“We just made extremely rapid decisions,” he recalled during a conversation organized by the Ŕ¦°óSMÉçÇř Dobson Centre for Entrepreneurship last month. “It was just action, action, action.”
Sonder, which caters to Millennial and Gen Z travelers with thousands of short-term rentals, pivoted to niche customers such as stranded tourists and traveling nurses, and offered discounts for extended stays. It also laid off a third of its staff and revisited some of its deals with property owners.
The move worked, with occupancy jumping back to 75% in a couple of months. Less than two years later, Sonder went public on Nasdaq, a testament to its crisis response, but also to the fast growth strategy it had embraced before the crisis. Some of its smaller rivals didn’t survive.
In a wide-ranging chat about his journey, peppered with book recommendations (see below), Francis spoke candidly about pivotal moments, the relationship with investors, and why Airbnb isn’t really a rival. The exchange with young entrepreneurs marked the launch of the Dobson Founders Series.
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Still an entrepreneur
“It feels like I'm perhaps eight years into the future for some of you, but really, I believe that we've only maybe just ended the first chapter of the business,” he told the audience. Despite having 1,600 employees and operating in 10 countries, “I feel very much like I’m still an entrepreneur.”
Driven by the ambition to “revolutionize hospitality,” Sonder banks on technology and sleek design at an affordable price to appeal to a new generation of travelers, comfortable with checking in, ordering food or requesting more towels on a mobile app.
The company doesn’t own the 18,000 units it manages. It signs agreements with developers and owners who build, or renovate, the properties to Sonder’s specifications.
The first iteration of Sonder (then called Flatbook) was born at the Dobson Centre while Francis studied at Ŕ¦°óSMÉçÇř. Advisory support helped him sharpen his idea and get seed funding.
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Location matters less
It wasn’t long before Francis -- who recalled how he would keep arguing with investors even when they rejected him -- got his Series A funding and was on his way to Bay area. At the time (2016), founders were expected to decamp for Silicon Valley, and it was the best place to find talent, he said. No longer.
“The world has completely changed, especially given the pandemic— I think it's actually irresponsible to start a company in San Francisco given where the wages are,” he said. “And there's now so much capital that's available, that will be deployed to ideas, regardless of where they're based.”
While scaling up and building a network, Francis discovered the benefits of executive coaching, which he still uses to this day. He even set up an in-house coaching program. He also turns to fellow CEOs for advice.
“In order to be a successful leader of an organization, there are so many things that you need to be capable of doing,” he said. “It is something that requires consistent introspection and feedback and learning.”
Going all out
A key moment came around 2018, the start of an era he calls “the competitive battles.” Several companies with the same idea were raising funds, so Francis decided to go all out and grow as fast as possible to squeeze out competitors.
That meant Sonder, as a potential tenant, would place an offer on every single new building being developed in the main North American cities, a bold bet that turned it into a market leader.
With its vast portfolio of high-quality properties, the company has also become a valuable partner for Airbnb, which has a supply constraint and needs as many available listings as it can get on its site, according to Francis.
Flush with fresh capital, the company will keep adding properties and build its technology as travels recovery.
Being publicly traded comes with new challenges, including the tension between delivering short-term results and making the right decisions for the longer term. Stock fluctuations can also be distracting.
“I have to remind people whatever the market does in the short run doesn't really matter,” he said. “We’re growing 200% a year--just focus on the goals, build a good business.”
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Francis’ Recommended Readings
- Pitching Hacks, a free guide to raising capital by Naval Ravikant and Babak Nivi.Ěý“I followed almost by the book this process for the first several fundraisers that we did.”
- Zero to One, a strategy book by Peter Thiel and Blake Masters that challenges the notion of competition as desirable.
- Blitzscaling by Reid Hoffman and Chris Yeh, on the importance of extreme growth to box out rivals.Ěý“After reading this book, I was even more emboldened to make it happen.”
- High Output Management by Andrew Grove, an engineer’s perspective on how to manage effectively.
- Biographies: Elon Musk by Ashlee Vance, Jeff Bezos by Brad Stone, Bill Gates by James Wallace and Jim Erickson, and more.Ěý“It makes you realize how all of these organizations went through near-death experiences, how all these organizations had doubters.”
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