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Scaling Up: “Michelin Star Software” with Joel Montaniel, CEO and Co-founder of SevenRooms
Podcasts
15 Sep 2022
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Joel Montaniel joins us to discuss the scaling story of SevenRooms. This episode traverses a wide range of topics; from leading with empathy to product innovation frameworks. 

 

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Transcript:

 

Ed (02:41): Joel, welcome to scaling up. It’s a treat to have you on this podcast. For many listeners, Seven Rooms probably might not be a name that they are that familiar with, but I’ve got a sense that after they listen to this, they will see your business everywhere, because there is an absolute proliferation of Seven Rooms, restaurants, and hospitality venues here in Australia, and that’s what piqued my interest, actually, in your business. And it’s a wonderful business.

The more I’ve dug, the more excited I’ve got for this episode. So welcome. A great place to start, as always, is the founding story, the inspiration behind Seven Rooms, and, of course, maybe some trials and tribulations of those early years.

Joel (03:26): Thanks for having me and it’s such a privilege and a pleasure to be with you. We’re such a big fan of everything you do and the podcast itself.

So, lots of trials and tribulations. Happy to start with the founding story and the origin. Similar to you, I started my career in finance. Investment banking was working 100 hours weeks and you never knew when you were going to have off for the weekend until maybe Friday at 08:00 when your boss felt compelled to come over and tell you that you didn’t have to work. And at that point in time, it was too late to book the restaurant that I was reading about. I didn’t know anyone at these places to get in last minute.

And so, we really started as this consumer idea. How do you make it easier for someone like that to go to these places without going to all the details? We ended up launching a consumer version or play that failed miserably. We learned lots of lessons and it actually led us to this larger idea of SevenRooms. Because what we realized is when you were thinking about where to send all this information about who this guest is, to let the restaurant get to know the person better, we started looking at the systems that the operators were using, and we didn’t have a place to put that information. And what we realized was, wait a second, these hospitality operators, these restaurants that care so much about understanding all the little things, care so much about making people feel special. The systems they are using to run their business don’t have the information that enables them to do it.

And so, we ended up flipping from focusing on a consumer to focusing on the business. With the idea being if we could help them better understand their customer, how could that help them transform service and how could that help them transform their relationships and they were building with their guests?

Ed (05:07): It’s amazing because I think historically hospitality operators have been great at the hospitality bit, but not so great at the business side of things. And so, to give them the tools to actually create better experiences for their customers, be it a wide platform and suite of products that you now bring to them, is such a wonderful and insightful idea. How did you understand the problem that you were trying to solve?

Joel (05:31): When we first started, we thought we were really smart and we white boarded all these ideas and, on the whiteboard, it made a ton of sense to us. And when we started talking about these ideas to the customers, we felt a lot of hesitation. They got a lot of that would never work. And for us we’re like, wait a second, this seems so logical. And what dawned on us is if we’re really going to learn their world, we had to go work in their world. We had to actually go walk in their shoes.

So, we spent a lot of time alongside operators in their offices. We were the hosts at certain places to see what happened and what the experience was like. And what you realize is there’s a hundred other things going on that made what we thought on the whiteboard so simple, actually made it really complex. And the only way we learned is actually by doing the role and being in their shoes and being the user, quite frankly, which allowed us to really rethink about the problem and then rethink about the solution.

Ed (06:30): I’m sure there are many surprises when you are helping the operators in their businesses. And I’m sure one of the biggest ones was just the margin profiles of these businesses are so thin. And so, if you could find a way to expand margin by 2% or 5%, they’re making huge impacts to the bottom line for these hospitality operators. And sure, you’ve seen the digital needs of not just the hospitality brands, but also the digital expectations of their customer accelerate beyond belief.

Just to bring this to life a little bit, can we do a little bit of a walk through as to not just what the customer sees, but what’s the value proposition for your customers, that being the hospitality operator?

Joel (07:13): Yeah, sure. So, to start with what the status quo was before Seven Rooms, and then we’ll go into what it is now and how Seven Rooms helps the consumer and the operator build a relationship and have an experience together. By not having any of that customer data, it prevented restaurants throughout the world from answering simple questions. For instance, today there’s about 15 million restaurants around the world. And if you ask the restaurant owner, who are your top ten, your top 25, your top 50 customers, 14 million of them today cannot answer that question if you took it out.

Another level, to your point about margin if you ask an operator, what’s the lifetime value? What’s the cost of acquisition for a customer? Most of them don’t know what that means, let alone how to calculate it, which means that they have zero control over profitability, zero understanding. And to your point, in a razor thin margin industry, that’s really bad if they don’t know that.

And then to the last point, how do you market to these guests? How do you get them to come back? How do you get them to order again? And we’ll often say to people who are thinking about this, what’s the last great piece of restaurant marketing you remember receiving? And so, in a world, in the industry where people care so much about it, where there’s built in natural loyalty, a lot of the things we would expect to happen haven’t been happening in this industry.

So, to fast forward and give an example of how Seven Rooms helps today, we power online ordering and reservation booking for restaurants. We’re giving them a way to take those orders, to take reservations anywhere online you can think about it very similar to the way people might book their hotel room or book airlines. We’re providing the plumbing and the infrastructure to bring those bookings in. When you make your reservation, you’re able to add an experience. You’re able to tell the restaurant a lot more information about yourself. We think it should be a two-way street. So, when Ed is booking, you can say that it’s a special occasion, you can pick the package that you like when you walk in.

The beauty is, it’s not about being the reservation system where we thought the value is actually, how do we help this person in a millisecond understand the value of ad? And so now that I’m using SevenRooms, I know that you’ve been ordering delivery from us eight times. I know that this is your very first time coming into the restaurant. So, I can say, Ed. Thank you for your support. Right this way to the table. You get seated, I can have the team bring over the Tzatziki dish that you’ve been ordering delivery all the time, knowing that’s your favourite, they drop it on the table.

We have an integration with several different point of sale system, so in real time, that’s getting tracked. And then we can send alerts to the team. So maybe it’s your birthday, maybe you spent over a certain amount. The manager can come over to the table, greet you, ask you how things are going when you leave the restaurant. We have data that’s being built and marketing automation, so that if you haven’t ordered delivery and you’ve been in delivery regular hours, in two weeks, you’ll get an email saying, hey, we miss you. Here’s a complementary Tzatziki.

Or when we’re thinking about opening a new restaurant that you haven’t been to, we will invite you to the wine event because we know you love that wine. All of that is happening without the team having to have the expertise, without the team having to add extra time into their day. And it’s all happening in order of servicing this guest who’s getting a much more personalized experience.

Ed (10:41): It’s a wonderful walkthrough, and there’s no doubt that for your customers here in Australia, and you service the Merivale Group, that is just the gold star of hospitality here in Australia. It’s become a step change in consumer experience. Just the data that they have. And it’s a big group, but across the group, not just a single restaurant. And so, the experience is interwoven right through their 62 restaurants. And that is such a wonderful consumer experience that my loyalty to all those restaurants goes up two, three, four-fold. And you can see what that lifetime customer value can do when you start coming back, be it in restaurant or takeaway.

I think something you touched on there. And what I’m hearing is it started as a core product as a CRM, but increasingly has become not just a system of record, but really a system of engagement or intelligence that can really drive outcomes for businesses. And so, it’s giving these operational tools to really make sure that their business is running effectively.

Joel (11:49): Yeah, absolutely. I love how you framed that because how do you move the industry from systems of record, which in the beginning was really people’s heads? Because you think about it as a guest, there’s a place you go to all the time in your neighbourhood, and when those people are there that know you, the experience is really great. When those people are not there, it’s different.

And a large part of that is because the system of record was the team and the staff. And so, to your point, we’re really replacing that information and using a system to be able to scale it and then creating ways that we can create intelligence. So, for instance, if you order this wine three times or more, you automatically get tagged as that wine lover. You automatically get invited to that wine event that’s happening two weeks from now. But because you’re a regular, you get a discounted ticket or preferred rate. So, we’re thinking about how do you make the data useful and actionable.

And then to your point, we did start as a CRM, but what we quickly realized, especially in the restaurant hospitality world, the host in this case doesn’t have the time to run up to the computer to look you up and then run back down and say, oh, I didn’t realize you were friends with the owner. Right this way to your table. We had to make that data actionable and bring it to life at the moment that really mattered.

Ed (13:04): We’ll just stick with Horizon, one of SevenRooms at the moment because I do want to dig into how you view your competitive advantage. And one thing strategically I’d love to lift the lid on is you talk to reservations or bookings as the tip of the spear, and that is in the very first instant, it’s where the restaurant can interact with its customers.

There are other people who have tried to use reservation as a powerful tool OpenTable in the US comes to mind, but there are others that use the point of sale or delivery and try and drive the data and system of record and engagement from there.

What’s the proposition, or the unique proposition for SevenRooms over these other providers? I think as an outsider, it feels intuitively clear what it is. But I’m really keen to hear your inside view on this.

Joel (13:53): Sure. So, a couple of themes that we have. We think about outcomes over capabilities. Why does a customer buy and how do we boil it down? Talk a little bit about differentiation. We want to help our partners, in this case restaurants, let’s say, maximize revenue profitability and then maximize guest experience for every dollar they give us today, we’re able to return $8. So, ROI in a measurable manner, we can prove it out to them. That’s one of the value props.

Another value prop is we’re helping them streamline operations and then ultimately be able to personalize service. We talk a lot about what if you could have it. So, restaurants can just focus on what they’re really passionate about, which is great food and great hospitality and what if we could do everything else for them compared to the rest of the landscape.

There’s a lot of point solutions that restaurants are using today. So, they might have an online ordering system, they might have a reservation system. More often than not, they don’t have a CRM system or data system. They might have a marketing system. None of those systems are connected. And then in some cases, those systems want to own the guest information, the guest relationship. So, the way we think about it is, isn’t this guest add the same guest that’s ordering delivery and booking reservation? Isn’t he also coming into the restaurant? Isn’t he also the person you want to market to? Here’s a singular platform that’s going to do all of it for you.

And then we don’t have any interest in owning your guest data or guest information. We are really helping put your brand front and centre. And I think that was a breath of fresh air where a lot of companies in the space and they do a great job of it, they help provide exposure and distribution, but ultimately there becomes a conflict of interest ultimately of where you want that person to order again or book again. So, we just thought there needed to be infrastructure that helped change the dynamic and help change the future for this industry.

Ed (15:43): I think that’s the key call out right there. You are in partnership with your customers where a lot of the others that are essentially trying to perform similar functions are independent of their customer base and in fact can be very much in conflict, be it on demand, generation, or other aspects to the business where who owns the customer is a critical consideration.

And fundamentally it seems you hold this belief that if your customers, that is the operators, are trying to build a direct relationship with their customers, they need to own that data, they need to own the customer. And it’s this customer obsession that has led you to the growth that you’ve seen and as you say, a really huge breath of fresh air in the industry that needed it.

One thing I do want to talk about unique, I think in many respects you took this view that we are building a global business from day one that provides a whole range of challenges, not just the usual start-up challenges that come and go but taking this global view. I’d love to hear some of the scaling pain points and maybe how you tried to alleviate those of growing a global business and also the advantages and disadvantages you’ve seen over time

Joel (17:00): Yeah, definitely is one of those greatest strengths can also be a greatest weakness and during the COVID time it was the greatest strength that was also really complex. So as markets were closing down, we redirected resources towards markets that were open and vice versa. So, you can imagine the go to market team and focusing on one market for a month and all of a sudden, they need to go switch gears to another market. So, it gave us the opportunity to grow the business even when certain markets were shut down.

On the other side, where the complexity comes in is every market. In some cases, there’s about 20% where they think about something differently. There needs to be localization. In certain cases, the team is fully built out in one market, not built out in the other. And so, it’s almost like you’re running a few different start-ups under one start-up that’s also learning who they want to be. And it provided a lot of complexity and lots of problems.

I would say we’re able to sort through it because ultimately everyone is on the same page about customer, company, department, team, person, and all on the same page about coming up with the best outcomes for customers and hats off to the different market leaders. We had to really sort through and figure it out as we went. It definitely is now a strength and, in many cases, even today, it’s something that we’re sorting through the best way to go after it even as a relatively small company.

Ed (18:28): And what about servicing these global customers as you touch on? They had different needs, perhaps during COVID as different markets were open, but how this is interacted with your product innovation and not trying to serve too many people and in that case serving no one.

Obviously, your use cases are wide. It’s not just for the Singular Restauranteur or the restaurant group, it’s hospitality at large. I know you service a lot of the Strip in Vegas and other hospitality venues. Have you thought about making sure that you still have the focus when it comes to product innovation but also that you’re servicing the needs of now this not just global but very wide use case?

Joel (19:11): Yeah, such a great question. Something I’m thinking a lot about these days and asking the team to think a lot about these days. So, by having a diverse customer base and by being customer centric, we get a lot of customer feedback, and the list of feature requests and rows only continues to grow and expand, and you could make a case for any one of those features.

Being useful to a customer or to a segment and where the team is making a lot of progress is how do you boil it down to the things that will truly move the industry forward or move the segment forward, so we’ve introduced a lot of frameworks now to help objectify the decision and help make it clear to everyone why we’re deciding to invest in something.

From day one, we understood we couldn’t be the best at everything. Let’s pick and choose the places where we really think we have a right to win. We think we could serve the customer uniquely, and so we’re finding ourselves having to say no a lot. We’re finding ourselves having to really prioritize. And one thing I kind of stick to is prioritization is only when you start to feel the pain, that’s when you’re truly prioritizing and making a tough decision. That’s how.

And what we try to do is we try to think about, is this valuable? Is this useful? Is this going to create incremental revenue and profitability for our customer and a better guest experience? If it does all of those pieces and we think can apply it to our customer base at large, those become no brainers for us to really invest in and focus on. And if we think we’re uniquely positioned, so we often think about where do we have the right to win? And then we put it through the prioritization framework.

That said, there are so many tough conversations that happen because, again, we really want to serve our customers, but we also know that we can’t serve everyone. Otherwise, we’re serving no one.

Ed (21:07): That’s such a wonderful matrix that I think is such a practical and useful kind of framework to put all kinds of prioritization through. Particularly, as you said, when you’re serving these big enterprises that are demanding, but you’re also trying to set out and help the family-owned restaurant that is such a suburban hit. They’re two completely different customers and yet the software is applicable to both.

Joel (21:34): One of the interesting things is we service everything from the little independent all the way to Marriott, and we find that almost 80-90% of the functionality can be used by both and the outcomes matter to both of them. It’s really some of the integration work perhaps, and some of the enterprise security that we really need to invest in for the Marriott. However, at the end of the day, that restaurant sitting inside the hotel is operating very similarly to the restaurant that is on some main street of some town somewhere.

Ed (22:21): I’ve heard you say this before, but I love it. It’s almost this mission to make the big feel small and the small feel big. And that sums up this kind of dichotomy that you face consistently. But it is in fact true that you can serve both well if you’re thoughtful about it. Some great lessons there.

Maybe while we’re talking about product innovation, I’m sure over the years it’s been driven from your customers. We’ve just heard that the tension that that can provide. But as you become such a market leader, I’m sure they’ve actually looked to you, your customers have look to you for product innovation that might be useful and solve real problems for them.

Can you give a sense of how you’re fostering innovation in your team, but also from a product sense that you’re driving the industry forward in many areas that these operators don’t know can be taken to?

Joel (23:13): There’s a few examples that come to mind. How do we get the team to think about innovation and really foster this idea that we should keep evolving and changing? We get a lot of our team members and we used to encourage all of them. And we’re going to start to move back there to spend time inside the restaurant to really have that empathy. So, it doesn’t matter what role you’re in. We get you to spend a day or two at the host stand of a restaurant or sitting in the marketing department in the call centre. And it really opens people’s eyes to what the day-to-day interactions like, what customer experiences are like, and how the system comes into play. So that’s how we can help them build this customer empathy and this idea that there’s a lot of problems still that we haven’t solved yet that we can help with.

How do we stay forward thinking? One example that comes to mind out of the gate is when we first started. We started around the same time that the iPhone and the iPad was launching. And operators, especially the old school ones, they were scared that technology was going to get in the way of the human interaction. So, they’re scared that someone would have the iPad at the hose in front of their face, covering their eyes, not looking at the guest.

And so, we got obsessed with this idea of how could you help deliver this experience while making the technology invisible? And one of the ways we can do it, we formed a type of partnership with Amazon, and the idea was, what if we could make the interface disappear? So, imagine it’s a busy Friday night at the restaurant and the manager is walking around and doesn’t know exactly who people are, and they have an invisible earpiece that’s connected to SevenRooms, and they can say, Alexa, can you tell me who’s on table seven? And she’ll say, she’ll read from the SevenRooms database. Well, that’s ed. He’s a regular. He’s celebrating his birthday tonight. His favourite wine is Caymus. Great, send a bottle of Caymus over so I can walk over. Ed, great to see you. Happy birthday. Let me know if you need anything. I have something special coming your way.

And so, it’s a way that you can deliver that same experience without having to have all of the technology front and centre and make it invisible and no one asked us to do that. No one said that we should leverage this type of technology. All they said was how do we keep the interaction more human? So, we prototyped that and we launched it at national conference. That was even three years ago.

Fast forward to another innovation that we’re thinking about. So, we’re taking a lot of cues from the hotel world and this idea, same thing with airlines, this idea of revenue management. Restaurants have never been thinking about their world in terms of revenue management where every guest, every seat has a different potential value. And now the system is actually helping optimize and maximize revenue and value and we started actually doing it for the enterprise customers and we believe that that innovation can be brought all the way down to the independent who has the same needs set but would never necessarily ask for it.

And so, we’re starting to do things like that and it comes back to do we understand the problems and what is truly valuable and do we think we’re uniquely qualified to bring it and that it’s as simple as we can help you make more money without the expertise while delivering a great guest experience. Sometimes they care how we do it, sometimes they don’t. As long as we know we can deliver the outcomes and we think it’s worth taking a shot on.

Ed (26:42): I love hearing that and again, just laying out the frameworks and thoughtfulness and a great case study of, as we’ve already mentioned, moving from a system of record to a system of intelligence and driving outcomes for your customers.

A word that keeps popping up in my own mind, and you just mentioned it, is empathy. And everything that I’ve read about you as a leader screams and empathy not just for your customers, but for your people. And we’ll come to people and culture in a second. But I think your covert response as to how you dealt with your customers who at the time, this incredible black swan event, essentially shut down the industry and put a lot of pressure on your business, I imagine, but your first reaction was for your customer. Can you give some colour for our audience as to how you manage those interactions?

Joel (27:34): Yeah, well firstly, it was incredibly, incredibly difficult. I think if I told you that it was easy or didn’t have lots of long nights, I’d be fooling everyone and myself. You could imagine this industry that we were serving all of a sudden shut down overnight. All of the strategy we had laid out and the grand plans we had all of a sudden don’t matter anymore. And we didn’t know when this pandemic was going to come to an end.

This was March of 2020, and we knew we had a few things that we needed to do. We needed to serve our customers, we need to protect our employees and protect our shareholders because we wanted to. Make sure we had a company to get through it. And on the customer side, one of the tough decisions we had to make was they practically were shut down too. Contractually, they’re supposed to pay us the monthly license fee. And so, we had this conversation that I give the team a lot of credit, the board a lot of credit. It wasn’t that big of a conversation, even though it was a massive decision, which was, should we stop charging and credit our customers that are going through this pain? And of course, the other side of that means we don’t have enough money, or we have less money to pay for the business costs.

Employees and hats off to the team to say, what’s the decision that we would be proud of? If we look back ten years later, what do we want to be known for? If we want to be this long-standing company, then we really need to be there for our customers when they need us most. And so, we made the decision to waive our fees. It was tens of millions of dollars, and that was one of the toughest decisions we had to make. And looking back now, of course, it’s easy to say it was the right decision, but in the heat of the moment, it was one of those ones that was really challenging.

Ed (29:22): It’s amazing when your own business is on a knife edge that you can display the empathy for your customer base. And as you say, there was no end in sight, and yet you’ve remerged. They’ve opened up. And I’m sure that loyalty that they are now showing you is paying off in spades. That’s not the reason why you did it is just so illuminating.

While talking about empathy, it’s probably a good place to segue to the topic of people and culture. And I’m lucky enough to talk to so many great leaders and founders on this topic. And scaling people and culture is by far and away the hardest thing that they do. There’s no doubt in my mind that SevenRooms is culture first.

Clearly, everything I’ve read, and research suggests that I’m really interested as to what the inspiration was to be culture first. You come from investment banking, both you and Alice and one of your co-founders. So, it’s not necessarily easy to join the dots on this. So, I’m keen as a starting point just to understand the inspiration.

Joel (30:25): Yeah, looking back, I have more clarity, I think, as we were moving forward. It’s hard to understand. What I can tell you is that when we first started our careers or my career in finance, I would say we are working with some of the smartest, hungriest people in the world that were willing to spend 100 hours a week working on something. And in that environment, the culture was really bad. There was a lot of selfishness. People didn’t really care about you. You were clogged in the wheel. And yet I was fascinated that all these really smart people would stay in that type of environment.

And from there, I got an opportunity because I knew I wanted to go start a tech company. I got an opportunity to go work for the founder CEO of a company called Live Person. It’s still around today, and the founder CEO is named Rob Ocasio. And what drew me in was sitting here looking across the table at this person who was just as successful as all my other bosses and was telling me, I want to transform the company. I want to grow up a certain rate. I want to be this company that can keep changing and impacting the world. And here’s how we’re going to do it. Of course, we can launch new products. We want to move from a single product chat company to a multi engagement platform. The other way we’re going to do it is we’re going to transform the culture.

And in this culture, at this point in time, it was a public company. They’ve been around for 15 years. Half the company was in the US. The other half was in Israel, which already have distinct cultures to begin with. And I was fascinated by this person that was telling me that he wanted to spend time investing in the culture. So, I got a job working for him as his chief of staff. And one of the mandates at the beginning was, let’s transform the culture. So, we went through this whole process of getting input from people about what the core value should be. We had an all-hands off site in Israel where we spent seven figures to bring everyone together. And this was before. A lot of companies are thinking in this way.

One thing I’ll give him a lot of credit for is he really drew a hard line out of the gate, and I didn’t realize how impactful this was. He moved the executives out of offices into an open floor setting. One of the executives, who was a really important part of the business for revenue, didn’t want to leave the office, and he let that person go, and as a public company, to potentially impact your revenue in that way. That was the first time where this person is really serious about what he wants it to be. And there’s no if end or whatever. This is 100% all in.

So that was really formative for me. And so, when we started SevenRooms, it was this idea that we weren’t so old that we forgot what it was like to work in not-so-great cultures. And I’ve been witnessed to what happens when you start to focus on it. And so, we went in with this idea that if we have the opportunity to build the culture we want, what would that look like? And if we focused on it, what if we could build a culture that we would have wanted to work in when we were starting in our careers. And since day one, it was really important and still continues to be a really important thing we think about every day.

Ed (33:35): You touched on something there that I do want to ask you, and it might be a bit cheeky to do so. I have looked everywhere for the SevenRooms values online, in interviews, and I can’t see them anywhere. And for a business that is definitely culture first in every action that you take to not have your values upfront seems odd. I’m sure there’s some thoughtfulness behind that, but I’m curious.

Joel (34:04): Yeah, it’s a really good question and one that I haven’t gotten yet. So, where we are, we are actually about to launch our core values. We went through a very similar process to what we’ve done at Live Person. We got input across the entire company. We had working group sessions. And what I think in actuality happened is the culture was very strong and even though we didn’t define it on paper, it really came across.

And so, one of those signals I can tell you about is when I asked people at the end of the interview process, what did you think about the people? They would all come back glowing. And actually, what they told me is they said, I asked everyone to explain how would you describe your culture and the people that work here? And they were so impressed that everyone was consistent all the way through, regardless of who they were talking to, regardless of the level of the person, the tenure. And so somehow, we got really fortunate not to have to write that.

Now, that’s one of the mistakes I would say that we made is we should have written them down earlier to really define it. All that said, I do believe that core values are what you hear. It’s way more than the words on the wall. It’s really the actions I do describe core values as core values are the promise that a company makes to its people and the promise that people make to the company. And it’s as simple as that. And I think it got codified even though we didn’t write it down. So, it’s something that we should have done a lot earlier, we’re doing now. And we were fortunate to get lots of great people in the door that had a shared system, shared value system.

Ed (35:44): I’m sure, there’s some light and shade to what you just described that being often core values as a starting point, as you kind of alluded to the founding team getting together, what do we stand for? How are we going to make decisions? What are the foundational stones? But when you look up and, in your case, you’ve got close to 400 people, those values might not hold, and you might need to rewire them anyway.

So, I’m curious as to how that has evolved, but also maybe wondering if you could give a little sneak peek, because I’m so intrigued as to what some of those values are before sharing.

Joel (36:19): I think about the values as, of course, the shared framework. And as we think about growing the company, the image I’ll give to people often is rings of a tree. And the next group of people we hire the outer ring. And it’s really their job to protect the culture and the core values, really help layer in it and strengthen the glue across all of the rings.

And to your point, we wanted to make sure we picked core values that were meaningful, that were true. One of them that we’re including is this idea put everything on the table. And of course, we use some restaurant references. It’s the idea that we should be able to be fully transparent and honest with each other. There shouldn’t be anything that we can’t say. And we believe that by putting everything on the table, you get ultimately to the best outcome. And so, for instance, one of the ways we’ll end the meetings we have is did we put everything on the table? Did someone not say something? There’s no meeting after the meeting. What is it that you’re thinking? Express your doubts so we can understand, because often that will lead us to a better answer.

Ed (37:27): I love the practicalities, and you bringing those to life because it’s those moments of simple codification of a value as a behaviour that ensures that they become more than just symbols or were still even meaningless.

Maybe you can give the listeners just a real time snapshot of some of the other cultural tensions that you’re resolving at the moment. There’s always a whole range of competing tensions right through the business and even within scaling people and culture. But maybe just something that’s real time top of mind at the moment.

Joel (38:03): Yeah, absolutely. One thing we’re thinking about as a leadership team is how do we start to retool the engine and the foundation for the business? Because as we continue to grow, of course, that will create misalignment or pockets of places where information doesn’t flow. And one of them that’s really important is this idea of learning and development. And do you get the outside person who’s done the job before, or do you enable the person who’s come up through the organization to take a shot into that? And I think it’s one of those tensions where the more we can get in front of, the more we can be transparent about everything that’s happening, the better for everyone.

And so how that really translates is making sure people know where they can see jobs always. We even went through this process of how do you request a new hire and what are the fields you have to fill out? We’re also, of course, going through career planning with each of our people to understand. And we ask this interesting question, which is, if you’re going to apply for another job outside of this company, what would it be? Because a lot of times people think that the next step for this person is to become whatever the next step is in their department. We try to think about it as maybe someone has other interests. Maybe it’s a salesperson that wants to go into be a product manager.

And so, the more that we can understand each person and where they want to go and the more, we can understand where the company is going, we think about it as these two intersecting shooting stars, if we can find that box where those two things overlap or intersect, then we position ourselves to be in a really great place. And if that isn’t going to exist for the person, we can have a conversation and get in front of it so that we can avoid any potential as much as we can normal conversations that happen when companies scale.

So, we’re really thinking about how do you get in front of those things and again, put everything on the table and create a space where it’s okay for people to tell us that they’re not happy with what they’re doing. It’s okay for them to tell us that they’re looking elsewhere. And in fact, if we think that’s the right move for the person, we’ll come up with a way to make it happen so that they can gracefully and in their own time frame, make it happen the way that it should.

Ed (40:21): A wonderful analogy of the intersecting shooting stars. Scaling, learning, and development is often something that is perhaps the last thing that companies of your size and scale are thinking of but is so crucial in a tight labour market to understand how to retain the best. And as you say, it might not necessarily be in a similar role to what they are but knowing that the best people are going to not only be cultural carriers but be additive to the business in many ways and it takes the pressure off the attraction and having to really recruit people when it can be so hard and expensive to do so.

The two other things I do want to touch on when it comes to people and culture, I’ve heard you talk about them before, but illuminating because they’re things that I haven’t necessarily heard of before. And one is around your Fresh Start program and the other is what you call 7 R&R. So maybe you can bring just those two programs to life because I think it really wraps up nicely how you think about your people as the leader.

Joel (41:30): Yeah, and I’ll give definite kudos to Paul McCarthy and the People Team who were the innovators of these programs. And I think it really speaks to how we approach our team, the type of company we aspire to be, the type of workplace we want to be.

So, the Fresh Start program was something that Paul and Team came up with. And it was this idea as we started looking at people that were coming into the company, where there’s a standard two weeks’ notice that people are giving before they start their next job. And what we found is people that were really talented often would not take time off between roles, and in actuality, their existing company or former company would want them to stay as long as possible, and the new company would want them to join as soon as possible. They will leave their company on Friday and then join the new company on Monday. And this would happen over the span of many years. And so, we said, Wait a second, don’t we want people to come in, really recharge and refresh? Don’t we want the best version of themselves? So, what if we could make it so that the first two weeks of their employment would be fully paid for, but they wouldn’t be expected to come in or reported until two weeks from then. So, for instance, if someone started on August 1, they would start getting paid August 1, but their first day in wouldn’t be until August 15.

We wanted to create room and space to let someone actually enjoy whatever they want to enjoy. If they want to go take naps every day, if they want to go watch a movie, learn a new skill, whatever they want to do with their time, they’re free to do with their time. And it really gets at this tension of, well, doesn’t the business need to hit these goals? What about the timing? And what we really realized was, if you found the right people, they’re going to give so much more and be so much more ready that you’ll get that back in spades.

So that was the Fresh Start Program, this idea of how you could just give a little space and room for people to take a breather and focus on themselves in a time where we all know the merging of personal life and work life is 24/7, there’s no real breaks. And giving them a time to have that space we thought was really important.

Ed (43:40): It’s an amazing program because in this day and age, particularly, I’m sure for some of your younger employees, they might finish a job and wrap things up on a Friday, and they were turning up on Monday and not really in any place to bring their best version of themselves to work or do their best work because of it. So, it’s a really thoughtful and unique way of making sure that when they start, they’re ready and they’re all in for their SevenRooms experience.

The other one I do want to touch on is the 7 R&R. And it’s off the back of you finding that your unlimited holiday or annual leave program wasn’t as effective as you thought it was going to be.

Joel (44:18): Yeah. So that was, again, an understanding of how we can really serve our employees and our peers and our teammates. And I think everyone knows the game of unlimited vacation. Companies studied it and they realized that actually people are taking less time off. When it was unlimited vacation versus defined. And we saw that happening with our team as well. And we said, well, we’re going to do two things.

Number one, we’re going to still have unlimited vacation. Whenever you want to take off, you can take off. And then number two, one of the very few things we do impose on people is we’re going to require you to take one day off a month as a recharge day and every six months, depending on your tenure, a minimum of five days off. So, you don’t actually have a choice. You have to do it, you have to unplug, you have to recharge because we think it will help you find that balance and it really is our investment. And put the foot first in terms of really putting your actions ahead of whatever you might say. And again, it’s something that we launched and hats off to the people team for coming up with that as well.

Ed (45:28): So thoughtful and I’m sure that the next question and my last question will have the same thoughtful response. As you’ve grown, I’m sure there have been people who have been brought into the business who might be cultural detractors or at some stage in your business have been little cultural bugs. Things have bubbled to the surface that are countercultural. How do you catch these cultural wobbles, so to speak? How are you dealing with them before they cause long term damage?

Joel (45:58): It’s one of those things where you constantly have to stay on top of it, focus on it, be intentional about it. So, some of the things we do is we’re constantly surveying our company and our teams. We are having one on one conversations with them and catch ups. We’ll ask them how they’re doing before we jump into the business side. And it’s one of those things that I think constantly has to be monitored. And you can also tell, sometimes you can tell with the energy, sometimes you can tell with the results.

Oftentimes the results are a lagging indicator of what’s happening truly before then, and fortunate to have leaders that really ask those questions. Think about the team, think about their teammates in that manner because it’s really hard for just one person to really carry the torch and watch everything.

So, across the board it has to be a team effort. And then we really encourage our people to have those conversations where if they’re feeling off or they feel like they need to recharge or they’re unhappy, we try to make it as open and comfortable space to say that those are okay conversations, those are natural conversations.

I think one thing that I’ve learned is the more I can show that I’m a person and be vulnerable, the easier it is for everyone to be. So sometimes I might say, guys, I’m really tired today, or I realized that I wasn’t really taking care of myself. I need to run every day again because I got out of that routine. Or I realized that I didn’t really have my home office set up the way that should have been.

So, I think just calling yourself out for not having perfect days all the time and then really tuning the organization to make sure you’re getting that feedback is really important, and then responding to it, making sure it’s not just feedback for the sake of feedback, but actually showing and demonstrating to the team that you’re willing to take that in and make changes.

Ed (47:58): Wonderful and thoughtful, as always, feels a natural place to wrap this up. Joel, I could have spoken for hours just on these people and cultural issues, because what you are building and how you are building it, it really speaks to me. So, thank you.

 

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