Brad Handler is an entrepreneur redefining the luxury travel industry. Brad began his career first as an engineer at Apple, then as an attorney at a top Silicon Valley law firm, and then at eBay as their first in-house counsel from 1997 to 2001. But he is best known for his innovation in the world of destination travel clubs. In 2002 Brad founded Exclusive Resorts with his brother Brent and served as the company’s CEO and chairman. They have since gone on to create Inspirato, a vacation service providing personalized, high-end travel experiences. Brad earned a bachelor’s degrees from the University of Pennsylvania, and a JD from the University of Virginia School of Law.
2:08 – Brad introduces Inspirato’s affordable business model
5: 49 – Brad explains the two travel products and services offered: Inspirato Membership, and Inspirato Pass
10:04 – Hospitality vs. real estate in the vacation business, why Brad chose to focus on hospitality, and the importance of specialization in a company
11:03 – Brad and Robbie discuss subscription vs membership business models
12:25 – Inspirato’s forever promise, and why a membership mindset is so important
14:03 – Brad highlights the importance of planning for success in the entrepreneurial world
16:07 – How Inspirato uses technology to pull ahead of its competitors
16:65 – Brad and Robbie get into the “nitty-gritty” of Inspirato’s business model, and talk about Robbie’s 7 steps for optimizing subscription business models
18:45 – Brad introduces his philosophy of “celebrating failure” to promote innovation
21:03 – Inspirato’s most important metrics, and how data collection can transform and improve customer experience
26:30 – Brad and Robbie discuss Inspirato’s key to lasting members: a personalized onboarding process
31:08 – Why Inspirato has decided not to make any services “free”
32:31 – How Inspirato is structured for profitability
34:12 – Brad and Robbie talk about the importance of customer satisfaction and success
37:01 – Brad and Robbie discuss how human relationships are a part of Inspirato’s success
37:55 – Brad offers advice to aspiring entrepreneurs and explains why passion is an indispensable asset
39:40 – Brad shares his tips for working alongside family, and how he and his brother have grown to be so successful together
41:58 – Robbie puts Brad through a round of rapid-fire questions
Robbie Baxter [00:00:00] For context, this interview was recorded in February 2020 before the COVID-19 pandemic.
Narrator [00:00:11] We all want a business like Netflix or Amazon Prime. Businesses where once a customer engages with them, it becomes automatic. And part of their lifestyle from then on. But how do you build that Forever Transaction? Robbie Kellman Baxter has been studying subscription and membership models for nearly 20 years. And in this podcast, she uncovers the secrets and strategies of the membership economy. Join us for Subscription Stories, True Tales from the Trenches.
Robbie Baxter [00:00:39] I’m Robbie Kellman Baxter. Today’s subscription story belongs to Brad Handler. He and his brother, Brent Handler, are vacation entrepreneurs who are incorporating membership and subscription in some really novel ways. Brad has done a lot of different things over his career, first as an engineer at Apple, then as an attorney at a top Silicon Valley law firm, then at eBay as their first in-house counsel from 1997 to 2001. But he is best known for his innovation in the world of destination travel clubs. The Handlers launched Exclusive Resorts in 2002. More recently, they have been building Inspirato, a membership model which also has introduced a subscription option.
Brad Handler [00:01:20] I walked into a little dorm fridge and a tiny little bar sink and my wife turned to me and said: “shut up or solve this problem.” So we spent the rest of that vacation week solving the problem.
Robbie Baxter [00:01:32] We’ll talk about how to package value for subscriptions and determine the right price and features and what he learned as a Silicon Valley insider that has informed his work in rethinking the travel industry. And finally, we’ll discuss the unique benefits and challenges of working with your family.
Robbie Baxter [00:01:55] Welcome, Brad.
Brad Handler [00:01:56] Thank you. Glad to be here.
Robbie Baxter [00:01:58] I’m so glad to have you. I wanted to start by asking you to walk us through your travel journey from the beginning of Inspirato until today.
Brad Handler [00:02:09] So we started Inspirato in 2010 and we had had a company before that that was also in the travel space. And part of our focus for Inspirato was to figure out a way to make it easy and accessible for friends and family to travel together and have fantastic experiences. So as we started to think about what we wanted to do to make this easy for people to understand as well as easy for people to participate. Our first goal was to make it easy to join. And one of the most important things about making something that’s travel related easy to join is to make sure that it’s not terribly expensive. So we were able to dramatically lower the price of entry in Inspirato versus our previous company. And once we did that, we were then able to shift to a model that allowed people to pay an annual subscription in order to maintain their membership and then pay nightly rates based on where they want to go. And those rates for the homes that we have vary based on seasonalities, size and location. And by creating our own mini market economy inside the confines of inspirato, we were able to dramatically lower the cost for people to get excellent value for their vacations.
Robbie Baxter [00:03:30] How did you go from being eBay’s attorney to starting and running a vacation club?
Brad Handler [00:03:37] So back in 2001, I was on vacation with my wife and at the time two kids, along with my brother, his wife at the time, two kids. And now we now each have three. And, you know, they’re almost all in college. But anyhow, at the time, we were just hanging out and having fun and we were staying at one of the nicest hotels and one of the nicest suites. And I just kept complaining. The furniture was old and ratty. I had asked to make sure that there was kitchen in the unit and I walked in to see a little dorm fridge and a tiny little bar sink, which is difficult when you have, you know, two kids under four years old. You need to have a little fridge there. And they had an all you can eat breakfast buffet, which was twenty five dollars. And my four year old just wanted Cheerios. So I was pretty cranky. And my wife, after a couple of days, turned to me and said, shut up or solve this problem. And we went down to Cabana 6 at this particular resort and we hammered out the idea for what ultimately became exclusive resorts. And that’s how we originally got into the world of vacation and travel, because it’s not something that either my brother or I had ever dabbled in before from a working standpoint. We’d just been on vacation.
Robbie Baxter [00:04:56] Yeah. You’ve had quite the varied career. I don’t know too many people that are engineers and lawyers and travel entrepreneurs.
Brad Handler [00:05:06] Yeah, it’s probably a pretty small Venn diagram, I guess. But I started out after college working for Apple. And when I was at Apple in the late 80s and early 90s, if you were really good at what you did, if you were, you know, a genius, you could do whatever you want. And if you were pretty good, you got promoted. So as soon as I got promoted, I realized that it was time to do something else. So I went to law school and was fortunate enough to come to work here in Silicon Valley after law school. And one thing led to another. And, you know, I was very fortunate and had a lot of great opportunities.
Robbie Baxter [00:05:46] So can you walk me through the model for Inspirato? So what are the options that that somebody has if I were to consider joining? What would my options be?
Brad Handler [00:06:00] Sure. So at Inspirato, we offer two different types of travel products and services. The first is Inspirato Membership. Inspirato Membership is what we started with when we started the company. You pay a nonrefundable one time fee to join, which you can now pay over a year monthly if you want to break that down. And then you pay annual dues, currently you pay dues of thirty seven hundred dollars a year. And from that you get access to our portfolio of homes, experiences, hotels, other travel options and a whole suite of travel experiences. So for our homes, for example, we generally lease our homes for five years. We put in our own furnishings. We put in our own kitchens, our own AV systems, everyone has a Sonos in the rooms, we we make sure that they all speak a similar language in the level of fit and finish that you would find in all the homes that have our own staff as part of them, they have our own concierge. We are like a brand that you would stay at for a hotel like a Four Seasons or a Ritz Carlton that manages a property that they don’t own. And so in the same way that we don’t own the underlying homes, we manage them. And you can only stay in them if you are an Inspirato member. And for that, there is a nightly rate that will be variable based on the seasonality, based on how big the place is, based on the location. That is the Inspirato membership. Then about seven months ago, in July of twenty nineteen, we launched a new product and that product is called Inspirato Pass and Inspirato Pass is a completely different product. So while Inspirato Membership has members and we have tens of thousands of members, we have Inspirato Pass, and Inspirato Pass has subscribers. So in Inspirato Pass, there is a twenty five hundred dollar a month fee and it works a lot like the original Netflix worked. So if you remember the original Netflix, you’d get one DVD. Watch it and send it back. You take another DVD, you’d watch it, you’d send it back. So with Inspirato Pass you have one reservation at a time and you can’t make your next reservation until you’ve consumed your existing reservation. So your reservation may be a week from now or it could be five months from now. But until you’ve consumed that reservation, you can’t make another reservation. And once you go to make a reservation, that reservation can’t start for seven days from the day that you make it. So the motto for Inspirato Pass is to “Look, Book, Stay, Repeat”. There is no nightly rates within Insiprato Pass. There’s no fees, there’s no access charges, there’s no tax, there’s no hotel fees. You just pay twenty five hundred dollars a month. And under the system of our rules where you can make that reservation, once you’ve consumed your existing reservation, you can optimize the choices that you want. And there’s currently one hundred and thirty thousand different choices in Inspirato Pass. The inventory set for Inspirato Pass is different than the inventory set for Inspirato Club and Inspirato Pass has a lot more opportunity for us to get smaller accommodations and to be in a lot of different hotels. We also have experiences, cruises, all types of different events that might pop up there.
Robbie Baxter [00:09:35] So a couple of things you said that I want to just pull on a little bit. You talked about leasing the properties. That’s different than what you did first time around with Exclusive Resorts.
Brad Handler [00:09:46] Correct. In the world of Exclusive Resorts, we bought and built and owned the accommodations. So we were a real estate company and we also provided the hospitality. And we were both and the company Exclusive Resorts still does both. When we started Inspirato, we decided that it was more effective and more efficient to pick one or the other. You either want to be a real estate company and manage your assets to a real estate cycle, or you want to be a hospitality company and just focus on your members and now your subscribers. And as my brother and I thought about what we wanted to do in our next iteration, it was a really easy choice for us because you can’t control a real estate cycle. You just manage yourself to a real estate cycle, but you can control the experience that your subscribers and your members have. And we knew if we poured our energy into building an infrastructure that could give members and subscribers the best vacations and experiences possible, that we would be successful with that business and not have to rely on the whims of a real estate market that could go up or down.
Robbie Baxter [00:10:58] So much more in your control. And in fact, you know, I want to talk a little bit also about subscriptions versus membership. And I think it’s very interesting that you’ve had these two separate models to really appeal to, not necessarily two different kinds of people, but two different need states.
Brad Handler [00:11:17] Yes. When we first started Inspirato, we had really one offering. We had 60 homes that we had set up on launch day for people to join and be part of. And if somebody wanted something else for the first couple of years, we said, no, we can’t do that. We have these 60 houses, 90 houses, 120 houses as we continue to grow. And what we do is we provide this experience. And over time, we realized that we had a unique opportunity with our members to become more integrated into all the travel that they did. We could say yes to being able to book people in hotels. We could say yes to being able to book people on Bespoke Experiences if they want to go to the Galapagos or they want to go do a bike trip through the Arctic in the middle of the summer. Right. Well, whatever it is they want to do. We want to be able to do those, we want to be able to say yes to those types of opportunities.
Robbie Baxter [00:12:22] And I want to make this point for for our listeners that what is especially powerful to me about your model is that it’s really focused on the promise you’re making to your members and to your subscribers, which is about a certain kind of vacation experience and confidence that they’re going to have these types of experience in a consistent way, as opposed to being in the business of providing, you know, hotel rooms or homes. We have these homes and you take them or leave them. That’s a very product focused. You have very much of what I would call a member mindset.
Brad Handler [00:12:57] Yes, we are not a marketplace, so we’re the opposite of a marketplace. We control the experience end to end. So in a lot of ways, we’re like Apple. We control the entire stack of what people are going to see and experience, even on the cruises that I mentioned. We’ve partnered with a provider where we take over the entire ship. So the only people on that ship are our members who come in through that particular lens. And that gives us the ability to make sure that we’re able to meet those expectations each and every time. The way we describe it sometimes is that life is too short to play vacation roulette. You only get a certain number of days that you can experience with your friends and family. And we want to make sure that it’s as perfect as it can be.
Robbie Baxter [00:13:43] And that feels like the promise that the whole business is built around is helping people optimize those days.
Brad Handler [00:13:49] Yes.
Robbie Baxter [00:13:50] And your point about end to end experience management is very much something that Apple where you work that early in your career, where they’ve become very well-known for that that same level of focus.
Brad Handler [00:14:03] Yes.
Robbie Baxter [00:14:04] Are there other things that you think from your time in Silicon Valley, both as a lawyer at eBay in the early days at Apple, that has influenced the way you’ve designed and built the membership and subscription that you have today?
Brad Handler [00:14:20] Sure. So one of the things that I remember early on from eBay that has sort of stuck with me the whole time is I started very, very early, as you know, one of the first 35 employees, eBay. And one of the first things that I had access to was a copy of the original business plan. And I still have a copy of the original business plan. And as you read it from our position, when I got there to read what the business plan said, you would be hard pressed to think that it would get to that point. But the eBay of today has exceeded that business plan and its most optimistic, perfect projections. You know, ten thousand fold, probably a million fold. And what that taught me early on was to build for success. So build the systems that you need in order to be a much bigger company than you are now. So we invested very early on before we’d really even hired more than two or three employees. We had invested early on on building infrastructure and building out the ways in which we would communicate with our members and build the framework and experience that they would see. And we did it in such a way that our provider at the time of, you know, what would be known to most people as a CRM system, our CRM provider told us that, you know, there’s no way you could add the features we wanted to do and we were too small and we couldn’t do this and we couldn’t do that. And we got a lot of no, no, no, no, no. And so we just went out and hired our own developers and we built a system which they told us, you can’t have. It won’t work. But yet it did.
Robbie Baxter [00:16:07] So are you more, do you think you’re more of a travel company or a tech company?
Brad Handler [00:16:13] You know, we’re kind of like a tech company that’s solving a travel problem. And the technology that we use is integral to what we do and the way in which we are able to use technology to help deliver that service promise to our members and our subscribers is really the differentiator for people to say, I’m willing to be part of this community because I know that they have the ability to determine what is going to work and what is not going to work over the long haul. So we do have a very big technology component within the company and we have a lot of developers on staff and we do everything internally. It’s a real critical component to how we operate.
Robbie Baxter [00:16:57] So this is a great Segway into some of the nitty gritty of how you’ve built your your business model. As you know, I have seven steps that I walk organizations through to help optimize a subscription model or a membership. And the first one we’ve already talked about is the emphasis on technology and recognition that technology is as big a component as any other piece of the business, regardless of whether it’s a travel business, news business, weight loss, business, finance business. I’d love to walk through the other six with you.
Brad Handler [00:17:34] Sure.
Robbie Baxter [00:17:34] OK. So the first one is the organization. And by that I mean the culture you’ve created, the skills that you emphasize, the metrics that you prioritize. What have you done that is unique to build the kind of organization you need?
Brad Handler [00:17:52] So the first thing that we do as a company and part of our company culture is to make sure that everyone who comes in knows that their opportunity to contribute is not limited to whatever the role they’ve been hired to do is. Whatever their job is, they need to be able to do and do competently. But we promote within. We spend an awful lot of time and effort on training in order to be able to promote from within. We have our own training staff. We have our own training rooms, we do management training. We do a lot of work to make our employees feel comfortable that they have a viable career path and that their knowledge and experience in dealing with different parts of the business can help other people in other parts of the business succeed. And one of the ways we do that is what I call celebrating failure. So I talked to the company, you know, maybe once a year on this topic, which is not only is it OK to fail, but if we don’t fail, then it means we’re not innovating. So Inspirato Pass, which has been very successful, was the result we have now over the last 10 years of iterating about different things that may or may not work, that we may have done a little test on one thing and then a little test on another thing. And all of that rolls up and gives us this one Inspirato Pass that’s now successful. But we’ve done a fair number of things that we’ve tested that haven’t been successful. And the most important point I try to communicate is the people who came up with those ideas don’t get punished. They get celebrated for the fact that they’ve tried to think of ways to improve what we do and make it better for our members.
Robbie Baxter [00:19:41] Do you think that that approach is unique to a subscription or membership oriented business, or do you think that that is a practice that could be applied to virtually any transactional business model?
Brad Handler [00:19:58] I think it can and should be applied. I talked to our team in Denver all the time. When folks come up to me and tell me how grateful they are to be in an environment where they have freedom and flexibility to try new things. Hospitality in particular, is a business that is obviously thousands of years old. So any innovation in hospitality, doing something a new way or a different way can come with an awful lot of friction from an embedded, established group that’s only ever done it that way. So one of the real benefits we have in our business is we hire people, a lot of them right out of school and do training and bring them into our environments so that they’re not they’re not completely set in stone with what they’ve learned somewhere else.
Robbie Baxter [00:20:55] And the role of data. What are you what are you measuring? What is your what is your organization measuring about themselves, about customers? And what are the most important metrics for you to run the ship?
Brad Handler [00:21:09] So we are data hounds and we’ve had a large number of partners come through Denver and look at the way in which we monitor and measure and have told us that they’re impressed that a company our size takes the data and data warehousing so seriously. We use Tableau and we’ve got a team of Tableau and Salesforce ninjas that are able to extract all kinds of data. So if you’re ever in Denver and want to come walk through our building, what you’ll see is large screens all over the building that are putting up metrics that are real time and up to date, and the entire company sees all of the metrics, you don’t only see your particular department. So our probably number one long term metric is, of course, NPS. We do a real net promoter score with members for interaction and for every trip. We do an awful lot of querying our members and asking them for their opinions about all kinds of different aspects of things that have gone on with both their interaction with us as a company and on their specific trips. So NPS is very big. We we monitor and measure everything so we can I can look at a cohort of data from a given day, an hour, a set of minutes, a set of days, and tell you from that cohort what’s happened to everyone in that cohort who came through a funnel of raising their hand and saying tell me something about Inspirato. And from that, we can long term figure out what’s the average number of weeks or months that it takes for someone to make a decision about whether or not they want to become a member. How long is it between the bookings when they want to book? How many pages do they look at before they make a booking? What’s the amount of time between one trip or another trip? And also on the cost and accounting side. So this is a this is a story that I think helps identify the amount of data that we capture. So we run every single home with its own cost. It’s its own cost center. It has its own profit and loss statement and wherever possible, we try and get multiple homes in a particular destination. And a lot of times they’re very similar. And we had one destination where we have probably 20 homes and they’re all fairly similar and they all came online around the same time. Yet we found early on that in one set of homes, the charges for electricity were almost twice as high as the rest of the homes. And there was no way that we could ascertain why that was so. They had the same amount of load. They had the same amount of people, had the same amount of reservations. So we did a lot of digging and we found that the builder had put in a different type of air conditioning control unit in those homes. That was cheaper for them to put in than the ones that were in the other homes. So it was cheaper for the builder, yet it was much more expensive for us to operate. So we went back to the developer and said, you need to talk to your builder because they put in bad stuff for you. They had to take all of those out and put the ones that had been specked so that we then went back down and we’re able to see the cost and make sure that our costs remain constant from place to place.
Robbie Baxter [00:24:45] So a couple of points I want to I want to bring up for our listeners. One of them is the tremendous amount of data you have and the number of hypotheses that you’re always testing about why things are different, what’s happening here that’s not happening there, and how do we optimize different parts of the member experience? I think that’s really important. The curiosity and also the depth and breadth of data that you have available increasingly important for any kind of membership business. The other thing that is that is really interesting to me is how careful you are with the assets themselves, you know, on on this show, Subscription Stories, there’s a lot of different entrepreneurs of very different kinds of businesses. But one thing many of them share is very expensive assets that are core and being shared by all of the members. Having a good handle on those costs is something that I think a lot of entrepreneurs don’t pay enough attention to. There’s a lot of attention paid to the marketing and the pricing and the business model side, but not necessarily the operations and the cost side.
Brad Handler [00:25:53] And we have to renew homes all the time, right? We have to you have to replace the sheets, the linens, the towels. You have to get new beds, new furniture. You have to. TV goes bad. You have to replace that or refrigerator breaks or whatever, all that kind of stuff. And then we have to schedule painting and a new carpet and all types of pieces to keep those assets up and running.
Robbie Baxter [00:26:15] So you alluded a little bit to the onboarding process and how well you’ve been able to choreograph it and how you understand what happens from the moment someone, let’s say, first hears about Inspirato until they sign up and then what they do once they join. What have you learned about that onboarding process and what’s important to understand about how somebody eases their way successfully into either the membership or the Inspirato Pass subscription?
Brad Handler [00:26:43] Right. So what we’ve done is we’ve divided the world into regions for lack of a better word, and each region has four or five people who are responsible for members and subscribers in their trips. So they work with you once you are a member and they work with you with questions about where you want to go, when you want to go, is it available? And members can look on the website. They can look on the app, on their phone. All of this. And then integrated into those particular geographies are also the regional membership managers who are the ones out there that, in essence, are selling the memberships.
Robbie Baxter [00:27:24] So are they selling? They sell the membership. They onboard new members and they support those same members on an ongoing basis.
Brad Handler [00:27:32] So they have an integrated team. It’s not the same people. So on a team, there will be one or two people who will be selling memberships and then four or five people who are servicing those memberships. But because they’re on the same team and they sit together when someone joins. That person will say, you know, if the regional sales manager’s name is Jim, Jim will say to the new member “OK, I’m now going to introduce you to Mary. And Mary sits right across from me. I’m going to brief her on everything that you and I talked about. And then I’m going to get on the phone with you and with her, and then we’re going to on-board you into the system. So, you know, it’d be great if your husband can be available at the same time. And we can all talk about this.” It’ll take about an hour and we go through how to use the system, how to effectively find what you’re interested in. We try to book your first trip to make sure that you’ve got something that you know you’re ready to go to. We learn about your kids, your parents, your friends, whoever you think is going to come with you on the trip. Importantly, we learn about the travel specific needs that you might have. So you might have someone in your family who has a nut allergy. So we need to make sure that there’s never any nuts anywhere. And that gets coded into that CRM system I told you about earlier so that everyone who sees any record of yours is going to know. We’ve got to make sure there’s no nuts in the house when this particular family gets there. So think about it. If you if you have an allergy and you go to the Four Seasons in Houston and they give you an amenity, when you check in of nuts and you go down and you call you that. Thanks very much. But I’m allergic to nuts. Can you get it out of my room? Well, now, just that hotel knows when you go check into the Four Seasons in Orlando two days later, they don’t know that they might give you nuts again. We don’t have that problem.
Robbie Baxter [00:29:23] Right. So one way of framing this onboarding question is, are you reinforcing the decision that they made, so the wisdom of the decision to join? Are you giving them a way to very quickly get some value and experience whatever it was that prompted them to join in the first place? And then third, are you setting them up for success for the long term so that they are going to get the full value that they anticipated and that they’re entitled to? And it seems like all three of those are happening. The reinforcement with this welcome and this team meeting, the immediate signing up for their first vacation and then this very thorough onboarding to ensure that you understand what it’s going to take for them to make their vacation dreams come true.
Brad Handler [00:30:13] Yes. If we’ve been successful, we’ve done all three of those things. And looking back at the data, what we’re able to determine is, you know, some families will say to us, I don’t have time to do the onboarding. I’ll figure it out myself, or I only have 10 minutes.
Robbie Baxter [00:30:28] Do you let them do that?
Brad Handler [00:30:28] Well, you know, if they can’t be available, then we have to let them do that. But from a data standpoint, what we see is satisfaction is higher for the people who have invested the time to do it. And their their happiness is higher and their longevity in the club is longer.
Robbie Baxter [00:30:47] Yeah, yeah. That’s a great point. I mean, I’ve seen that over and over again with subscription businesses that having the right onboarding experience and having new members who understand that onboarding is key. Those are the people who are going to get the most value, which is great for them. And it’s also going to be the most valuable customers for the organization. Let me move on to pricing and how you’ve thought about pricing and the use of free and how you thought about what, if anything, should be free. I know that many timeshares, for example, offer a free vacation or a free meal if you listen to the pitch. What is your perspective on pricing and whether or not anything should be free?
Brad Handler [00:31:30] We don’t have free as an option. So my own personal belief is that free is a way to subsidize someone else, getting to make a decision and choice about something that’s put in front of them. And we are a very luxury product. We hit a very specific demographic and it’s expensive. And the people in our demographic, they don’t need subsidized vacation.
Robbie Baxter [00:32:02] And the money, I don’t know if I’m right on this, but it would seem like the money is not the thing that’s holding people back.
Brad Handler [00:32:10] Correct. Money is generally not the issue. And so for us, free never worked when we did test it, because that locks someone’s perceived value to the experience they got as it was free. And related to that is another core tenant that my brother and I have about the business, which is which I think makes us pretty rare and unique, maybe more unique than the vaunted unicorn, which is we’re profitable as a business. This year will be our fourth year of profitability. We have built an infrastructure to support people being able to have these experiences with their friends and family. But at the same time is self-sustaining and profitable. How big is the business now? So we’ve got six hundred employees. A little over 600 employees in Denver. There’s another thousand to fifteen hundred people around the world who will do something that involves an Inspirato member being onsite somewhere. Not necessarily as an employee. We will do, we did last year well over 200 million dollars of revenue. Half of that was ARR and we’re profitable.
Robbie Baxter [00:33:38] ARR, Annual Recurring Revenue. So that’s that’s important because that demonstrates the health of the business that it’s predictable. Recurring.
Brad Handler [00:33:45] Yeah. And we have two streams. We have transactional revenue from the people that are members of the Inspirato Club that pay their nightly rates for the travel that they book. The transactional revenue for that. And then we get ARR from the people who are members of Inspirato Pass. And we also count the annual dues that our club members pay as ARR. Because it’s an annual subscription.
Robbie Baxter [00:34:08] Got it. We talked a little bit about customer success when you talked about onboarding and, you know, customer success is a big term in software as a service businesses. The idea being that when you’re charging on a subscription, ensuring that the customer continues to be happy is a lot more important than if you have a one time transaction and they, you know, roll the car off the showroom floor and it’s their problem. How do you think about customer success? Let’s say for somebody who’s been a member 18 months or two years, three years. How do you track to make sure that they’re still getting value and still happy to be members?
Brad Handler [00:34:52] Yeah. So one of the key components, particularly on the club side, is the way in which we optimize our pricing model. So normally in something like travel where you have disappearing inventory, so an airline or a hotel, they will optimize their pricing to get the very last dollar that they can possibly get off the table before that expires. And we don’t do that. We actually do the opposite of that. We optimize for making sure that our members are happiest with the choice that they made so that they will renew. And the outcome is that it doesn’t do me any good to charge someone ten dollars more a night for a stay if they’re not going to renew the next year because they feel that they haven’t achieved the value that they believe they should have as being a member of the club. So for us, making sure that people are surprised and delighted when they travel as well as happy with the value that they’re receiving, is a critical component to the entire engine. And it is a metric by which those regions I told you about are measured, which is what is the renewal rate of the people in your region. And we’ve been very fortunate and had very high success and get in making sure that people renew because they’re happy with the service that they receive. And so the outreach from those teams back to the members is particularly strong. So strong that we’ve actually had to partner with a number of hotels in Denver to make sure that Denver was added on into the club as a place for people to stay because they’d go to Colorado in the summer or the winter to go up to the mountains. And people want to come by and meet their team because they’ve become so important in the lives of our members. We’ve planned weddings and anniversaries and surprise parties and all types of things for members all over the globe. And the personal relationship between the members and their team in Denver is particularly strong.
Robbie Baxter [00:37:02] It’s interesting because, you know, a lot of what we’ve been talking about is the technology and the numbers and the data and the digital experience. And yet at its heart, I think a big part of Inspirato’s success is this emphasis on the relationship, on the trust that’s being built with actual real people.
Brad Handler [00:37:25] Right. So, you know, everything wants to end with “as a service”, right? You’re software as a service. So are we travel as a service? We’re really people as a service. Right. What we’re doing, you know, people as a service, PaaS. So what we’re really doing is making sure that our members and our subscribers are building those relationships where we can make sure that they are optimizing the time they have with family and friends when they’re in residence.
Robbie Baxter [00:37:56] I would be remiss if I let you go without asking for advice. What advice would you give to entrepreneurs and executives who are either knee deep in a subscription or membership model or thinking about where to get started? And I’m especially interested in your perspective as both a serial entrepreneur and as somebody who runs a business with his brother.
Brad Handler [00:38:23] I think that we have been successful because my brother and I like to travel and stay in nice places. So we built something in essence that we wanted to take our wives and families to. And I don’t know that the two of us would have been successful building a new router company, because I don’t have a strong belief that I’d be good at it or understand it. So even though I went into travel without knowing how the business works, I knew what I wanted as a consumer. So if you are building a subscription and you do not enjoy or want or need that service, other people probably don’t either. So I’ve seen a lot of what I would call interesting subscription companies pitch me, and the feedback I give to folks when they come and talk to me is tell me why you want this. Why do you, the entrepreneur, want this service? And if they can’t tell me why they want it. If the answer is, well, I did some research and this is really a critical need in the market. You should move on and do something else. They have to really want to do it because it’s not easy. And as far as working with your family, you know, my brother and I’ve had more than one company that we’ve worked on together and we’ve been pretty fortunate and they’ve been pretty successful. And for us, they work for a couple of reasons. The first is we’re both good at different things. We both have a lot of creativity and are very passionate about the business as a whole. But our individual strengths don’t have a lot of overlap. And so we stay out of each other’s way in those particular lanes. The second is we decided on the very first day that we thought we might do a company together, which was we made a decision which was we can argue and scream and yell at each other all we want when is the two of us. Because, you know, H.R. doesn’t really care about the two of us talking to each other.
Robbie Baxter [00:40:45] Was this one of the travel companies or was this your snow shoveling?
Brad Handler [00:40:49] Yeah. My brother and I had a really early subscription business back in Denver. That was our first one. Where you, you know, people would pay a fixed fee to us for the winter and we would shovel their walks. So when we started Exclusive Resorts, we knew that in order to be successful, we had to speak with one voice. So though we’ve had disagreements about what we were gonna do or not do or how we would implement something, and we may talk about it fairly vigorously, once it’s past the two of us, there’s only one answer. So the thing you don’t want when you are working together as a family in a bigger business, you don’t want people to try and play one family member off the other. It doesn’t work in a business. It doesn’t work in parenting. You have to have a unified voice. And we decided early on that we made that commitment to each other, that we would we would never, ever let it be known if one of us had disagreed with a decision that was done.
Robbie Baxter [00:41:54] Very wise. OK. Speed round. First subscription you ever had?
Robbie Baxter [00:41:58] Probably CBS cassette tape of the month.
Robbie Baxter [00:42:02] Me too. Favorite subscription you have now?
Brad Handler [00:42:05] Inspirato.
Robbie Baxter [00:42:05] Your superpower?
Brad Handler [00:42:08] I seem to be pretty good at figuring out what’s going to happen in any given market or any given question sometime in the future, whatever that might be. For whatever reason, I can see it and articulate it kind of before we get there.
Robbie Baxter [00:42:27] What do your employees love about working with you?
Brad Handler [00:42:30] Well, I would guess most of them love the fact that I’m in Northern California and that they’re in Denver. But what I think they really enjoy most is, the feedback that I get is, listening. I try to make sure that everybody gets heard.
Robbie Baxter [00:42:48] And the one thing you want people listening to this interview to take away?
Brad Handler [00:42:55] It would be that you have to really want to consume whatever it is you’re trying to create, because otherwise it’s just not going to be fun. And it may be successful, but it won’t be fun. I’ve been super fortunate. I worked at Apple and I love Apple Computers. It’s what I grew up on and that was a lot of fun. And then building out eBay was just a ton of fun and the people that we worked with was just fantastic. And now with Inspirato, you know, it’s something that I really like to do. I love to go and see new places and travel with my friends and family. So if you’re looking for something to do, if you’ve got the entrepreneurial gene, whatever that is, that’s going to turn you into an entrepreneur, be doing something that you love because so few of them actually become successful. You might as well love it while you’re doing it.
Robbie Baxter [00:43:46] Do something that you love. Make sure you’re having fun. Those are wise words from our guest today. Brad Handler.
Robbie Baxter [00:43:57] I’m Robbie Kellman Baxter, and this has been subscription stories. Today, my guest was Brad Handler, chairman of Inspirato. To hear more success stories of entrepreneurs creating their Forever Transaction in this new and exciting Membership Economy, subscribe to my podcast wherever you download your podcasts. Also, please give me a rating or review to help me better understand exactly what you want to hear. To learn more about Brad and Brent Handler and about Inspirato, go to Inspirato.com. Arnav Gupta was the audio engineer and editor for this podcast. I’m Robbie Kellman Baxter. Thanks for listening and for your support.
“We got a lot of no, no, no, no, no. And so we just went out and hired our own developers and we built a system which they told us, you can’t have. It won’t work. But yet it did. “
—BRAD HANDLER, CO-FOUNDER, INSPIRATO