WestCap Founder On What’s Next For Short-Term Rentals: Full Video

For the first time in his 25 years as an investor, WestCap Founder Laurence Tosi says that the short-term rental market and overall economy possess the most extreme economic health indicators he has ever seen. With strong positives and negatives, it is hard to gauge what will happen next.

What the long-time investor did tell Skift CEO and Founder Rafat Ali at the Skift Short-Term Rental Summit in New York City is that the industry was a big winner from the Covid-19 Pandemic, and despite the uncertainty, it is on the right side of travel.

Tosi also explored the struggles of the global housing shortage, the interference of political players in the industry, and how key figures should react to these challenges.

You can watch a full video of their discussion as well as read a transcript of it, below.

Rafat Ali: Okay, so thank you for being here.

Laurence Tosi: Oh, thank you, Rafat.

Ali: You were here four years ago, in 2019, and gave just a great spectral overview of what the sector was. I think it was in the second half of the day, and we figured it was so great that next time you speak, you should be at the start of the day because you can then give a more overview and LT for those of you who don’t know, (inaudible) story career, Blackstone, was the CFO of Airbnb, for our world that I’m sure you heard of him then, and has since left and started WestCap. Was (WestCap) there before you were Airbnb, right? So WestCap now is probably the largest, one of the largest investors in travel. Public and private both, right? 

Tosi: Yep.

Ali: Public and private both. It still holds a good steak in Airbnb, your investors in Blueground; Saunders, the ones you exited out of. I don’t know if you still hold. 

Tosi: Hopper, Flyer.

Ali: Peak, you said?

Tosi: Yep

Ali: And so, you are obviously bullish on the sector, in general overall travel. What did you make of yesterday? I mentioned on stage before the real estate guys were not so happy, but the operator is happy. This is in the hotel industry. What’s your sense of where the market is and how we should wrap our heads around it.

Tosi: First of all, good morning; nice to see everybody in now what foggy New York. I live in San Francisco, I arrived last night. Why is it foggy in New York, anyway I guess it’s not fog. A couple of thoughts. So, I’ve been looking at markets for a long time, probably 25 years of being an investor and an operator in not just travel businesses but businesses. This is the market that has probably the most opposite indicators of economic health. So let me go to the positives. Record job market, low unemployment, record wage increases, stability in the banks. Who knew you could actually have three of the top 30 banks go bankrupt, and the market keep going along?

Earnings were decent for the first quarter, particularly in technology; the S&P is largely flat for the year if you back out the tech companies all pretty stable. The consumer is healthy, and that’s important for everyone in the room. Let me give you the negatives; you still have $650 billion on bank balance sheets that are unrealized losses. That’s what took down the three banks that went down. Regional banks, which many of you probably do business with, are getting a lot tighter with credit, which usually pushes down economic activity. Consumer lending is contracting. And the big one for all of us is what’s going to happen to commercial real estate. There are two trillion dollars of loans coming due in the next 24 months; those loans will be refinanced at much higher rates than before, 500 basis points, maybe more, and a lot of those loans are financed by the regional banks, which we all know are going through stress.

So, it’s for the first time in my career I could say there are super polar opposite indicators. Where it plays out will be the tussle between the two. Can the consumer stand steady at the same time? We’re getting pretty tough news on the commercial side; it’s hard to tell what’s going on.

Ali: Do you think the consumer will stay steady?

Tosi: I do, I do. By the way, I thought Seth did a great job great presenting. He did a really nice job. I think the area of hyper-growth for travel which all of you have seen, played itself out in listings. Paid itself out in ADRs. ADRs over the last few years, you saw those charts. I mean, you need 40 percent growth in STR in a three-year period. I think it’ll be moderated growth, so you’ll go back to travel as a whole if you go back to the 1950s and you look at international travel and just travel dollar spent. It’s grown at about six percent, which, given the size of a three trillion-dollar market, that’s a lot that’s bigger than energy. I think we’ll be back to that level. I think STR will outperform. I think it’ll be more like an eight to 10 percent growth rate, so you’ll be decelerating growth.

So, the charts that Seth showed the year over year will slow down, but I don’t think you’re going to have a sharp contraction because the consumers are healthy. The most important thing for everybody in the room that happened to remember like five years ago, people are like, “A stranger staying in my house? I don’t know,” right? That’s gone because a lot of people who never would have tried STR did. So, you’re basically your market cap awareness and, frankly, comfort with the asset class changed, and that’s not going away.

Ali: So STR versus vacation rental is an unending debate in the industry. Where do you fall?

Like in terms of this debate on vacation rental, folks say the traditional vacation rental folks “traditional,” they may not be, but just that’s let’s just use that word. People have been here even before the internet came along, versus the short-term rental layer, as a tech layer, as listings players, as meta players, as urban players. Do you think it’s a moot debate from a consumer perspective?

Tosi: I think it is. I don’t think I think the consumer now naturally thinks about it, I remember the early days of Airbnb, like the awareness of Airbnb, and people who wanted to actually travel to Airbnb was very limited. Well, it’s one of the problems we had when we were building the business. You look at it, and if we ran a television advertisement for a hotel, well, everybody in the room stayed in a hotel. We would run it here in New York for a vacation rental for an Airbnb, maybe one in 10 people. That’s completely changed. That’s now sixty to seventy percent of the travelers have used STR, so I think it’s a bit of a moot debate.

The slide they showed about the ecosystem is interesting. Because marketplaces are brutally efficient, and STR is a marketplace. So, what you’ve seen come up are a lot of really Innovative companies that are helping property owners or property managers be able to outperform it. The chart on how professional managers were outperforming reflects the fact that there are tools, technology, and connectivity, and they’ve gotten good at certain parts of it, and I think that’s healthy. There’s also been a lot of businesses that didn’t make it, and so marketplaces are very efficient, brutally efficient.

So, what you’ve seen is the rise of places where value is being created, like some of the technology sectors you point out that Seth pointed out, and you’ve seen the fall of, you know, the other places. I think I said four years ago, sitting here with you, “Look, STR is hard, got to be good at real estate, got to be good at hospitality, got to understand marketing, got understand operations, and it’s hard.” Here we are four years later, and I’d say 70 percent of the kind of come-for-the-moment companies are gone.

Ali: The opco propco model, which is very normal in the hospitality world, and real estate owners, and then there are the management companies and operators except brands. Is that is that coming in the short-term rental?

Tosi: We used to have this expression at Airbnb. Brian Chesky and I would joke about the best thing about Corporate Apartments are that corporate people actually run them. Because it was, they were boring, and they didn’t look that good and whatever. I think opco propco really works. I think if you look at a business like a blue ground. An amazing business consumes very little capital to break even several hundred million dollars of revenue; those are all apartments in buildings where the owners of the buildings realize that that’s a really stable tenant and makes sense because they’re great at direct marketing, they’re great at operations, and so it’s a better-quality product. So, I think the opco prop code model will continue.

There will be some people who both own and operate. If you think about it, when Blackstone bought Hilton in 2006, one of the theses we had was to separate opco and propco. So, eventually, what became Park, which is a public company we put all the real estate on one side because that’s a different return model and different skill set, and we put the operating side and we focused on growing the business and Kristen Setter who’s still running the business today who we put in when we bought the business has done an amazing job focusing on operating properties, and if you owned a hotel today you’d really want to have something like a Hilton running it because they’re just going to do a better job and the cash flow it’s going to be better in the experience for the guests will be better.

Ali: So, the hotel brands, what’s the equivalent you see emerging in the STR? What are the hotel brands of the STR world? I mean, obviously, Saunder is trying to be. Francis, he’s going to speak on stage. It was one of your investments. Vikasa, you could argue, would be another show. A bunch of others we trip I think Steve is here somewhere. What would it take for brands as resonant as Hilton, Marriott, and those to emerge in the short-term rental space?

Tosi: Operating excellence. You have to have a great product, you have to deliver it in a way that the guests are very happy, so you get repeat usage, has to be consistent, has to be clear, and obviously you got to run a sustainable business with discipline. I remember the first time the first speech I gave at Airbnb way back in when it was 2014, I stood up, and I showed this fulcrum, and on one side of the fulcrum, I said a great place to work, and the other side of the fulcrum, I said, great company I said if this gets out of whack and you’re a great company, but not a great place to work, you’ll never get good people to work with you. But if you’re a great place to work and not a great company, the company’s going to betray you you’re not going to last very long. Question is can you get that balance? Can you run a really good business that makes sense sustainably? You owe it to your employees; you owe it to your guests and your shareholders; you got to run a good business.

Ali: So how do companies like Sandra and Vacasa (how) are the two public companies, at least in the U.S., get profitable and continue to grow?

Tosi: You know, look, the market, as I said, is going to moderate growth. So if you weren’t making money over the last couple of years when we had a spike in ADRs, nobody in this room would have predicted the ADRs would go the way they did. I mean, whoever knew that, like everybody, would go out of urban areas and go to all these different parts of the world and work from home; it was not predictable. You and I probably didn’t even know what the word pandemic meant last time we were here.

You have to be careful with that, so if you weren’t making money during that period where you had basically the great bull run of ADRs, you should really look hard at your cost base because it’ll be a more moderated environment going forward, and they’re going to have to prove to the world that they’ve got sustainable models.

Ali: And will these types of companies necessarily have to focus on, for instance, urban versus non-urban? Is that something that you’re thinking about? I mean, I guess Blueground, which is a long-term stay from a corporate that’s city-oriented because it is business focused.

Tosi: Usually central business district, the average stay is about three and a half months. It’s a lot easier for people to be able to take an apartment on a month-to-month basis versus one year. So really, the real innovation in Blueground is they broke up the 12 12-month leases and the deposit and all the pain of moving furniture and stuff like that. It plays very well in a more mobile world, and it’s a great business that’s profitable, and it’s incredibly well-run.

Ali: So, I guess my question was, for these hotel brand equivalents to emerge in the city, in the sector, would they have to focus primarily on non-urban or urban?

Tosi: I think there’s a solution for both urban and, of course, there’s a solution for vacation rentals, Rafat. I think the thing with urban is you have to look at the dynamics of each one of the markets that you’re in. Because you have to look at what’s the presence. I’ll take a good example. San Francisco. Hotels are incredibly expensive, and they’re actually not that centrally located.

Ali: And not that great, either.

Tosi: I don’t want to offend anybody. But for a perfect example so, short-term rentals in urban-wise work really well. They work really well in New York; I know that Seth was born into some of the moves that New York City is trying to make to extinguish that; it’s unfortunate it’s a shame. Hopefully, they won’t succeed; they’ve been at it, by the way, for years; I mean, if I gave you all the times I had to sit in a room with one of these thuggish union bosses and explain why Airbnb wasn’t the end of the world. This is not a new story for them, and I’m sure that they will manage the situation.

But you just have to be careful, both in vacation rentals and in urban, does the mix work? Is that the chart that Seth showed? Is there a (inaudible) value for the guess between the hotels and what you’re offering in STR? Because marketplaces, I said, are brutally efficient, if you’re in a place where the hotel Market’s super healthy and they have great hotels, it’s harder to compete. Same thing with vacation rentals. So just always be aware of what’s the dynamics of occupancy, what’s the offering where does the market look, because you are competing in that market, and you have to make sure that you adapt to its challenges and opportunities.

Ali: I should say if you use the app, there you can ask the questions, and I’m going to try and get to some of the questions towards the end. We still have about 15 minutes, so please put your questions in there. You still hold a bunch of stock in Airbnb, your sense of where the company is they’ve gone through obviously what they went through and covet came out amazingly well on the other side. They haven’t succeeded beyond their core business; they tried and experienced, uh, Brian has gone back and forth on it looks like they’ve sort of given up on it for now. He said to me last month of the month before when I met him that he’s now betting the company on AI changing his whole business; what’s your sense? 

Tosi: So, a couple of things; first of all, I think that people don’t give Brian credit for what he’s been able to accomplish. I mean, it is an amazing business. I remember way back in 2014, we were writing this business plan. We’re like, we could get to 15 billion dollars. Wouldn’t that be amazing, and he got to 100 in value? He always had his eye on the 100. I thought 15 was a more modest place for us to end up, they’ve done a great job, and they’ve adapted the company. I just had a conversation with them back and forth last week to compliment him on the new app rollout. I thought it was absolutely excellent, and interestingly enough, the most prominent feature sure was they went back to where they started. They went back they had it called rooms which is an affordable shared space. That’s actually; at the beginning of Airbnb, 80 percent of it was shared spaces. So, Brian recognized that he could innovate back and make that available to really adventure travelers, younger travelers, budget-conscious travelers, so I think they’ve done an amazing job just iterating; the products have gotten better, and they’ve continued to grow as you saw on the charts even coming out of this massive cycle they’re still growing in the 20s. 

I would say that, you know, on the on the AI piece, it was probably 2016, and we were experimenting inside of Airbnb with a company called Symantec Machines, which was eventually bought by Microsoft, and Dan Roth was running the business. He showed us something that I’d never seen before. And it was this. He was able to do a search on Airbnb where he was; by the way, he went on to run AI at Microsoft for years, and this is some of what’s coming out of what you’re seeing in Microsoft. He showed us a query search that would say this: I want to stay in Boston, a period of time with temperatures between 60 and 70 degrees during the day, I want to be within walking distance from Fenway Park, and I wanted a sunny apartment that’s bright with two bedrooms for less than four hundred dollars, and bam, it came out. That’s the first time I saw it, and I looked at it, and we thought, oh my goodness, this is going to change everything. Because what I just described is probably six searches, and they were able to couple each one of the queries, so each one was asked sequentially. That’s the first time I’d seen that. They then sold that technology we actually looked at buying it.

I think Nate Blecharczyk, the other founder of Airbnb, correctly pointed out that eventually, this will be available to everybody, so if we embed it in Airbnb, it’s just going to be (inaudible), and nobody’s going to know how to use it. He was right; he was one hundred percent right. But I think, I think Brian’s right. That it will transform his business. I’ll give you one more stat. So, when I was running customer service at Airbnb, we would spend eight million dollars a year changing passwords. People would call if they want to change their password. That’s gone. You don’t ever have to do that again because you’ll be able to have the chatbot. So, I think it’s super exciting for travel, and I think it’ll be a quantum shift, and Airbnb is really good at capturing innovation edges.

Ali: And so, as you’re talking to some of the companies that you’re invested in and investing and looking at, are you on the AI side, are advising them to not create your own AI but adopt open AI or to any other open-source type tools?

Tosi: Yeah, no, it’s a great question. So, a couple of things. Open source is definitely an aspect of AI that makes it very hard to invest in AI itself. 

Ali: Yeah, from a venture.

Tosi: For sure; I mean, I used this question the other day. It’s like when the internet was starting to come around; it’s not like you could just invest in the internet. There’s no such thing as the internet. It was how the internet made businesses more successful or larger or scale. No internet, no app. no Airbnb. What we’re telling our businesses is that AI is both an opportunity and a threat, and you should analyze very carefully both of what it is now. Some of our businesses, like Hopper, they’ve been using AI for years. The entire engine is built on AI going out and figuring predicting what the prices will be for certain travel. I mean, we invested in Hopper in 2019 during the pandemic; you know, that’s a business that went from five million or revenue to seven hundred million in three years. It’s remarkable what they’ve been able to accomplish using AI.

So, I think I’m going to date myself a little, but I remember the first time I got my Apple 2E, and I wrote a paper on it. Wow, and then I saw the first time I saw a navigator, I was like, wow, the internet’s out there. This is amazing. First time I saw an app, which was actually embedded, or the first time I saw a mobile phone. That’s how I feel about AI. The adoption of chat GPT is the fastest to a million users of any technology. If you go back to all the things I just mentioned, browsers the internet apps, this is a revolution, and so I think that understanding it, playing with it, embracing it, and using it to benefit your business is important, but be careful. I think this kind of AI only companies… we’ll see.

Ali: Just as we thought that AI is totally whiplashing us in terms of trying to understand it, Apple just launched this thing (the) day before. I haven’t even read the full details. Should we care at this early stage? I’m sure all of you have seen the Vision Pro, the goggles, the VR mixed reality goggles, and what are they calling it? Spatial computing

Tosi: So, I think there’s two sides to AI that you need to be aware of. One is open source, right? Open source clearly will take the economics out of it. It’ll make it more available than it’ll be how it’s applied; it won’t be just AI itself. The other side is the platforms. What are Amazon and Google, and Apple going to do to bring AI into their products… you want to always be very careful when you’re building a business that’s somebody who has an inherent advantage, doesn’t enter your space, and wipe you out because they have an inherent advantage, right. And that’s why I think that people need to be careful. So, you’ve got open source on one side, you’ve got the platforms on the other that are going to use AI and their own platforms that might make it superfluous.

Ali: How many of you are buying the goggles as soon as it comes out? Come on, how many of you are? I’m sure a bunch of the people on our team are. V2 is what you’re waiting for? Yeah, I just hope I never have to…

Tosi: I’m just not a big buyer that the screen closer to your face is going to make a difference. 

Ali: Yeah. I think that’s what it is, but it will get better as we know. Questions. Let’s ask questions. This is a good question. How does the STR industry level the playing field in a market where the hotel industry (I guess) controls the political process, meaning they have a lot more lobbying power than the short-term rental vacation rental world has.

Tosi: That’s on all of us, right? We all need to work together; we all need to participate in the political process. Look, I don’t want to sound like a libertarian, but like we all live in this country because we’re free. If you own a piece of property, you should be able to rent it to somebody, period, full stop. And somehow, some economic selfish motive gets in the way of that. It’s a shame. So, we should all step up and do what we can and fight it and fight it early.

I mean, for Airbnb, it’s been; I can’t even remember; as I said, I couldn’t remember how many times I’ve had to be called into the office of some politician to tell me that the business should be removed. That’s just wrong. It’s just wrong for the free economy, and so just make sure that you stick together, use the venues you have, take the time to meet with the politicians, make them understand. STR has been a revolutionary change for small entrepreneurs. This country was built by small entrepreneurs; in these rooms are small entrepreneurs. That matters a heck of a lot more than a bunch of big hotel companies, and this is from a guy who built, you know, Blackstone. We built the largest hostility platform in the world. They can co-exist peacefully, but just be careful because there are political wins that are against you that you need to be aware of, and you need to participate in the process, and ignoring it is not good enough.

Ali: How do you? I guess this will come up later with many of the other speakers on stage. In general, this is particularly true in the U.S., the housing shortage and STR less vacation rentals, but STR’s role in it. From your perspective, your advice to the industry on how to navigate that because it’s real, the housing shortage is real.

Tosi: The housing short shortage is absolutely real. It’s tragic, you know, that Americans are getting priced out of, or people around the world are getting priced out of urban areas and stuff like that. I mean, it’s as if it has tragic social effects. As serious an issue you can think about. In all the years I’ve been doing this, investing in this, looking at it operating a business like Airbnb, I’ve never seen evidence that STR comes at the expense of housing; it’s just not big enough.

You saw the numbers. It’s I mean, STR may be in some vacation places might be 10 or 15 percent of the supply. Urban one, two maybe, and by the way, it should be people that are renting their own homes; they’re already in the homes anyway. So that’s always been a bit of a false label that’s been put on. It’s more of a political conclusion than it is an actual economic reality. 

Ali: Okay, this computer is going a little nuts here, Brian. Why do you think the institutional investors remain on the sideline of the short-term rental sector? institutional investors.

Tosi: So, this would be for the public companies. I think it’s pretty straightforward. Think after the bubble that you had; if you’re still not making money, I think there are questions of viability, period, full stop. I think that very early on in the days of Airbnb when we were trying to construct the company and what it would look like, I remember the budget for like 2015 had us losing half a billion dollars. Something like that’s not a company. It’s called Airbnb (inaudible) Inc. And we got discipline, and we got smart, and we started making money eight years ago. That’s what you have to do.

So, you could talk about innovation; you can talk about anything. In the end, the way to control your destiny business is to have a sustainable business. If you believe in your vision and what you’re trying to do for your guests and your company, and your employees, then you owe it to them to run a really good business; that’s a discipline that makes money. It’s just the way it works.

Ali: There’s some the screen here is going little a little nuts. Can we close the pop-up that’s coming up on this? Brian, I think you’re trying in the back end here. Okay, thank you. There’s a ton of conviction around STRs, Harvard (inaudible) is out on a successful business model OTA owner operator opco propco. I guess we just talked about it. So how do you have your account for the fact that numerous cities like Houston, definitely not just New York, are moving to shutter and, most of all, urban STRs? I guess this is also you answered this as well. California introduced a 15 tax for STRs to reduce homelessness; what’s your take on this?

Tosi: I mean, what’s the relation between those two, you know? That’s just simply taxing it. That’s the political lashing out. What’s it in New York if you have a lock on a door? That’s considered uh a separate space and, therefore, you don’t you don’t follow the you know the rules. These are just political outcomes that only a politician could come up with, and it’s just, you know, it’s just it is the political pressure headwind that everyone in the room faces, and I think we have to take the responsibility to push back.

Ali: One of the questions that when we were doing the prep for this, you said ask me a question about who are the winners and losers out of the pandemic.

Tosi: Sure. First of all, I think STR is a winner. I think the market has expanded. I think people using it expanded. I think a lot of people in the room are building their business on the back of it. I mean, STR is here to stay. I know that it sounds so simple, but four years ago, when we were sitting here, it was a very nascent industry. So, I think STR is the big winner. I think these hybrid markets where people are having, you know, this kind of remote work environments, I think that’s a long-term win. That’s here to stay. And so that’ll give people more flexibility on where they’ll live.

So, I think those are the big winners; you know, the hotels have lost a share for sure the expensive STR, and then that will continue to go. You’ve got a whole generation of people coming up who grew up staying in Airbnb’s, and they’re not going to change that. They’re going to have kids and families and other things, and they’re going to go on to nicer rentals, and the market will continue to expand. I think you’re on the right side of travel if you’re an STR.

Ali: One of the things that the industry does get thrown off by, and Brian, I know, is very focused on this, is the social media buzz about how the fees, and extra fees and the stuff. Do you think that, in general, the short-term rental industry has a bunch of work to do in terms of transparency?

Tosi: Yeah, I think Airbnb did a really nice job responding to, so what Rapid’s referring to is that there was some gamification of the system, where some of the hosts were apparently charging excessive cleaning fees. So you think you’re getting a good deal, you go to the checkout; it turns out that once you get to checkout, we have another business called StubHub that we’re in; those types of marketplace businesses you get the checkout people are so convicted of what they’re doing they sometimes skip over what they’re seeing on the checkout thing, click it, and then all of a sudden they’re like “whoa I paid 20 percent in cleaning fees.” So, I think Airbnb has done a nice job to clear it up.

We’re doing the same thing in StubHub; just give people transparency. Just remember that once they get to the checkout page, they’re already on the downhill slope, so you should be more sensitive to giving them transparency. People are very sensitive about travel. It’s their hard-earned money. That’s their vacation because you saw the two things they hate the most are bad service or lack of being able to access customer service, or inconsistency. So, you have to deliver a good product. This is a little bit of that; make sure that you’re open about the fees.

Ali: How do hotels have global companies, Hilton is obviously a global company, not just U.S. global company; in fact, probably the guessing the majority of the growth is coming outside the U.S. This is probably true for all Hotel companies. In the short-term rental, Hendrick is here and is very focused on Europe. Do you see cross-country or global companies emerging in the STR space? I’m not talking about Airbnb; I’m talking just about the math adopters.

Tosi: Yes, absolutely. Absolutely. Just like you have brand affinities, I’m sure there are people in the room that have, you know, like Starwood versus Hilton versus a Marriott. I think there will be brand affinities, and that will drive global brands, and I think when they’re professionally managed, and people get what they expect, you will create brand affinity, and people will adhere to that, and they’ll be more loyal over time. It’s very hard in the Airbnb world to do things like loyalty programs because that would be taking from one host and giving to another, so it’s very hard to do. But you could certainly do what these other global platforms where you give people credits or an extra night or something like that. That will start to create more brands and more, if you will, global networks.

Ali: One last question for the service and software companies providing SaaS products. What do you think the multipliers at for now multipliers.

Tosi: I’m guessing they mean multiples. I think they mean multiples. So, SaaS multiples can be some of the highest in all technology, and technology is some of the highest multiples in any type of investing because it’s asset-light, it’s recurring revenue, and it’s very extendable. Like each incremental user, the incremental costs are very small and different than a hotel. So the multiples we went through a very weird time in the markets, where multiples aren’t decoupled from their historic multiples.

So, if you think about all the years we went out as clever as Brian and I may have been raising money for Airbnb, we basically did between nine- and ten-times forward revenues. That was our multiple. It went to 23 shortly after they went public; it’s not Airbnb’s fault; that’s the market just applying to it, and now it’s back to the more normalized. So, I think the SaaS multiples blew up to big numbers. I think a good SaaS company in this space that has the growth dynamics that you have; because I’m assuming these are SaaS companies that support short-term rental, you should probably be looking at something like, first of all, you should have 30 to 40 margins any good SaaS business does, and based on that you’ll trade somewhere between 15 times earnings, which probably translates to three- or four-times revenues. 

Ali: Do you think the platform should buy these tech companies?

Tosi: I think there’s some great innovation. That chart that you showed, the ecosystem Rafat. There are some amazing businesses that are helping hosts be better, and they’re probably closing the gap between the smaller hosts and the institutional ones because they’re allowing people to have tools that they can’t build themselves. And it’s amazing how the ecosystem is built; I mean, people are ingenious people who are figuring out all these different ways to help the host, even the guests, and help find people, service people, etc.

So yeah, the answer is I think there will be some really great companies built, and we buy, we always buy, the things you can’t build. Build the things you can, but if something’s super proprietary, you should buy it and add it to what you’re doing because it’ll give you an advantage long term.

Ali: Let’s end it there; thank you.