FaceStays
Chris Bruce-Nicky came to FaceStays through a college friend who was buying vacation homes outside a major stadium and furnishing them as investments. Chris, a former paratrooper with a mathematics and computer science background, saw an opportunity to apply his technology skills to the business. The company turned into a marketplace for professional vacation rental management companies, the firms that look after luxury properties in places like Tahoe, Miami and St. Martin for owners who live elsewhere.
FaceStays started as a test marketplace in 2010 while the founders still held full-time jobs. In its first year it handled $100,000 in transactions. The core idea was to make the marketplace the easiest in the world to join: property managers opt in and their inventory syncs automatically, much as Kayak syncs hotel inventory. The founders later added a software layer, a white-label booking website that property managers could use to take direct bookings and push listings out to consumer channels.
The business initially worked with individual homeowners, but that space was crowded with peer-to-peer rentals like Airbnb and HomeAway. Chris said the company's real strength was serving professional management firms, which control about 55% of vacation homes. Those firms were the main supply. By October 2016 the platform had around 2,000 property management companies, averaging about 10 properties each, and roughly 20,000 units in total.
The marketplace took an 8.5% commission from sellers plus a traveler fee that fell as booking size rose, for a blended take of about 13%. Chris said the average booking was just under $2,000. Volume was highly seasonal, with a big rush from June through September. The company also said property managers were using the marketplace for only about 5% of their transaction volume, which created a clear opening to win more of it. To win that share, FaceStays waived setup and monthly fees on its SaaS product and charged 1.5% on bookings made through the white-label site. Chris acknowledged the model could cannibalize the marketplace, but argued the marketplace still generated demand that the SaaS product could then serve.
FaceStays had raised about $1.5 million, first through a note and then through an equity round that closed after roughly 18 months of fundraising. Chris said the company had turned down offers of $2 to 3 million for its technology and brand, and he placed its valuation in the $6 to 12 million range. Their stated goal was to reach $100 million in transaction volume within a few months, and they had already added about $10 million in volume by moving property managers to the SaaS platform.
- •Targeting professional management firms, who control a large share of vacation rentals, gave FaceStays a supply base with many units per relationship instead of chasing individual homeowners.
- •Making the marketplace effortless to join, with automatic inventory sync, lowered the friction for property managers to bring their listings.
- •Using the marketplace as a demand-generation funnel let the company build relationships that could convert into a higher-margin SaaS product.
- •Offering a free or low-cost SaaS tier to property managers who already relied on a custom booking site reduced switching costs and expanded the company's share of their volume.
- •Seasonal demand and a high-ticket traveler audience produced strong revenue per booking, which funded a team of 13 and attracted investors.
- 1.Start by serving a professional segment, such as property managers with many units, rather than individual sellers, so each partnership brings in large inventory.
- 2.Make supplier onboarding automatic, for example by syncing inventory with a single opt-in, so partners can join with minimal effort.
- 3.Measure what share of each partner's total volume runs through your platform, then offer a low-cost software product to capture the rest.
- 4.Charge a commission that declines as transaction size rises, which keeps large bookings profitable and small ones accessible.
- 5.Pair the marketplace with a white-label product so that partners who outgrow the marketplace stay on your platform.
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