Transcript: Episode 161: Airline Bankruptcy Surprise

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[00:00:00] Susan Barry: This is Top Floor episode 161. You can find the show notes at topfloorpodcast.com/episode/161. 

[00:00:13] Narrator: Welcome to Top Floor with Susan Barry. This weekly podcast right up to the top floor features tangible tips and excellent stories from the experts and characters who elevate hospitality. And now your host and elevator operator, Susan Barry.

[00:00:32] Susan Barry: Welcome to the show. Jared Lerner is the co founder and CEO of Napper, a company focused on short term hotel stays designed specifically for improving sleep. A software engineer by trade, Jared's interest in sleep health and personal experiences with travel related sleep issues inspired him to launch the company in 2014. After an initial pivot from brick and mortar nap spaces to a marketplace model, Napper now partners with thousands of hotels worldwide. Today we are going to talk about making quality rest more accessible for travelers everywhere, but before we jump in we need to answer the call button.

Call button rings 

[00:01:24] Susan Barry: The emergency call button is our hotline for hospitality professionals and anybody else with a burning question. If you would like to submit a question, you can call or text me at 850 404 9630. Today's question was submitted by Martha. How do you know when it's time to pivot your business and how do you decide what is next? Well, I know Jared that you pivoted your business. So what's your advice for Martha?

[00:01:57] Jared Lerner: Yeah, it's a tough question because you could be on a path that seemed so right. And something you've been working on for so long, and then, you know, something else comes along and you're like, oh, uh, is this, is this worthwhile? Is this worth exploring after we put all this work and effort into path number one? It's not always a simple answer. And, you know, for us, I think it was an easy decision because the first path we took was very capital intense and the second path was just easier to scale. So if it's that clear cut, then I think it's worth looking into. But yeah, for something like that, I think definitely consult your advisors, your team, make sure that it makes sense for the business to pivot. Pivoting is great, but only if it's going to help, right? Pivoting for the sake of pivoting, not a good idea. So you have to make sure that, um, you know, it's, it's going to be a great long term move. 

[00:03:03] Susan Barry: My company has been through really three major pivots and each time it was driven by the marketplace. It was, what we were offering, to your point, wasn't scalable or financially viable anymore and so we had to move into an area that made more financial sense. So I think it will be more clear to you, Martha, then maybe it is right now, the further you kind of get into the numbers. Jared, before you went full time in your company you worked as a software developer in support for a variety of companies. How did those roles impact or influence what you do now? 

[00:03:45] Jared Lerner: I think it was really helpful to bounce around different startups here in New York City just so I could see, you know, how they operate, how the culture is, and if it was the type of environment that I really thrived in. And, you know, the smaller the company the more fun I had at these, at these places, and I really got a good sense of what made the employees happy at these companies. The culture was obviously paramount. People were fulfilled in the product and they, you know, enjoyed coming to work every day. And I found that that was the case for me at a lot of these places. And that's kind of when I decided, okay, like I want to do my own venture someday and have employees who feel like this. 

[00:04:37] Susan Barry: Was the smaller company feeling better related to or in opposition to it being more or less well-funded? Like, I'm assuming that in a startup, the more, the further into your rounds of funding you get, the bigger and more personnel. Is that when the magic starts to die? 

[00:05:00] Jared Lerner: Yes. For me, I was joining these companies after they were series A or B. So it wasn't five people and everyone wearing 15 hats. It wasn't, you know, where we're at with Nappr right now. It was further along. So yeah, I mean, funding helps, right. You can pay for company outings, you can give people swag and all this other cool stuff and a nice office. Yeah, in that sense, you know, it definitely helps. I don't think the funding is a requirement as long as the culture is good for me. I've always been a company culture champion, and I think you can make the culture great anywhere, no matter what the funding is, or what the product is. So as long as you put your employees first, I think it could work.

[00:05:56] Susan Barry: What personal experiences with sleep issues and travel sparked the idea for Nappr? 

[00:06:04] Jared Lerner: So yeah, I've, I've had a lot of sleep issues in my life. I'd say that is definitely the catalyst for all of this. Medically I've had sleep apnea, I've had insomnia, I've had upper GI issues, affect my sleep to this day. So that's probably the number one thing that really sparked this idea. But also I've traveled to many countries, about 30 now and I've been on many red eyes and many layovers. And I found that it's really difficult to get quality rest in the middle of a hectic travel day, or really any day, but especially when you're traveling. And that airports really didn't have a great solution for this or when you land on a red eye at 8 a.m., you know, you can't check in until 3 p. m. I've been in that scenario so many times, exhausted, and was wondering why there was no solution for something like this. You know, it's something that happens to millions of people a year. So those experiences really paved the way for me wanting to solve this issue on a mass scale. And that's why I founded Nappr. 

[00:07:13] Susan Barry: So Napper focuses on short term hotel stays, obviously emphasizing sleep specifically naps, specifically. How does your platform differentiate itself from other kind of day part focused companies like day use or hotels by day, things like that. I think those maybe cater to other needs, but can you talk about how they're different? Like, I'm trying to picture a hotel that's going to release a room from 8 a.m. when the red eye lands to 3 p.m. check in, how does that work? 

[00:07:53] Jared Lerner: Yeah. We do have several competitors in this space, you mentioned a couple of them. You know, right now, our main differentiator is that we are heavily focused on the sleep aspect of this. It's right in our name. You have Nap right in our 5 letter company name so it's front and center. We go out and we pitch it like that. You know, you're, you're exhausted, you're traveling, or you're working 16 hours, or you just need to get away for a bit. You can take a nap at a hotel room.

Our other competitors are more broad focused. You know, they, they mentioned a variety of use cases, which are great. You know, you don't have to use us for napping, but because our mission is to combat sleep deprivation, we definitely focus on that. In the longer term, we do want to differentiate ourselves from our competitors by going beyond hotels. I think that's really going to separate us from the rest of the pack. We want to have our own brick and mortar stores in airport terminals so that people can rest as soon as they land or right before they take off and we'd also love to have consumers hosting their homes. So two very, very big ambitious goals there in the long term. So our competitors haven't really done that. So I think if we have all three of these channels, it will really serve our customers the best 

[00:09:26] Susan Barry: It makes sense to me. I struggle with how a hotel is able to be affordably enough priced for only a portion of a day because they still have to invest the same amount of money on their end. They have the same overheads, cleaning sheets, towels, all that stuff. But the idea of doing a sort of short-term rental, vacation rental model is really interesting. I can see that working super well. I hope it works out. I know when you started, we talked about this earlier about your pivot from purely focusing on a brick and mortar model to then like partnering with hotels and all that. Why did you make that change? What was it was capital intensive? I know, but can you get into the weeds of that a little bit and tell me, tell us more about it. 

[00:10:18] Jared Lerner: So we started in 2014. It was me and a couple of coworkers at the company that I was at. And initially we were set on having our own store where people could go take naps with a membership model, kind of like a gym, but for sleeping.

[00:10:33] Susan Barry: Oh, okay. 

[00:10:34] Jared Lerner: Yeah. And it had a different name. It was called Siesta. And we were going to have these places all over the city, so that people didn't have to go too far to get a midday nap. And we ran with that idea for two or three years, and then we realized, okay, this might be challenging without any funding, but it's tough to get funding before you have revenue. So we were wondering, you know, should we have our own pop up store? Should we do something kind of out of the box to get the ball rolling here? And then one of our advisors at the time suggested to maybe consider a marketplace instead. Airbnb was very hot at the time marketplaces in general in 2017 were exploding.

And at the time it really kind of made sense for us to go that route, I think. As a startup without funding and, you know, we're able to potentially leverage other people's homes, you like Airbnb was doing, but for a shorter amount of time. So that's why we did that pivot. Obviously I still want to go back to the brick and mortar model, but it was so early in the company and with, without funding and without a lot to go on, I think it just made sense for us.

Doing the actual pivot we had to change the tech around because we didn't have an app. So with the marketplace model, I started focusing more on the app development and getting that built. Also my co-founders wanted to do the brick and mortar model. So they left and then I was back to square one. So that was definitely a challenge. I had to find other co founders who are more excited about the app and the marketplace. 

[00:12:35] Susan Barry: Tell me why, why did you need co-founders? 

[00:12:38] Jared Lerner: I think it's just easier to have two or three heads working on something, especially for something like this. It was my first company and, or at least the first one I founded. And I think doing it all yourself is a lot. You know, going back, I would have changed a few things. I think I wouldn't have tried to do so much myself because, you know, having two or three founders helping you in different areas that you may not excel at is such a huge boost. I mean, it's, it's invaluable.

And for me, you know, I'm an engineer who has an MBA, so I cover a lot of ground, but I can't do it all myself, I found. So yeah, just having someone who, you know, might be good at operations or finance or, you know, business strategy, growing the business, these kinds of things. Or, you know, having a founder who may have been there before and has founded a couple of companies already. That kind of presence in the room, you know, you can't really buy something like that. Either you have it or you don't. It's a long winded answer, but it's just very tough to found a company like this and do it all yourself, um, you know, cause it's going to scale and grow and, you know, at that point, when you have, we have a thousand hotels at this point, doing that alone, it's just the tall, tall order, so… 

[00:14:21] Susan Barry: So talk about how you got to a thousand hotels. I know you started with about 10 in New York and then move to now at least a thousand, right? How did that happen? 

[00:14:33] Jared Lerner: So we actually got our start by partnering with some of our competitors. We're using their inventory and doing a revenue share with them. And it's a lot less overhead for us to do that. We don't have to talk to the hotels every day as much as they do, we're just kind of listing the inventory and taking a cut. That being said, we do have the capability to work directly with hotels. So it's something we want to do as well. But it's very easy for us to expand our inventory when we are connecting to an API from one of our partners or multiple partners. So that's how we started and that's how we're growing. 

[00:15:17] Susan Barry: So, and what's in it for them is that they get a revenue cut, but then are they sort of relying on like superior distribution or extra great marketing on your side to get the word out and give them that revenue share?

[00:15:31] Jared Lerner: Yeah, they're definitely relying on the marketing piece of this. We've done some creative out of the box stunts recently, like rolling a bed around Manhattan with our custom branded sheet, taking it down to the subway. These kinds of things are less traditional and they're not really, you know, marketing that way. So the fact that we're doing these things and bringing, awareness to this business model is definitely helpful for everyone. I think, you know, the more bookings we get, the more they profit. So it really is a symbiotic relationship. Everyone wins. And that's why we've been able to convince these partners to work with us.

[00:16:18] Susan Barry: We like to make sure that our listeners come away from every single episode of Top Floor with some specific practical things they can try either in their lives and their businesses. So for those who like you struggle with sleep, especially while they're traveling, do you have any tips or advice on how to improve their rest?

[00:16:42] Jared Lerner: Yeah, this is definitely something that a lot of people struggle with, myself included. And it's tough to get really quality rest in sometimes when you're traveling and your circadian rhythm is off and your time zones are off. But there are a couple of things you can do. So if you do use one of our hotel rooms, for example, and you have four hours, I would definitely start a routine, even if it's a quick one. I would make the room dark right away. Maybe do a little bit of meditating, get your body into rest mode. It's been through a hectic day. So you kind of want to want to, you want to wind it down and tell it it's okay to actually rest now, not run around and, you know, hustle all day.

So I would do a little bit of meditating, get the room dark, have an eye mask, for sure. I wear an eye mask every night. Definitely helps with simulating that nighttime experience, especially if you're trying to nap in the middle of the day. If you close your blinds in your hotel room, it might be dark, but not pitch dark. So the eye mask can definitely help there. 

[00:18:02] Susan Barry: That's like me with earplugs. I wear earplugs every single night, dead silence. 

[00:18:07] Jared Lerner: Those are great, especially, you know, if you're taking a midday nap, you might hear noise in the hotel hallway. So if you have ear plugs, that's a great too. And yeah, I would try to wind down that way. Maybe go for an hour nap. If it's not working out and you can't, you know, definitely don't force it. Some people are better at napping than others. So it's just the way it is. 

[00:18:34] Susan Barry: Yes I'm terrible at napping every time I wake up from a nap. I feel like I have an illness. I hate it! 

[00:18:40] Jared Lerner: It's not everyone's cup of tea, you know, i'll be the first to admit it. But if your body's exhausted enough, if it's been through a lot it'll be much easier to do obviously because it'll tell you that it wants to nap. And you know, obviously there's so many studies out there that show the benefits of this, even if it's 30 minutes or an hour. It seems like a short amount of time, but you can really make your day so much better in a number of ways. So, if you can do it during a long travel day and you have the means to, I would try these tips and give it a shot. 

[00:19:23] Susan Barry: How has your own sleep or your own relationship with sleep evolved as you've worked on Nappr? Do you feel like you're a better sleeper now or a worse sleeper cause you're like running a startup?

[00:19:36] Jared Lerner: It's definitely something that I focus a lot more on. As a founder of a sleep startup then before. In my twenties, I sacrificed my sleep so much. I went out until three or four in the morning and was okay with sleeping for five hours and just getting through the next day. You know, these days in my thirties, though, sleep is probably my number one priority. I will try to carve out seven or eight hours every night so that I don't have to nap the next day. I don't always get it. So if, you know, it's a rough night, I'll try to take a nap to, to get through the day a little easier. But yeah, it's, it's very paramount for me. It's always on my mind. You know, if someone has a late event, uh, at night, I will try to duck out early at 12 or 1 because I don't want to throw off my circadian rhythm and 

[00:20:34] Susan Barry: Just wait till you're my age. Then duck out early means 9. P. M. Time to go. 

[00:20:41] Jared Lerner: It's getting earlier and earlier as I get older. And I'm okay with doing it because to me, it's worth it. You know, it's fun to go out, you know, late sometimes, but I, I really hate being exhausted. And you know, I think I fare worse on less sleep than most people. So I have to be more conscientious about that. 

[00:21:00] Susan Barry: I feel like I do too, but I almost always get, not just eight but like eight to nine hours of sleep every single night. Maybe that's why I hate napping because I'm like, well, I don't need a nap. I got plenty of sleep last night. Okay. Okay. We have reached the fortune telling portion of our show. So you have to predict the future and we will tell you if you got it right. What is a prediction that you have about the future of short-term stays and sleep focused services in the travel industry? 

[00:21:32] Jared Lerner: I think this will definitely be more of a focus as time goes on. I think people are much more aware of the effects of sleep deprivation today than ever before. It's still a massive problem that continues to rise, but people are starting to realize, okay, this is something that can really affect me short-term, but also long-term. So, you know, when it comes to services that are offered to alleviate this sort of thing, I think you'll only see more and more of them. And recently we've seen sleep tourism trending all over the place, which is great. It's when people, you know, take a vacation with a focus on resting instead of sightseeing. Which, you know, as a sleep evangelist, I can't be upset about it. I mean, that's, that's great to get away from your hectic day to day and get some quality rest for a few days. 

[00:22:35] Susan Barry: Plus, hotel room sleep is just different. It's just better. It's so much better because it's freezing cold, dark, fresh, clean sheets. Like nothing's better than a hotel sleep. I'm one hundred percent convinced. If you could wave your magic wand and change something about how hotels either manage or approach short-term stays like what you offer through Nappr. What would that be?  

[00:23:04] Jared Lerner: I think the one thing I would change is for more hotels to embrace this concept. A lot of them do already, obviously, but it's not all of them. A lot of these hotels have up to 40 percent vacancy in the daytime. Those rooms are just sitting there. They're not being used, they're not generating revenue and this is a way for these hotels to get some more income for the same thing that they were already doing just a shorter amount of time. So, if they're dedicating a made to these rooms. And cleaning them every six hours they're still making a healthy margin, even after we take a cut from it. So it would benefit any hotel to be on our platform. So my hope is that more of them want to do this and embrace the idea. 

[00:23:59] Susan Barry: What is next for you and what's next for your company?

[00:24:03] Jared Lerner: So we're still working on scaling Nappr and making sure the world knows about us. We are currently trying to partner with businesses who may want to subsidize this for their employees.  

[00:24:15] Susan Barry: Oh, that's an interesting idea. 

[00:24:18] Jared Lerner: It would be a great perk, right? If you were hired somewhere and they told you that you could use short-term hotel stays whenever you're traveling. So that's, that's our focus right now. Could be a large company. And finance or or legal, or maybe it's, you know, a hospital helping their doctors and nurses, or even a university that wants to offer this for their students. We'd love to partner with with anyone right now who might want to subsidize this, and that will really help us grow, I think. So that's the short term focus. We're also trying to get as many hotels as possible on our platform. We have 4,000 more on the way. So that'll take us to over 5,000 and long-term, we'd like to have as many hotels as possible. 

[00:25:09] Susan Barry: Awesome. Okay, folks, before we tell Jared goodbye, we are going to head down to the loading dock where all of the best stories get told.

Elevator voice announces, “Going down.” 

[00:25:24] Susan Barry: Jared, what is a story you would only tell on the loading dock?

[00:25:27] Jared Lerner: So this is a pretty crazy story from six years ago. My wife and I were traveling to Europe with a friend and it was for a wedding in Budapest with other stops scheduled in France and England. It was a pretty normal trip for the most part. We went to France first. I love Paris. So that was a lot of fun. Budapest was great. I had been there before for a grad school class. And then our last stop was England. Our friend was scheduled to fly home a day before us and then I was going to have one or two days in England with my wife, and then we would fly home as well on the same airline. So pretty normal trip. The day comes where our friend is flying home. 

[00:26:21] Susan Barry: I'm already getting nervous. 

[00:26:23] Jared Lerner: Yeah, you can see where this is heading. So his flight is at 10 AM. He goes to the airport and I get a call from him at 11:30 AM. And I answer with, “Hey. Aren't you supposed to be flying right now?” And he seems a little taken aback by whatever he's experienced. And he tells me, “Hey man, you're not going to believe this. But our airline just went bankrupt.” 

[00:26:56] Susan Barry: No way. You are joking me! 

[00:27:00] Jared Lerner: Went bankrupt the day that he was flying on that airline. 

[00:27:06] Susan Barry: So what happened? Like so he goes to the gate and they're like good luck friends. We're out of here! 

[00:27:11] Jared Lerner: Pretty much. The entire flight hadn't heard any news about this beforehand. So he comes back to our hotel and crashes on our hotel floor that night. We only had like, a queen bed. So immediately we're, we're trying to figure out like, how do we get home now? Because this airline is gone. We are flying on the same one a few days later. So he books a flight on Air India, I think with a layover, it was the best thing available. And it was like $800 or something crazy. So it was kind of an emergency move.

We also booked on Air India for a few days later. But the story gets even crazier because we booked through a travel aggregator and a day after we booked, we still didn't have a confirmation number. So I call them and they say that even though the booking went through, they couldn't guarantee us a seat on that flight. So my wife is panicking, you know, we're in England, we have to get home to go back to our jobs. And then I remembered, Oh, wait, this is where Virgin Airlines is located. Richard Branson's a cool dude, you know, maybe, maybe they'll help us out. So I call them and tell them about the situation and they said, yeah, we heard about this and we're willing to help you out for a very low emergency rates.

[00:28:49] Susan Barry: Oh, wow. 

[00:28:51] Jared Lerner: That's how we got home.

[00:28:54] Susan Barry: I mean, that just gave me such chills, because while we are recording this, there is a whole thing happening in the south where there is hurricane after hurricane coming and price gouging is at like sort of an all time high. It's embarrassing. It's embarrassing to be in the hotel industry when you see hoteliers do stuff like this. So the example of someone doing the absolute opposite instead of gouging you, which they very well could have, man, I mean, you're stuck, like, but to instead sort of reach out with open arms is like the epitome of hospitality. And probably - let me not put words in your mouth - but probably made you as loyal to Virgin as you can be forever, right?

[00:29:41] Jared Lerner: Yeah. I knew they were great at customer service before this, and I read Richard's autobiography, but you know, this took it to a whole other level. And, and yeah, I tell that example to people all the time about how they didn't have to do it, but they came through and got a customer for life. You know, if I see a Virgin flight that makes sense for me, I'll, I'll book that over another airline for sure.

[00:30:09] Susan Barry: Oh, I love that story. Jared Lerner, thank you so much for being here. I know that our listeners are intrigued and hopefully not taking a nap right now. And I really appreciate you riding with us to the top floor. 

[00:30:24] Jared Lerner: Yes. Thank you so much for having me. I appreciate it. 

[00:30:27] Susan Barry: Thanks so much for listening. You can find the show notes at topfloorpodcast.com/episode/161. Jonathan Albano is our editor, producer, and all around genius. He even wrote and performed our theme song with vocals by Cameron Albano. You can subscribe to Top Floor on Apple Podcasts, Spotify, or wherever you like to listen. And your rating or review will go a long way in helping us give you more of what you like.  

[00:31:03] Narrator: Thanks for listening to the Top Floor Podcast at www.topfloorpodcast.com. Have a hospitality marketing question? Reach us at 850-404-9630 to be featured in a future episode.