On paper, Justin Miller was a man who was right where he belonged. He and his partners had sold Pillow, a San Francisco startup that ran short-term rentals sold through Airbnb and sites like VRBO, to Expedia, and Miller wanted to do something like that again. Airbnb was there in the South of Market neighborhood, practically down the street. Easy, right?
So why is the 34-year-old sitting 1,250 miles away in Denver?
The answer, he says, is that his new company, Showplace, will capitalize on what he sees as the emergence of a small technology cluster for travel technology companies, many of which are focused on short-term rental properties, in the Rocky Mountains. The first was Exclusive Resorts LLC, now 20 years old, and the largest startup is probably closely associated Evolve, which has raised $224.2 million in venture capital but isn’t disclosing its sales and earnings. There’s AirDNA, which does business analytics for short-term rental investors and was sold in March to a private equity firm, and Inspirato, a luxury vacation club that went public in February through a special acquisition company, or SPAC.
And now there’s Showplace, which raised $2 million in venture capital in a deal announced on June 7. The so-called seed round, the earliest stage of venture capital, allows Showplace to add engineers and build a sales force, Miller said in an interview.
“We see Denver as a hub for travel technology,” Miller said. “Being in Denver gives Showplace access to the industry’s brainpower to collaborate and share best practices. Denver is also home to a lot of short-term rentals, so it’s a good testing ground.”
Technology clusters are difficult to build and good for young companies when they arise, says Natty Zola, a venture capitalist at Matchstick Ventures in Denver who led Showplace’s investor group. They tend to promote virtuous cycles of hiring, as people with relevant skills live in close proximity, generating ideas that lead to growth and jobs.
And they are the holy grail of economic development leaders across the country. William Kerr and Frederic Robert-Nicoud of Harvard count 25 different attempts by government officials to brand their local tech clusters as Silicon This or That, and 238 cities bidding for Amazon’s HQ2 proposal, all of which together contributed little to the supremacy of Silicon Valley. According to Kerr and Robert-Nicoud, The Valley still receives 48 percent of US venture capital, compared to 1.1 percent for Denver, which ranks ninth among US technology clusters between Miami and Austin.
It’s not hard to imagine why the cities are trying so hard. Seattle has four times more highly paid workers in R&D-intensive industries per capita than Denver, according to the Harvard team’s 2019 paper.
Although Zola’s last job was running a business incubator in nearby Boulder, he says there has been no organized effort to make Denver Travel Tech Central. But he does see signs of employees switching between local companies in the industry, starting with Exclusive Resorts, the majority of which are owned by Steve Case, the former CEO of America Online, where Brian Egan, CEO of Evolve, spent seven years. worked.
“If you have a lot of experience and success, it builds on itself,” Zola said. “You don’t have to be where the incumbents are to build a great business.”
For Miller, Denver doesn’t have to drive out the Valley to add value to Showplace. For starters, he currently only has a team of 10, so even a relatively small group of people with highly relevant expertise will help build his team. And he found his lead investor in nearby Boulder, though Showplace is Matchstick’s first tech travel game. Zola’s own startup, before coaching and investing in startups, developed tools for travel bloggers, Zola said.
Showplace’s business is basically to help new short-term rental owners get their properties in a state to be noticed and often rented out, Miller said. He likens the process to helping home sellers stage their homes by choosing furniture, colors, and other elements that will attract buyers, and photographing them in a way that grabs shoppers’ attention. Once the unit is set up, he says, most owners will turn to hiring a management company to help them run their unit as an ongoing business.
This means that Showplace uses standardized design plans and takes advantage of discounts it has arranged with leading furniture companies. The deals allow owners to take as much as 80 percent off the price of Airbnb-friendly design, Miller said.
Like interior designers he hopes to supplant, Showplace will charge a design fee that varies depending on the size and design of the home, plus a discount on the savings offered by furniture sellers and other suppliers.
“We help onboard a home in half the time, and we help the owner save money,” Miller said. “Most owners are new to the business.”
The goal is to act quickly and bring in 100,000 new Airbnbs and similar units as customers within 18 months, or about 10 percent of the million units a year he expects only Airbnb will add. Software-driven design templates will help the company scale, he said. With valuations in his sub-sector of sometimes as much as 30 times sales, he says Showplace could be a multi-billion dollar company in just a few years.
To do all that, Miller needs help. He hopes – and bets – he can get some from his new neighbors, like a digital cup of sugar exchanged over the back gate.
Here’s more of what Skift has to say about Travel Tech Hubs
† Why Barcelona is becoming a hub for travel startups : A new study highlights Barcelona’s recent growth as a hub for travel startups. A rich touristic history, a sun-filled location and a favorable cost of living. The field is certainly attractive.
† Brazil’s Travel Tech Scene is thriving despite the pandemic : Brazil harbors dozens of travel technology companies. Developing homegrown digital capabilities could help the country resist incursions from foreign heavyweights as it leans towards a recovery from the pandemic.
† 6 French travel startups are thriving despite the pandemic : Travel bookings get worse before they get better. But we found half a dozen French travel startups defying the odds. They seem well prepared for the recovery after the crisis. Good chance!
† Can Scotland create a regional Travel Tech Hub for a post-coronavirus world? : Countries don’t have a roadmap for coping with the impact of the pandemic on tourism, but Scotland is one to keep an eye on when it comes to its new effort to boost its travel technology sector.