Hostaway CEO Marcus Rader said the best way to serve an industry with software is to come to it completely as a novice.
The software as a service company is focused on vacation rental properties and the small businesses operating them. Hostaway recently raised $365 million in a round led by General Atlantic. Hostaway, which was the first property management system to integrate directly into OpenAI's ChatGPT, said it will use the money to expand globally and invest in AI.
I caught up with Hostaway CEO Marcus Rader to talk about technology. Here are the takeaways.
Hostaway's core pitch. The company provides software for vacation rental property managers in charge of anywhere from 10 to 8,000 properties. "All of our customers are running remote operations and for that you need software to know what's going on and connect to the biggest companies in the space like Airbnb and VRBO," said Rader.
The advantages of being an outsider. "Most vertical software companies were started by people who are running a business in a certain industry and start building tools for that," said Rader. "We did the opposite. We're software people and had no experience whatsoever in vacation rentals when we started 10 years ago."
Rader said the first step was to learn about the industry. "What are vacation rentals all about? We started renting out properties. Just learn, in addition to talking to people. And then we started building the tools and the only global solution that's really available," said Rader, who noted Hostaway's first customer was in Portugal with an initial office in Barcelona.
A child's eye to starting a business. Rader said entering a new industry has its advantages. He said:
"One of the great things with entering a new industry is that it has preconceived notions of how things are supposed to be done, or how people think. Those truths are true, but the industry experts are often the last ones to notice when things change. That's why so many industries can be disrupted.
Taxis were not a new industry, but they were just doing the same cab rides they’d been doing for 50 years. Suddenly Uber came and took everything away. Being new in an industry you don't have opinions. You just listen to what customers want and go build it."
SMB challenges. Rader said Hostaway's approach is to look at what has worked and failed in other industries and then apply it to its vertical. SMBs can also be a challenge in that they may not know how to run a business. Hostaway aims to make those tasks easier.
The role of AI. Rader said AI has the potential to save a lot of time and money for Hostaway's customers. "AI is extremely important in our segment, because just like any hospitality business, the biggest expense is either the time you spend trying to delegate and teaching your staff, or the money that you're paying your staff," said Rader. "Every hour, every minute counts, and AI has the potential to save a lot of time and money. It's our top priority in 2025 to build out that functionality for our clients."
Process and efficiencies. Rader said process and efficiency plays a big role in AI. "We hate inefficiencies, especially when a company makes a decision and then two years later reverts to the old way," he said. "That's my definition of inefficiency and it's terrible. I see a lot of smaller property managers struggle with that. Their business is doing well until one day it isn't and they don't know why. And there's a ton of people more than willing to tell them that they will solve all of their problems if they give them money. Our goal is to make it easy as possible to pick the right solution when it comes to operational efficiency."
