Francis Davidson launched his startup while still in school. That company now has over 1,000 employees and is going public through a SPAC deal. The venture Sonder has acquired funding from top-tier investors like Greenoaks Capital, Sandy Cass, Inovia Capital, and Spark Capital.
In this episode, you will learn:
- The book Francis wishes he would have read earlier
- His blog writing on scaling your startup to $1B
- Interviewing strategy and processes
- What’s important in fundraising as you graduate through different rounds
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Francis Davidson:
Francis Davidson is the CEO of Sonder. He helped to establish the organization with Lucas Pellan in 2012.
They started leasing empty school condos, and now the organization is esteemed at in excess of a billion dollars. As of now, Sonder rents out condos to the clients through their site just as Airbnb and Expedia.
Francis Davidson’s Wikipedia page doesn’t exist as of now. Francis’ present age is 28 years. One can find out about Davidson’s profile and his organization on a few Wiki-bio pages. As of now, Francis is situated in San Francisco, California, USA.
Francis is dynamic on Twitter with more than 1.1k adherents and 34 tweets. Davidson joined the stage in September 2014 yet tweets less every now and again. Francis Davidson’s conjugal status isn’t known.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
Connect with Francis Davidson:
Read the Full Transcription of the Interview:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today I’m very excited with our Canadian founder that we’re going to have on the show, and I think you all are going to find this super inspiring. There are many of you outside of the U.S. that are thinking about how to come here, how to make it happen. I think that you’re going to find our guest’s story very inspiring. So without further ado, I’d like to welcome our guest today. Francis Davidson, welcome to the show.
Francis Davidson: Thank you so much for having me.
Alejandro: For the people to get to know you a little bit here, let’s do a walk through memory lane. You were born and raised in the Quebec area in Canada, so how was life growing up?
Francis Davidson: Yeah, I’m from a town called Gatineau which is the fourth largest city in Quebec. It’s right beside Ottawa, and it’s known to be the dormitory of Ottawa. Typically, people go there to sleep, and then they go work in Ottawa, typically for the federal government, which is what my family and both of my parents did for 35 years of service to the federal government. I grew up in an environment that was great but not too entrepreneurial. I think that it’s somewhat of a surprise that I decided to take the journey. Frankly, even a surprise for me when I launched the business, Sonder, when I was in college. I was about 18 to 19. I was first trying to solve a problem for myself trying to figure out what to do with an apartment for the summer in Montreal. It’s a great university town. There are like 160,000 students in Montreal. A lot of them just vacate for the summer, so I thought there are all these empty apartments. At the same time, Montreal is a great city, beautiful and great culture. People want to visit it, especially during the summer, so I thought I could find some travelers to go and stay in those apartments, and maybe I could manage to earn some money that would allow me to pay for my studies. That turned out to work very well. A couple of years later, having done this part-time during the summer, I said, I’m going to go into it. I’m going to figure out a way to manage more and more apartments, more cities and figure out ways to add value to even real estate owners who would potentially have really amazing properties that guests and tourists would like to stay in. I identified a way to monetize these properties for them by offering really amazing consistent, high-quality experience to guests that were seeking an apartment instead of a hotel room to stay. I think the core issue here is that there’s no brand in the hospitality segment like a Marriott or a Hilton, but that operates apartments and homes. That was the idea that we built that brand. I went right into it. A year later, I decided to relocate in San Francisco where the action was right after we raised our Series A—three or four years of just building the company, expanding internationally, going from having no knowledge at all about the world of business—no money, no network, no experience, and learning the ropes, and scaling an organization, and bringing amazing people to build it alongside me. Ultimately, the last 15 months have been about battling the Corona Virus, and it’s been very difficult for a lot of segments of society, hospitality, economics, which have all been hit really hard. So just going through that has been enlightening, and I think we’re coming out of it stronger on the other side, and we now have announced that we’re going to be taking Sonder public through an SPAC IPO. A lot of my life’s story is with Sonder. I’ve spent one-third of my life building this company. I’m as dedicated as they come. There have been a lot of ups and downs. I’m happy to talk about anything that you think might be of interest related to the story of my life.
Alejandro: This is a wonderful snapshot, a 30,000-foot view of what we’re going to be going into here. Now, going into it, I know that at 13, for you, it was quite a big moment where you started to ask yourself about stuff. Also, you became very much into philosophy, so what do you think was that teenage crisis in a fun way to label it somehow that pushed you into understanding or trying to find the Why behind things?
Francis Davidson: Certainly. I was really a sports person growing up—every sport you could name. Hockey being the primary one in Quebec, where I played a ton of hockey. I had never read a book before age 16. What got me into it was an altercation or a moment where I was in a French literature class, and I couldn’t understand a lot of the words that were being used in a novel. I underlined a bunch of the words that I couldn’t understand. I went up to the teacher, and I said, “I can’t understand these words. Please help me out here.” He looked at me with an air of condescension, to be honest. He was like, “This is elementary school level vocabulary. I can’t believe you don’t know this.” So instead of being kind and supportive, he actually challenged me. He was like, “You’re going to have to start reading if you really want to understand these words.” I had a chip on my shoulder, and I was like, “I’m going to show you what I can do.” I think it’s one of those things, knowledge, where you start, especially as a teenager, discovering something. It’s like, wow! You become so fascinated with all of the things that are related to it. I started reading about the Big Bang; Simon Singh’s Big Bang is the first book that I read and a series of others. A discipline that I found was fascinating was philosophy, asking myself the core questions of why we’re here, and what is morality, and what is truth? I got really, really interested, and I dropped all the sports, and I became somewhat of a bookworm, a nerd for the following many years. I think that curiosity is intimately related with entrepreneurship. I didn’t realize initially that I was quite a leftist back when I was in my teenage years. I didn’t think much of business as a contribution to society. I think it’s still a widely shared perception that multinational corporations take more from the world than they give to the world. I definitely had that perception, but in the process of building a company, I realized that, actually, organizations could be forces for good, and, at the same time, they were incredibly challenging to build. They were the ultimate intellectual challenge. They’re much more difficult than reading a few novels and having more vocabulary. They brought together so many disciplines, and you had to have such a good mastery of psychology and of even financials, probability, and so many disciplines are brought together to build a great organization, obviously, technology organizations in particular. I really became fascinated with business. I still am fascinated with philosophy, just critical thinking and the verbal reasoning that it forces a super beneficial in many aspects in life.
Alejandro: I’m sure that for you, when you went to McGill University, at that point, you were able to combine not only philosophy, which was something you were already incubating there, but then you blended that with economics and then voilà, it gave you an even different perspective on how to tackle things.
Francis Davidson: Yeah, definitely, and I think economics brings the quantitative discipline to the social sciences that I find is really crucial. I use lessons of economics all the time and particularly statistics, which I find really valuable in order to make decisions in business and in life. So I’m really glad that I went in that direction as well, but it was only two-and-a-half years that I got the time to be fully immersed in my studies. The business started and growing quite rapidly as I was a student. I think I dropped out of McGill when the business was doing about $1 million in revenue, which is something that I think is a great introduction to entrepreneurship when you’re young and in college, and you have nothing to lose. And if it doesn’t work, then you go back to college. Every semester that passed, I spent a disproportionate amount of time towards the business until I was fully in.
Alejandro: You alluded to this earlier in our discussion, but tell us about that moment when you were in school, and you came across this opportunity, and then you really brought it to life. What was the process like?
Francis Davidson: I don’t think I had a grand ambition for the business initially. It was just like, “Here’s a problem I’m facing. I can’t find a subtenant for my apartment.” I wanted to go back to my hometown during the summer, and it turns out that there are thousands of people there in a similar situation. Part-time, over the summer, I could make $20,000 to $30,000. That would be enough to pay for my living expenses during the year. It was that approach that I got into it. I actually entered a business plan competition called the McGill Dobson Cup. What’s funny is that we didn’t even make it to the finals. We projected really, really early, so I think interesting lessons of perseverance there. There’s an alternative state of the world where we’ve been like, “These judges are pretty smart. They told us this business is not going to be very good and that we should pack our bags and stop, but I think, again, I wanted to prove them wrong and double down. It reminds me almost of the film Whiplash, which is one of my favorite films. It’s a very controversial film about leadership and this conductor who is very hard on this drummer student. There’s a quote about how one of the best musicians of all time, Charlie Parker, where a cymbal was thrown at his head, and it’s because of that that he started practicing more and rose to prominence. I think there were many instances in my life where I’ve had almost a figure of authority, someone I thought was really credible to tell me, “You can’t do this.” I think it’s up to the person that’s on the receiving end of that to decide whether it’s going to take them down or actually fuel their energy and energize them to actually do even better than they would have otherwise.
Alejandro: 100%. You’re alluding to that. You reached the $1 million mark, and then you determined that it was time to drop out of school. I’m sure that was a tough conversation to have with your parents.
Francis Davidson: Actually, not too much.
Francis Davidson: I also try to understand why is it that I started that company? It’s obviously much more normal to just finish your Bachelor’s degree and go on with your life. I think one of the reasons why I was comfortable doing that is because I’ve received really awesome parenting. I didn’t get the money, or the network, or the business scales from my parents, but what I did get is the sense that the opportunity was boundless and that they’d support me in whatever I wanted to do. So instead of being prescribed to learn the piano or the guitar or to have to read or have to pursue sports, it was always like, “We’re here to support whatever you want to do.” But I never felt any pressure. It’s interesting to see that if you give children quite a lot of breathing room and freedom, but quite a lot of support and unconditional love, then they can go pretty far. They’ve always been supportive. I’m not even sure there was a difficult conversation to have. It was just like, “This is what I’m going to do,” and they were like, “All right. How can we help?”
Francis Davidson: Actually, they pulled together some savings. My mother, in particular, I remember; she remortgaged her house and put $50,000 in our seed round, which was a huge commitment for her at the time. She was completely believing in what I was up to and wanting to support me regardless of where I wanted to take my life.
Alejandro: That’s amazing. Obviously, this ended up becoming the Sonder that we know today, but for the people that are listening to get a better understanding, what ended up becoming the business model of Sonder?
Francis Davidson: It has evolved quite a lot since the student rental days. Now, we’re just a modern hospitality brand. Think of us as a 21st Century version of the Marriott’s or the Hiltons. We have an apartment product. We work now with developers, and they build towers for us and apartment buildings that are converted from a hat factory or an office. What’s special about those is that they’re really well designed. You’ll see if you go on our website, just really beautiful spaces, and they come with a service that’s quite modern. What that means is that you can basically tap into services like requesting an early check-in or a late check-out or getting recommendations all on the mobile app. We’re making the mobile app the core area where you’re going to interact with your stay. That means instantaneous service around the clock, wherever you are in the city, in a way that meets the needs of the next-generation traveler; the Millennials and Gen Z, in particular, really love that kind of service-type that’s more self-graded, self-serve through digital channels. The third piece that distinguishes us is the application of technology to improve the operations of the hospitality business. A lot of stuff is done manually in hospitality today. We’ve built software to automate a lot of that work, so that means you can check into a Sonar without having to line up at a front desk. You can do it on your phone, and you walk right up to your room. There are a lot of areas that the guest doesn’t see that are in the background. For example, around pricing or whenever you book a room, like figuring out which room we’re going to put you into. There are algorithms that decide that, which we’ve built on our end, and a lot of things to manage operations like how we clean a room in-between stays and so on. You have a request, and we need to send someone in. There’s a tool that we built called Dispatch that will manage that workflow. It’s a modernization of the industry in order to democratize access to the best of the best. One of the things that’s standing in the way of the best of the best in hospitality is if you want a really nice hotel, you’re going to have to fork out several hundred dollars to make that happen. Our view is to apply technology to reduce the operating cost, we can provide an elevated experience, and you’ll, again, you’ll see awesome stuff at a price point that almost defies realism. It’s kind of shocking: the extent to which it’s possible to offer these spaces at affordable prices. That’s what the brand has become. We’re about ten countries today, 38 cities, and expanding rapidly.
Alejandro: You got started, and you went to Montreal. You were in Montreal building this, and Montreal has changed a lot. Now there are a lot of VCs and a lot of money that has gone to Montreal, but definitely Montreal is not San Francisco and the Bay Area. So what were some of the challenges that you encountered on building Sonder in Montreal, and why did you make the decision of making the move to San Francisco?
Francis Davidson: We started in Montreal, not because it was a strategic choice. That’s where we were, and we’re big believers today of the Montreal ecosystem. Like you mentioned, it has evolved tremendously over the last seven years since I started the business. I think at the time, the idea was that as someone that hasn’t built a company before, I needed to surround myself with people that had done it. The ambition grew quite large, quite rapidly, so I wanted to partner with and have folks on the executive team, on our board, and as investors that had built global consumer brands extremely rapidly. Those people are in a high concentration in the Bay Area, so the kind of disruptive organizations. The thesis played out. I moved to the Bay Area in 2016, right after we raised our Series A, and I started building out the team there. Just the caliber of talent and the learnings I’ve been able to embed as a result of being there. It’s not just folks that work a Sonder, but it’s also the social environment, even, like comparing notes with other entrepreneurs that are going through a similar journey of expansion and size, and they’re dealing with very similar problems. That is tremendously valuable. That being said, I don’t think the Bay Area is the best place to scale an organization. Now, we have as many employees in Montreal as we do in San Francisco, and we’re hiring even faster in Montreal as we are in San Francisco. There are so many smart and capable people. I think what’s lacking in the Montreal ecosystem is that senior talent that’s been there, done that a few times already. As a first-time entrepreneur, that was crucial to get things launched.
Alejandro: How many employees do you have now?
Francis Davidson: Sonder has about 1,300 employees.
Alejandro: Got it. In terms of culture and hiring, with you, with your philosophical approach, I’m sure that you’ve asked yourself the Why behind people, behind culture, behind the dynamics. How do you think about culture?
Francis Davidson: I’ve written a post. Actually, when we closed our Series D, which was in 2019, and we reached the billion-dollar mark on valuation, whatever that means, I wrote a post that described how it was that we went from a college basement to a billion-dollar company in five years. It might be three levers, and you pointed out two of those. I think strategy is the other lever, and there’s a lot to say about that. But hiring and culture are the other two things that an entrepreneur might be able to control in order to get differentiated outcomes. On hiring, I spent probably 30-40% of my time since I started the company in recruiting and hiring. Obviously, it’s incredibly important. Many books have been written about the topic. We’ve devised our own process at Sonder to hire. I view it as a prediction game. One of my favorite topics is generally trying to understand forecasting better, like Superforecasting for tough luck is an excellent book or cognitive biases and trying to figure out: how could I potentially have a better chance at predicting whether someone will be a rockstar, and how could I do that as fast as possible, which is one part of the job? The other part of the job is salesmanship. I think the most important thing there is relationship building, like accelerated relationship-building and trust-building. If these two things—if you devise a process that allows you to predict with high accuracy whether they’re good or exceptional and build a really strong connection, you should be able to bring them in and have a high hit rate on your hiring process. So, I’ve written a little bit about some of my ideas there on that blog post. Maybe one that’s worth outlining is what I call the Domain-Specific Interview. It’s a simple idea, but one that’s not often done. The first interview I’ll do is going to be the Store Interview, mostly about building connections, knowing who you are, just the first filter. The second one that I call the Domain-Specific Interview is where I try to understand. Suppose I’m trying to hire someone to run technology or to run HR. What are the things that matter most in these disciplines? I’m trying to understand, what are the ocreas? What are their contributions to the organization? Really good people will tend to be like, “In HR, it’s about engagement levels; it’s about attrition; it’s about recruiting metrics; it’s about compliance. They’ll have a mental framework to describe what matters: the objective function, so to speak, if you were to speak in economic terms. Then the next question I ask is: we have these four or five things that really matter most, hopefully, quantitative variables. Then what are things that you do that you’ve learned as an HR technology professional to give you a differentiated chance of achieving outlier outcomes? What I’m trying to do when I hire someone is to try to figure out someone that will get numbers and an outcome that is way better than the average person I could hire. I’m not looking for just someone that’s good enough. I’m looking for truly extraordinary outlier talent, and these kinds of people have such pride in the methods that they’ve devised in order to win at their discipline. They can’t wait to tell you all about it. Maybe they’ve even written about it before, and they follow up with the doc, and they teach you something, which is also super important to someone that doesn’t have that kind of experience going through the interview process and asking 20 engineering leaders what makes engineering great and what have you done to actually get a disproportionate chance of outlier outcomes, which means I can assemble a bunch of nodes. It’s almost like I’m aggregating perspectives from 20 people as to what the best tricks are of the trade. The people that I find most impressive are the ones that teach me the most during that interview process. They have ideas, and I’m like, “Why aren’t we doing this right away. We should be implementing this right now.” I take robust notes of this, and I send the notes to the candidate afterward, as well, to correct if ever there are any issues. But it just takes an hour, and it’s a deep-dive interview, and I find it so, so helpful for me to educate myself and to have a better chance at finding someone that’s really special.
Alejandro: Nice. Talking about finding people that are special, obviously, that’s investors. How much capital have you guys raised to date?
Francis Davidson: I think the total tally is probably around $700 million. Just around there. We’re going to be adding quite a lot more to the balance sheet when we complete our SPAC IPO, which should happen the second half of this year.
Alejandro: We’ll talk about this in just a little bit, but talking about the earlier stages or jumping from one cycle to another one from a financing perspective. You were alluding to it before that. You did your series A. You were still there in Montreal, but then you relocated to San Francisco. How has the transition been from one financing cycle to another one, and also, that shift from fundraising in Montreal to all of a sudden being fundraising in San Francisco?
Francis Davidson: I’m not sure much of it is extremely different in the early stages. We tried to fundraise in Canada, but also for our Series A, I spent six weeks in the Bay Area. I was only supposed to spend a week or two, but then I had a partner meeting on the next Monday, canceled my flight, ended up staying out of a suitcase, and getting new underwear at H&M kind of thing to just get this tough fundraising done. It was really a nail-biting exercise as an entrepreneur that wasn’t based in the United States, that didn’t have that network, etc., but I ended up meeting quite a lot of venture funds and ended up getting it done. Spark Capital, Nabeel Hyatt, ended up leading the Series A. Then, after that, I had a thought partner to help me raise the next rounds. Of course, this is something, I’m sure, you know, but it’s increasingly about data and about the metrics as you get to later and later stages. Then I brought on and hired my CFO two years ago. He takes on a disproportionate amount of, now, the fundraising activities. Those are the ways in which fundraising changes. But, you know, one thing that’s also been surprising to me is even at later stages, it isn’t more about the metrics, but it’s not just about the metrics—the story of where it’s going and the vision and the mission of the organization is absolutely crucial to getting investors excited about what you’re building.
Alejandro: What is that transition like going from early-stage to growth stage and then dealing now with growth issues or scaling issues?
Francis Davidson: One of the most challenging things that has been well documented is the organizational scale beyond 150 people. When the organization goes from everyone is intimate with each other, and there’s a basis for trust that exists towards anonymity, and people not knowing you on a personal level like me stop doing interviews for every new hire maybe two-and-a-half to three years ago when we reach 400-500 employees is when I couldn’t hire, and every slot in my calendar was completely jammed. That adds that layer of distraction and the exponential quantity of 1:1 connection that exists in the network as you become the larger and larger organization poses real challenges, and it’s then crucial to then formalize the culture. There’s coordination among various departments and things like we’ve had to push hard a concept called the Assuming Positive Intent because oftentimes, an organization that becomes anonymous when something bad happens, there’s an us versus them dynamic or kind of an evil in a person that’s really fighting for good on your side that it’s important to get ahead of. So we formalized our principles, and the principles are, in our view, the values in most organizations. We call ours our Leadership Principles that are inspired very much by Amazon and Bridgewater. Those things are the antidotes to ensuring that the organization scales. There’s a lot of behavior that is really normal, but it creeps up. People can end up being gossipy, or there’s some politics that can come in, or there’s not a lot of accountabilities, or people are fearful of telling each other what they believe when the organization becomes larger and larger, so it’s crucial to have principles in place to fact fight these very natural impulses. There are impulses of bureaucracy and things slowing down—the pace of innovation slowing. Risk-taking tends to go down, as well. The organization tends to become a little bit less focused on the mission as it scales, so all of these kinds of things culturally have to be documented and embedded into the hiring process and the onboarding process in the day-to-day in the organization.
Alejandro: As they say, this is part of culture, and if it’s a really good culture, then it can weather any storm. I’m sure that, for you, as for any other company that was in the hospitality segment, March to April of 2020 was a beast, so how was that for you guys? I’m sure that was probably one of the most challenging events or periods of time for you, probably, even building this business. So how was that for you?
Francis Davidson: It was absolutely brutal. I couldn’t have imagined worse. We had to lay off or furlough a third of our staff in April of 2020, and it was an incredibly difficult thing for all the folks that were impacted and all the uncertainty that existed in the world at that time, as well. It was super scary and literally like a punch in the gut. We went through it, and the world got better, thankfully. Things got back and bounced back more rapidly than expected initially, but we’ve had to rehire quite a lot of folks, and the job market today is doing exceptionally well, so I’m at least happy that folks that were impacted got back on their feet. That was a very difficult moment, and battling COVID has been by far the most difficult thing that I’ve had to face building this organization. It’s really unrelenting. Throughout 2020, even though the bounce back during the summer was faster than expected, the recovery kept being pushed out and out and out. I don’t think anyone would have predicted, or very few—you have to be extremely skeptical and clairvoyant in March or April of 2020 to think that in June of 2021, there would still be substantial restrictions and that there would still be cases rising in some areas of the world. The fact that it has persisted for so long, I think, was incredibly difficult to work through. Then, thankfully, a lot of folks are long-term believers and have stayed, and they’ve decided to fight along with us and get out of it, and hopefully, stronger on the other side. But we’ve also lost some really good people along the way, as well. People are like, “You know what? I didn’t sign up for this, and a bunch of other companies are on fire, and I’m gone.” So folks that weren’t bought into the mission in the first place, or bought into what we’re trying to achieve, who were there when it was up and to the right, but the minute it went sideways because of something that’s totally out of our control, they were gone and not supporting us. It was clarifying to say, “You know what? We really have to make sure we surround ourselves with people that want to be here. Not because it’s a fast-growing rocket ship, maybe it’s one of the things that is attractive, but it should also be about a bunch of other things. The people that have been there in the last 18 months, I owe them everything. And, hopefully, the fruits of their labor are going to pay off tremendously in the years to come.
Alejandro: Talking about the fruits of the labor, as what they say: what doesn’t kill you makes you stronger. In this case, you guys, right now, we’re seeing the light at the end of the tunnel with this COVID thing. Now, it seems that there’s no mask. The other day I actually went to a mask-less party with 250 people. People were shaking hands and no masks. I thought, “Wow! This is weird,” but it felt amazing. Now, I think that the travel and hospitality segments are definitely opening up. In this case, you guys kept up the momentum. Right now, you’re preparing for what’s going to be going public, which is pretty exciting, so how has it been, this preparation and now thinking about becoming a listed company? I’m sure this is way beyond the dreams that you had when you started at McGill University.
Francis Davidson: Yeah. It definitely is incredibly exciting. I’m, above all, incredibly proud of what’s been built. I actually am a big fan of doing it in the public eye, and I love the accountability in the way of the markets and the fact that we have to publish our numbers every three months and show what our forecast is and our guidance is. It’s actually terrifying for most entrepreneurs, and that’s usually when they’re like, “Okay. I’m done. I’ve done my job of going from zero to one. Now, someone else takes over.” But I actually really thrive, I think, in that environment and especially as a fast-growing company where I feel like even though we’re about to begin to have our public debut, I feel like there’s been now a legacy of companies that have innovated a ton post-going-public, and I find those stores to be incredibly inspiring. I was re-reading Bezos’ annual shareholder letters and looking at companies like Amazon or even Netflix. There has been incredible change after they’ve gone public, and I feel like more innovation can happen post public market’s debut than before if the management team has the will to do it. I’m incredibly excited by it. I’m, obviously, incredibly excited by the pace of recovery of travel, and that 250-person party, three or four months ago, it was impossible to do, but increasingly with vaccination rates rising rapidly across the world, there’s light at the end of the tunnel. I think there’s general excitement around the bounce-back. Some call it the revenge of the travel industry and in the second half of 2021.
Alejandro: Yeah. Imagine that you go to sleep tonight, Francis, and you have the snooze like no other, and you wake up in a world five years later where the vision of Sonder is fully realized. What does that world look like?
Francis Davidson: It’s possible for anyone, globally, to travel and stay somewhere. And, by the way, it’s not just travel. It could be for a few nights, but it could also be for many months—and stay in a place that is just incredibly inspiring, like it’s designed like what you see in the magazines, and you were like, “Wow! I’m getting this despite the fact that five years ago, I’d probably have to spend $1,000 a night that’s this nice. And the brand, also, is capable of being your entry point towards the city. It’s not just about staying in a nice place, but it’s also, “I know that there’s an amazing restaurant. The tables are always booked two weeks in advance, and I’m going to tell you, ‘This is the time to book your 7:00 table for this restaurant.’” So I’m your curator and your insider, and your best friend when it comes to visiting that place. I think in time, as well, we’ll be able to have no compromises when it comes to the quality of service that you’d get in a really amazing accommodation. That means that if you want to have dry cleaning done, or if you want to have a massage therapist sent to your room, if you want to have room service, all of it can be done on the phone, but at a price point that’s more affordable than what is currently offered. So, basically, the vision is accomplished if we have democratized and elevated hospitality and enable a new class of digital folks that are working remotely to camp for one month here and spend one month there; one month in Mexico City, and maybe you spend two months in Miami and roam across the world and have really productive spaces that are just jaw-dropping, but offered at a price point where you can actually sustain living in them for a large portion of the year. Sonder offers properties all over the world, at that point, in the top 100 global cities, resort destinations, and any format, especially in buildings that are purposefully built for our use, so I’m talking about a 200-unit tower where you have some hotel rooms, some one-bedroom apartments, all the way to three- or four-bedroom apartments, some lofts, all-in-one property. I think that would be a world-way. You have an extension of your home on your phone wherever you are. You can push a couple of buttons and then use your phone to stay there for as long as you want, with services available at a snap of a finger.
Alejandro: I love it. One of the questions that I typically ask the guests that come on the show is, imagine if I put you into a time machine, and I’m able to bring you back in time. You have the opportunity of having a chat with your younger self, that younger Francis that is still at McGill University thinking about, “This is school. Maybe there’s something I can do around this thing, and you’re able to sit that person in front of you, and you’re able to give that younger Francis one piece of advice before launching the company, what would that be and why given what you know now?
Francis Davidson: This is a fascinating question. I think probably the most important thing would have been to be more thorough when it comes to documenting the culture. Earlier, we were discussing the hiring process. I guess in my view, in this part of the culture, there are a lot of other things that were undefined. In an organization, it’s so important to be very clear about who you are as a company and how you do things. That will allow prospective employees to figure out whether they like it, and it’s going to make it such that everyone here has a constant reminder of how to behave within the organization. A strong culture defines what are the behaviors that are expected and what are the things that are prohibited? It has a point of view that’s not for everyone, but I feel like there are a few years in building the organization where I lack that clarity or I had a Version One of it, and I didn’t update it, and I didn’t make sure that it was pushed across the organization. Then I woke up one day being like, “Wow.” For example, one of our cultural customs is that we don’t use Slack to communicate for things that are non-urgent. Only urgent communications should go through Slack. Otherwise, you should use a Sonder task manager in order to communicate with your teams. It’s a much better way to organize work and much more productive, etc. I realize that there are hundreds of people in this company that don’t know about this cultural custom because it’s not been built into all of the hiring processes and the onboarding in a way that is as thorough as what was needed. It’s so easy to get caught in the day-to-day when you build an organization on things that are decision-strategic decisions, or should we do A, B, or C, and lose sight of the fact that culture is something that exists in the background. I’ve heard of the concept of culture debt in a sense, and accumulating culture. That is potentially one of the most dangerous things to do, and it’s really kind of the foundational thing upon which everything else rests.
Alejandro: As we’re talking about lessons here and you were pointing to some books earlier, what would you say is a book that you wish you would have read earlier?
Francis Davidson: Actually, the one that I mentioned is probably a good start, Superforecasting by Philip Tetlock. It is a very practical guide for how to predict better. Prediction sounds niche. If you’re not into forecasting and if you’re not a finance person, why does it matter so much? When you make a decision, you’re doing a prediction. You’re trying to figure out where to go: where should you go to college? Which company should you join? It’s an act of prediction, like, which stock should you invest in? You’re trying to figure out like five years from now what’s going to be the stock price for that thing for that company. I think the art of predicting well is crucial to decision-making, which is a most important input into making decisions is predicting. Tetlock has come up with a brilliant synthesis of research that he’s done over decades for what distinguishes people that are really good at forecasting versus those who are not. He studies what he calls super forecasters, people who are consistently in the top two percent or some cutoff of the best, most reliable forecasters, and what are all the methodologies that they use. Do they have a quantitative background or not? Which publications do they read, and what are the methodologies for coming up with opinions? Obviously, they’re much more open-minded individuals, and they’re constantly looking at ways to update their beliefs, the Bayesian updating framework, which is something that we can naturally do. I think that’s a foundational one, frankly, for anyone that makes those kinds of high-stakes decisions or simply an interest in predicting better. I think this is something that is really fascinating work.
Alejandro: That’s very profound. I’ve got some reading for this weekend. Francis, for the people that are listening, what is the best way for them to reach out and say hi?
Francis Davidson: Maybe shoot me a note: [email protected]. Send me an email, and I’ll be happy to engage.
Alejandro: Amazing. Well, Francis, thank you so much for being on the DealMakers show today.
Francis Davidson: Thank you.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected].