Quality Control

Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient.

Sun Tzu, The Art of War

In the last memo, we discussed considerations when building marketplaces / platforms.

Today, our focus is on evolution.

Large marketplaces exist for every consumer need.

But every advantage comes with a disadvantage; massive platforms can afford to neglect valuable niches within their own domain.

Let me explain

Actually, let Airbnb explain

Airbnb went public in 2020 and its stock has underperformed since, delivering -7% returns since IPO. Still an $80B company though

Most Airbnb users can attest to the variability across properties. Now, obviously, some rentals on the site are glamorous while others are affordable, but that's not what I'm referencing with the word variability. What I'm referencing is the differential between what's presented on the site and what you get in real life.

In 2019, Airbnb was getting ready to go public.

That same year, a relatively unknown startup - coder.com - was raising their Series A round.

The company was the brainchild of three tech prodigies (John Entwistle, Kyle Carberry, Ammar Bandukwala) and it provides an enterprise platform with open source tools to make software development more efficient.

It was success after success for the trio of 20 something year olds. After the Series A, Coder signed In-Q-Tel as a customer in December 2019. In April 2020, Coder raised a $30M Series B. Forbes 30 under 30 followed suit

In 2021, John Entwistle stepped down from his co-founder role and began to wander.

His travels were intentional, designated with a destination in mind: his next mission.

As he journeyed through different parts of the globe, a pain point emerged.

Short term rentals were low quality.

This is how Wander began.

wonder how much the domain cost

Wander is a marketplace with the highest quality vacation rentals. Luxury is an understatement

non est perfectum nisi particulare

Each property comes with:

modern workstations with ultra-fast WiFi, smart home capabilities, and more
gym + pool, with many properties featuring saunas and spas as well
24/7 concierge service
a Tesla

Which led to:

industry leading 93%+ satisfaction rate
industry leading 85 - 90%+ occupancy rates

The most interesting part about Wander isn't the quality control, it's how controlled the quality is.

Each property is carefully vetted by an internal acquisitions team looking for the most luxurious homes in outlandish locations. Then, properties are renovated to include the same high end brands and high level finishes regardless of location. Finally, properties are exclusively listed on Wander's site, and property management is done in-house as well.

Wander is a vertically-integrated marketplace.

Marketplaces are generally integrating backwards towards supply:

Netflix is producing more of their own content
Uber is developing autonomous vehicles
Owning supply leads to a consistent product experience and better margins

But Wander's market has a capital intensive supply-side; it's not cheap to buy mansions, renovate with high end finishes + tech, and manage the properties.

That's why the company launched a REIT to acquire properties at scale and make money on the investing front while doing so.

Wander's short term rental REIT - Atlas - is the first of its kind. The investment portfolio allows accredited and institutional investors to access a new asset class with a 8% target yield, while allowing Wander to move costs of acquisition and development off the balance sheet.

The initial Atlas vehicle has exited and delivered a 22% cumulative return to investors over the course of two years, according to Wander's website.

Fundraising wise, Wander has:

raised $40M+ to date, last round was Series A
investors include QED Investors, a16z, Susa Ventures, Kevin Durant, Sahil Bloom and more
Series B on the horizon

Headlines

OpenAI launches Operator, an AI agent that performs tasks autonomously. TechCrunch article here
Spotify founder's body scanning startup hits $1B+ valuation. Fortune article here
Netflix takes an anti-ESPN approach to sports rights. The Athletic article here
UNC GM implies future of NIL payments will focus on performance. SI article here