October 17, 2019

I’ve always been entrepreneurial, even from a very young age.

Nate Ritter

Please introduce yourself (name, age, country, job before starting a company) and what you are working on.

Nate Ritter

My name is Nate Ritter and I’m 42 years old, currently living in Austin Texas, USA. I’ve always been entrepreneurial, even from a very young age.

I quickly moved from recycling cans and bottles from the side of the road to selling neighbors anything I could create on my own – drawings, lemonade, custom-designed t-shirts, etc.

While trying to make it as a professional artist, I eventually found an affinity for fixing computers (as well as the profit that comes from it). Troubleshooting was especially fun for me.

By the time I was 19 I was running a six-figure business out of my father’s upstairs bedroom selling custom computer systems. However, I had no knowledge of tax structures or larger market dynamics. So, although I was ahead of Dell and Gateway, I didn’t understand what I had. Once I realized Dell’s business model and how they were going to completely take over my own, I moved on to work at a local internet service provider, where I learned to code.

Coding has been my go-to method of creating businesses ever since.

What’s your backstory and why did you decide to start a business? My father worked an extremely stable job, and always encouraged me to join a large company to gain that stability. But I had a feeling I wouldn’t do well in a huge corporation. I also saw the trends – that corporate job that used to be so stable wasn’t any longer. Times had changed.

The excitement of the startup life was appealing, fun, fast-paced, challenging, and fit my take-a-challenge-head-on attitude. I enjoy and thrive in conflict, and startups have all kinds of conflicts all the time.

I tried my hand at a few other businesses here and there, but then joined a true startup, which was my first taste of something other than bootstrapping. It was dynamic and fast but left a bad taste in my mouth when it came to using other people’s money. I felt a sense of responsibility for that. Sometimes it was people’s savings accounts that they entrusted in our company.

After leaving that company, I built a company and when it failed to reach beyond the city I was in, I split it and sold half of it to a competitor.

After joining another startup and leaving it a few years later, I decided to ask the people around me what they thought I was the best in their world at. Not the best in the entire world, just their world. Their answers were enlightening.

I took their answers and leaned into them, which was the catalyst for starting a web development agency with a business partner which lasted for almost a decade. Technically, it still exists today as Perfect Space but is no longer an agency. We now take products and build them as “side hustles” with the intention of automating them or building them as self-service SaaS applications which run mostly without our interaction.

The latest of these is Room Steals.

Describe the process of starting and launching the business.

For the past few years, while building our SaaS products on the side, I’ve been working as a CTO for a hotel brokerage firm in Austin. I’ve learned about many of the ins and outs of the hotel industry. Some of the more fascinating parts of the industry related to the agreements between OTAs (Online Travel Agencies) like Expedia, Booking, Kayak, etc, and the hotel brands like Marriott, Hyatt, etc.

First, their agreements typically surround something called “rate parity” which simply means one cannot sell the same hotel room for less than the other party. That’s why, when you search for hotel prices, you see very little difference between prices. They are almost always at most a few dollars difference.

However, this is only for the public display of prices. There’s a whole world of pricing (wholesale prices) that are available, but the public doesn’t realize they exist.

Second, all the major OTAs make their money one of two ways – either by commission or margin. But there is a way they have not taken advantage of.

The commission is simple. For each room night sold, they take some percentage of the cost as a type of “finders fee” from the hotel. Usually 7-18%. (Hint: notice that this means the hotels would likely be happy selling the room to you at 6% lower if they didn’t have to pay that commission!)

Margin is where the public is usually not “in the know”. Many times the hotel is willing to sell the room for up to 70-80% off their typical rate! No kidding.

But, because of the rate parity agreements, they can’t. So, distribute the inventory to the OTAs trying to sell it faster.

Let’s use an example: Let’s say a hotel has a rate of $300/night typically. But there are no events going on in town, no tourism that week, so their vacancy rates are predicted to be high. They would love to sell any room they have for $150/night for that week.

The OTAs tap into these “wholesale rates” when the hotel marks the prices down on inside distribution channels so that the OTAs will advertise them harder. The OTAs do market them harder, but they still sell it for $300/night and keep the $150 difference!

So, you just paid $150 more than you needed to.

Enter Room Steals.

We don’t think you should be paying those prices. We think you should pay wholesale rates. The $150, not the $300. So we show you the wholesale prices. We make zero margins and zero commission. There is absolutely no markup to the prices at all.

Instead, we flip the revenue model on its head and we make money through a small monthly subscription fee.

For most of our customers, the fee for the entire year of our fees is covered the first time they book a reservation. One of our first customers saved $157 on his first reservation.

We are giving the prices back to the people.

Since launch, what has worked to attract and retain customers?

Our revenue model, once we explain how the OTAs and hotels make their money, makes complete sense to people. We started by charging everyone a very small fee per month. We had a few signups, but with the recommendations of a few marketers we knew, we quickly raised the price but kept it low enough that anyone will be able to make savings with their first reservation. If someone travels more than once per year, it’s a no-brainer. That said, people still want to see for themselves. It makes sense. We are educating the consumers on how they’ve been taken advantage of over the years. It’s a bold claim. So, they want to search and see it. So, we now give a 2-day free trial. You can search and even make reservations if you want to within that 2 day time period. Switching to this freemium model has definitely accelerated our leads, but we have yet to determine if it’s helping our true conversions. We test everything, and this pricing model and the freemium model is just another test. In a few weeks, we’ll probably change it again and tweak until we get it right.

How are you doing today and what does the future look like?

I’m more excited about Room Steals than I’ve been for many of the side projects we’ve worked on in the past 5 years!

We are not profitable quite yet, but we are close. A few more customers and we will be.

Regardless, we are ramping up because of how easy it was to start getting customers after launching. It’s an easy story to tell, and people are curious, so the signup process is a small amount of friction for the potential benefit one could receive.

We built it with B2B partnerships in mind, so we have Single Sign On (SSO) built-in, and that is my business partner’s focus while I focus on the B2C side. Additionally, we have another junior partner who works on the front-end while I teach him back-end coding, and we’ve recently taken on a marketing intern to help with some out-of-the-box thinking around guerrilla marketing tactics.

We’ve all been very excited about the results thus far, and the future looks very bright!

Through starting the business, have you learned anything particularly helpful or advantageous?

Ask for advice. You have no idea who will resonate with the idea and become your champion, promoting you in the marketplace and helping you move forward. Build fast. Ship faster. Get your product out there and then listen to the tweets, comments, etc. Change your product quickly according to what you hear. Give your product/service a personality. Don’t write what everyone else writes. Don’t be corporate. You’re not a corporation, you’re a person. People buy because they like you, so write your copy like you’re a person, talking to a person. Have a personality.

What platform/tools do you use for your business?

We primarily build using Laravel. In this case, Laravel Spark. We also use LogRocket, Zapier, Slack, and ActiveCampaign.

What are some sources for learning you would recommend for entrepreneurs who are just starting?

Read the book called “Blue Ocean Strategy” and then follow that up with “Lean Startup”. It’ll give you the big strategic picture, and then bring you back to earth to help you make active, tactical steps forward. Also, promote on Indie Hackers first. They are your friends. They’re mostly welcoming and extremely helpful with ideas and brainstorming on how to be better. They also encourage you to keep writing about your product and giving updates. It’s quite motivational to be a part of a community who supports each other in their quest for independence.

Advice for professionals who want to get started or are just starting out?

Ship it. Just get it out there. It could be a piece of paper or an Excel spreadsheet at first. But whatever you do, tell people you’re ready to go and figure it out as you work to serve that first person who gives you money. There’s nothing that lights a fire under you like not wanting to let someone down – especially when your relationship and future business/independence is on the line.

Also, find a champion – someone who believes in you and your product (by promoting it, but because they LOVE your product, not just because they like you). A champion will pay dividends.

Are you looking to hire for certain positions right now?

At the moment, no. We are always looking for creative marketers, but right now we would only pay for performance marketing. If it converts, we’d pay for it.

That said, we do have a Room Steals affiliate program, and that’s probably the best way to earn money from us. We love affiliates (I used to be one), so we pay residually, not just one time. For as long as the user is with us, paying us, we’ll pay you too.

Where can we go to learn more about you and your business?

Website: https://nateritter.com

Twitter https://twitter.com/nateritte

Company: https://perfectspace.com

And most importantly, https://roomsteals.com