
Sonder Raises $135M to Turn Airbnb Apartments into Hotels - anguswithgusto
https://www.forbes.com/sites/bizcarson/2018/08/23/sonder-raises-135-million-to-turn-airbnb-style-apartments-into-a-different-kind-of-hotel/#7384ac54455d
======
sperling75
Sonder's sales channel was and is primarily airbnb itself which could easily
turn it off if they determined them to be a threat. So it's a business highly
dependent on future competitive partners (see Airbnb plus). Their company was
called Flatbook but the service and reviews were so terrible and so full or
irate customers who had been scammed that they had to try and erase it from
the internet and reimagine themselves as Sonder. You can still find a few
places with flatbook review if you search ex.
[https://www.google.com/maps/place/Sonder/@45.5198842,-73.587...](https://www.google.com/maps/place/Sonder/@45.5198842,-73.5877813,17z/data=!4m7!3m6!1s0x4cc91a337df40af7:0xb7718325314fcfa6!8m2!3d45.5198805!4d-73.5855873!9m1!1b1)
. Anyhow miles of bad service, scams, and very serious negative reviews. Since
they used Airbnb as the primary sales channel on a grand scale they would just
wipe property listings once the reviews were negative and replace with new
fresh listings. I do believe they have professionalized their service recently
however I am surprised they were trusted with a large investment and shows you
the poor judgement of VC. Their product message was cloned rather than
originated, they have a history of scam level of service, their revenue
channel is largely dependent on competition, not to mention their business is
neither innovative nor defensible, the product is not great for cities and
community. Really SV at its worst.

~~~
justinjlynn
If the VCs continue to invest in poorly conceived and doomed ventures then
they will lose money and eventually fail once they've lost investor
confidence. There's evolutionary pressure at play here. VCs are incentivised
to take risky investments with potentially high returns; but there is a limit.
In a very real way we're exposed to the outliest out the outliers here in SV.
It should eventually get better. However, nobody said that evolution, or
capitalism for that matter, was efficient; so it may be quite a long time.

~~~
yayana
It's true that VCs that invest in utter nonsense will eventually be
eliminated, but I think most VCs who never invest in a success invest in
enough doomed models that survive until IPO, (often with built-in failures
like a model of exploitation that requires obscurity.)

The highs and lows of tech average together well enough to satisfy Wall Street
and then have huge profits for some that VCs that find and hold good
investments, and more VCs that feed off a constant influx of sucker investors.

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ordinaryradical
"Compared to your typical Airbnb, no one “lives” in Sonder apartments except
for its guests. Each rental comes with a living room space and kitchen so
people can cook and relax like they would in their own home. Units range from
studios in a heart of a city to sprawling a six-bedroom unit in downtown
Montreal."

This is bad news for cities that are already short on housing. You're taking
what could have been space for housing and erasing it with larger, lower-
density hotel suites. Very luxurious and pleasant for the travelers, sure, but
you're ballooning the space taken up by the "hotel" and magnifying the market
pressures on everyone else in the process.

What's pretty surprising about this article is the breathless, unquestioned
enthusiasm for these kind of ideas. Is this really a sustainable model for
urban centers and hotels? Is this how we want to conduct our cities and use
our most precious, economically productive spaces?

I'm pro Airbnb--when the room is actually rented out by the renter, everyone
including the little guy wins. But this is a very "rich get richer" style of
tourism with the fig-leaf of the share economy strapped to its extravagance,
right?

~~~
samclearman
Most Americans have spare bedrooms for when guests visit. You could have your
guests stay at a hotel but typically that will be really far from your home
which sucks for everybody. Having Sonder or Airbnb style short term rentals
distributed throughout cities could allow people to live in smaller
apartments, eliminating bedrooms that sit unused most nights creating more
space for everybody.

To be clear I'm not talking about the model of renting out your spare bedroom
on Airbnb because nobody actually wants to do that. I'm talking about full
time airbnb studios / 1BR's obviating the need for guest bedrooms.

~~~
jMyles
> To be clear I'm not talking about the model of renting out your spare
> bedroom on Airbnb because nobody actually wants to do that.

Demonstrably false - there are many thousands of such rooms available on
AirBnb:

[https://www.airbnb.com/s/homes?refinement_paths%5B%5D=%2Fhom...](https://www.airbnb.com/s/homes?refinement_paths%5B%5D=%2Fhomes&room_types%5B%5D=Private%20room&allow_override%5B%5D=&s_tag=i8tJ8cL-)

I often prefer to stay in this configuration, especially in a city where I
don't know the local language. This way you have a host and a cozy, lived-in
place to stay instead of some sterile suite that makes you feel like you never
left your own city.

~~~
chrischen
I've used Airbnb a lot, and in my experience at best it's 50% of the listings
that are actually like that. Demonstrably false, yes, but also not as much
like that as most people think.

~~~
code_duck
50% of all listings seems significant to me.

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sudonim
I stayed at this location last January -
[https://www.sonder.com/destinations/chicago/Handsome-2BR-
nea...](https://www.sonder.com/destinations/chicago/Handsome-2BR-near-
Restaurant-Row-by-Sonder/759?stay_type=nightly)

It photographed really well which is why I stayed there, but the bedding was
terrible. The worst of any Airbnb experience and it’s part of why I generally
choose hotels for short stays now.

This rental had cheap pillows, linens that felt like sand paper, and the
comforter was bare sandwiched between a large sheet. Towels were tiny and
cheap motel quality. I was really disappointed. Hopefully their other
locations are better than this one. I personally wouldn’t go back.

I filled in their after-stay survey and never heard a response.

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theologic
I'm struggling with the angle here.

A. The secret to AirBNB is that everybody had extra space, and Gig Economy
allow you to get value out of your extra space.

B. When you are in the Gig Economy, you have two things that you need to do:

1\. Have the extra space 2\. Manage the extra space

Sonder initially focused on #2, and this worked out well. Bring
professionalism to the management interface turns out to be very good deal
because a lot of people with #1 is not good at #2.

My problem with the next step on their is that they are leaving the core of
the gig economy.

Buying the facility and coming up with unique rooms with different paintings
is simply getting into the hotel business. The fundamental driving force of
the AirBNB business model is the use of an asset that is otherwise unused, and
sparing somebody from needing to invest CapEx in building rooms. This is a
massive lever to get into the hotel business, which is what AirBNB really is.

Obviously, I'm totally ignoring the moral choice of if having somebody else
consuming and reselling beds is good or bad for cities. I'm simply on the
point that hotels are a going business that is pretty competitive, with a
series of operators at all levels. It's not clear to me how Sonder business
model is superior to the standard hotel model once they are forced to spend
CapEx for rooms, because having unique hotel facilities or rooms does not
appear to me to drive a competitive advantage.

Secondly, if having unique rooms turns out to be brilliant competitive
advantage, and I'm totally wrong on this point, I don't see how this drives a
real moat (as Buffet would state) that is defensible. I would think that the
entrenched hotel operators should be able to pivot and counter the threat.

~~~
tptacek
Isn't this really a kind of regulatory arbitrage? Hotels totally could buy up
condominiums all over cities and then manage them centrally, but they're not
allowed to do that. Airbnb gets away with it by distributing the liability and
claiming plausible deniability; they're the Napster of hotel zoning.

Isn't Sonder just trying to slip in under the radar, the confusing ostensible
aegis of people renting out their rooms temporarily, to do what Marriott can't
do?

~~~
theologic
That's another angle I wasn't thinking of.

I'm no expert, but the Blackstone group and some REITS already focus single
houses and renting them out. The REIT market is well understood, thus having a
easy line of investors. If this is simply a way of getting past local rulings,
I would guess that somebody in the aforementioned rental market buying single
homes might explore short term hotel type operations instead, although it is
unclear to me the leap from longer term rentals to overnight stays.

------
dawhizkid
Surprised Airbnb doesn’t just do this themselves, though I suspect it might
just be a matter of time?

Agree the one thing I really don’t like about Airbnb and why I still prefer
hotels is the inconsistency of the experience from check-in to check-out. If
I’m in a new unfamiliar city all I want to do is minimize the unknowns as much
as possible and everything about Airbnb from key hand off to cleanliness to
whether the listing is even real is a big question mark until you’re actually
there.

~~~
omegaworks
>Surprised Airbnb doesn’t just do this themselves, though I suspect it might
just be a matter of time?

Airbnb has gotten a lot of pushback for commoditizing spaces that would have
likely been used as long-term rental properties. They very meticulously craft
their brand and community relationships so as to avoid negative repercussions
from operating in a city.

This is an attempt to directly capitalize on the prime, long-term rental stock
drained by Airbnb's presence without damaging the Airbnb brand.

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dano
This would seem to negatively impact the rental market for long-term tenants,
no?

~~~
cycrutchfield
Only if supply is artificially constrained.

~~~
khazhoux
I disagree. Even loosely factoring in parameters such as construction costs
and timelines, permitting, current construction activity, and overall housing
stock elasticity, you find a correlation with hotel/short-term housing and
regional sale prices and availability.

~~~
cycrutchfield
In markets where supply is not artificially constrained nobody demonizes or
really cares about short term rentals. It’s only in markets where housing is
constrained where suddenly Airbnb is to blame for all our problems.

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drum
"Comfortable beds, nice linens, soft towels, and well-chosen amenities and
essentials."

Clean linens alone has me interested. That is by far the biggest headache for
me when comparing an AirBnB to a hotel. Can I trust that the host actually
cleaned the bed sheets?

~~~
nightfly
You can't trust that a hotel did either.

~~~
coltonv
Don't know why you're getting downvoted. Hotels cheap out on that stuff __all
the time __.

~~~
puranjay
I remember reading that hotels often prefer using harsher detergents because
it gives the impression of "cleanliness" more than a milder detergent.

Cleanliness is often a matter of perception

------
gnicholas
I heard about Sonder last year and have been surprised how under-the-radar
they are. It's a great concept, and the pricing sure beats the cost of a high-
end airbnb, which to me is their main competition.

We've had too many dodgy, misrepresented airbnb experiences and my wife has
sworn them off. Looking forward to using Sonder when we're in the cities they
serve!

------
te_chris
"Compared to your typical Airbnb, no one “lives” in Sonder apartments except
for its guests." So just like Airbnb then....

------
whatsstolat
Interesting. First disrupting hotels with holiday rentals (airbnb) which is
now disrupted again by a hotel.

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Rainymood
Sonder is also a made-up word that means "the realization that each random
passerby is living a life as vivid and complex as your own." Originally from
the Dictionary of Obscure Sorrows, which has a lot more beautiful neologism
definitions like this you might enjoy. I felt deep sonder thinking about the
all the people who looked up this word along with me." [1] And in German
Sonder means special and in Dutch Zonder (with a Z) means without.

[1]
[https://www.urbandictionary.com/define.php?term=sonder](https://www.urbandictionary.com/define.php?term=sonder)

~~~
jjmorrison
Actually, the founder is french Canadian. "Sonder" is just french for
"wondering" with a bit of an inquisitive connotation.

------
kevinyun
This might be a far shot, but any landlords here who have leased to Sonder? I
read through their About Page and Lease page but still am not clear on exactly
what they look for, or what the catch is.

Also, crazy how under the radar they have been, really curious to see how they
built up traction over these years without any mainstream buzz

------
minitoar
This was so confusing to me at first because last year I stayed in a Sonder
that I booked through AirBnB.

------
puranjay
Off topic, but people who use Airbnb over hotels, what is the primary
motivation to do so - besides cost?

One of the experiences of traveling for me is the hotel experience where I can
just let go of all my worries and let the hotel handle everything from clean
laundry to changing the sheets.

~~~
enra
I've been using Airbnb for maybe 7 years. The cost has been never a reason,
and often might rent places on Airbnb that are more expensive.

My main reason is that with Airbnb, you can rent a fully functional apartment
or a house, not a badly functioning/uninspiring room with no amenities, no
places to chill, all the furniture is weird and everything looks fake. Then
you need remind telling people to not to clean your room everyday at 8am, and
hear people slamming doors from 6am to 10am. When I travel I like to have a
little downtime at the house, shop local groceries and cook some meals at the
house.

The second reason is that you find amazing and variety places in the world.
Some of my favorite ones has been a modern loft on a hillside in overlooking
the lake Atitlan and surrounding volcanoes in Guatemala, A-frame cottage in
the forest of Mendocino Coast, and a penthouse loft with 360deg view, filled
with vinyl records in Berlin.

I never stayed in a hotel that I found have enjoyed that much, or been that
impressed by it. They are all the same and so bland, even the most high end or
expensive ones.

(Disclaimer, I currently work at Airbnb.)

~~~
puranjay
I reckon that it mostly comes down to how you travel. If you're a "slow
traveler", you probably like to explore a city extensively over several days.
In which case, a home-like atmosphere would be nice to have.

------
joelrunyon
Why can't the US just start serviced apartments like they do in Australia and
Asia?

Apartment type buildings w/ laundry + kitchens stuck in a hotel like building
w/ front desk to check you in.

That's gotta be a way better use of city resources.

~~~
rahimnathwani
The US already has hotels that specialise in apartment-type experiences. A
couple I've stayed in for >1 week stays: Residence Inn in Seattle, and
Staybridge Suites in Sunnyvale.

The main difference between them and pure serviced apartments is that they
have a breakfast room, and rates usually include breakfast.

~~~
ghaff
They also usually have daily maid service. I often favor this category of
hotel, especially in cities, because I prefer a refrigerator, sofa, and some
more space over more typical hotel amenities that I often don't use (bar,
full-service restaurant, etc.) Serviced apartments in Europe are often a
better deal than conventional hotels too. I suspect I don't value conventional
hotel amenities as much as the average person does. On the other hand,
especially for business travel, I do value having a staffed front desk and
reliable check-in, bag storage, etc.

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babesh
This is what other people are doing already but on a larger scale with VC
backing.

------
babesh
The logical stable point is that all city centers will be in effect hotels or
homes of the very rich who can afford to bid against the expected return of
those units.

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siruncledrew
Interesting... I suppose their game plan is to get bought by Airbnb for
providing them with a convenient add-on service that could boost their
revenue.

~~~
ibrahimcisse
I am not sure if they will ever be acquired by AirBnb, the main difference is
that they either own the apartments but most likely They have signed long term
leases on the apartments, this is a completely different model than Airbnb.

They're much more closer to WeWork' Business model. This is typically a
vertical where WeWork could make acquisitions.

The space is quite competitive, and a company like
[https://www.staylyric.com/](https://www.staylyric.com/) is doing pretty much
the same thing.

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tptacek
How does Sonder qualify the spaces they purchase? If they aren't careful,
aren't they really just one big target for lawsuits?

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pucado
In India there's a massive unicorn by the name of Oyo rooms which has been
doing the same

------
emphasis
As you can imagine, Sonder is hiring like crazy as we are positioned to grow
at blitz scale.

Check out our open positions here and feel free to DM me if you have any
questions:

[https://jobs.lever.co/sonder?lever-
via=KHoOVtOKv0](https://jobs.lever.co/sonder?lever-via=KHoOVtOKv0)

------
purplezooey
We've not built enough of all kinds of buildings for 20 or 30 years. We're
seeing it hit housing affordability now, and Airbnb is a reaction on the
commercial side. It's the fault of junk city councils and HOAs that oppose all
development no matter what.

