#78 Sam Shank

Sam Shank (@SamShank) and James Altucher talk about startups, pivots, and what might happen if someone offered you $400 million for your business and Sam gives the best answer to that question I’ve ever heard. Sam is on the podcast to talk about Hotel Tonight, one of James’s favorite apps. HotelTonight is “Hand-selected hotels at great prices on your mobile device.” Sam wasn’t always in technology though.

He tells James that his secret origin story was in the film industry, where he worked with Wes Craven on the first Scream movie. If you’re under 25, you may not appreciate the Scream series in the canon of horror movies, but it was the franchise that bridged the Halloween series to the Saw style movies. One story from the set that Sam shares is when something happened with some footage that had to be reshot. Filming is resource intensive between the time and financial costs and a huge pain in the ass. It would have been easy for Craven to loose his head but he followed the same professional kindness that Carol Leifer talked about with James, saying, “don’t be a jerk.”

Sam could see that his upside in film was limited, only a handful of directors get to work on movies each year and there were people years ahead of Sam still doing the work he was. Sam switched to technology, working at Excite and CNET for about ten years. From the interview with James he sounded very focused when he decided to work there, saying, that he had to meet people and get experience before he could start his own company.

James asks about how he knew he was ready to start a company and Sam says, “You’re ready when it just feels uncomfortable enough that you can bear starting a company.” In a sense, Sam was ready to start failing in little ways to succeed in big ones. In her interview, Carol Leifer said, “you should be failing in your career because everybody fails and if you’re not failing then you’re not doing something right. Because it’s through these failures you really get better.” We need to see failures as opportunities for improvement and expect them to arise on our path. In their book about any kind of Switch, the Heath brothers write that we should expect failure; “The answer may sound strange: You need to create the expectation of failure—not the failure of the mission itself, but failure en route.”  Ryan Holiday might take the idea of failure one more step to say that failure isn’t bad, it’s good. Failure is an obstacles and obstacles show you the way. This is exactly what happened with Sam.

He launched Travel Post with “not a lot of downside.” Sam was applying what Nassim Taleb calls asymmetrical thinking. If nothing happened with TravelPost, Sam could go work for another technology company with almost no change in knowledge or income status. If, on the other hand, TravelPost succeeded wildly, then Sam had the upside of a hot startup. TravelPost was eventually sold to SideStep and after working there for 15 months, Sam started Dealbase.

These iterations – through different companies – led Sam to his current venture, HotelTonight. At this point in the interview I was stunned with what came next. I expected that someone who had a pair of startups in his toolbox, a Kellogg MBA, and two partners would have an efficient and scalable system right from the start. Nope.

Instead, Hotel Tonight started with 15 hotels in 3 cities. Sam and his co-founders called each hotel in the afternoon to see how many vacancies and at what price point the rooms could be listed at. There were no boardroom meetings with a Hilton, no elaborate databases. There were three people with a computer and a telephone.

It took two weeks of listing rooms before anyone booked a room and Sam says this lag time was to be expected. People wanted social proof or to see online reviews but the nature of Sam’s business meant it took time. You hear about a video online, you can watch the video. You hear about a hotel, that’s another matter. This timing, I publish something online I want immediate results is an internet fallacy. Even Ryan Holiday, marketing guru, needs time. His email list (which is wonderful) took years to build up. He writes, “Be ok mailing to very few people for a long time. I was. I knew that I had a long-term strategy. I also knew that recommending some life-changing books even to a small number of people was a beneficial activity in itself. Look at my chart–the size is basically unchanged for over a year.”

Sam tells James that the key to any consumer product is solving this equation:

“It boils down to saving time and saving money. I think all consumer products need to deliver on one, ideally both.”

The end of the interview has James and Sam spitballing ideas about other “tonight” services for food, cars, or other hospitality stuff. I do an idea list each day and it’s nice to hear James brainstorming because some of his ideas are as silly as mine.

At the end of the interview is the real gem of the conversation. James asks Sam if he would sell the company for $400 million dollars and Sam says, probably not.

We’ve got big goals for Hotel Tonight. It’s a wonderful platform, where we’ve got a great team, we’ve got lots of resources, wonderful investors. We’ve got great co-founders and we’ve got a really strong vision for where we want to take it. The other way I look at it, is if this all ended right now, what would I want to do personally? What I’d want to do personally is get back to where I am right now.

 

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