Stay22

Hamed Al-Khabaz explains the clever marketing and product validation that have helped him rapidly grow Stay22, a hotel accommodation service, to $5,000/mo.

Hello! What's your background, and what are you working on?

Hi everyone. Hamed here, from Stay22. I'm Canadian, but my roots are half Iraqi and half Persian. I've been living in Montreal since I was born, 24 years ago.

Like most dudes, I've always been fascinated by video games, which got me into computers early on. I wanted to impress my friends with how good I was at a particular game — Dota — so I used tools like map hacks to cheat my way through and win. (Bear with me: I was a kid.) Dota would push new patches to keep cheaters out, and the developers of the map hacks would start asking for money to develop new versions. I was 16 and had no money, so I decided to learn to code and create hacks myself.

Not my proudest thing to say, but this kick-started my career in programming. I've been self-taught since then, and I fell in love with the web a few years later when I worked for a startup in exchange for food. I was coding in PHP and HTML/CSS/JS. Best move of my life. I had no idea what I was doing and was learning as I go. Lots of Googling and Stackoverflowing. :)

I went to college to study computer science. I thought it would be a walk in the park given my prior coding knowledge, but boy I was wrong. I learned a ton in the first year and a half until I got kicked out.

The story of how I got booted from school is long, but the short version is that I noticed our school's student portal was using outdated tech and discovered a way to access every student's data, dating back to 1998 (around a million entries). Data like credit card info, billing info, locker pass code, SSN (SIN), digital photos, etc. Schools don't appreciate people sniffing around their systems (rightfully so), so you can imagine the reaction when I told the administration about this.

I went to college to study computer science… I learned a ton in the first year and a half until I got kicked out.

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The media picked up the story shortly after, and the attention unlocked a network of high-profile professionals and investors in Montreal. I co-founded my first startup in 2013, called Zilyo, a travel startup that did vacation rental meta-search. We raised some money, grew the team, and ultimately failed. A lot of mistakes were made.

Stay22 is my second swing at it. At Stay22, we make it easy for event organizers and ticketing platforms to provide places to sleep for their attendees.

In July 2017, our widget was seen 5,436,120 times and generated $108,880.06 in hotel sales.

What motivated you to get started with Stay22?

I've always struggled finding the best hotel deal for my next event. I'd spend countless hours searching, using products like KAYAK, Airbnb, and Google Maps. Basically I would go back and forth between them to figure out if the price was worth the distance. There was no hotel meta-search product out there that provided a specific user experience just for eventgoers.

It's crazy, because market research suggests that over half the total spend on hotels and short-term rentals, $295B each year, comes from event accommodations for conferences, concerts, festivals, and sporting events. This is an incredibly under-served market.

The market is huge, and I knew how to solve it.

At that point, I didn't want to get into travel again because of the failure of my previous startup. However, the idea kept bugging me, and there was an upcoming event I really wanted to go to, so my thought process was, "I guess a bit of HTML and jQuery here and there wouldn't hurt." A few days of coding later, a new web app was born: stay22.com.

Stay22.com

What did it take to build the initial product? How long until you were ready to launch?

Stay22's product is a double-edge sword. It's very simple to use and understand, but it's also easy to replicate if anyone wants to set sail in this market. All they'd need would be a simple Node.js server and Google Maps on the front end.

I knew if this was going to be a startup, the value wouldn't lie in the tech. As a product/technical founder, this was initially hard to grasp.

I was very lucky to have lived with my parents while starting Stay22. There isn't a better time to kick-start a startup than when you're still young and backed by Mom and Dad in a risk-free environment. I always tell my close friends that you can always take a $100k-salary job years later when your startup fails and need money ASAP.

When we started Stay22.com, it was merely a web page where users entered their event names and found hotels nearby. The initial strategy was to launch, get press, acquire users on our homepage, and grow from word of mouth.

As you might suspect, things didn't work out that way. This works for some startups, but not for travel. See, travel startups are known to be hard and expensive to run for one main reason: the users you acquire from launching and press aren't necessarily ready to shop for hotels and flights. In order to acquire customers who want to buy something in the next two weeks, you need to bid for Google Ads. And oh boy, ain't no travel startup equipped with the proper funding to compete against the Pricelines and Expedias out there.

But I needed a fast, non-scalable way to validate the solution. Luckily for me, there was an upcoming LAN tournament happening soon for another game I play called Counter-Strike. As an avid redditor, I knew there would be many travelers lurking in /r/globaloffensive. So I launched and successfully validated the product through its event-oriented UX, cashing in $23,000 in hotel sales from just one post.

(Note: it took a couple of tries until I got 663 upvotes. The first few posts either got flagged as spam or just didn't get enough traction to go on the subreddit frontpage. Reddit is tricky — keep trying until you get it. You can use services like Fiverr or whatnot to get fake upvotes, but I recommend against it if you're trying to validate the idea.)

What marketing strategies have you used to attract users to Stay22?

You can only spam reddit so many times before the community hates you. I needed a better acquisition strategy — something cheap and scalable. A co-founder in the event space also wouldn't hurt.

I'm a firm believer that almost any skill can be taught — you don't have to magically be born with it.

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I had limited options. Bringing users to Stay22's homepage and giving them the option to search for an event or venue was out of the question: it was too damn expensive. And Reddit's post success involved free marketing, but wasn't scalable.

I needed to identify other spots that attendees went to and market to them directly there. Shifting the strategy from bringing people to Stay22 to bringing Stay22 to the people was the first breakthrough we had.

You can guess how the rest rolled out. We knew if attendees wanted to purchase their tickets or get more information about the event, they had to go through the main event website. So that was where we decided to embed our solution.

I ended up testing this theory by partnering up with a local event organizer that I was connected with, and it went better than I expected. Turns out, attendees appreciate the convenience of having accommodations pop up in front of them right after purchasing their ticket. The conversion rate beats the average of top online travel agencies (Booking.com, Hotels.com, etc.), from lead to booking, by at least fourfold (2.3% to 9.1%). Not only was our solution cheaper, but it also worked better.

At this point all I had to do was get more organizers using our solution. Easy, right? Not so fast! I was a programmer at my core, and we introverts have been taught to shy away from sales.

The saying goes, "You're either born a salesperson or you're not." For entrepreneurs, however, that saying should be bullshit. I'm a firm believer that almost any skill can be taught — you don't have to magically be born with it. After searching the web and reading plenty of "Ask HNs", I discovered a fitting book by Max Altschuler called Sales Hacker.

So I put on my sales hat and got to work.

How does your business model work? What's the story behind your revenue?

At the moment, there's only one way Stay22 makes money: hotel sales. Our product is free to use, and if that's not enough, we sometimes even share our revenue with the organizers as an extra incentive to embed us.

Event planners typically view attendee accommodations as a non-revenue-producing activity and spend countless hours (and dollars) reserving blocks of rooms for $0 in return. We instantly turn this into a new, often huge, source of revenue for our partners.

We've managed to generate over $1M in hotel sales in the last year, all while keeping a 0% churn rate. This is no easy feat. Your revenue only goes up when you don't lose clients, so it's safe to say we're solving a real pain point for these organizers and attendees alike.

But the real trick lies in delivering proper customer support. Prompt email replies and even, occasionally, customized work (as long as it is aligned to the vision) is key for customer success. Of course it gets harder as you work with more and more partners, but that's why you keep hiring.

While our numbers might look impressive for our company size, we only get to keep 7% of it. The revenue is split many ways, starting with the actual hotel, the API provider, the travel agency, transaction fees, etc.

Around six months ago I found an awesome co-founder who's taking over sales, raised some money, and helped us grow to a team of nine, set for growth:

Stay22 growth

What are your goals for the future, and how do you plan to accomplish them?

Our long term mission is to transform the way eventgoers book their travel-related inventory for their next events. Every big vision has to start somewhere small, so for now accommodations are just one part of the story for Stay22, and we'll be solely focusing on that for a long while until we think we're #1.

As soon as we get mediocre success, competitors will spawn out of the blue, and it will be a race off. These could be new startups just starting out, or established companies with millions in funding. The key is to be focused, and to deliver the best customer experience possible.

I knew if this was going to be a startup, the value wouldn't lie in the tech… This was initially hard to grasp.

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If you had to start over, what would you do differently?

It would be hard to start your life over and get to the same destination. Everything starting from your teens will lead to something small that leads to another thing in the bigger picture. For me, mistakes were made, but without them I wouldn't have learned to avoid them at a later, more crucial stage of the company. Embrace the failures, learn from them, and move on.

One mistake I constantly catch myself doing is that I always try to make the perfect decision, which ends up costing us a lot of time. Time is the essence of a startup's life, along with growth. You raise money to either buy time or buy growth. Learning to balance between a good decision and the "right" decision is key, and my advice is to always go with your gut and execute a plan — any plan — that sounds good enough. Only make sure to do it ASAP, since the results are the only way to know if you got it right or not.

(There's a great article on this from First Round.)

What were your biggest advantages? Was anything particularly helpful?

There were a few of them actually, but the most important was that I began by solving my own problem, which gave me insight into a consumer's perspective. On top of that, my co-founder sees things from the event organizer's perspective, so the feedback loop is instantaneous — we're essentially the creators and the customers.

There's also a few milestones that gave Stay22 unfair advantages. One of them was joining Travelport's Accelerator in Colorado. If you're starting out a travel startup, Travelport Labs is an excellent program that unlocked a network of investors and mentors in travel that we would have never been able to connect with otherwise.

What's your advice for indie hackers who are just starting out?

Start something you already have experience in, and which addresses a problem familiar to you (or someone close to you). This will give you an unfair advantage over others and allow you to observe things others can't.

If you've heard that VR is the shit but you don't have the skills to take the leap, then take time off and learn it. Help others out for free and build your network.

Where can we go to learn more?

Visit our website at https://www.stay22.com/, and follow us on Twitter: @getstay22.

If you're planning to go to an event which doesn't have our tech installed, let me know and I will reach out to them!

And anytime you want to learn more about entrepreneurship or startups, don't hesitate to email me at hamed@stay22.com or leave me a comment in the section below.

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