#279 - John Andrew Entwistle - Founder & CEO of Wander - Vertically Integrating The STR Industry

John Entwistle: I remember standing in that home and saying, if we can duplicate this feeling, we can build a portfolio like this. We can deliver an experience like this to thousands and thousands of people and then build a significant company. 

Chris Powers: Welcome to the Fort Podcast. I'm Chris Powers, and on this show, I talk to some of the most fascinating minds in business and discuss important topics in real estate, entrepreneurship, investing, and more.

To learn more, visit fort pod.com. That's the fort pod.com.

Today I'm talking with the founder of Wander John, and this was a great conversation. We talk a lot about the short-term rental industry in general. We talk about their take on it and why they have decided to take what is otherwise a fragmented industry of marketplaces, property managers, and asset managers and vertically integrate.

We talk about the wreath they spun up, how they plan on owning hundreds of world-class properties, the operating side of the business, and how they are making operating more efficient, cost-effective, and a better solution for their client. And then we talk about what travel and hospitality will look like over the next five to 10 years, how things are changing, where we might see some of the most significant impacts, and why the experience should get better.

So this is a great episode; short-term rentals are continuing to grow, forming into their asset class, and continuing to be something capital markets want to invest in. And Wanders is doing one of the best jobs. 

The first part of this story is incredible; John has been an entrepreneur since he was 13.

He's a teal fellow, a Forbes 30 under 30, and he has a lot of unique experiences that I enjoyed learning about. So thank you so much for continuing to listen and enjoy the show. This episode is brought to you by Fort Capital. Are you a commercial real estate investment broker, or anyone out there with an off-market class B industrial deal?

Between 15 and a hundred million dollars? Fort Capital offers industry-leading incentives, including a bonus and the ability to co-invest in exclusive partner trips. For those close deals with us, join Fort Capital's deal incentive program today to be eligible for these incentives and more by going to www.fortcapitallp.com/connect.

John, welcome to the show, my man.

John Entwistle: Thank you so much for having me. I'm Jazz to be here. 

Chris Powers: I'm pumped.

Been doing some research on everything you're doing and am excited about today's conversation. I wanted to start with your career early on as an early founder and then lead into what you're doing today at Wander.

John Entwistle: I grew up in New York, just north of the city, in a small town called Katona. As most kids got into trouble, had fun running around, et cetera, and were raised by a single dad and a lawyer; I became an internet kid pretty early. I started my first company when I was 13 or 14, this little game server company, which did well, like low six figures, and always meant that I needed to be more focused on my homework, as you'd imagine.

It was so interesting, like thinking back to that time because, if it weren't for my pop, I wouldn't be on the journey that I am on, I remember I ended up in some legal dispute with this Fortune 500 company, and I had no idea what I was doing, right? And so, I CC my dad, and I'm like, Hey, can you help me?

And now, suddenly, this company thinks I've secured counsel, right? Because he is a pretty successful lawyer, they add 13 more lawyers. And all of a sudden, it's this vast back and forth, and I think from there on out, he was like, you know, what is my son doing on the computer?

You know, because he was always the dad that was like, you're into, you know, RC cars, I'm going to get you all the tools you need so you can build these things. Or, if you're into computers, let's build a computer together. And you know, when this started happening, he was, how much money are you making?

Like, all right, you owe a lot of taxes; let's go to the city. Back then, they had us print out all of these transactions. But, in my company, they were like little micro-transactions. So I walked into the accountant's office with thousand pages of these little $1 transactions.

And the accountant fees were more than like what I made. But it was a good lesson, also a lesson that Accountants and lawyers are very expensive. So that's something a lot of business owners learn. That was my childhood, basically building these little companies and having fun.

I ended up doing high school online, which gave me the freedom to travel around and travel around the world with my pop. So, I spent a few months in Korea and, otherwise, sort of that, that kid in the boardroom out of high school; I started a company called Coder, which moves the development environment where a software engineer writes code to an organization's cloud infrastructure.

So a very technical product and started with my co-founder, Kyle Lamar. We moved to Austin, Texas, to start that. We couldn't afford the rent in New York, so we rented a rusty tin shack on the east side and convinced engineers to join us, which is very impressive because we had garbage piled upfront because we didn't have an actual dumpster or anything at that point.

And an engineer coming from IBM or Google to interview with the startup and seeing a bunch of garbage outside could be more attractive. But somehow, we recruited the first few people and got to work, and I got to learn a whole bunch. Raising, seed round, and Series A and Series B at such a young age was quite the experience.

I went through a phase where I thought we had to dress up so people didn't know how old we were. So we were those 18-year-olds in Silicon Valley with buttons and slacks walking around to all these VC offices, and that company ended up being pretty successful. So we raised about 45 million from G G V, Founders Fund, Red Point, Bezemer, et cetera.

Big customers like Palantir, and Goldman Sachs, my co-founder of Mars, still run that company, and Kyle's still there. And I stepped down early in 2021 after a five-year run; somewhere in between, I became a Teal fellow with 31, 30, and all that fun stuff. And then, I was like, all right, I'm 23.

Like, what's next? And I'd rented this cabin out in Colorado to get away and explore the world, and that's where the idea for Wander came from and wouldn't let me sleep at night. And here we are now, almost two years later. 

Chris Powers: Man, I love that. I will unpack a few things before we move forward, but you mentioned your dad a bunch.

What about your dad? Has such a significant impact on you? He believes in you; your dad's a massive part of your journey. But if he's listening to this, like. How would you describe him? 

John Entwistle: I wouldn't be here without him, like point blank. And it's interesting; many people talk about this idea of being self-made, and it's like getting to where you are with the help of so many people, your team, your parents, your friends.

And I would be in a completely different spot without him. If you sort of look at his decisions, you know, a lot of parents if when they were, you know, be put in, in his shoes, wouldn't choose to say, okay, I'm going to raise my daughter and my son as a, you know, single dad and I'm also going to, keep working on my business.

He owns his law firm. As young kids, you don't realize many of the sacrifices your parents make. But for me, I realized it pretty early. I remember being pretty young, and he had picked us up from school. We had hung out, and then time for bed, and I woke up around three, four in the morning, or five in the morning, went downstairs, and found him still at his computer working.

And I realized that what he would do is he would drop my sister and me off at school, go to work, and pick us up, which he was always late, which was like something that I was like, come on, dad, as you've got to be on time. But of course, in retrospect, right, you're late because you're working, you're doing emails, you're fighting giants, and so, when I realized that he would drop us off at school, pick us up, hang out with us, and then work all night and maybe get, a few hours of sleep in between.

That's where it clicked for me. The sacrifices my dad was making. And also the fact that I wanted to work like dad, which, you know, from a timing perspective is really when I started not just playing these games, but trying to figure out the business behind it and how it all worked.

And, of course, I was always a curious kid, but that started it. And if you think through my whole life, you have this kid who started a company in high school, so Coder was started while I was still in high school, and we had three or four employees before I graduated.

The idea that he would be supportive of that not going to college, which most of my family has gone to college. Very privileged in that sense. So you have this kid who's not going to college, and he has five other brothers and sisters and an immigrant family. And you know, my pop came from Scotland, like an immigrant family, and your kid's not going to go to college.

There's a lot of pressure like he will skip that, but he was massively supportive. And when I told him, Hey, I want to go and start this company and take it seriously and get an office and move to Austin, he packed up his stuff and said, all right, left New York with me and came down here.

And if that doesn't earn you a massive award as a parent, I don't know what does. And he's been with me every step of the way. And free legal is very useful. So we're, we're glad to have him. 

Chris Powers: Well, cheers to your dad, man. I could tell from you talking about him that he's a massive part of your life.

And I share that with you. My dad was my biggest fan, and I don't know where I'd be without that support. You glossed over this, but I have not had anybody in 270 episodes. It was a Teal fellow. Can you describe that experience? Was it positively impacting you, like a little more on that?

John Entwistle: Absolutely. For those who need to become more familiar, the Teal Fellowship is a program that Peter Teal puts on, and the idea is to support young people who aren't attending college. What's interesting, and that comes with grants and network and all that sort of fun stuff, but what's interesting is there are two dynamics.

Number one is how small the classes are. So it's about 20 people every year. And the, uh, the acceptance rate is very, very small. They don't publicly discuss the number of applicants, so I can't necessarily share, but it's a tiny group of young entrepreneurs. And the other exciting dynamic is its general purpose.

Many people think about it in the sense of how this accelerates your career. How does this move you forward? Building a company, especially young, is a lonely endeavor. You don't have many friends, and everyone you work with is far older than you, especially at that age.

And so this idea that 20 other kids worldwide are of your age and excited and passionate and wanna build brings them together.

You have this shared experience of starting a company at a young age and building it, and all that cool stuff is the most powerful dynamic.

And now, the program is about ten years old. So there are about 200 alums, including the founder of Ethereum, Dylan Field, from Figma. The list goes on and on. A study showed that the program would be one of the planet's most successful venture firms and studios if it were a venture studio.

So, so far, it's been, been successful. And the real benefit and the thing that I'm so appreciative of is that truly I would have very few friends. Suppose it wasn't for that program, and that's invaluable, especially as a business owner and an entrepreneur. In that case, again, it's such a lonely journey that the idea that he took the time to identify this group of kids who were genuinely alone and build some infrastructure around it was, is beautiful.

Chris Powers: So That's awesome. If we say that you left with friends, if I were to say from a business perspective, fill in the blank. Before going to the fellowship, John was X post-teal fellowship.

John Entwistle: Yeah, it's interesting because when I got into the Teal Fellowship, the Coder had just raised at Series A, and Founders Fund led our series Seed.

So Peter and Founders Fund didn't lead the seed; they participated in the seed. And so, my path into the fellowship was different. I got a text from one of the Founders Fund partners; you should check this out; let me connect you with the folks there.

Typically it's an application process where you apply, and then your application gets reviewed and goes from that perspective. So I was different than the company was far along; we're about 30 people and off to the races. But aside from the personal dynamic, its most significant impact was just the level of ambition.

Because you're with these people with goals that are just as high as yours, if not higher, you can also see folks who are a few years older than you and just at a completely different stage, right? You're stoked, you raised your Series A, and they're working with bankers on their I P O.

And so that dynamic is critical. Paul Graham has a quote about the importance of being with ambitious people and how that ambition will die if you're ambitious. Other ambitious people do not surround you. And so it's something that you have to identify in yourself and seek out.

Chris Powers: I love it. All right, so you've been starting companies since you were 13. Skip College. You fit the mold of a tech founder. So my question is, and then we will start getting into Wander. What are you good at? If you had to describe yourself now, what is your skill set? 

John Entwistle: It's tough because I hate talking about myself, especially in the context of things I'm good at.

And that's really because I constantly question everything. I constantly say, John, Andrew, you're not shit, so work harder, learn more, and be better. So you're putting me on the spot here because it's a, it's a framework I last thought about a while ago. I can say the things that I enjoy doing. I enjoy working with people.

People are everything in a company, and your customers, employees, and products you create. And so I love finding these highly ambitious, incredibly talented individuals that society sort of glosses over for some reason. And I'm good at finding those and creating a culture where they can thrive.

I also spend a lot of time on the idea of culture. Companies and people think that good employees are just good employees, and it's not the case. People often work best in specific environments, as a tree can thrive in the rainforest, but if you go and stick it in Arizona, it will die.

And so that's one of the reasons why I think a lot of people screw up when they're recruiting talent as they go and look at a bunch of different companies and say, Hey, this person seems talented, and I want to bring them over here. In reality, one of the big reasons they're so talented is that specific company culture and environment.

The people creating that culture are essential to me.

I love thinking about the future, a product in the ecosystem, and a strategy that comes together in this beautiful idea. Humans are one of the only creatures that can see the future.

We need to spend more time looking at it. And so that is; the one other thing that I genuinely love is strategizing and building products for the future. 

Chris Powers: I said the same thing not too long ago, and it's inherent, but like I am, nobody's harder on me than me and my whole life.

Every day I wake up feeling like I have something that I need to get better at or improve, which on one end, has led to many incredible things. It can also be exhausting Absolut. Absolutely. Because there is no finish line when you look at life that way. 

John Entwistle: Yeah. It is tough. I recently got into chess.

And the ceiling on chess is so high, and I'm, I'm pretty bad. I am not terrible, but I'm pretty bad. You go and look at me; I can't help it. I go and look at Magnus Carlson, the best in the world. And I'm like, okay. Like, what do I have to do to like to get there? And then you realize that it's hundreds of thousands of hours and constant study, and you have to choose, like, okay, do I want to be good at chess, or do I want actually to get some good work done today?

So yeah, it's, it is a, it is also a curse. See, it's the same for me with everything. You know, go out, play golf one round, and suddenly you become like, Hey, I want to be the best.

Chris Powers: So golf's good at completely breaking me down 24 7. Every time I've shot a great round, I'm like, man, I should have done this for a living.

And then, on the next day, I blow it. And I'm like, no, I'm, I'm right where I need to be.

John Entwistle: Yeah. It's something you have to get good at is choosing what you want to be good at. Because if you believe that you can be good at anything through hard work, you have to focus, pick that one thing, and then be willing to accept that you're not going to be great at everything else. And that, for people like us, can be painful.  

Chris Powers: All right. Well, you've chosen to focus on an excellent idea. You could have done anything in the world that you wanted to do, and you chose to start Wander. Let's move into that.

What is Wander, and what are you looking at in the future when you think of this business?

John Entwistle: Yeah, so taking us back to the company's origin story. So after I stepped down from Coder, I rented that cabin out in Colorado, and the place didn't look like the photos, the beds were uncomfortable, and the internet was terrible.

And that's a vacation rental experience that most consumers have had. And so, I was thinking about this idea of verticalization, the importance of building a platform. And when I had this experience, I mentally broke down the different pieces of the vacation rental industry.

Up top, you have your marketplaces, Airbnb, and V R B O. Underneath that, you have your property managers, which could be V Casa Evolve or a local company. And then underneath that, you have your asset manager, which is just your homeowners in the case of vacation rentals today. All these parties work together to deliver this experience to a consumer.

But the problem is that if three parties work together, it could work out better, especially in a logistically complex business. And so the idea for Wander was, or the thesis behind it, the, the way I like to frame it was what if you could vertically integrate those components?

What if you could build a booking platform, property management, and the underlying asset management have all three components talk to each other and create this radically better experience?

 How Apple owns the hardware and the software, or Tesla owns the hardware, the software, the distribution, the network, and all those different pieces?

And so that was a fantastic idea with Wander. So we started a company in May 2021 and got to work, you know, purchased our first few houses and built the booking platform and the property management software and all these different pieces to prove this idea of could it be done and would it be better?

And it turned out that it was something that customers were jazzed about, which makes sense. People want to go and book a perfect dope house, and the customer experience makes sense. But the business model also has to make sense. And so you have this dynamic: Can you create scalable, positive unit economics?

Can you efficiently assemble a vehicle for the underlying asset management? All these different pieces. And so it's a complex idea, especially for such an early-stage company. But you know, over the last two years, we haven't slept much, and it's finally starting to like real work, which is exciting.

Chris Powers: So if you had to say, of the three components, you said there's the marketplace, the property manager, the asset manager. Was there any that was worse of all? Or did they all kind of three suck together? 

John Entwistle: So, the booking platform. I was probably the easiest, which I'm sure all of the engineer and product team are like, John, Andrew, what are you saying?

But it's something that is; I understand particularly well what experience feels excellent from a digital perspective. How can you build this ecosystem? How can you build up the distribution and the brand around the product? Then the next piece is, I would say the property management was a little bit of a pain in the ass, and it was because there currently are no good models for scalable property management.

Most people have taken the approach of a headcount-heavy model, which doesn't work. You want most of your turnover or costs generally tied to turnover, and someone books a property, and then there are costs associated with that, rather than having a bunch of w2, which you pay regardless of what's happening.

And so we had to build out a lot of automation and systems and processes to have it so that, you know, we could automate 90% of property management. And in the process, we created a lot of enterprise value in a pretty excellent property management software, which we'll release at some point, which I'm excited about.

But that was, that was a lot of work, and we knew that going in and in the early days of the company, I was out there like plunging toilets and putting in fixtures and like understanding how that part of the business worked. And if you automate it and have these efficiencies where the platform and the property management software are talking to one another.

So it's saying, Hey, this guest would like to check in early. Like, did the cleaners submit their photos? Yes, yes, yes. Did the landscapers get triggered, et cetera—property inspector? And basically, what you have is an orchestration of a bunch of third-party contractors. And so that was the first part of the business we launched was the booking platform, property management, and homes.

We just launched with a few on the balance sheet. When it came time to set up the asset management, I decided that we were going to launch a Reit, which I'm sure that you've, you've looked up and are very familiar with. And it is a ridiculous amount of work. I mean, holy shit, like. Thousands of pages of documents and models.

And working with Ian Y's REIT team on their read opinion is so intense. Plus, obviously audited financials as well, and all these different pieces. And, of course, this is the first time anyone's done it for short-term rentals. So you have to go through this process of drawing parallels and understanding, you know, can this be done?

How will it be done? And so that was a ridiculous amount of work. And you are then adding, on top of that, building a product that allows for the onboarding of investors. It is even more work. You're looking at, you know, KYC and AMI; you're looking at accreditation verification through third-party integration. You're looking at integration with a third-party fund administrator regarding funds tracking, distributions, dividends, and all these different pieces.

It was a ridiculous amount of work. It's been like the last six months of craziness, and these bags under my eyes are permanent. So, yeah, exactly. That was the hardest I was putting together, and it still is difficult. We're going through this phase of launching V2 of the flow because many people want to invest.

But it's a step-by-step process because there are so many regulatory controls. And so we're optimizing that dynamic now. And gosh, it's, it's an incredible feeling, and it's fantastic. Like someone wants to go and invest, as you know, you're well aware, but it's like, okay, like how can we help them do so faster and easier and automate this process?

And the next phase of Wander is the one I'm most excited about integrating that ownership dynamic directly into the experience. So having it right through the Wander app, you can invest. Then it says, okay, would you like access to Christmas at Tahoe, for example, blurring those lines between customer and owner without this predatory timeshare dynamic?

Like it's an authentic financial product that earns dividends and will grow in appreciation, but it also comes with certain perks inside the ecosystem, and that's where things get, in my opinion, really trippy from a user experience. And so I'm excited to test that thesis on the.

Chris Powers: I look forward to diving into some of these on the REIT side. You're, you're raising equity. Are you able to capitalize on any of this with debt? Are there lenders lending on short-term rentals, or is it still the wild west? 

John Entwistle: We closed the first short-term rental facility if different from one of the first.

So we closed a hundred million facilities with credit Swiss/Apollo, now UBS. So thankfully, that facility is still up and running and with Apollo, and you know, great to be unscathed through that transaction. But yeah, that was also a lot of work, right? 

Putting together those facilities and the scrutiny you get with a large international bank is intense. So put together that facility, it sort of mirrors a lot of the dynamics of the single-family rental market, which is what allows for this business model to start to be institutionalized, is that institutional players can look at it and say, okay, what are the parallels to the single-family rental market?

And then how can we apply that to the short-term rental market? So we have that facility, and then eventually, we'll put some leverage inside of the rest; if I had to guess, it'd end up being from some insurance company or probably 50, 60% leverage. Pretty, pretty typical.

But yeah, it's certainly starting to see some institutional interests on the lending side. But now, the institutional investor side is starting to look at this category very seriously. That's also driven mainly by the current rate environment and how you need a product that can generate a much higher yield to deploy capital into the asset category of single-family homes.

And so short-term rentals are, are starting to be attractive from that perspective. But it's a hospitality business as well. And so you need to deploy with an excellent operator. You can't just go and buy 500, you know, cookie-cutter homes in Phoenix and expect them to perform well over the next five years.

That's probably not going to happen. 

Chris Powers: I don't know if you can share, but what is an excellent yield on a well-performing short-term rental?

John Entwistle: 15%, typically. 15, 20% if you're like performing well, but 15% where you end up. And then obviously you have all types of other costs and otherwise associated with that.

But about 15% is a good target. 

Chris Powers: I will get into the service, vendor, and management sides in a second. What makes a perfect home for Wander? Like, what do you all, what's your checklist of, like, this is an absolute no or a yes because I've been on the site, and these are incredible places, but they seem like they're super unique, and they're in these incredible places.

A lot of them are remote. So how are you finding these, and what makes an excellent property for Wander?

John Entwistle: Yeah, so you have two dynamics. The first is what consumers want, which is critical, especially when considering who is renting these properties. And then the other dynamic is your underwriting process. Is this property going to yield, and how confident are you in that data?

We look at it from those two perspectives, which creates a little bit of. Pulling in either direction, which is, is always good, and it's always good to have a little friction and as many guardrails as possible in your acquisition process. So the first thing we do is analyze these massive troves of existing short-term rental data.

So we've got these massive data dumps from all these different providers along with our data and analyze things like occupancy, seasonality, rental rates, existing comps, all that sort of fun stuff down to the actual property addresses. That creates a heat map of all the areas we want to focus on across the United States and globally.

We're not global yet, but we're very excited about it when we get there. And so, We start there, and then once we've identified key target markets, what makes sense? We also know where our users are, so we have the advantage of saying where folks are interested and where we can drive demand.

That's the other fundamental dynamic with Wander because we own our users; we're able to say, Hey, you may have never heard of St. George Island, Florida, but trust us, it's incredible. It would help if you went there. Versus existing marketplaces depend on: are people searching for Nashville?

So once we find a market that we're excited about, we have a few different alerting systems. Still, we scrape those for on-market and off-market opportunities, and then the acquisition team will go out and find a property that makes sense. Interestingly, that acquisition team sits inside finance, which is a critical decision from our perspective. Many companies have that team sit outside, but you want the finance team to decide what assets you're buying at the end of the day. So that's why we have them sit there. From there, the property has to pass through the guest experience.

Is this property something that we think people will love? Is the neighborhood safe? Is it an asset we want to own for the next 10, 20 years? And typically, we focus on areas that are supply constrained. Launching into a market with a lot of competition is typically problematic regarding overall yield compression over the X period.

And the other dynamic is we want to have truly unique places, and this idea that God isn't making any more oceanfront or beachfront is super important to us. From there, it goes through this intense underwriting process. And then through investment committee, obviously physical inspections, appraisals, all that sort of fun stuff.

Our appraisals have appraisals on the appraisals desk, you know, the desktop reviews. And so it's, it's, it's the same institutional process that exists for single-family rental. It's much more intense because we're the ones who are on the hook as the operator if the property doesn't perform.

And so we want to make sure that it's something that our customers love, and then the property gets onboarded and off to the races. And that process typically results in, to your point, really remarkable properties, which is, is fantastic to see.  

Chris Powers: Okay, let's talk about service because this is where it gets competitive.

Or that's what everybody's; I had somebody on who said we're in short-term rental 3.0 now. It's no longer like this; it keeps evolving closer to being a resort-like experience. But one thing you all have figured out is how you outfit these and create the experience and the amenities.

So let's start with how these homes are outfitted that would make them stand out against the competition. What are you doing to the homes that make them something that people want to be at and love? 

John Entwistle: Absolutely. So an excellent way for the listener to think about it is to draw parallels to their favorite hotel chains, four Seasons, Aman or Ritz-Carlton.

And each one has its flair and standardizations and this dynamic. That idea of quality, consistency, and brand in the short-term rental space has just existed. And that's one of the pieces that we're so excited about is the idea of creating a brand around the experience of the short-term rental so that you know, when you go to a Wander, there's going to be G Deli, chocolate on the bedside table and those different dynamics in terms of the guest experience.

We also focus on things that we know we can do that no operator can. And that comes from the dynamic of owning the hardware and the software. So when you book a wander and arrive at the property, you'll notice the music playing and the lights turning on. And that's because we know that you're about to check in.

And you can unlock the app right through your phone, turn off the lights, turn on the fire pit, all those excellent dynamics. You'll also notice a Tesla in the garage; you can go through that whole insurance process again right through the Wander app and then text the concierge to go and book a private chef or specific restaurant recommendations in the area.

You start to, as a user, really experience the benefits of the fact that Wander owns the booking platform and the experience because of those dynamics. It just isn't possible. You could print out a guest guide and have an iPad on the wall, but that idea of fluidity will not exist.

And then having that level of consistency across the entire portfolio makes it magical. Let's go to Wander Vale Valley this summer, and in the winter, let's go skiing in Tahoe. And knowing that it's going to be the same type of experience and we will know your preferences or otherwise is critical.

And then, of course, we have our partners from a, you know, furniture and linen perspective otherwise. So if you like the beds and the sheets at one Wander, you'll like them at all the wanders, and there's just a little bit of comfort. Knowing that everything's made for you 

Chris Powers: And to confirm, do you all own everything that you're, that you are renting out, or are you sometimes renting and then re-renting?

John Entwistle: No, there's no rental arbitrage. Wonder is the owner.

Chris Powers: Okay, so on the technology side, we're, everything can be booked through the app, and you guys control the experience. How do things work with vendors? So I think this is where a lot of the questions start coming in is, one, you have to have scale, but two, the cost of turnover, especially in remote areas where, you know, maybe vendors are more scarce, or they're more expensive, or they're traveling far.

What are some things you've done to automate, like how these places get serviced with the vendors in the area, that makes it profitable? 

John Entwistle: Yeah. So, the team you put together regarding your local contractors is hypercritical, the cleaning crews, landscapers, and that dynamic.

And what's interesting is that because Wander is the property owner, you don't have this dynamic that many property managers have where you're trying to coordinate certain costs or improvements with the homeowner. For example, let's say, I don't know, the driveway gets washed out. A, a property manager will have to go to the homeowner and say, Hey, the driveway got, you know, washed out.

Here's what it will cost to fix this, X, Y, z versus Wander if we're the same entity. And so we can assess, get bids, and then approve the project. And so that dynamic from an efficiency perspective is lovely. You know, where most property managers are effectively dealing with this.

This third party, we are, are just a connected entity. That's critical in terms of turnover costs. You're constantly optimizing it and always looking to improve your n o I for Wander; we're fortunate to operate in the higher end of the market.

And so we can pay cleaners and a little more than a lower-end short-term rental could get away with. And we're also, of course, making sure that that experience is consistent and high quality and hotel grade and, in every respect. And what we see from that is from guests that we're able to drive, uh, higher occupancy, higher ADR, which offsets it.

So we're now seeing the benefits of this Wander platform effectively and driving outperformance relative to the rest of the short-term market. 

Chris Powers: And do you have to be a member of Wander, or can I just, if I'm, can I book one right now without signing up?

John Entwistle: You can book one right now.

You should, you should. 

Chris Powers: I should. But what do I get as a member if I am a member? 

John Entwistle: So anyone who signs up is a Wander member, and by doing so, you get a bunch of perks that we don't market. So all of our vendors, we get these pretty hefty discounts, and we can't pass them all to them, but we can pass a discount light to our users.

For companies like Herman Miller, you can get 15% off all these brands we work with. It is probably one of my favorites; I don't know if you can see that Suitcase Silver one in the background, and it is a work of art and the most beautiful suitcase. And you get 25% off Sterling Pacific.

So it is like many cool perks just by downloading and being a part of the app. And, of course, the idea there is over time; as Wonder grows as a company, we want to be the central travel app for users. This idea of, I went, I booked flights, I'm a Wander member, so I was able to get into this, this airline club, and then, you know, have, you know, my rental car waiting for me, all these like cool things right through the Wander app.

So that's where the company will go over the next ten years if we want to turn into this massive travel behemoth. But today, it's one step at a time. 

Chris Powers: I want to talk about the future in a second, but real quick, during the experience, so I booked something; I will rent it for X a night.

Do as like a hotel. Do you all offer upsells while I'm there? Are there other things I can buy while I'm there? 

John Entwistle: So we don't offer upsells, which we should, but we don't. Everything's just included. The drinks, the snacks, all that sort of fun stuff is included. And the price, including the Tesla.

Tesla is just part of the price. You can use it or not, whatever you want to do. The tricky thing is that people want to be something other than nickel and dimed when you get to. You know, your destination. People have gotten used to it, but we get used to many bad things. And so I'd much rather our customers get used to good things, like instant customer support and resolution; everything is included when they go to a competitor. It's not; they're not used to it not being included, so there's no, no upsells; everything's included, and we modeled that all into our turnover costs and our overall pricing.

Chris Powers: Yeah. If you're a hotel owner listening to this and charging people extra for wifi, you do not get it. I don't care; I have to pay for it included in the price, raise the price of the hotel room, but do not make me log in after booking a $500 room night. And then you're going to charge me 29.99 for premium wifi.

On top of that, I cannot understand why they still do that. It is; it is low-hanging fruit. And that's my TED talk on hotels right there.

John Entwistle: I think you will; the TED talk will change the industry. 

Chris Powers: so you, you were, you were talking about ten years from now. What about the what about like? As you've been in this for two years, you probably had your mind evolve and change even from when you started in 2021 to everything you've learned 

What needs to go away in this industry? Like, what won't be here ten years from now? What is, is dying a slow death, and they don't know it right now? 

John Entwistle: So when I was a kid in our town, we had five or six restaurants, four of which were terrible, lousy service, bad food, just terrible. But you would only know if you would call four 11 and make a reservation.

And this idea of online reviews and curation just needed to be added. Right? But I was young over the last 10 or 20 years when my pup dialed four 11, but I still remember it. And that dynamic is coming to travel, and it's coming in a big way. This idea that people are falling victim to underwhelming properties, underwhelming hotels, and underwhelming travel like airlines or otherwise is, is very quickly disappearing as consumers have visualization into quality.

What will happen next is this idea that curation will become the next big thing. I've always talked about this idea of I want a travel app where I can say, Hey, I need to go from Austin to New York and click one button and book my trip and not have to worry about picking seats or what hotel, because the app knows, hey, a middle seat at the back of the airplane next to the bathroom is just not good.

Like, that's not a good seat, and you shouldn't sit it. And so, like we know, we also know that a 5:00 AM flight is terrible, so let's put you on a 10:00 AM one, and oh, if there isn't a 10:00 AM one, then you know, does it make sense for you to fly the day prior and stay the night and you know, do your meeting in the morning.

So there are all these different dynamics when it comes to travel, and a lot of that was solved with this idea of the travel agent, right? That's where the curation and ensuring everything together came from. And so, over the next ten years, we'll see the elimination of low-quality operators just, period.

They're not going to be able to survive. Obviously and otherwise, there will likely be those who attempt to catfish and trick travelers, but they will suffer dramatically. And then there will be this whole wave of curation regarding how users travel.

And I know it can sound buzzwordy, but AI will play a massive part. I was taking a user prompt and turning that into a trip while understanding the user's preferences from an accommodation perspective. So that's what it will look like in 10 years.

Travel will feel effortless, and it will be one click, and the whole thing will be a surprise. And the app guides you on your way. 

Chris Powers: If we had done this podcast in 2021, I would guess this is me just guessing, and then I'm right, maybe I'm wrong. My question is, are most of the people booking your stuff, are they on vacation, or are they on a long-term, two-month sabbatical because they can work from home?

My, so where are, is, in 2021, it was a lot of people, you know, bumping around the country, working from everywhere. And maybe that's shifted now that we're in 2023, and things are back to normal. What is your average stay? Who, who is the customer profile? Like, how are they using the properties?

John Entwistle: Yeah, our average stay is 3.7 days. And the way people use it is all over the place, which to your point, is what you would start to expect. Right? Vacation. Nowadays means something very different than it did, like in the 1950s, right? You would say to your boss, Hey, I'm going to, I'm going to take three, four days off.

And that's it. Because if you're not at the office, you're not working. There's no phone or anything; you're just gone. Versus today, there is no such thing as being completely disconnected. And so we see many people who go on these trips and still have to answer an email or hop on a Zoom or otherwise; the other 80% of the time, they're relaxing.

Or, on the flip side of that, it could be a business owner who's just had a ridiculously stressful quarter and needs to work on their goals and wants to do so while looking at the ocean, which of course, there's nothing wrong with that either. So our use cases are all over the place from families and couples.

Business owners to teams, and we aim to create an environment that works for those users. So that's why we ensure that our internet is good because whether you're watching Netflix or doing a Zoom, it's super important and accessible. So, then, there's just making sure that people can enjoy themselves again, whether relaxing or working.

And so the mix is, is all over the place. But it's just representative reality, which, you know, is messy in terms of how people live and work and wander is, is just there to let people enjoy themselves and whatever, whatever way that looks like. 

Chris Powers: Do you think there's room in your market for what you're doing for these big 16-bedroom houses that are almost like little hotels?

Or will you stay more boutique kind of family-style houses that are more for smaller groups? 

John Entwistle: The larger houses can be challenging; this is where you return to the flip side of the house, and not only needs to satisfy what guests want but also what finance wants. And those 16-bedroom houses are typically expensive if they're not in the middle of nowhere.

And the market for 16-person groups. If you are a 16-person group, you're like; this is a vast market. Like why can't I like find a place? But on the operator side, it's much smaller, and you also have to look at it from a competitive point of view. So why would a 16-person group rent this, you know, 15 million houses when thousands of hotels can accommodate and have restaurants and all these different dynamics, which are better suited?

You know, maybe at some point, and to be clear, there are no plans for this, but maybe when wanders a few billion-dollar companies, you know, knock on wood, if I can find some like it would be cool to go and buy a hotel, right? There are a lot of cool spaces and urban environments, and you could imagine a wander hotel and, wow.

Like how cool would that be? But our largest one is eight bedrooms for the larger houses, which is already pretty massive. So going beyond that isn't planned, but never say never. We'd buy a few houses next to each other so they could be rented independently or together.

But again, it gets more complicated because you get into concentration and otherwise, which can affect portfolio performance. So there's a whole bunch of dynamics at play regarding composition. 

Chris Powers: Do you ever worry about zoning or like s t r regulations by these local municipalities?

That's one of the challenging things. In any real estate is like they don't all have the same rules, and it's different everywhere. And you hear some cities saying, you know, no more Airbnbs. How do you get around that or think about that? 

John Entwistle: Yeah, so that's one of the reasons why we focus on more like remote and vacation destinations, because if a local, if a, if a local economy is dependent on tourism, then typically they're pretty friendly to anything that drives tourism.

And so that's why we focus on those sorts of areas. The other thing is that, like any regulator, you need to work with them because their goal is particular. In many circumstances, they're trying to avoid housing shortages or otherwise, which in wanders case isn't applicable because we're buying these multi-million dollar vacation homes. So it's not like your average family isn't going to like be able to go and live there.

It's just different from where we play. So trying to solve for landlords, taking long-term leases and saying, Hey, let's make this a short-term rental instead, which can be bad for the local economy. And so navigating that is interesting. Suppose I had to guess in the future. In that case, there will be regulations passed in many of these places that carve out this idea of almost an independent hotel style where, hey, if the property is over 2 million. It's a professional operator, then falls into a different bucket again.

You know, multi-family or otherwise. So, we play by the rules and work with the regulators, and all of our properties are permitted and happy, and we pay local taxes and bring many great folks into the economy. And that's probably one of the things that I'm happiest about is that we make a real positive impact, just like the village of people who are supported by what we're doing. You know, sending, sending our guests to these incredible local restaurants and ice cream parlors and, you know, being able to support the local plumber and landscaper and cleaning crews is all really important to us. And then again, we're, we're also the owner.

And so, like we, we deeply care about these communities because we are vested in ensuring their flourishing. And we have a great relationship with all of our neighbors. And, like, it brings a soul back to it when, again, you're the actual underlying property owner.

And that's important. And yeah, I love, I love the idea that we have these meaningful relationships with these, these truly incredible communities and American towns. And we were talking about it before the podcast started. Like, it just makes me love this country, and I was meeting all these incredible people in all these local small towns.

It's like you really; you appreciate how unique and diverse this place we live in. 

Chris Powers: Yeah. We have suitable in America. Absolutely. I wouldn't; I wouldn't change it.

 You mentioned concentration risks, like, uh, there, could there be too many wanders in a, in an area or is it, is it, do you, I'm sure you guys have data on how many you could have in any one location, or have you figured out what that ceiling is?

John Entwistle: Like any portfolio, an excellent way to think about it is around diversification. And so what you want to do is to have diversity in terms of size of places and locations so that God forbid there's a fire in a particular place, that it's not taking out 20% of the portfolio.

Right? And so, from our perspective, we want to diversify in terms of size, location, and amenity sets as well, beachfront versus ski, and ski out those different dynamics, winter versus summer to even out occupancy. And that's what allows for the product to be investible and lendable.

So, for example, if all of our homes were just in Joshua Tree, there's no way that we couldn't secure the facility that we did because it's just way too high risk from a lending perspective. Even from an investing perspective with the idea that you're buying this index of the highest-performing short-term rentals across the United States, diversification is essential, even if you're a solo operator.

And you go and buy a house, and as the pipes freeze, it's flooded like that year's income is screwed, right? You have to do many repairs and all that sort of stuff. If you can invest in a diversified portfolio, even if that happens to one of the homes, you know, you're not taking the same hit or risk.

So diversification is super important, and I'm like a Ray Dalio nerd regarding this idea of the holy grail of diversification. And if we offer a singular financial product in the vacation rental space, I want to ensure that it is as diversified as it makes sense.

Chris Powers: You're going to build this, you know, again, we'll knock on wood, but I, I'm, I think, I think you'll get there, but this multi-billion dollar Reit, you're going to have all these properties, and then you're going to have this wonderful Copco that's managing them in an elegant way that's doing it better than, how do I value a business like yours?

Is it, is it two separate valuations? If you were to sell one day, are you selling it all? And then my, and then I'll get into, I don't, I, I try not to ask too many questions in one question, but you said it's good that we own everything, but you're also building world-class property management, and so maybe you might end up doing some third party management for others.

I'll return to the first question. Are you guys a REIT with value and an opcode that has value in all the fees you generate by managing, or what do I think about you? 

John Entwistle: Yeah, so that's a question we get a lot is like, what, what even is this business? Because it's, it's really; three businesses rolled into one.

And I always think back to this incredible interview with Jeff Bezos where he was asked, are you an internet company because you own a bunch of warehouses, right? And his response, I thought, was just so beautiful. He said, I don't care if we're an internet company, and the only thing I care about is that we're providing the best experience to our customers.

Which was an excellent idea; now, he knew it was an internet company, and he just, like, that was an excellent reply. When you think about Wander, you want to break down the three components. So you have the booking platform and that, that whole dynamic.

And so that would draw comparables, let's say, to Airbnb, V R B O, et cetera. Then you have the property management company, which draws your parallels to Vacasa or otherwise. And then you have the asset manager, which you can draw as many parallels as you want to, whichever player, Starwood, Blackstone, whatever that looks like.

And so when you think about how to value this business, you have a few choices. First, you can value each piece independently and then combine them all. Hey, each piece harmoniously interacts with and compounds the effects of the other pieces. 

Chris Powers: So, part of the flywheel.

John Entwistle: Exactly, so it's worth slightly more than the sum of its parts. Whatever that dynamic looks like for us. And the way that I think about it is it's all about the business model. And so you want to create a business model where you aren't necessarily set up for failure in a case where, Let's say like, an event like Covid happens or otherwise.

And so, from our perspective, we're taking advantage of the business the way we're it. We're able to provide a much better user experience, and we're able to create this reality.

And at the end of the day, we'll see how the public market values a business like that. I mean, I have, I couldn't tell you right, I couldn't tell you if they're, it's going to be a, you know, ten-time sales or, you know, well, like, I have no idea. But we know that the unit economics work and that all those cash flows are ours because we own all three pieces.

And when you have a high cash flowing business that is effectively, entirely asset-light with a great consumer brand, you know, it's just. You're your customer, which from the property management perspective, is a pretty important idea that you aren't going out and trying to recruit op-like hosts or otherwise; we'll see. Still, you know, you can develop these from all angles.

But I look at it by breaking down each component, understanding how each interacts with itself, and to your point, the idea of this flywheel it creates. And then basically you come to some, you know, multiple above, like the sum of its parts is how it's been broken down.

Chris Powers: You gave the tenure vision, but your coworker, Kyle, we have to take one of his questions from Twitter and, and his question was basically if, if we've been successful, this is where we'll be in five years, how would we answer that?

John Entwistle: Yeah, you know, it's such an interesting question because you have different levels of success.

So I'll break it down to the ones like the baseline requirement. It's essential to me that Wander is a profitable and durable business, as trendy as it is to build like a high-flying, high-growth startup. That differs from how to scale a business, especially if you genuinely believe it can be around for 20, 30, or hundred years.

Like you want to build something that's genuinely durable and. Profitability should come sooner than five years out. But it is critical. That's what I would first put first and foremost as what I'm driving towards from a success perspective is reaching profitability and ensuring that we continue to deliver something great for our consumers and customers through that process.

And if we can do both things, we create a lot of value for shareholders, which is also deeply important to me; it is always making sure that our customers are happy and our shareholders are happy, and the team is happy. And even if I kill myself in that process, it's okay at the end of the day.

Chris Powers: From there. You got more yourself, man. We need you to, your wife one day, kids, all this great stuff coming. So let's make it there. You're going to be a great dad because you've had a great dad. 

John Entwistle: I appreciate that. Yeah, it's one of my goals in life. Beyond that, what you're looking at is tens of thousands of properties, you know, across the US and internationally.

Taking the company on a global level is essential to me because a guy here is truly magnificent in every respect, and creating an excuse for people to explore it is good for the world. And so going global is essential to me.

From there, you will start to see the integration of many things I mentioned. At that point, things like flights and hotels will also likely have added curated properties, so you'll have a true marketplace dynamic starting to take place. So there's a whole bunch of exciting things that will start.

At that point, the REIT is also. Likely publicly registered. It may not be publicly listed, but it'll be a publicly registered entity. And so, it'll be this incredible, just this incredible financial product. And who knows, we'll have a hotel at that point, too, to make us all smile.

Chris Powers: So I love it. So if you're a travel agent right now, you think this is just an industry that might be dying. This slow death like AI, automation, and tech will make it to where people can press a button and have trips, whether through Wander or whomever, but it's tough to imagine travel agents ten years from now.

John Entwistle: Yeah. So you have value if you were a travel agent listening to this. You have value in understanding. What people want in different locations. You have this idea of creating a personal relationship with the traveler, which an AI could never do. I recommend thinking about it.

How does the future of the business look, and how can I leverage these different technologies and this idea of curation and support to create an incredible user experience? And so rather than looking at it through the lens of it, it will be like doom and destruction. Otherwise, I would look at it through the lens of the landscape changing in the same way that, you know, couriers bringing letters was changing with the dawn of the internet, and you were at the forefront of this industry.

And so you have a choice. You can lean in and adapt and start to learn and play with these tools and understand how they work and, you know, maybe even join some of these companies or create your own, or of course you can, you know, look at the opposite way and, and do nothing. And that's a choice.

And so I'm more optimistic and very pro, like just the human race. Like I am, I don't want to see the human race erased by AI, which does not make me happy. And so my advice is to understand that this change is happening. And so leaning into, you know, how you can, how you can build around it and support it, and leverage this idea of human connection in a world where there's just less and less every day.

So that'd be what I would say from a travel agent's perspective. 

Chris Powers: All right. I'm going to; I'm going to give you the, the one zinger, and then we'll bring it home. And I know they're all your favorites, so you can't use that answer. Where is your favorite Wander to stay? Hmm. 

John Entwistle: Well, since you took away answer number one.

Wander Bandon Beach. Okay. And that's in Bandon, Oregon. So Southern Oregon. Anyone who's a golfer will know it for Dunes Baby. Of course. Bandon Dunes. It is one of the most remarkable places in America. It is the town along the ocean, the beaches, the golf course, and the hiking trails. It, it's like God spent a little extra time on it.

It is just so incredible. And I recently, I've just gotten into golf. Why can't I? I've just gotten into it. I've been playing golf for a while but still wrong. So I, I like to keep saying that. I'm; I'm just getting into it as an excuse. And I recently got a new set of clubs that I'm super jazzed on. I got this wood putter from Ember Ember Putters, which I highly recommend.

And I am so excited because I know that I'm going to book; I'm probably going to book some bad dates because I don't want to take up occupancy for other people. But I will book later this year, and I'm sure it'll be raining the time of year I go. But I'll be there with my wood putter looking at the ocean like drenched.

And I'll be just, it'll be my happy place, and I'll just be so stoked. And I'll be there with my pop; it'll be a great time. So abandon. And for those who are wondering, that was our second property. And I remember standing in that home and saying, If we can duplicate this feeling, we can build a portfolio like this. We can deliver an experience like this to thousands and thousands of people and then build a significant company.

So if anyone ever goes to that, that property, you'll be able to stand where I stood, and you'll be able to see what I saw.

Chris Powers: when you book, tell them The Fort Podcast for $0 off of your stay

John Entwistle: for free wifi.

Chris Powers: John, this was awesome, man. I'm pumped for what you're building. I'm rooting for you, and I will do my best to try and stay in a wander sometime soon. 

John Entwistle: I look forward to that. Thank you so much for having me. It's been a great conversation. 

Chris Powers: I hope you've enjoyed this episode of the Fort Podcast.

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