Ep. 47 – Delegating Tasks Across Cultures with Isabel Berney

Ep. 47 – Delegating Tasks Across Cultures with Isabel Berney

There’s the complexity of running 50-person company with all the different moving parts. For a hospitality business, you have to be hands-on as a manager and you can’t let anything slide through the cracks. As you’re scaling, you’re never done with the management and training and you never can take your eye off the ball, and more challenges come with delegating tasks across cultures. Isabel Berney, the co-founder and COO of Vacayo, talks about their real estate business model and how it differs from others. What started as a side hustle grew, and they now have a team in New York and a remote team in the Philippines that does the bookings and reservations. Isabel shares you can get your multi-cultural teams aligned with your vision so that they’re making it happen for you.

Delegating Tasks Across Cultures with Isabel Berney

Isabel Berney is the Cofounder and COO of Vacayo, a real estate management platform that transforms underperforming rental homes into generous passive income streams for landlords. In her role as COO, Isabel oversees growth and management of their vacation rental portfolio operating in four cities on both coasts. She cofounded Vacayo with her husband Truth in 2016 and they’d been bootstrapping their way to $1 million in revenue. Around that time, Airbnb and other sharing economy startups were gaining traction. In 2011, Isabel discovered her passion in the industry and the potential to use real estate as passive income. Isabel, I’m looking forward to hearing from you. You guys are in a crazy competitive space but a really thriving space as well. Tell us about your model and how it maybe differs from some of the others that are out there.

The space itself is competitive, but we actually have a little niche within it because we’re offering guaranteed higher income to landlords. We furnish the properties completely so there’s no out of pocket expense for landlords. We’re also targeting the single-family home market, which is a forgotten market in terms of the managers. Many of them want to go to condos because it’s a little bit easier to work with a big developer or landlord and move into 20 or 30 condos at once. We’re targeting single-family homes, which is a lot of small-time landlords that maybe they had a house, they moved out and now this is an income-generating property for them. It’s not necessarily working with them in terms of all the demands of managing a short-term rental. We take all that on and absorb all the upfront costs and we both profit month-to-month.

Are these longer-term rentals that you’re doing then not just short-term?

We actually go after the long-term market. We reach out to landlords on Zillow, landlords that normally had long-term tenants and then we convert their home into a short-term rental. We’re able to make our margins above a long-term rental. Short term rentals on average make around 60% over the long-term rental. Something people don’t necessarily know but with the proliferation of Airbnb and all these websites, even Booking.com and Expedia getting in the game. There’s a lot of profit to be had. We take the larger share of the profit, but we guarantee the landlord the 10% extra every month.

Do you deal with the insurance industry much in your space? We had to move into a house due to a renovation from an insurance claim and the insurance company was paying a huge amount of money to a homeowner to put us in their house. Do you deal with them at all?

We work with Proper Insurance. We partnered with them. They do exclusively vacation rental insurance. Occasionally, not often. Once a year or less we have to deal with Airbnb’s host guarantee and they have their own insurance that guarantees up to $1 million. We’re basically double insured.

No, I’m sorry. I meant the insurance companies that are paying. I had a claim at my house, they had to then go put me up in a house and they found the house for me. They paid for it, but they were paying like $16,000 a month for me to be in a house that I probably could have rented for $8,000.

Maybe they got taken advantage of there. We definitely had homeowners having homes that have been damaged and they’ve come to us. We haven’t directly dealt with insurance companies on that. Especially when there’s a hurricane, we’ve been there and we’ve helped people who are displaced or were renovating their home. We get that all the time.

You said you were on both coasts, so what cities do you focus on?

Our two top cities are San Diego and Miami. They happened to be the two top vacation rental markets in the country. We’re focused on growing our Miami market. It’s high season in Miami for short-term rentals. It’s a slow season for long-term rentals. Nobody’s moving in the winter, but all the snowbirds want to be here. It’s actually great for Vacayo because we have many landlords that their homes had been sitting on the market and then we have lots of guests that need places to stay.

You said you are actually paying for the furnishing of the places?

We do. We partnered with Wayfair. On the West Coast, there’s a company called Feather that we’re working with and we rent furniture from them. That lowers our CAC a little bit. We can rent furniture. As soon as they’re on the East Coast, we’ll be taking advantage of it, but with Wayfair, through our partnership, they give us great deals and they’re partnered with Handy. Handy will put the furniture together and they do it all within 48 hours.

Tell me about what part of the business you’re focusing on. You guys started the business several years ago. Talk a little bit about the trajectory and what’s changed in your role over those years as well.

We started as a side hustle. We both had corporate jobs that we hated and we didn’t feel we were a good fit for Corporate America. We started when Airbnb was just becoming popular and it was a side gig. We realized that it could be much more because even in New York, landlords that deal with vacancy risk, especially in the winter so we started growing. I would say I did a bunch of everything. Any entrepreneur when you’re starting out, you’re doing everything. I would even greet the guests. We did have a cleaner, but I would do pretty much everything else and correspond with all the guests. Now, I have a team in New York, but we also have a remote team out of the Philippines that does all the bookings and reservations. My big focus is I am running operations/sales. I have somebody who helps me with growth in terms of partnerships, but I’m still overseeing our inside sales making sure that landlords are happy with our leasing process. I would say that’s about 60 to 70% of my work and 30% is overseeing operations.

How many total employees do you have full-time and part-time in your organization?

We’re still small in terms of our US. We have eight employees and we have about seventeen employees in the Philippines. It’s been a lot of great work basically making sure that all our guests are happy and well taken care of. We have a lot of independent contractors so they’re not full-on employees because we partner with Superhost. We have about 26 superhosts between our different cities managing all the properties. Some manage one and some manage up to six or seven. They are independent contractors even though they are part of the team.

SIC 47 | Delegating Tasks Across Cultures
Delegating Tasks Across Cultures: Having to let people go is never easy, but for any startup, you have to fire fast in order to get to the next level.

 

You’ve got the complexity of running about a 40, 50-person company with all the different moving parts. That’s what it felt from the different groups you’re starting to talk about. I always love these startup phases and you guys are past startup now. I’m not to ask you your age, but when Isabel was five, she was Isabel. When she was fifteen, she was Isabel. When she was 25, she was Isabel. I’m not sure if you’re into your 30s up, but if it’s your 35, you’re Isabel, but you changed. As you were 1, 11, 21, 31, you’re the same person, but you evolve and our companies have to evolve as well. What were some of the early things that you were like, “This is perfect for Vacayo,” and now, you’re like, “That was a dumb idea or we’ve evolved and iterated out of that?” What are the things that you used to do that you no longer do that we can learn from?

I used to think that just because our revenue was strong, I could focus on making sure all the design was perfect. I could be more hands-off with the operations and hire out a lot of that. I realized that for a hospitality business, you have to be hands-on as a manager and you can’t let anything slide through the cracks. We bootstrapped and then it took off pretty quickly and we were one of the first people even offering short-term rentals in terms of in professional managers in New York. I think that I was a little bit blinded by that or I thought it was going to be this glamorous thing now.

I realized that when we got to Miami, it was square one in terms of hiring, managing and training. I think the cautionary tale is as long as you’re growing, you’re never done with the management and training and you never can take your eye off the ball. You can’t get too comfortable even if you’re not cleaning places or checking in guests. It’s good sometimes to get back to your homes. For me, go see them, make sure everything’s the way it used to be. Obviously as you scale, there’s always the risk of quality going down, but that was something that I had to learn.

I was talking to a CEO and we were laughing about the people side of the business. I call it the pain in the butt side, but it’s hard. People make everything a little bit more complicated because there’s no real rule book for it. It doesn’t matter what size you get to, people are still the big one to try to figure out. How do you get your team aligned with your vision and move the vision that you guys have as a couple where you’re taking the company? How do you get them aligned with that vision so that they’re making it happen for you?

A lot of times I think just simple little ways. I’ll pop up on Slack with exciting news about a partnership or a landlord that has a lot of properties and I’ll share, “We’re moving into these properties and take pictures or video.” Even bring my operations person to the properties so she can get a sense of the excitement that the growth is exciting. When we get positive reviews from landlords or guests, I always try to make sure that everybody in the team is celebrating, every little victory and they’re all a part of it. Especially if they’re in the Philippines and they can’t physically be here, I still send them Vacayo swag and stuff like that because it’s sometimes the little things to remind them that this is like a landmark for us. This is a new city, this is a revenue goal we tried to reach.

Is it a different culture in the Philippines than it is with your US team or do you try to have the same culture to blend all those operations? How do you work through that?

The Philippines is obviously you’re dealing with a different culture. They’re fantastic, but it definitely took years for me to find the core fifteen people that I found in the Philippines and the people that understand the business and the sense of urgency. They’re passionate. I see them posting on Facebook about the business, which makes me happy that even though I want to go visit them because I haven’t gotten to that yet. I’ve been swamped with Vacayo, but I know we need to do a Vacayo trip to the Philippines.

I have the little manual that I send to them and when I am interviewing or onboarding somebody, I always make sure that our freelancers in the Philippines understand that they’re an important part of the team and it’s not a strict hierarchal structure. It’s a very open environment and everyone has a voice and is expected to speak up, which I think for a lot of them shock them. Maybe they’ve worked for like IBM, some of these huge companies and they’re not used to chiming in on a lot of things. We do a lot of team meetings, which I do once a week where everyone can state no matter who they are, issues or things they want to improve upon, things we were doing well and not doing well.

Can you give a specific example of time with someone over there that you’ve had to work with them to help them speak up more? It is a very different cultural norm. I was coaching a CEO from Thailand and his second-in-command is quite strong and kept telling me, “I don’t want to disappoint him.” I was like, “He thinks you’re amazing.” They’re worried about saving face and not disappointing and saying the right thing that they often don’t say the stuff that we need to hear. Can you walk us through one specific?

I’m always writing down examples of that and adding them to guide books to help them because that is a huge pain point for our business in general. I always give an example. There was one guest that was having trouble with the code and for some reason, I think they were from Asia and the translation wasn’t going well. It was actually a home that I had vetted. Every month I go vet some homes so I was totally familiar with this home. They left the guests way out there for two hours until our Superhost was able to get there and let the guests in but the guests left a bad review. I was like, “If you only escalated it to me or my assistant, somebody would have been able to help you.” They felt bewildered or they were so scared that I would be upset that they were bothering me. I was like, “Just get that out of your head. Please bother me. I want you to bother all of us all day. That’s your job.”

That’s how I was trying to say, “Please bother us. If you’re bothering us, you’re doing your job. If you’re not bothering us, you’re not doing your job.” That can go too far the other way, but I let it be that way in the beginning while they learn and over time, my operations person and I will be like, “That’s actually on the manual.” You still want them to make the initiative, but the flip side of that is a lot of things can slide through the cracks and they don’t learn proper escalation. I think escalation training is important for anybody from a different culture where there’s a lot strict hierarchal structure and there’s a lot of division between boss and employee, so we try to get down.

Even in North America, you’ve got people that are more dominant, more expressive versus people that are more analytical and amiable. Even of those on a cultural norm, people are either more polite, more reserved and quieter. You’ve got a bunch of salespeople in a room and a bunch of writers in the room who’s going to talk more to salespeople.

If you’re here from New York, you know how to express yourself. I think we’re very confrontational people overall. It’s something that’s been hard for me to understand. Just confront me, what’s the big deal?

I wonder if almost showing people some written examples of how to confront and how to have that radical candor like good and bad and maybe a video where you have the same people. Maybe you have someone from the Philippines role-play with you what a bad radical candor would look like or not doing it. What a good one would be to show an example. We used to do it with our clothing examples of our teams at 1-800-GOT-JUNK?. When I was building that company up, we would show the good branding examples and bad branding. It was so obvious, everyone was like, “I see it now.”

That’s a good idea so they can learn by example.

We would show them a good truck, bad truck and good dress code or bad dress code so they’re like, “I get it.” It was clear.

SIC 47 | Delegating Tasks Across Cultures
Delegating Tasks Across Cultures: Escalation training is important for anybody from different cultures where there’s a lot strict hierarchal structure and there’s a lot division between boss and employee.

 

In fact, the manager doesn’t have to squeeze this out of an employee. That’s the problem.

Is New York your head office or do you have a head office? Are you mostly remote?

New York is our head office and then we have a small office in San Diego and in Miami.

The next time you’re in San Diego I want you to go visit one of my clients. A company called Billy Gene Is Marketing. I don’t know if you know Billy Gene.

I definitely heard of it.

Take a look at some of his videos on YouTube. They’re hysterical. My favorite one is still The Wolf of Paid Advertising. It was basically a spinoff of The Wolf of Wall Street and it was just making fun of that whole thing. They are brilliant marketers that their culture in their space is fantastic and they’ve opened office space. He’s a good guy to know in the San Diego market. Walk us through your growth as a leader in the years since you started the company and running it now, how have you changed and grown over the years?

We started running the business, I was 25 and I didn’t know much because I had very little true job experience. I had worked a couple of years at Omnicom and a year at a financial firm. I didn’t have a lot of experience and didn’t have a lot of leadership experience at all. I definitely have learned over the years of different management style. I’m not by nature a micromanager. I’ve learned a happy balance where I want to lead, I want to empower and I want to be able to let people make decisions because obviously micromanaging in a business like ours is a nightmare. There are so many people to manage. You’re managing Superhost, you’re managing landlord relationships, you’re managing guests coming from all over the world.

It’s not a great business if you don’t have competent employees. I’ve learned over the years how to differentiate. I think Ray Dalio said it best that once you’ve done the basic training and given them the tools, if you have to micromanage someone, get rid of them. That’s been a very hard lesson to learn having to let people go is never easy. It always feels like a loss but you have to fire fast for any startup in order to get to the next level. As a leader, I’ve learned to build the guts to be able to do that and trust my intuition because it almost never fails you when it comes to people.

I listened to Ray Dalio a lot and I copy a lot of his principles, but I also have been trying to adopt them in terms of getting tons of feedback about employees and being able to make those notes and then review them every so often so that everybody is growing in their role. Those are big tips for me. For me, in the beginning, I used to lose my cool a lot. Not like abusive but get upset and worked up because the stakes are high. Sometimes you have an $8,000 reservation, that one little thing can go wrong and it can be thousands of dollars refunded or some disaster. I’ve learned that that never serves you well in any situation. In any kind of situation, don’t lose your cool because you lose your power when you lose your cool.

We lose our power and people also question us as leaders if we can’t stay within it. I’ve had to teach my team over the years that I’m a bit of an emotional train wreck. One day I think I’m going to take over the world and then four hours later it’s like I’m stressed and scared about something and then I went back to while it was great. They’re like, “Did you not remember that four hours ago we thought we were going to lose the company?” I’m like, “No, I was just thinking out loud.” They wonder whether you’ve got your things together, but it’s part of our DNA as well.

You hear in movies and stuff people losing their cool and you hear of all these big-time entrepreneurs losing their cool, but then you realize that it doesn’t work.

It actually doesn’t work for them. Steve Jobs at Apple was famous for being a bit of an emotional train wreck, bipolar, hypomanic. The culture at Apple was not a great culture. They were a spectacular company and I wonder what kind of company could Apple be if Steve Jobs had the ability to temper himself 15% or 20%. We all have room to grow. Here I am criticizing Steve Jobs but we all have areas to improve. I love that you kept mentioning Ray Dalio and his book Principles. Have you read Ben Horowitz’s book The Hard Thing About Hard Things?

Not yet. I have it on audio. I need to read that.

Buy the hard copy version of The Hard Thing About Hard Things and you will be scribbling notes and underlining. It’s going to be like a textbook. It’s a great soundbite. You pair that with Principles and you’ve probably got two spectacular books. It’s smart to be rereading it. It drives me crazy when people are reading one and another one. There’s enough in a couple of books, just put it in place.

While you’re driving, you miss things especially Ray Dalio’s book is so dense with so much advice that you can keep reading, and new things stick more than other times with you.

I think that’s where our learning goes. I have a client in Geneva, Switzerland and he will only read a book that’s tied to something he’s working on over the next three months. If he’s working about people issues, he’ll read about people stuff. He won’t read about marketing because it’s not going to sink in. How do you measure your customer engagement?

SIC 47 | Delegating Tasks Across Cultures
Delegating Tasks Across Cultures: Landlords are the first and foremost customer of any rental business.

 

We’re always tracking the website in terms of viewership and people messaging and inquiring on the website. We have two different types of customers. We have landlords and we had guests. Are you asking more about one side or the other or just in general?

Who do you believe your true customers of all those?

Our first and foremost customer is landlords because without them we don’t have guests and we’re very focused on growing our landlord base. I would say we measure customer engagement the most by the number of signups coming in through our website through SEO and social media and making sure that we have landlords flowing in constantly. Also, when we are sending out email blasts to landlords to see who’s interested in leasing with us. We’re always tracking the percentage of clickthroughs and feedback reviews that we’re getting from landlords are our key metrics.

Do you use a Net Promoter Score?

My partner, he’s handled more of that. I’m heavier on operations and sales. We use that.

Take a look at that as an opportunity with landlords. How many landlords do you service?

We have the ones that we guarantee the rents. We’ve taken over the lease and we have about 59 of those. We have about another 60 odd landlords that they’re homeowners and they need part-time property management when they travel or go away for the summer. Those are our profit shared homes. Our meat and potatoes in terms of our offering are our rent guarantee, but then we also do profit share with people who are still occupying our home at least part-time.

It’s a great market to serve. Talk about leveraging technology. How do you instantly leverage technology? What are your favorite technology tools or hacks that you’re using to scale?

We built a rent guarantee tool, which is basically a quoting tool that allows us to provide an offer to the landlords that are looking for a full-time tenant. We become their tenant and their manager. That is definitely the biggest game changer in terms of being able to go online, type in your address and get a quote. The quote is completely accurate because you pick all of the amenities of your home. You can make adjustments if you have a pool, if you have this kind of parking, an elevator or whatever it might be in your home. The only reason we would ever change it is if we get to the home and it’s not what you said it was or the home isn’t in good condition, we would have to adjust. Other than that, it is a way that they can lease in under 24 hours, have their home rented and then we go furnish it and start occupying it as tenants.

We have that and we have an automated home leasing process. It’s all through a dashboard that we’ve created for landlords. Once they sign the lease, they can see all their rent payments, they can approve or manage repairs to the home through their dashboard. We also created a Superhost matching process so that they’re matched with homes based on what they’re looking for, proximity to them, how big of a home they’re comfortable with. They can see all the homes that are available for management and be paired with that.

Walk me through that one. You take people that are Superhost and you give them a property to put under their name then?

To put under their management. There are on the ground property partners is what we call them. They’re the eyes and ears of the company in terms of what’s going on in our homes. What we do is if you’re a Superhost and you’re on Airbnb and you’re like, “I would take on some more properties. I’m interested in making some money.” Some do it full-time, some do it part-time. They go on our website and they have to show us that they have this Airbnb profile. We can see they are Superhosts. They have 200 reviews. We do a quick review process or review of all them. They can see the homes that we’ve leased that are available for management and then they can pick and choose in their area what works for them. We’re very big on proximity. We need our hosts to be no more than fifteen, twenty minutes away from the home so they can get there at any time.

That totally makes sense. That explains why you’ll take a higher percentage than would be normal. You’re running it for the homeowner. You mentioned that you went to hands off on something. How do you find the balance from going to hands off and advocating to not micromanaging? How do you figure out that blend?

First of all, I’ve created hundreds of pages of manuals explaining the business. It had to be their living breathing documents, which I always explain, “Please to anyone who works for me, this is a living document. Let me know if there’s anything that you think needs to be updated.” I would say being able to hold people accountable, check in with them, have brief meetings unless there’s a serious issue that needs to be addressed. It’s always important for people to know, especially if you’re traveling, you’re not always there in the office that you’re still on top of things. You still want updates. I tried to do at least weekly meetings with anyone who reports to me. Some people it’s multiple times a week, sometimes it’s five minutes. I learned that from Elon Musk. It is very helpful because it also gives them a quick little platform to address issues that might fall through the cracks. For me, I was not a meetings person and I don’t like long meetings, but I do believe that short meetings are essential to running a business so you have a lot of moving parts.

Tell me a little bit about how you avoid the whole micromanaging while at the same time balancing out not advocating and not being too hands off. How do you find that balance with people within the company?

I would say creating lots of manuals is important so they understand your mindset. Trying to get them in your head as best that you can is the way that you are able to delegate properly, which takes time. You have to put in the time up front. I think that was hard for me in the beginning. You want people to understand how you think and it doesn’t happen. It’s a slow process. Once you feel you’ve done all your due diligence in that sense or at least you’ve put it all down, frequent short meetings that they have this space to be able to address issues and you follow-up. Making sure that they’re reporting to you on key metrics however, often is necessary. For me, sometimes certain things I need every week, certain things I need every month. I’m not losing sight of the business, I’m just not in the nitty-gritty.

SIC 47 | Delegating Tasks Across Cultures
Delegating Tasks Across Cultures: Running your own business is hard. You have to be passionate and you have to believe in what you’re doing.

 

I like that you point out that some of the metrics you need weekly, some you need monthly. It drives me crazy when people look at the same dashboard all of the time. When I think about my car, I need to look at the speed every couple of minutes, but I only need to look at the gas once every week or two. It’s a different kind of measurement time periods for each metric for sure. Let us sit on some parting lesson that if you were to have one big lesson in your career in business that’s helped you as a COO, what is it that you would have wished you’d known at a younger age?

I think I was a little bit idealistic in the beginning. I didn’t know how hard it is to raise money. I know this sounds a little bit bleak, but running your own business is hard. You have to be passionate. You have to believe in what you’re doing. You don’t do this for money. There are many other ways to go to make money work. I would say if you want to make money, go work for somebody else. That’s my advice. I know that sounds silly because obviously many are making a ton of money. I do believe that in order to be successful, you have to believe in the mission more than your desire to make a bunch of money. There are definitely easier routes with less roller coasters and less emotionally taxing issues that you have to deal with. You have to be able to drop everything sometimes. Sometimes you grow too fast and you have to readjust. You have to be ready for a bumpy ride. I finally have been able to come into terms with what it means to run your own show.

I don’t think I’ve met a single entrepreneur who’s ever said, “Starting and running my own company was way simpler than I thought it was going to be.” A friend of mine, Aaron, who is the Cofounder of a company called iContact. They sold for well over $100,000 million. I saw a post of his and he saw the first email that he sent through the iContact system. He said that that email began the next twelve years of sleepless nights. I think as entrepreneurs, we’ve got to recognize that. When you’re a second-in-command, when you’re the COO in an entrepreneurial company, we’re strapped to that entrepreneurial roller coaster as well. In your case, you’re the Cofounder as well, but if you’re the entrepreneur or the COO in an entrepreneurial company, you are going to ride the roller coaster. You might as well wave your arms in the air and have fun.

One other little piece of advice I think is that don’t get caught up in titles. It doesn’t matter if you’re a CEO of a company that’s not off the ground. People say, “Don’t you wish you were CEO?” I’m like, “No, I don’t care about that. I only care that the company is successful and growing.” If you have a tiny little piece of Facebook, you’re much better off than being the CEO of tens of thousands of other companies.

Isabel Berney, the COO for Vacayo. Thanks very much for joining us on the show.

Thank you.

I appreciate it.

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About Isabel Berney

I worked on “Babigo,” the concept was to take baby play-gyms in cities like New York, who often charge high rates and are not “drop-off,” and turn them into a hourly “playcare” centers by providing sitters. Kind of a WeWork for childcare. I set up an online presence, surveyed thousands of parents of young children and found that, especially during travel, they needed a solution to flexible childcare–something better that hiring a sitter for their hotel-room. Stay at home parents were also excited about the concept and I gathered over a thousand emails of potential customers. I met with investors and business owners of childcare centers and made some headway. Owners of the Playroom NYC were ready to pilot the idea. Ultimately, I decided to focus on Vacayo, which was already in operations, but this was solid experience in laying the groundwork for a startup. Someday, I plan to try to return to this concept. It could be a great subdivision of Vacayo, or even a stand-alone company.

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