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IPO Hopeful 3 – Is there really demand? đ
Continuing from the last post, after stepping into enough pitfalls over the years, Iâve developed one principle: demand is king. When people start off by bragging about how amazing the team is, how well-funded they are, and so on, it goes in one ear and out the other for me. Demand is the “1,” and everything else is just the zeros that come after it. Without proven demand, all the rest is meaningless. So, before the appetizers were served, I went straight into skepticism: Whatâs your traction now?
Since their product involves placing tablets in hotels, my questions naturally covered two aspectsâone from the hotelâs perspective, and one from the guestsâ.
Kevin, the guy running the show, explained that after spending several years developing software specifically for hotel operations, installing the tablets has gone smoothly. Theyâve already signed contracts with [Hilton], and just last month, they completed installation in [thousands of] rooms. The pilot was a huge success, with usage rates hitting 90% after guests checked in, even higher than the industry average of 80%. Naturally, the hotels were very satisfied.
The data was indeed impressive, but I still didnât see anything groundbreaking. So I asked: Why exactly are hotels so satisfied? All youâve really done is increase tablet usage, right? Sure, eliminating the need for printed materials is convenient, but I donât see this as some earth-shattering innovation. Improving guest satisfaction and saving a bit on costs seems like scratching the surfaceânothing substantial.
I asked this question for a reason. Their team includes several former executives who retired from [Hilton], where they specialized in [hotel] tech and operations. So, while the data looks good and theyâve secured deals, I couldnât help but wonder if this was more about leveraging relationships. And while relationships can be useful, theyâre not exactly a sustainable competitive advantage, nor something that creates innovation or builds a strong competitive edge. I wanted to know whether the logic behind the numbers was driven by human connections or the product itself.
Kevin responded: If you own [1M hotel rooms] worldwide, this tablet can save you resources, reduce costs, and boost guest loyalty. But most importantly, you donât have to spend a single penny. Would you try it?
âNot a penny?â Now I was intrigued. Before I could ask more, he added, âAnd if I tell you that not only will you spend nothing, but youâll also continuously make money from it? With this tablet, itâs like having a golden gooseâand Iâm giving you the goose for free. Would you sign up then?â
âWhat?!â At that moment, I got really excited. I quickly put my knife and fork down and said, âExplain that to me in detailâhow exactly does it keep generating money?â
Till next time.