Milwaukee-based short-term rental company Frontdesk is among the fastest growing companies in the country. Last month, it ranked 136th on the 2021 Inc. 5000 list of America’s fastest growing companies. That news came shortly after the company closed a $7 million round of funding, bringing its total raised capital to $18 million. Frontdesk leases apartments in upscale neighborhoods and then sublets them to guests – with a focus on short-term business and personal travelers – and provides onsite management of its properties. Chief executive officer and co-founder Kyle Weatherly recently spoke with BizTimes associate editor Lauren Anderson about how the company has managed to grow despite industry headwinds.
What drives your entry into a new city?
“Pre-COVID, we entered a new city largely based off of the lack of sophisticated competition. There are a number of competitors in our space that seem to be fighting over the same cities – Nashville, Austin, New Orleans, etc., these gateway markets or destination markets. We saw an opportunity where there wasn’t well-funded, sophisticated competition in cities like Indianapolis, Minneapolis, Jacksonville, Tampa, San Antonio, Dallas, etc. And, for us, we wanted to go where the competition was the least developed.
“In a post-COVID world, half of our competition has gone out of business, so one of the real exciting things for us is not only did we survive it, to some extent we thrived during COVID. … So, whereas half the cities I just mentioned, those weren’t interesting to us a year ago or a year and a half ago, now all the sudden, they’re very interesting to us because consumer demand is, as best we can tell, back to where it was pre-COVID … yet half our competition is now gone.”
How did you do it? How did you thrive during COVID?
“In order of importance: our investors, our coworkers and luck. Our investors continued to stay with us. If they had decided to abandon ship during COVID, we would be out of business. Yet, they stayed with us. ”
What gave your investors confidence?
“We were within 2% of our quarterly revenue predictions every quarter before COVID hit, and I think being as accurate as possible and as honest as possible … that built a lot of trust that, when we hit a crisis, (investors) believed what we were saying, that we were being forthright with both the risks and the opportunities. The thesis (we had) is sort of how it played out, which is: we think we can survive (COVID) and, if we can, we think the market demand will whipsaw back and that any number of our competitors will be out business.”
What are your projections for next year?
“Our internal projections, which thankfully we’ve hit for the first eight months of the year, show us turning a profit in April of next year and at that point never turning back from profitably while continuing to grow at a pretty breakneck speed.”
What about the delta variant? Does that present any concerns?
“Honestly, the concerns come from the human tragedy of it. Obviously, you see the numbers …
“I would say, as opposed to pre-vaccine COVID, (which) had a massive effect on consumer demand, what we’re seeing right now with delta is it’s either having no effect or a minimal effect. For instance, we performed 10% above our model in June, and we performed right in line with model in July and August and it looks like we will again in September as well.”