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- [00:01]
A
This is Alex Zardanovsky. When he was 20 years old, he started a website helping companies sell more stuff by sharing a piece of the sale with anyone who referred customers. In other words, it was an affiliate business. And within five years, that business was doing 200 million in sales and gushing with profits. So Alex kept on building. He built an e commerce company selling pet food, a blogging business that pulled in millions. And now he's doing Prima. This is an app that lets people make restaurant reservations, but Alex is doing it in a whole new way. Alex is here today to talk business growth, hacking, and why he loves fixing messy markets. That's coming up in just a sec. Welcome to the podcast. My name is John Davids, but you can call me jd. I'm the CEO of Influicity and on this show I love to share stories of some of my favorite businesses and all the people behind them. If that's your thing, make sure to smash that subscribe button. Wherever you're listening, leave me a review and share this episode with a friend. That's how we grow. Get my best stuff to your inbox@johndavids.com and now let's get to the show you're listening to Making it with John Davids. So, Alex, you and I were talking a couple weeks ago and I was listening to your story and it's so good. We'll get into all of it today, but just tell me what you're doing right now.
- [01:28]
B
So right now we are paving the highway between hotels and restaurants. There's a lot of guests that stay at high end hotels that have a really hard time booking restaurant reservations in big cities like Miami, New York, London, LA, Ibiza, where I'm based. And we're creating an easy way for them to book those reservations directly from their hotel into the restaurants without all of the friction that currently exists within the reservation space.
- [02:00]
A
So it's a marketplace where you've got restaurants on one side and hotel visitors on the other. And then how does it actually work? How does the hotel find the restaurant?
- [02:11]
B
So we've curated Miami is our test market. There's over 70 restaurants that are live in Miami. And we've created a booking interface that tracks all of those transactions. As a hotel guest staying in a nice hotel. When you check in, you'll be given a card with a QR code that you can scan. And in your hotel room there will be a beautiful custom designed QR stand in the hotel room that you can scan to open up the booking interface. Our system will then know which hotel that guest is coming from and present them the curated list of restaurants those restaurants pay to be on our platform. And for every single one of the covers and every single one of the bookings, they pay per cover fee, which then our system tracks and reports to the hotel partner via their dashboard. So they can see exactly which touchpoint created that booking, who the guest was, and then from the restaurant side, they can now tell where these guests are coming from. So they can offer that high end hotel guest that they're seeking to get in that restaurant a slightly different experience. Could be a welcome drink or it could be some higher level of service or a better table.
- [03:23]
A
So it sounds to me like when you describe it like that you've got on one side, hotel room guests are obviously, they don't know the city. So if I'm traveling to Rome, I don't know the best restaurants in Rome or Miami or Ibiza or wherever it is, I go to the concierge and I might say, are there any restaurants you recommend here? But then the concierge is going to try to scramble to get me a reservation. If it's last minute, they can't get me a reservation. So I guess what I'm wondering is what's the actual like, let's say I'm a guest, what do I, I walk into a hotel, what do I do?
- [03:54]
B
You can use all those channels. So you can go to the concierge and you can ask, where should I go? And the job of a good concierge is to make the recommendation. The booking part of it is the actual difficult part. Usually when you ask the concierge to book that reservation, they then have to figure out who to call, who to email. They'll send an email, maybe they'll hear back, maybe they won't. Now, as the guest, you can either go to the concierge desk, use the concierge to get that same reservation and get the yes that they're looking for immediately while they're standing in front of the concierge or, or with that welcome card, they can scan. They open up our booking interface and it's a curated list of, like I said, in Miami, there's over 70 venues that they can choose from. Two clicks and they have a reservation book, they have a confirmation sent to their phone. They can modify it, they can cancel it, they can do whatever they need to do. The difference between our guests and the guests that a restaurant traditionally gets is we call them high intent guests. If you're checked into a hotel and you're looking to book a dinner reservation. You're hungry, you want to go for dinner. You're not booking 10 different restaurants so that you can maybe later choose which one to go to.67% of the bookings that are made on Prima today are for today and tomorrow. And that's why our no show rate is under 2%, whereas other platforms have a much higher no show rate. Because that guest is in town, they're ready to go to dinner.
- [05:16]
A
It's kind of like, I mean, your open table, but for rich dudes. And also people that are traveling and don't have, don't plan in advance. Because it kind of reminds me when you said that last thing about people are booking for tonight and tomorrow. Kind of reminds me of Hotel Tonight, which was an app that I used all the time. Like, I don't use it all the time as well. I used to travel to New York like, I don't know, three, four times a month. And when I'd go there, I would never book a hotel in advance. I would literally land book my hotel for that night a few hours prior to. And I actually did that because I thought maybe I'll get a better deal. Maybe I just forgot to do it. Is that the purpose of Prima or are you trying to solve some other problem?
- [05:55]
B
It's actually the inverse of that. So, you know, from the, from the restaurant space, because of the way that the current reservation system is set up, especially for the high end restaurants, most people, many people do actually plan in advance. So they'll book restaurant reservations two weeks, three weeks a month in advance. And plans change. And these people end up not going to the restaurant, not because they didn't want to, just because the trip never, never materialized, or the mother was sick, or the child was sick, or they couldn't go to the restaurant. And what the restaurants typically do is they end up overbooking. So some of the venues that we work with, they allow up to 30% overbooking because they know around 25% of those reservations are going to be canceled. And that creates a tremendous amount of friction. And you look at some of the top restaurants in Miami, they have a low rating on Google. And if you look at the reviews, it's never about the food. It's about the fact that they were made to wait at the bar for an hour because the restaurant was full. It's because the reservation system itself is just not functioning well because you're forcing.
- [06:56]
A
A review because you're too popular.
- [06:59]
B
But that's exactly, you know, this is happening and it's negatively affecting their business. As an operator, you're very concerned about those, those types of reviews, especially when every, you're doing everything you and there's no way to mitigate it because you know a certain percentage of people are just not going to show up. So we on, on the Prima interface, the way that it's intended to be and where this is something that we're massaging right now for those guests, we actually don't want to allow people to book 30 days in advance. Our system works for today, tomorrow, or sometime over the next seven days. There's no need for you to book a reservation 30 days in advance. You can book one for tomorrow and that way those restaurants don't have to have such a high no show rate, don't have to have a high cancel. They don't have to have all of this friction that's currently inherent within the current reservation system.
- [07:51]
A
This episode is brought to you by my social media selling challenge, available now@johndavids.com challenge. Do you ever feel like you're just wasting time and money posting content to social media that goes nowhere? No likes, no comments, and much more importantly, no sales? Well, you can change all that right now. My social media selling challenge gives you the training and tools to turn your posts into a predictable sales system. And you can do it all in just 20 minutes a day. Spots are limited, so join now visit johndavids.comchallenge okay, so I get all that and I see how the diner is happy because they're coming in. They get to go to the restaurant they want on short notice. The restaurant's happy because they get to fill their tables. Concierge happy because they get to give the guests what they want. I get it all. And if you were just some random entrepreneur off the street, I'd say, okay, awesome, cool idea. But ideas are a dime a dozen. But you're somebody who's actually built enormous businesses in the past and sold companies. So tell me how this thing is actually going today.
- [08:58]
B
Well, it's going well because it's not a reservation system. My original business that I built and with my co founder and sold was an affiliate network. And the idea for this company came about in 2008 when I saw just how disconnected the hospitality space was and how difficult it was to manage for all of the constituents of the space. So I actually wrote the spec for this business in 2008. So it's been 17 years.
- [09:32]
A
You wrote it in 2008 and you launched it in like 2024. And 2024.
- [09:37]
B
In 2024, 2025. So it took 17 years to.
- [09:41]
A
No procrastination there. You were busy.
- [09:43]
B
No procrastination at all? No, it was. And you know, when resi launched in 2014 and they were selling restaurant reservations. So within Prima, there's two types of bookings there. There is a booking, which is no fee, where the guest doesn't pay anything for the reservation. And then there is what we call a prime booking. And that's a reservation for a restaurant that is traditionally fully sold out. So for example, Mila In Miami, the second highest grossing restaurant in North America, they generate $49 million in revenue. You can't book a reservation for this place, but if you want to, you can get access to that restaurant through Prima. We charge $200 for a 2 top plus $50 for each additional cover over 2. So a 4 top is $300. We take 60% of that fee and we pay it to the restaurant before the management time involved in facilitating that reservation. And we share the rest between us and the hotel partner or generated that booking. So when resy launched in 2014 and they were selling reservations, people came to me in 2014 and said, Alex, this is your business that you've been talking about since 2008. And so the thing that I realized in building companies and selling companies is the marketing side of things. The customer acquisition that people used to come to us and spend millions of dollars a month with us for, that's the most difficult part of the business. And what I looked for in launching this business was I looked for a business that is not reliant on buying eyeballs, on buying memberships and consumers and running ads and buying meta traffic, which every single business does for us. This is a B2B product. There are consumers, there are pockets of consumers at these hotels in high end residential buildings on one side and on the other side there's a service provider that wants to sell something to those people. Right now there is no highway that connects those two entities. And they're kind of. Restaurants are hiring concierge liaisons that they send out to hotels to go give out gifts to concierges to try to get bookings in a very non technological way. It's just kind of handshake deals. And this industry shouldn't function this way. There's so much technology out there today to make things easier for all of the constituents. And that's what we're doing. We're creating those connection points.
- [12:18]
A
Yeah, the hospitality hotel world you were explaining to Me is all built on handshakes. This guy knows that guy. I met the concierge here, met the manager at this restaurant three weeks ago. So you should go there. And there's no really fixed, well, operating marketplace. So there's a couple things you said that I actually want to dig into. I definitely want to dig into the business model a little bit more. How you're charging for bookings, how you're making money, how everybody's making money. The other thing you just said though, that I think is so important is channeling demand. Or you said, you know, take the demand that already exists and just move it in a different direction. We always talk a lot about creating demand and the idea of if you have a new product, you have to create awareness of your product, but then you also might have to create awareness of the pain in the consumer because they don't even realize they have the pain necessarily until you point it out to them. And, and then once they realize they have the pain, you tell them about your product. What you're talking about here is actually a much easier path, which I love. It's that the pain already exists. People already know that they want to book a restaurant reservation. The concierge already knows that it's a pain in the butt for them to handle these and they'd love a better way. And all you're doing is channeling existing demand into a better experience for everybody. So it almost sounds to me like your first story, which I want you to share now, which is how you got into the affiliate world in the first place, which was similar, which was this demand already existed, it was just all messy and you came in and cleaned up a market. Is that how you got started?
- [13:44]
B
Correct. Yeah. So I, you know, I started in 1999. Someone showed me a website that had links to other websites and you could make money by linking to other websites. And that was the very beginning of affiliate marketing. There was Commission Junction, there was Link Share, there was Be Free. There was all kinds of different marketplaces. And I created this website called bigbigsavings.com that had links to Staples and to, you know, Amazon when it launched their, their affiliate program. And people would come to bigbigsavings.com to find about deals that were available. They would click on a link, they would buy something. Next thing you know, I'm a 20 something year old kid going into RBC with a stack of checks like this from every single merchant that paid me with their, you know, from, from them based on whatever we generated in link share, I would go to every week with 80 to 90 different checks that I would have to deposit. I had no idea who was paying me when they were paying me, if they paid me at all. It was just, it was, it was a pain in the butt to manage all of these things.
- [14:49]
A
These were affiliates. So what you're saying is that like when you sent a customer to Staples and they bought something, you had to trust that Staples was going to pay you, right?
- [14:57]
B
And that was. And it was tracked by an affiliate marketplace like a commission junction or link share that exists today. And so what we did was I met my co founder who had a very similar website. We combined our traffic because there were different tiers that you would make based on how much volume you would generate. Next thing you know, we have a group of people like us that were, that were sharing links and generating higher commissions from these merchants that we work with. And what we realized, you know, there's a couple, skip a couple steps, because we know we were in the email business delivering emails on behalf of people. And we very quickly realized that the same pain point I had as a publisher working with all these different advertisers every other publisher had as well. There was not one single place where they can go to get all of these different campaigns and just get one check for all of these different advertisers that you could work with. So in 2002, we created a Zoogle Ads, which was an ad network which immediately had us. As you know, I was a publisher, my co founder then was a publisher, and many of the other people that we were working with in that year, we did over $2 million in revenue. And what we did was we aggregated all of these different advertisers that you could work with onto one platform with real time reporting. With a check that arrived every single, every two weeks, you got a payment for all of the traffic that you generated on our network. We dealt with the advertisers, we invoiced them. If one of them didn't pay us, it was our problem. If you're a publisher on our network, you always got paid for every single transaction that you sent our way. And so that business exploded just because there was a lot of publishers that wanted the security of working with a network that they knew that they could Trust. Went from 2 million in sales to 21 million in sales. 64 million. 108, 140. Kept growing to be a $200 million a year business. Over 200 employees, seven offices, US and Europe. You know, it Was a. It was a.
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A
You did this in your 20s?
- [17:03]
B
Did this in my 20s.
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A
Wow. Okay. So at the time I remember. So you mentioned a name just now, Commission Junction. I think they're still around. Cj.com.
- [17:11]
B
Yeah, cj.com.
- [17:13]
A
So what were you doing? So Commission Junction, in my layman understanding, I think I was actually a customer or a user of that. Commission Junction would go to websites and say, hey, if you want to put this ad on your webpage will pay you when someone clicks it and buys something. And you were doing that or you were doing something different.
- [17:32]
B
So Commission Junction work would work with a lot of Internet retailers at that. You know, this was like when the dot com boom happened and then the dot com bust happened. Right. A lot of the eyeball based, CPM based advertising went to more performance based where you would actually get paid if you actually sold something. So as a merchant, for example, let's say Staples, I think was on B free, but let's say it was Staples. If we would log into Commission Junction, we would find an item that was for example, on sale at Staples. Then we would take that item, put it on our site, say this item is now on sale and you can get. And if somebody bought it, we would just get a revenue share. I think it was like 8% of whatever the cart size was for that transaction. The same way as the Amazon affiliate program works today. You can promote any products from within Amazon. But this gave us Commission Junction at that time probably had hundreds if not thousands of different merchants that were online. And I think with Commission Junction you would actually get an aggregate payment, but from others be free linkshare, they were just the reporting interface. But you would get paid by every single one of the retailers with whom you worked.
- [18:41]
A
And so you built that business up to 200 million plus in revenue. And what were you doing? I mean, were you literally just accepting the demand that was coming in the door, people were knocking on your door, or were you doing growth hacky things for those five years?
- [18:56]
B
It was very different. So we. Whereas most networks, if an advertiser, even today, if you go to advertise on Meta, you put in your landing page and you put up a pixel and then whatever transactions happen, that's what you pay. When an advertiser came to us, the first thing that we would do is myself and our team would sit down and say, how is it that you're acquiring customers? What is the entire landing page, lead page, whatever it is that how you were generating business? What does it look like we would Redesign the entire thing. We work with customers like Netflix. I personally built their one page sign up flow. We worked with Blockbuster where we redesigned their entire flow. We worked with ebay. If a client came to us and said, we want to generate mortgage refinance leads, we would then say, okay, who else can we find that is your competitor? And we can build a lead aggregation engine where you might want this lead, but they might want that lead and we can make them bid for each other. So we did this in mortgage and debt consolidation and online education where we worked with all the, all the universities. We actually built portals where you would send traffic because we knew that every single one of those clicks, you know, it's either for us, it's either a one or a zero. We could either make money on it or not make money on it. And we knew that. We, through our experience in working with hundreds of different advertisers, we knew what it would take to convert somebody. So we had a team of 40. We had 40 developers, we had a team of 40 designers that would work on optimization and we had affiliate management team that were working with our publishers. At the height we had about 40,000, just over 40,000 affiliates on the network and over a thousand.
- [20:52]
A
It could be a person with a blog right up to it could be someone with a website with some traffic that you could put an ad on that page.
- [20:59]
B
Correct. It wasn't necessarily somebody with a website. There were a lot of people that would just media buy. So they would come to us, they would take a campaign, they would then go to Fox News, buy a link on the homepage and they would just arbitrage. It was just the same way as we made a lot of money in our business, there were a lot of people that made a lot of money by working with us. I know one of my best friends to this day. There were campaigns that he would negotiate hard against me to try to get a higher rate from me because he was telling me that he was losing money. Meanwhile, he was getting a 10 times return on roas on the media buys that he was doing. He's just printing money every single day. All he did was just buy a text link and he's arb ing it on the other end.
- [21:48]
A
So he would get a text link from you. He knew that you were going to pay him something and he was going to resell it for 10 times what you were going to. What is what it was going to cost him, kind of thing. Correct?
- [21:57]
B
Yeah.
- [21:58]
A
Wow. So, okay, so you build this company up and there's two. There's something I'm noticing in the current company, Prima and Azugal ads, which is that you're a marketplace guy. And marketplaces are notoriously hard because of this fancy term supply, demand liquidity, which basically just means you need to have a way for the buyers and the sellers to work with each other. And once you have a lot of buyers and sellers, it's easy. But getting that first buyer and seller transaction and getting it to happen a hundred times a day, a thousand times a day, is very hard. How do you start? How did you begin to create liquidity in this marketplace then? And then how are you doing it in Prima? And are there similarities?
- [22:38]
B
There are a lot of similarities. We started as Google Ads, as publishers ourselves, so we built the product for us. And we already had an existing informal network of publishers with whom we've worked. And so at the beginning, the campaigns weren't the Netflix and the ebays of the world. They were more direct marketing focused. It could have been an ebook or something like that. I remember with my co founder, we created Escape the Police ebook, you know, that we would sell for 1999. We put it up as an offer on Azoogle ads. Next thing you know, people are promoting it and we're making money. So, you know, at the beginning it was us and our informal network of people that fed the engine that Azoogle ads became. Prima is no different. You know, I tell my team here all the time that it is really the team here that drives the business forward. The type of individuals that I, over my career have been able to become friendly with and have cobbled together as my business associates are at the very top of the hospitality industry. So these restaurants that we've been able to bring on board, many of them the owners of those places or the management of those places, we've been very close with over many, many years. And now we're expanding in London right now. And a lot of the introductions that are happening in London are coming from our existing Miami relationship because of the results that they're seeing in Miami. So it's kind of the same once you have a core group of individuals that are very connected within this. Just like the online advertising space is very small back then. Even today there's a handful of places where you can buy media. The hospitality industry is no different. There are people at the very top that are highly, highly connected. And you know, for us to go live with a restaurant, it's five seconds, they sign a digital onboarding document, we program their, their Open hours and their availability, and they're live within the marketplace within an hour. So it's just having the. That the right individual to open the right door and the product is online.
- [24:54]
A
It's easy to say that. That's a really, really hard thing to do.
- [24:58]
B
I'm.
- [24:59]
A
Yeah. Because to get Mila, which makes restaurant makes $49 million a year at one single location. I think you said it was the number one grossing restaurant in the country. You know, for them to do anything, frankly, to make any change to their business model, bring on a new partner, new vendor, new whatever, it's like a big risk because they could just do nothing, and they'll be fine. So how do you convince them? Even with a relationship, how do you convince them to do this thing?
- [25:25]
B
Well, look, I think the business model has to stand on its own two feet, right? The product itself. When you explain it to any business traveler or any affluent consumer, when you say to them that if you check into a hotel in a city that you've never been to and you could scan a QR code and get access to the top restaurants without having to call or talk to anyone, every single person says, yes. There's been no one that we spoke with that says, oh, it's really easy to book restaurant reservations. It's. It's horrible. It's a horrible experience. No matter where you go, any city that you travel to, the second that you get there is like, you go, I've done it. I spent a year traveling the world when I. When I took a break from my. My. My third business, and I remember checking into a hotel, walking over to the concierge and saying, I want to go for dinner. And, you know, their response is not, oh, let me help you with that. It was like this guy, right?
- [26:20]
A
But can't. Can't open table. Like, why has an open table crushed you, or could they crush you?
- [26:25]
B
OpenTable already has a lot of restaurants that they're working with. You know, most of the restaurants are doing everything that they can, right? So they're on OpenTable. They're sponsoring their listings. They're paying for bookings. We said that there's three types of restaurants. There's the restaurants that are always sold out, right? And for those restaurants, we give them money straight to the bottom line because there's, you know, there's no increase in. In cost for us to get. For them to get this affluent consumer that wants to come and spend money with them. So that money goes straight to the bottom line. There's the restaurant that's struggling, we don't want to work with them. You know, if it's a restaurant that's struggling, they're struggling for a reason. And then there's the restaurants that are kind of in the middle. They have 50 tables and 43 of those tables or 42 of those tables are, are booked any given night. But they still have six, seven, eight tables that are available almost every single time slot. And for every one of those restaurants, when we meet with them, we say, look at that two top. If you had to pay $20 to put two people at that table, would you? 100% of the time they say 100%, yes, we would.
- [27:31]
A
So they would have to pay $20. What's the business model? Because you mentioned earlier that at some point the consumer actually has to pay a premium just to, just to get the two top.
- [27:40]
B
Right. So those are for the restaurants that are sold out, the restaurants that want to invite the guests to come to them. It's a no fee. We charge the restaurant around $10 a cover for each one of those guests. And keep in mind, we're working with the higher end of the restaurant where the average spend is anywhere between 120 to $130. We're starting to get data now about our average spend from our guests and I don't have hard data to share yet. We will soon, but anecdotally we've been told that the average spend is at the higher end of their expected RA range because again, that guest is coming from a high end hotel spending 800 or $1,000 a night. That is exactly the kind of guest that is going to come in and buy the bottle of wine or buy the extra drink or maybe stay a little bit longer at the restaurant because they're not in a rush, they're on vacation.
- [28:30]
A
So there was another growth hack here that you told me about on the phone that I, when you said it to me, I just smiled. I thought, oh God, this is going to be so huge. So you said to me that when the guest walks up to the concierge and actually wants to book a restaurant and goes through the Prima app and it's all booked and everyone's happy, other people, maybe the person behind the front desk or another concierge or other employees might say, wait a minute, can I also help guest book? Just give me a login also to this app. Are you using that as a growth hack and can you talk about that?
- [29:00]
B
Yeah. So you know, at Azoogle Ads we used to give any referring affiliate a Revenue share from all of the revenue that we would generate from any of their referrals. And so within Prima, we built a two tier referral program. And so there were some people at a Google Ads that would make more in referral revenue than they did by themselves. Because at the very beginning they just referred a lot of affiliates to this brand new affiliate network. So within Prima, we see the same thing as a concierge who uses our system. You can refer any other concierge or any employee. You know, we have people at the beach, for example, at one of the hotels that all signed up. And you know, when guests are at the, at the, at the beach chair asking them, hey, where, where should I go for dinner? They say, great, you know, I can actually help you with that. I can book that reservation for you. So there, there's an incentive for them to send that guest to a participating restaurant. So this, the, the, the system is set up just like an affiliate network, you know, and there's, there's multiple layers to this because when a hotel refers a guest to a restaurant, they get a revenue share from that booking. When we launch the Prima app, for the guest to actually be able to book within an app rather than a web based interface, when that guest downloads the Prima app and they use it anywhere else worldwide, that originating hotel continues to generate rev share because it's their, their hotel guest. So the.
- [30:28]
A
Whoa, sorry, sorry, you blew my mind there. Did my brain just explode? Wait a second. So if the hotel introduces a guest to the Prima app, they make money off that guest indefinitely.
- [30:41]
B
Indefinitely. I have two options. I can spend money on advertising, I can hire people, or we can share the revenue that we generate with the actual demand side. So if a hotel generates that guest for us, I want that hotel to make as much money as possible. It's the same way that Netflix used to pay us $45 a sale. When each transact the monthly fee was only 9.99. They knew that on average that customer is going to stay a year or two or more and they're going to monetize, hopefully that consumer forever. So our pitch to our hotel partners is we want to be a revenue driver for them and we want them just to be just as much a part of our ecosystem as we are of theirs and become a valuable amenity to their guests, but also a valuable revenue driver. Very different than the minibar that they have in their room is just transactional. Whatever somebody takes out from that when the hotel guest leaves, that minibar is not selling to them anymore. We are. So as we launch more geographies, as we launch London and Dubai and all of the other cities for everyone that travels worldwide, we want our hotel partners to sign on as quickly as possible. We want to grow the business as quick as quickly as possible and incentivize everybody in the right way.
- [32:01]
A
So on one hand, when you first told me this, you said the hotel is able to serve their guests better. Great hotels want to serve their guests better. Check. And then the next thing, which is not only can you serve us better, but maybe you get some fee for that referral. Okay, fine. But you're also saying you get this recurring endless revenue stream because that guest, anytime they use the app in the future, a chair goes back, a little vig goes back to the originating hotel. And so this is actually not just a bit of incremental revenue. This could be a very substantial revenue line for a hotel that is referring this app to a lot of guests.
- [32:37]
B
Correct?
- [32:39]
A
That's the goal. Okay, what if a guest is using the app and they've been using it for a couple of years? Is the idea that consumers will eventually just use this themselves or is it always going to be through a concierge type figure?
- [32:53]
B
Well, the idea is that eventually, you know, for us to curate a subset of guests that want to use the system on their own. Of course, if you're able, you know, the last thing that I want to do is create for restaurants the exact same problem which they have today, which is, you know, people log into Prima and they book stuff 30 days in advance or 45 days in advance. So our system, for example, prevents a guest from booking two reservations on the same day. Other systems don't, don't, don't do that. Our system also for guests, realistically, should not allow them to book more than seven days out because we don't want them to book more than seven days out. You should be able to book these restaurants, you know, when, when they're available. And if they're sold out, you will pay a premium to, to get in, to get into these surge pricing. Correct. So the goal eventually is to consolidate the high end market to allow them to use our products to fill these restaurants. Because the goal for us is not to work with thousands of restaurants. We want a highly curated list. We call it kind of this fire hose. The market right now is diffuse. Hotel guests, if there's 300 rooms in a hotel, 300 times two, arguably 600 people are going to eat dinner somewhere. They're all eating, but most of them are just making their decisions based on a Google search. You know, they search a restaurant or some recommendation or something that they, they saw on TikTok and then when they see that video on TikTok, you know, in addition to it to that video, there's also no way to actually book from that TikTok. And so one of the divisions of the companies actually working with influencers and bloggers to allow them for actual tracking of how many bookings they're driving. So we have partnerships that are going to go live within the next couple, couple months with several high profile influencers that are going to go to a restaurant, eat there, do the review and then put a book through Prima Link which now the restaurant will see. What did that actually generate for us? Nothing like this exists today.
- [35:01]
A
This episode is brought to you by Influicity's new tool, the AI Ads Generator, available now at johndavids.com ads. Great ads aren't about luck, they're about leverage. The brands that win are the ones who can launch faster, test smarter and outspend everyone else without wasting a dollar. That's exactly what the AI Ads Generator gives you. Instant ad copy that speaks to every customer and feeds the algorithm high performing variations your competitors can't keep up with. It's like strapping a jet engine onto your marketing. And right now it's free. Yes, it's free. Go to johndavids.com ads. That's johndavids.com Ads. Yeah. I understand the idea that the minute you cut the third party, the minute you cut the hotel out in this instance, it all of a sudden just goes head to head with OpenTable and you could put limitations in. But I really like the idea of saying, listen, this actually is an app that you use with a hotel as the intermediary because it gives the hotel something special that they can offer you. I can't just jump in and do it myself. Then it's not special anymore. It's just a self serving.
- [36:13]
B
Correct. And that's the part that makes it interesting. So a lot, some of the hotels that we're speaking with, they actually want to, they'll pay for the prime fees in order to provide that, that level of service to their guests. So they'll subsidize the fees there. Because everything is also dynamic. There may be some restaurants that would be available to certain hotel guests and not available to others. And there will be restaurants that may only be available to be, to be booked at a subset of hotels, whereas other restaurants might want to just be able to book anywhere you know, the nice thing here is it's all dynamic, it's there, you know, you control both sides of the equation.
- [36:50]
A
It gets so juicy. If you're staying at the Ritz Carlton, you can eat here. If you're staying at the Hilton, you can eat there. I mean, you get really, really granular and you can start to attract only the most high net worth consumers to your restaurant. And you're using technology to do it. You have, I mean you could even say, well listen, if you dine, it's almost like the, like the Rolex Playbook or the Louis Vuitton or any of these guys where it's like, hey, if you spent this amount of money here, then we'll let you go there and that.
- [37:18]
B
But that's, you know, this is how the restaurants work. You know, when the operator of Miele is actually on our advisory board and you know, one of the things that he had mentioned is the thing that we're building is the one thing that he looks for in his business. He wants to reach exactly these people. And so creating that channel, you know, a restaurant can only fit so many covers for every single time slot that they have. And when a restaurant hits that 100% demand, the only way for them to optimize for the amount of revenue that they generate is a, they can work with prima to sell some of those reservations to create more bottom line revenue or they can actually optimize for the channel. So they can say we'll leave less for the open market because we know that Average spend is $100 and we'll leave more for the hotel guest because we know that that hotel guest is going to spend $140. So they can decide exactly where that pipeline is, is coming from. As long as the TR that the volume is there. That's the, you know, that's the thesis for the company. That's what we're building now. But when the traffic is there, you can then decide, I've hit my limit of covers, I don't want anymore. Right. So you're, you're actually, you're not listed anymore.
- [38:32]
A
Yeah, it's crazy. You can go super Kelly bag, Birkin bag model on this at the height. Okay, so let's, this is, this is so cool. And I'm curious to see how this goes over the next little bit. Let's get into the story of, I think it was your second or two and a half business. So you had a zoogle before that. You had the deal site. Then you had, it was an e Commerce company for pets. And then you turned into a blog. So talk about that experience because that kind of ended in a wonderful explosion of a disaster. Tell me how that whole thing.
- [39:07]
B
When we were ready to move on from Azuga Lads, I had whiteboards in my office that we filled with a thousand different ideas of new businesses that we wanted to launch. I had a dog at the time and we lived in New York City and I constantly ran out of dog food all the time.
- [39:29]
A
What year is it?
- [39:31]
B
This is 2009. And one of the ideas was just create auto ship for dogs for dog food. It's the most predictable thing that you need all of the time. They eat the exact same quantity every single day. A bag lasts a certain amount of time. And for many people who fed their dogs a specialty type of food, you had to go to the one store and then when you get there, they don't have it. It's like, okay, now you got to change the dog's food. Dogs don't have diarrhea. It's the worst experience. So no one was doing it at the time. And we figured that the biggest challenge that we're going to have is unfortunately dogs die. So there's a certain time limit to a customer. And we built petflow, which was a auto ship product for pet food. We built it's almost 10,000 SKUs, multiple warehouses. It grew to be about a $60 million a year business. We drove it to Breakeven, which was unheard of in that space at that scale. Everyone thought it would have to be much more than that. And one of the strengths of customer acquisition for that channel was Facebook. We were buying a lot of media on Facebook and within Facebook, they opened up the algorithm for outbound links. And we created something called the petflow blog. I did it myself. It was just me creating a simple website and it was content sourced from YouTube with a wrapper around it of an article of some story that was made up about. About the content with a lot of it was pet centric with links out to PetFlow to buy. To buy dog food. And we were generating thousands and thousands of customers because you know, who likes to watch videos of cute cats and dogs? Owners of cats and dogs.
- [41:42]
A
And you were placing these on Facebook or on your blog?
- [41:46]
B
We would put those. We will put the art, the videos on Facebook that would link out to our blog. And then what I quickly realized was that I remember turning to Joe and I said, I bet you we can get other stuff to work to make a lot more money than our Own website. And so we put AdSense up there and then we optimize it with another network. And then it just turned out to be an arb play. You can put cost you a certain amount of time and money to curate a piece of content. You post it on Facebook, it generates traffic on the other side and you can see how much, how much money you make. Next thing you know, in one year it makes $7 million. Oh, just from this little Pet Flow blog. Just me doing it myself.
- [42:36]
A
My first real business was this exact thing. I made $300,000 a year in college on a much smaller scale doing this with msn.com, yahoo.com, aol.com, where I got my stories onto their front pages and then through related links, they would send back traffic to my site and Google Ads. And then eventually we got into big agency campaigns, big $35 cpm type brand marketing stuff. And yeah, we were just. It wasn't we. It was me literally just cleaning up through the arbitrage of get traffic cheap, sell it for a lot. And it sounds like you were doing the same thing.
- [43:13]
B
Yeah, we did the same things. And we, and then we, we realized that this is an actual business. Much more interesting than, than shipping heavy dog food around the country. As much, as much as I enjoyed that original business. So we, you know, we handed the keys to, to Pet Flow to our, to our COO who continued to run the business. And then, you know, that business was eventually sold and we spun out a product called LittleThings.com. it was a destination site for, it was just, it was almost identical to BuzzFeed, just, you know, designed by me with, with the content that resonated within our audience. PetFlow kept growing. You know, the PetFlow blog, the Pet Flow fan page kept growing to be millions of followers. Next thing you know, we realized that there's other publishers with other fan pages that weren't monetizing. So we created a monetization engine behind littlethings.com so anybody could syndicate our content. And then we had a team of 40 writers that would curate content and then started working with big agencies and started. We had a production studio, big office on, on 7th Avenue. And that business grew to be a $60 million a year business. Just little things. Little things dot com.
- [44:38]
A
Were you bootstrapping that or did you raise money for that?
- [44:40]
B
Eventually we raised money for petflow. Little Things was just spun out. I mean it was making money from day one.
- [44:48]
A
And I'm just curious, how did you even when you say it was spun out and you handed the keys over. That sounds very, very simple. But there was also, I'm sure equity. There was ownership. Somebody maybe said, did you have to kind of share the revenue with, with PetFlow or what?
- [45:01]
B
We transferred the ownership. So it was, you know, the, the investors in petflow stayed on for little things. It was just, just an extent. We spun it out as in the founders moved on to run, to run that business. We created a separate entity but we basically carried from, from PetFlow as a, as a standalone business.
- [45:21]
A
So you build this up to a $60 million business and then what happens?
- [45:25]
B
And then you get the oh shit moment, which is, you know, why we, my co founder. Oh sorry, my phone is ringing here. We'll decline. That will say, you know, never depend on someone for all of your traffic. And for us, unfortunately, that was Facebook. No matter how much we try to grow our email list or to syndicate anywhere else, I mean it's like today if you're going to go buy media, meta is the place that you're going to start and if you say you're not going to get it from there, 90% of your business is gone. So we were generating the lion's share of that revenue and traffic. And I mentioned to you when we spoke, we had a TV in our office that showed the number of concurrent users on our site at any time. And I remember I still have, have photos on my phone to this day, 120,000 concurrent users. You know, in, in that three second segment, that's how many people were on our site all day. And in one day it went down by 90%.
- [46:35]
A
And why did that happen?
- [46:38]
B
Facebook just tuned the algorithm down. They wanted more people to stay within, within Facebook rather than linking out. So they deprioritized out outbound traffic. And you know, it was more, the video content shifted to more native video rather than linking out to YouTube, you could then start uploading videos onto, onto Facebook directly. And you know, it's not one of those things that was like a slow. It was very painful because it was so fast. But I think it was actually to our benefit that it was, that it was so fast rather than kind of like a slow decline because then you could kind of see the writing on the wall very quickly.
- [47:23]
A
You know, it's funny, there were so many businesses back in that 2010-2016 17 time frame, even before Buzzfeed that I remember like about.com as an example and there's a whole bunch of others that were built on these either enormous Facebook or enormous Google dependencies where all the traffic came from either the search engine or the feedback and business. When you're getting that much traffic and it's free and it's just plentiful, it feels great. But at the end of the day, like you said, 90% of your traffic coming from one source, they sneeze, they turn a light switch, they change one line of code and you're done. And it happened to so many different companies.
- [48:05]
B
So many companies. And I mean, to an extent it works the same way. Now when you're buying media, everything could be going really well and a competitor just, you know, they see the exact ad that you're running, they can, they can copy you and they bid just a little bit more. I used to always say that, you know, in online advertising, you don't win by beating your competitor by 5 or 10%, you can beat your competitor by 0.1% and that will give them all of the media versus you getting all of the media. So there's lots of people that, who build their businesses based on advertising and it works really, really well until it stops. And then that, you know, that's really the challenge of being a founder of one of these companies is because you constantly have to iterate and constantly have to update because there's always somebody on your heels that will take all of it.
- [48:59]
A
Yeah, I almost rather like the example of, hey, would you rather get a bunch of free traffic from Google and meta or would you rather pay for it? I almost would rather pay for it because at least there's an incentive for them to not stop giving it to, to me, I'm giving you some money for it, so at least keep going. Whereas if Google is sending you a bunch of traffic but they're not getting anything from it, what do they care? They'll, they'll just demote you on the page.
- [49:20]
B
Yeah. And I mean, look, there's the same thing. It's TikTok and Instagram, right? Like, you can't predict virality. You'll go viral with one piece of content and then you're going to spend the next three months chasing that one piece of content with another one that you hope to replicate. And it just, you know, it doesn't work that way. You can't, you can't predict this stuff.
- [49:41]
A
It's so true. But there's, and the one thing I will say about meta, I remember. Do you remember that day, what was it, two years ago or so, where meta in a single day dropped by 25%? So I remember when that happened and I had then and I have now a very large portion, you know, of Meta stock. And I remember when it happened and everybody was, oh my God, you're going to sell your metashares. I said, are you crazy? I'm going to buy as much as I can. This company is so built in and you don't realize it unless you're in the E comm space, in the digital space. You don't realize it's not just that people use Facebook and Instagram, it's that businesses depend on this for their life. Businesses that are billion dollar companies and businesses that are $400,000 a year companies. It is so built into the modern commercial ecosystem.
- [50:27]
B
There aren't many channels that you can rely on for a broad based, stable traffic whenever you want it. The only challenge is it takes a lot of capital to figure out exactly what's going to work and you have to be able to be prepared for a little bit of pain until, until you get there or you really have to understand how the ecosystem works and have very deep connections within, within that ecosystem in order to, you know, to turn a profit very quickly. Otherwise it takes a long time.
- [50:59]
A
Mm. Do you see similarities between what you built, like the azoogle ads and then with little things and then what you're doing now? Like, is there a common thread that you keep coming back to as an entrepreneur?
- [51:16]
B
Well, I think it's really, you know, having a diversified business that's the for pet flow. It was having a lot of skus for customers to choose from for a zoogle ads. We used to joke that, you know, what if our top advertiser went away? And we would say, well, the second one would become the top one. And that's why we grew that business to have over a thousand different advertisers because we really had no idea what was going to perform and why it was going to. Sometimes it was the strangest thing that would be the top campaign for a day or for a week. It was really hard to know exactly what was going to work. And the same thing for Prima. One of the things that I love about this business is how many people we really can touch because the product is being installed in residential buildings, is being installed in hotels, is being installed in different apps. We have a couple of partnerships that are about to kick off in the next 30 to 60 days where again there's communities of people that are using an app every single day. And as a benefit to using that app, they will get access to the Prima booking system so they can get this frictionless way to get into these restaurants.
- [52:37]
A
You have that QR code thing that you showed me last time?
- [52:40]
B
I don't have it in my.
- [52:41]
A
You don't have it? So these beautiful QR code, I don't know, little statues.
- [52:45]
B
It's a stand. And look, even with this, the qr, when I check into a hotel, usually the QRS are in a pamphlet or there's just like a little printed sticker on the copycat or a sticker. None of them have ad copy. Ours is either wooden or acrylic. I can send you the new designs. There's one that's in metal, in gold. It's supposed to stand out. It's something that makes that hotel money. So we want as many eyeballs on this thing as possible. And that's the same thing as when an advertiser came to us and wanted to work with us. We didn't just take their landing page right. We redesigned the entire process. So we're rethinking the way that consumers are going to get into these restaurants. And again, on our site, the headline is the platform that connects hospitality. We want to be connected to any pockets of these high end guests, high intent guests that want the same thing. They want to get into restaurants without a hassle, and we provide that for them. So the more people we connect to, the more diversified this business is, the more hotels we're working with, the more defensible that business is for us. And I definitely don't want to rely on one channel, which is why when the influencer business came to us, I said, great, of course we'd love to work with influencers. It's just another link that goes to our system that tracks a transaction. When a community comes to us and Sundays, we have 20,000 people using our app every single day and we want to give them as a benefit your services. Of course, we would love to integrate with you and work. It's just an API integration. And for us, nothing changes. For the restaurants, nothing changes. So we're trying to create as diversified a business as possible where we don't have to say no to anyone and we're not dependent on any one partner. So I don't have to worry of, oh, our top client is going to go away.
- [54:48]
A
Ch. Channel dependency, customer dependency, any kind of concentration there. And you probably get cold chills just thinking about that day where you saw your Facebook traffic dip. You never want that to happen again. You don't want it to be that. You get one hotel that is responsible for 80% of your bookings. I mean, that. And the reality is that does happen in a lot of businesses where they have these dependencies on a certain partner or a certain vendor channel. And it sounds to me like you're getting wiser as an entrepreneur thinking back to those scars and saying, I don't want to repeat that same mistake. The other thing, though, that I see that you have across the board here is you're really good at finding inefficient marketplaces, or even lack of a marketplace, finding inefficiencies in the market and saying, okay, how can I bridge the buyers and sellers here? Because you kind of did that. I mean, in the first case, you did that with Azoogle ads. You kind of also did that with the E commerce because you sort of arbitraged. I mean, E commerce was one thing, but with little things, you arbitraged the content with the, you know, the monetization. And now you're doing it now for sure. Is that something? Do you look at markets all the time and just say, wait a minute, that should be more efficient?
- [55:56]
B
If I could list, there's a lot of markets. I mean, I find hospitality to be one of the most inefficient ones. Just because there's a lot of handshake deals that happen anytime you, you know, you walk into a restaurant. I've done it many times, and you have to walk up to the maitre d and give him a 50 for a table. That pains me because as an operator, I know that the owner of this restaurant put their heart and soul into building this place, probably borrowed his mother's and his father's money to open this restaurant and has been slaving away for years. And then that money is going to someone else who's just standing at the front and taking that money and putting it in their pocket. And shouldn't. It shouldn't. It shouldn't be like that. It might be 100 in Ibiza or more. So these, you know, when you look and it's the, you know, the same thing for nightclubs and, you know, nightlife is a huge market segment for us that we will definitely be through our network. We are definitely going to enter, try booking a table at one of the top clubs. It's like I get five messages every week from friends that are coming to Ibiza. Do you know anyone where we can book a table? And it's a WhatsApp message that gets sent to a promoter. The promoter has to ask for the inventory. They Get a response back two hours later. I've been there, I've booked millions of dollars in spend at the top nightclubs in New York, in Vegas, in Miami. And that system is the same today as it was in 2000. You know, you got to know a guy, and it shouldn't be like that. You know, if you. If you want to spend money, the one thing that we all want is we want our time. I actually want to use this as little as possible. So if I can, in two clicks, book a restaurant or book a table somewhere or buy a ticket for something without having to do all of the research and having to know a guy, it makes my life better. And so this is why the pitch to everybody that we speak with is very simple, because everyone has the same pain point. There's no one out there that says it's easy to book reservations for anything. You have to know where to go, and you got to know a guy.
- [58:14]
A
Do you find, I worked for a hot minute in the nightclub world as a promoter years ago. Do you find that. That type of customer versus a Netflix? And I don't even mean a Netflix because of the size. I just mean a different industry of customer. Whether you're selling pet food or something else. Hotels, nightclubs, restaurants. Aren't these, like, haven't these always been inefficient? And might there be a reason for that? Like, isn't that maybe part of the appeal?
- [58:40]
B
No, I think they're just in. I mean, I think they're inefficient just because no one has act. Every. Almost every conversation that we have with at the highest level, whether it be at the hotels and restaurants, when we explain to them about prima, they say, finally, it's not that they said, oh, you know, we're kind of happy with the way that it's been working. I just don't think anyone's really approached it from this point of view of actually, you know, bringing. Building a bridge between all of these parties. Most groups build technology for themselves or for a specific product, right? So there's seven rooms and cover manager that handle the back of the house. Once a reservation comes in, you have to assign it to a table. You have to track, spend, who the waiter is, and all of that kind of stuff. On the front end, there's these marketplaces. You got opentable, you got resi, you've got talk. But beyond that, when a restaurant does everything that they can within that sphere and they still have empty tables, there's really very little that they can do. And so when someone comes in and says, we're going to consolidate this traffic and point them to the participants in the marketplace, they see that as the actual solution to a lot of their problems. So I think the market is inefficient until somebody comes in and makes it more efficient, the same way as Uber did for transportation. You know, you don't have to hunt around for a taxi. You can just request one on your phone. This is, I hate that I've sat on pitches where they. Everyone explains we're the Uber of this and we're the Uber of that. And here I am to say we're kind of the Uber for hospitality because we're making it easy for everyone and we're, and we're putting money where, where it belongs, which is on the, in the, In. In the Demand channel. The Demand channel is the one that facilitates all of these, all of these guests to the, to the supply. They should get paid for it. And traditionally they have it.
- [60:47]
A
Well, Alex, no one should doubt you. You've got a track record. You've done this before. You've got, you've, you've got a pretty sterling resume. So I'm excited, man. I can't wait to see where this goes.
- [60:56]
B
Thank you. Thank you.
- [60:57]
A
Thanks for coming on and sharing the story.
- [60:59]
B
Of course.
- [61:00]
A
Thanks for listening. If you're a fan of the podcast, leave a rating and review on this episode and get my best stuff to your inbox@johndavids.com we'll talk to you next time. This episode is brought to you by my Playbook website selling machine, available right now@johndavids.com Playbook Most companies want websites that look nice. But a lot of nice looking websites don't sell. What you really want is a website that grabs attention, builds trust, and turns visitors into buyers while you sleep. That's what this Playbook gives you. Based on 10 years of work we've done at Influicity, optimizing websites for 7, 8 and 9 figure brands. Download the Playbook now at johndavids. Com playbook. That's johndavids. Com Playbook.