale up. What we have done from an HR perspective is I have two companies. One, another one of the companies I'm really involved in is Akiva Labs.
[00:19:20] It's a software development firm. It develops software for other companies. On the Salesforce platform, and it helps, like large organizations that are, that use Salesforce as part of their core business, uh, tool set. There we viewed, uh, we were saying, okay, well, is this, is this going to disrupt us?
[00:19:37] And uh, so we, we set together a task force to go off and study if they're still working to understand what is the impact of AI and what's the opportunity. , and thus far, kind of the high level findings are, that it's an enabler, that it just makes, uh, it's going to make everyone stronger, uh, if used in the right way.
[00:19:58] So we've gone through and we've actually put together kind of guidelines of, hey, look, these are different tools that can help in different ways, either in code creation, code validation, testing, uh, just building documentation, building. So we've, been building, um, like tool sets for different employees.
[00:20:14] And we've done it. We did it first on the developer side. We're doing, uh, they're working this quarter, they're working on doing the same thing for sellers. What tools are out there to enable sellers to sell better? And then, thankfully, we're sharing those findings across both of the companies.
[00:20:29] So even with generative AI, which can really speed things up, and you identify all these different applications for it, both, in both companies you're involved in, It still comes down to priorities in terms of prioritizing what tools to develop from that or anything else. How do you decide? What's your thought process for developing that list of priorities?
[00:20:53] I'd love to say that I'm super scientific, but I'm not. There's uh, customers drive things first. So if we, if we go out and we socialize things and we see demand, That'll prioritize it. The other side of it, frankly, is still, a group that have got. I have a team of people that have been around in the industry for a long time, and, uh, we're looking around, and we're checking to see what's, what's around us, and where the opportunities lie.
[00:21:18] I can give you an example. In Hapi, we build event streams. So what's happening in different hotel systems, systems in hotels, we, we ingest it, we normalize it, and we expose it at a scale. And what we saw, um, well, I was at Dreamforce last year, and, uh, as I've told the story a hundred times, and I learned that they were building connectivity to what was CDP, their data cloud now, where they would ingest in real time data from Snowflake without replicating it.
[00:21:50] And I said, wait a minute, how did they do that? So I came back and I started picking at that. I asked the teams and we were going back and forth on, on, on what this meant and how it was, how they were doing this. And could we benefit from this? We realized that, well, a lot of our customers are actually using the data.
[00:22:09] We're building a fire hose that they're just using to fill buckets. So, would it make sense for us to extend what we're doing and build a normalized bucket? So we normalize messages, could we create a data at rest story, uh, would we use Snowflake or would we use something similar to drop the data that they could then consume in many different ways without replication?
[00:22:30] And uh, we started to go through that, uh, we brought in team members, we brought in folks from AWS, uh, a gentleman from AWS to help guide this, and we created a happy data Uh, which was an evolution. This is, this has come together this year and that was a little bit of our customers were asking for this, a little bit of we're listening to the market and then looking ahead a bit to what we expect the market to want.
[00:22:58] And that's the intuition side of things that, uh, you, you almost can't even go to the market and ask them if they want it because. So it's a combination of the three and, uh, and that is an example. We, we saw there was opportunity, we prioritize it. We had some customers that wanted it, and, uh, we're now, uh, we're now deploying it, uh, already into customers and some into some very large customers.
[00:23:22] So that's, that's been our process. We've done similar things. We do Salesforce work. Uh, where we knew where we needed to end up, the market that it had wanted, but they couldn't convey it. We knew we had to change some, uh, change some commercial, approaches with Salesforce. But we leaned in and said, look, we'll build this because we know we can make the other bits of it come together.
[00:23:44] We have and uh, and then we've got it to market already. So it's, uh, a little scientific. We're not sitting here doing massive, uh, uh, studies on, on feasibility, on the market, et cetera. We, we listen to our customers, uh, listen to the problem, think about how we would solve it ourselves, and then drive to, to, uh, to, to the outcomes.
[00:24:03] You know the whole idea of intuition and gut, you know, it's it's it's so tough to wrap your head around that that still is important even in this age of data in 2023. It goes back, in my mind, it just reminded me of the old Henry Ford quote, um, if I'd only asked my customers what they wanted, they would have told me, uh, a faster horse and buggy,
[00:24:27] Yeah.
[00:24:27] you know?
[00:24:28] Uh, Luis, we're going to move on to the fourth question here. What are the key things innovative leaders and entrepreneurs should prioritize and focus on to gain traction for their business?
[00:24:41] I mentioned them earlier and I guess it would be avoiding them. So, you want to have a good grasp on vision, on the products that you're selling, uh, how you're marketing them. The people that you have and the processes that you're running. And I'd really encourage folks to look at the EOS, uh, the Entrepreneurial Operating System, because it really creates a playbook to follow it by down to almost meeting cadences and things, and processes.
[00:25:08] So if you follow a process like that, it creates discipline for you and, uh, and with that you can avoid the, avoid a lot of pitfalls. and if, if we'd have to look at, at the one thing, it's, uh, what I, what I was alluding to before, that if you as a separate item that you're addressing a big enough problem that this is a, um, a, a product and not a feature.
[00:25:30] Uh, I'll, I'll give you an example in, in hospitality right now, and it's still a question mark. I have an opinion on it, but it's the, the notion of, uh, um, digital tipping. Is digital tipping a product or a feature? And when you look at that, you, at first blush, you say, well, you're solving a great need. I think that, , in and of itself, it would be, it's a, uh, it's a feature.
[00:25:56] If you find ways to integrate it into the operating system of, uh, uh, into the operations of a hotel where it's creating incremental value, uh, and it goes beyond the notion of just getting money to somebody, then you start to create something that's, that has more permanence. And that's, it's an example of, you really have to look at that and you should look at that before you try and scale a business to say, okay, am I going to, am I going to be a flash in the pan?
[00:26:19] Or is this going to be something that, that will scale for the long term?
[00:26:23] Good point. I spent 11 months in digital tipping.
[00:26:27] Yeah, sorry, I didn't realize that as I was saying it Jason, uh, and, and I, I, I'm a
[00:26:31] big
[00:26:32] believer in the space, uh, but there's gotta be differentiation. There's gotta be something that, that, uh, you're not gonna get gobbled up by, uh, by someone saying, Oh, I can just add that here. So how can you do it in a
[00:26:44] way that, that you're creating a mode for yourself, that has, uh, has, uh, has long term value.
[00:26:50] And sometimes you start with that feature. But you need to have a roadmap that says, okay, I'm going to, I could start here, but if I, if I start here, how do I get it to where it needs to be that, uh, that this has long term value?
[00:27:02] Yeah. Solving a huge problem. Solving a great need. It's a great thing to have. It is, uh, what I watched when I entered the market, I would guess there were Three players, maybe there were more that just hadn't raised their head yet. By the time I got out there, I counted, I think 21 that was either a standalone product or a feature of a larger product set.
[00:27:29] And, uh, you absolutely have to build that mode. So it's a fantastic example of solving a problem, but long thinking, long term, putting yourself in the shoes of the hotelier, your customer. What do they need? Not, yeah, they need, it needs, this will work today, tomorrow, next week. But really, as this thing develops, uh, what's, what should it be for them? Next year, you know, good point.
[00:28:03] think that's a great point and a great way to finish it off. Luis, do you have any final thoughts?
[00:28:11] No, I think I've said a lot. So I'd say that we could stop it there. I applaud the journey of an entrepreneur and someone with special needs scaling up. It's not for the meek. It's hard work. You know, I've now done it a number of times. I guess I have a really short memory because I forget how hard this is.
[00:28:34] Uh, so I'm not trying to make small of any of the things that I talked about today. They're big decisions, big, a lot of effort that's got to go behind them, a lot of risk that goes into it. But they're, the rewards are, are, are there for, for the folks that kind of come out on the other side.
[00:28:48] The subtle come out tomorrow, I guess I would say, but, uh, be smart. And then, and hopefully you're, the odds are stacked in your favor at that point.
[00:28:54] that's fantastic advice. Luis, thanks so much for coming on board.
[00:28:59] And thanks, thank you, and thank you Jason.
[00:29:02] Yeah. Thank you.
[00:29:03]