Today is a big moment for Sonder. Eight years after launch, we began publicly trading our common stock on Nasdaq Global Select Market under SOND.
In January 2014, with no money, network or experience I stopped attending class to dive head on into entrepreneurship. I would have never imagined that today, we’d be sharing that the startup I incorporated in a basement as a college student would become publicly traded.
The story starts in Montreal, when I needed to sublet my apartment in order to head back home for a summer job. Subtenants were hard to find and I’d be stuck paying rent on an empty place. An idea sparked: what if I took the best sublets available for the summer and rented them out by the week to travelers visiting the city? I quickly gathered data on every property listed online for short term rent and built a model laying out expected revenues and cost. The math made sense. I decided to go for it.
That first summer I tested the model with the apartment I shared with a couple of other classmates.
The space that incubated the idea that would become Sonder.
We entered our business in a college entrepreneurial competition, didn’t make it to the finals, but bookings were rolling in regardless. My roommate at the time and I greeted guests with bottles of wine, parked their cars, cleaned rooms between stays and everything in between. When September came, the revenue tally totaled $13,700, right on forecast. The model worked.
I then expanded the test to six apartments. I was the sole housekeeper, revenue manager and customer service agent. By the following summer, a small team in Montreal was up and running and we scaled to 82 units across 11 cities by leveraging a network of entrepreneurial students who were following the playbook we’d written. For six weeks straight, I slept on a futon that barely fit into a closet in the office. We generated our first million in revenue. I decided it was time to go full time and build a real business. The question was: what would it be?
Still without a network, we decided to enter an accelerator program in Montreal so that we could get mentorship from seasoned entrepreneurs and investors. It was while working with this program that we clarified the vision for our business. Sonder, which was called Flatbook at the time, would be a new kind of hospitality brand bringing technology, design and predictability to alternative accommodations.
Building out the first office and team.
To pursue this new vision, we dropped the subletting business, raised a $3M seed round, started working with property owners and developers to operate and manage entire floors or buildings. I brought on fellow entrepreneur, Martin Picard, to help launch the business. We quickly saw that technology would have to play a crucial role in allowing us to scale and operate efficiently so we started building our engineering team to replace the network of spreadsheets we’d used until then. Twelve months later in early 2016, after a series of ups and downs but tremendous growth, we closed our series A funding round. Before the round even closed, I relocated to San Francisco with a couple of carry-ons to start building out an executive team. The workload and intensity that went into building the company was extreme. No tasks were too small – we felt like hackers hustling our way to success.
In late 2016 we rebranded to Sonder, and by early 2017 we raised a Series B round of funding and the pace of growth was scorching. At any given time, more than half of the company’s employees hadn’t been in their seats for more than six months. With little experience, it was crucial for me to scale too. I started getting executive coaching to tackle the detailed feedback I regularly sought from the team. Coaching became a cornerstone of the culture at Sonder and we built an in-house coaching program. This helped us promote a growth mindset across all functions that meant we were moving and aligning faster. Meanwhile, we kept applying pressure to win the market and expanded internationally to Italy and the UK. We became the leading company in this hotly contested, alternative accommodation space.
Each year, we secured better and larger properties, with an increasing amount that were custom built for us. We meticulously designed all of it with the underserved millennial and gen Z traveler in mind, and they loved it. Behind the scenes, our technology got more and more sophisticated – it allowed us to operate spaces very efficiently and with a modern service twist which eventually led to our awesome guest-facing app. We recast what great hospitality meant by focusing on eliminating friction and moving to modern modalities of communication. You could check-in and get into your Sonder without a key, message our team on your phone and request fresh towels, extra blankets or other in-room items at the tap of a button. This is when we started thinking about boutique hotels.
Using proprietary technology, the Sonder app powers the entire guest journey
In 2019 growth went into overdrive. We were the leading company in our space, and could use our size and balance sheet to our advantage to eclipse competition further. We also believed that our tech, operations and design ethos could revolutionize the boutique hotel space and we signed our first boutique hotel that year. By 2020, close to half of our new signings were hotels – a dramatic expansion of the opportunity, and one that we increasingly believed would be a hit with guests. Who wouldn’t want well-designed boutique hotels with modern, frictionless service and high consistency at a price point within reach? Rather than being an alternative accommodations brand, we could apply our tech and design know-how to any category, from hotels to apartments or resorts. This is the vision we’ve been relentlessly pursuing since then.
In early 2020, COVID-19 arrived. We first saw cancellations skyrocket in Rome and then our occupancy rates cratered overnight. By March 2, 2020, it was increasingly clear that we’d have to take drastic action or we might not make it as a business.
This is one of the moments in the journey of company building where you stare at the abyss and start fearing that it may all end. That the years of hard work may amount to nothing and just leave behind the humiliation of having possibly failed your team and supporters. Every great company goes through a deeply defining moment at one point or another in its existence. This was the first of our defining moments and we just had to keep our heads up, power through and do the best we could given the cards that we’d been dealt.
By March 17, 2020, one day after the start of lockdowns in the US, we had landing pages up on Sonder.com targeting traveling nurses, discounts for longer stays and performance marketing campaigns ready to go for a variety of niche use cases. We did everything we could to offset the waning demand, including revisiting hundreds of deals with property owners and making very difficult downsizing decisions. Through really intense focus, we successfully reversed our downward occupancy trend and were up in the 70 percentile range within a few months. We even closed a $200M+ Series E funding round along the way, a major accomplishment given that the world was caught in the initial waves of the COVID-19 pandemic at the time. Over the next year, the pandemic kept bringing new twists and turns, with further waves and variant after variant, but our numbers kept getting better. We lost some good people, but the vast majority stayed on, powered through, and gave everything they had to turn this crisis into an opportunity.
Sonder Casa Luz in Barcelona, opened in 2021
The results have been nothing short of exceptional. In 2021, we announced that we’d be going public through a business combination with Gores Metropoulos II, with hundreds of millions in PIPE investments from blue-chip investors. We had an ambitious plan to grow the business rapidly following a difficult 2020 and in Q2 and Q3 of 2021, we beat the plan and raised our full-year 2021 outlook twice.
And today, SOND became a reality on the Nasdaq Global Select Market. In the short-run, we’re focused on rapidly growing, improving our technology, guest experience and operational efficiency. We’re just scratching the surface of growth in our over 35 markets and 10 countries we’re currently in. In the next three to five years, we expect to be truly global with presence in Latin America and the Asia-Pacific region.
In making all of this possible, I’d be remiss not to express my deepest appreciation and gratitude to all of those who got us to this point. Thank you to our investors who believed in and supported our vision. Thank you to our real estate partners who work with us every day to provide an amazing experience to our guests. Thank you to the many vendors and partners who do business with us and help make us successful. And most importantly, the biggest thank you and greatest appreciation to every Sonder employee who’s applied their outlier-talent, work ethic and determination to lead us to where we are today.
Our ambition is immense – it will take a long time to fully materialize and it will be far from easy. But we’ve already built a truly special company, and have not only survived, but thrived through some of the greatest and most unforeseen challenges there could be in hospitality. At Sonder, we do not relent and we do not settle for less. We’ve instilled grit, intensity, discipline and a continuous improvement mind-set deeply into our culture. There are no challenges too big for this company to take on. I’ve said many times over the last few years that going public isn’t an exit. It’s only a transition point in the early days of every great company. It’s now up to us to show the world what we’re made of.