Inn Flow CEO John Erhart’s Commitment to Constant Improvement

Sometimes the journey to success means getting knocked down and figuring out how to get back up again. And for today’s guest, it means navigating the hotel industry in the middle of a worldwide pandemic that has devastated the market.

John Erhart is the founder and CEO of Inn Flow, a hotel management platform that consolidates all hotel operational needs into one comprehensive solution.

Obviously, the hotel industry isn’t in a great spot right now, but Inn Flow is handling this situation the way that John handles everything – by committing to constant improvement.

Jason Gillikin: Hey everyone, and welcome to the Donald Thompson Podcast!  On this show, we’re committed to sharing stories of success so that the next generation of leaders can learn by hearing what others did to become successful.

But sometimes the journey to success means getting knocked down and figuring out how to get back up again. And for today’s guest, it means navigating the hotel industry in the middle of a worldwide pandemic that has devastated the market.

John Erhart is the founder and CEO of Inn Flow, a hotel management platform that consolidates all hotel operational needs into one comprehensive solution.

Obviously, the hotel industry isn’t in a great spot right now, but Inn Flow is handling this situation the way that John handles everything – by committing to constant improvement.

That’s why John is reading and listening to everything he can to be a better CEO.

That’s why Inn Flow is a SaaS based hotel management platform instead of selling licenses, so they have to consistently improve.

And John says hotels need this commitment to consistent improvement in order to survive this pandemic.

So today, let’s learn about Inn Flow and what they’re doing in the hospitality space today. Here’s your host, Donald Thompson.

John, welcome aboard. Glad to have you.

John Erhart: Thanks Don. Appreciate it. Glad to be here.

Donald Thompson: So as we jump in, you know, John, why don’t you give the folks that are listening, a little introduction yourself, and most importantly. Why’d you start a business and why Inn-Flow?

John Erhart: In 2005, I was running an environmental design company, and I developed a homegrown application and then integrated, the accounting and the project management with the sales effort. So that could kind of see all aspects of the business. And then a few years later, in 2008, I joined my family business, CMC hotels as their technology leader.

And I was kind of tasked with finding, ways to use technology to improve their operations, much like I had in the design company. At that time, CMC was running operations using a network of spreadsheets, which gave the ownership critical insights, and the staff is able to follow these procedures.

But they’re spreadsheets, right, with obvious limitations. So over the next year, I implemented a number of the industry leading applications at some CMCs hotels and discovered that these products lack some of those key analytics, right? The key capabilities within the CMCs Excel program. And that’s kind of when I realized that we were going to have to build an in house solution.

And over the next five years, I learned everything I could about all aspects of the hospitality industry. How they are currently using technology and was kind of exposed  to the industry leaders, executives at CMC and how they operate trusted consultants. And of course, the property level staff.

And with that insight, I developed the accounting and the labor modules of, of what’s now Inn-Flow.  CMC used it, some friends and families became part of the beta testing. And then, in 2014, I, I launched Inn-Flow, as a separate business and started signing up customers.

Donald Thompson: That is awesome. I mean, really one of the things is, you know, innovation and entrepreneurship and risk taking, it’s usually born out of trying to solve a specific problem. And you were trying to make the CMC business building hotels and then you guys own and operates several hotels, how to make that business better for technology, but found a better way and spun out something different.

Talk to me a little bit about when you, when you look at Inn-Flow as a technology, right? What makes you guys stand out from competitors, right? Like, what makes you guys better? What makes you best of breed? Why should people rely on you?

John Erhart:  When I developed Inn-Flow, I was trying to solve three main problems, that we had, that all hoteliers have and that we didn’t have a simple single solution for. The first one would be visibility. Visibility in terms of real time metrics, see your entire portfolio, visibility of every department, in a hotel from a single location. The ability to use those analytics to drive decisions, to manage any opportunities.

And the second was, process control. It flows more than just a bunch of different applications. It’s a management system, so it’s got checks and balances built in so that owners know that their system is being followed, their processes are being followed at all of their different, properties and then automation.

There are so many manual processes, in other applications and outside these applications, you worked on spreadsheets. You know, hospitality is about service. If a GM is stuck in their office working with spreadsheets and data entry, they’re not providing service to the guests. Inn-Flow is designed to simplify the processes and automate recurring tasks.

So freeing up a manager to focus on the guest experience.

Donald Thompson: That is really powerful. And you said a couple of things that are really instructive in anybody that’s building a technology company, right? Is your job is to make it easier for people to do their real job, right? Which is creating a guest or a client experience and automating kind of the typical tasks is really what you guys did.

So now let me, let me pivot a little bit. When we’re talking about the business and the technology, tell me a little bit about how you guys have grown as a company. That’s what Inn-Flow does. How have you grown the business? Tell me a little bit about the last several years of growth as a company and where you see the future.

John Erhart: Most startups, it began with me and a couple of developers, right? And me  wearing all the hats. And we’re a bootstrap company. I’m proud of it. We’ve had a gradual, controlled growth and we make the most out of the resources that we have.

And me playing those different roles, I soon started to rely on advisers to help me as a CEO kind of, establish my company vision and figure out ways in which that, I can, you know, scale this business. And as the company grew. I needed to find a way to delegate the responsibilities to stay in the loop.

I found this awesome application called Asana, and it’s really become a big part of our company culture and more recently I’ve tried to pull myself out of some of those loops, realizing that I can’t be as effective as CEO, if I’m involved in every single conversation. And so part of that comes with, realizing my strengths and weaknesses and having really good personnel to, to handle those areas in which are not my strengths.

And really you’re taking my time and focusing more of it on the areas in which that I can contribute the best.

Donald Thompson: So that’s a powerful thing to segway cause we went from the technology to actually some of the thought process as a leader. Right. And one of the things that you said is you listened to advisors, you could work on growing yourself as a more complete CEO, and that is a very powerful point of advice. And then the second thing you described is now how do you make sure that you focus on your right strengths? One of those things as a CEO and leader is knowing what business you’re in. So are you in the hospitality business or are you a technology company, or is there some kind of metamorphosis of both?

John Erhart: That’s a really good question. We talk about that all the time. Those are kind of the two pillars of Inn-Flow, right? We strive to be equally good at both of them. That’s why the company is filled with leaders in both areas, both technology and hospitality. You know, our mission is to use advances in technology to solve common issues, problems in the hotel operations. So a recent example of this would be, a smile ID. This is something that we’ve rolled out this year, beginning of first quarter. Labor’s the number one, expense in the hotel operations, right? The number one controllable expense and buddy punching is an industry issue.

That’s where one person punches in for other people and so let’s say there’s always looking for ways to mitigate this issue. So we as a technology leader partnered with Apple turned our iPad time clocks to be used for facial recognition so they could punch in. We create our own proprietary technology called smile ID.

It really, it’s simplifies the punching process and eliminates that buddy punching.

Donald Thompson: So that’s another example of identifying a problem that your clients had, creating an innovative solution and then bringing that to market. Now is that smile ID specific just to the hotel, your space? Where is that now a product that over time could serve different, different markets, different functions.

John Erhart: Yeah, the technology and the way that it’s developed can apply to multiple industries.  These are based off using Microsoft components, Apple technology all wrapped together with workflows that can apply to all kinds of hospitality and additional industries.

Donald Thompson: That’s awesome. When you were deciding as a software CEO, how to price and take your product to market, some people sell licenses, some people are software as a service. Why did you pick the business model that you picked as a software, as a service company? Because that’s independent of Inn-Flow and the industry that’s more of a technology thought processes as a leader.

John Erhart: I never really liked the client side model or the longterm sales model.  There’s too much friction, one, in the sales process, right? It takes a lot more negotiation up front, you’re dealing with licensing. There’s some technical issues, and honestly, there’s some business issues to it as well.

The SAS model, was always more appealing to me because it’s kind of a commitment to constant improvement. Right? Your client has the right to walk away at any point. They’re not locked into a five year deal. You know, where they have to then pay for upgrades. The expectation in the SAS model is that you’re going to have a product that is constantly evolving and providing the customer with new and better ways of getting their work done.

Donald Thompson: That is a powerful answer, right? I’m going to restate it. And then give a quick thought on it. A commitment to constant improvement that both addresses a client concern that they’re not stuck with an outdated piece of software, but it also keeps a company innovative because the expectation for new and better makes you have to service that client different. Have you found that in your own team in terms of innovation?

John Erhart: Yeah. I see myself as a product CEO, different CEO’s are, there’s sales CEOs CEOs that are, are more fitted in the marketing.  I’ve come to find my strength is in the product part and so I get very excited working with, the engineering team and developing these new features, pulling in from all of our different departments, you know, sales and our trainers, our implementers. In getting that feedback, we get very excited when clients come to us, we meet once a week as an entire company just to talk about what feedback we’ve received within the week, and which one of those items we can elevate and will add value to our clients.

And then we push those through development pipeline. We’re an agile development shop, so we make a point of being able to identify those improvements, get them out there and all the way down to the support team. They get the excitement of being able to show, explain how these new features can solve some big and small problems that our clients were having.

Donald Thompson:  That’s awesome. We’ve worked together for many years. I’m a super fan of Inn-Flow and what you’ve done and what you’re taking the business. But I also own a marketing company and you’re one of our clients. And one day, and this was maybe two years ago,  we were talking about marketing and growth, and he said, Don, I don’t know how to say this, but I don’t want to retain a relationship with a marketing agency anymore and you guys are doing fine. It’s okay, but I want to bring this work in house. Right? What I want to explore with you is we hear that all the time as marketers, and it’s a big decision for a CEO to use outside resources for marketing, build your internal team. What was that thought process for you as a small emerging business? What are some of the reasons that you wanted to bring the majority of that work in house.

John Erhart: Right? Good, good question. I guess it goes back to kind of, the early way in which I developed the company. Out of necessity, I had to learn about each of these different aspects, right? These different hats of, of the business and by doing that, the real value to a CEO and startup is that you learn from the ground up how each of these things works. And so then as you hand it off to someone else, you’ve constructed a foundation and built it in a way to the best of your ability.

And then you give it to somebody that’s skilled and way better, that’s going to elevate it even further. Right. And so I did that, you know, I feel with, with each of those and kind of marketing was that last one that I kept playing with and then, I realized that what I was missing, you know, I’m somewhat metrics driven. I felt that, that I would feel comfortable having control over the metrics if I had that, that foundation in there.

And so that came with hiring a marketing automation manager, building out, and standing up a modern marketing automation platform. And having a clear internal process of our marketing,  through sales, you know, the life cycle. And so that’s allowed me to bring in consults like Walk West to come in, help us out on specific projects where I know now know that I’ve got a much more clear dashboard of what, you know, what we’re doing and right, and what is working and not working for us.

And another reason is  I find it very valuable to invest in having some marketing, some limited marketing resources in house that would live, sleep, breathe hospitality plus software that would sit there and hang out on our development calls, our support calls and they come with a marketing mindset, would at least be able to, you know, produce, hey, you guys are talking about this feature or, you know, this issue. Why don’t you express that to your client base right? Often that we’re not and or we don’t think about it in that respect. So having that person kind of right there on our shoulder has been valuable. And then once we need to really put legs to an idea, we can pull in,  Walk West to really put the polish and professionalism into those ideas.

Donald Thompson: One of the things that, that our interaction taught us as a company, Walk West, and I mean this sincerely, right, is because when you said that to me at first blush was like, no, pay us a lot of money. We’ll do these things for you. It’ll be fine. Don’t worry about that. But then what is your real charter to be a partner with a company? It’s for that company to be successful. And that always doesn’t mean the relationship will stay the same. And what we’ve now started to offer it to a lot of our clients is a more co-build a co-campaign development program to where we work directly with teams, that are partners so they can be smarter, raise their capacity, and then they come back to us once or twice a month to continue to get upskilled with what we’re learning. And what we’re finding is that that relationship is just as strong as the other. It’s just a matter of what type of life cycle in marketing that client is in at the time. And a lot of times in, in our experiences, outside of the startup, you can get a little arrogant. And think that the way that you deliver marketing services or consulting is the exact way it should be.

And I think our experience working with Inn-Flow from a Walk West standpoint was humbling, and now we’re using it as an advantage as we’ve talked to other clients and so it’s just pretty cool.

John Erhart: But that’s great to hear. It’s helped us out tremendously,  it makes sense to us and we feel that that gives us the best opportunity to progress.

Donald Thompson: No, that’s super good. So now let’s pivot to the hospitality space as a whole. Right? Anybody that’s on planet earth understands we’re dealing with a global pandemic, Covid-19. And one of the worst hit sectors has been the travel and hospitality space. How’s it affecting you guys? What do you see for the industry and sector? Just give our audience a point of view from somebody that’s in the trenches in the hospitality business.

John Erhart: It’s not good right now for sure but like you said, it is devastated the hotel industry.  There’s no playbook for this current state of affairs. Smith travel reporting, it shows the year over year occupancy is down nearly 70%.

Your average daily rates are down 45%, and your revenue per available room is down 83%. Right? These are numbers we’ve never experienced, not even close. But the hospitality industry is, it’s an agile business. They’re always shifting to meet the changing demands of customers.

That’s kind of, it’s part of the DNA. So hoteliers are getting creative. They are closing floors in hotels to reduce those, you know, areas that they have to maintain. They are cleaning rooms by request only. There’s a health benefit there too but that also reduces costs.

They’re reducing nonessential expenses, landscaping, you know, maintenance have reduced the frequency of that. And even other uses like, medical, overflow support and things like that. So, they’re programs in place, like the paycheck protection program. It’s allowed, a lot of hotels that we work with to bring staff back or keep them on, on staff. But of course, that’s two and a half months worth of payroll. Unfortunately, I think the hospitality industry is going to need more than that to get on the other side of this pandemic.

Donald Thompson: Yeah. What would you know? There is no playbook for sure. What do you think about, when you think about the economy and just what we’re going through? What are your thoughts on the, on the, on the future? Like once we get to the other side, I mean, we know it’s going to be different, but what do you think’s going to be different about it? What kind of changes are you anticipating getting ready for?

John Erhart: Yeah. I think that things are going to become much more competitive. You’re now going to be looking at rising levels of all those different metrics. But the question is how quickly does it come back?

That international tourism, will stay domestic. You’re going to end up with, your domestic travel, especially leisurely travel. I think that’ll ramp up fairly quickly. But business travel is the big question mark, right? At what levels do, do those, increase and then all of your sporting teams and all of that, whether those events happen or not, will also help drive, how quickly,  that type of, of business rebounds. From the hospitality industry as a whole,  those that are, preparing now for ways in which that they can, improve their efficiency, streamline their business, are the ones that are going to, make it through this downturn better.

Donald Thompson: No, that makes sense. And, and I think, you know, to your point, it’s going to come back, but it’s a determination of how quickly. And you know, even from a personal standpoint, when I think about, alright, how do I feel about travel in the future? Like I’m not going out of the country anytime soon. Like independent of whatever deals they throw, right? I’m going to be at North America and I’m going to drive places, my car, my air, you know, all those good things. But I do see me trying to get back to some level of movement, as quick as possible because there is that pinup demand, even though you’re not able to get those dollars back lost. Right. Like that, revenue lost. Let me ask now, just as a business ,leader, as somebody that has had to learn on the fly, how to become a CEO, what things do you read? What things do you listen to to help keep yourself sharp and growing as a business leader?

John Erhart: Yeah. So, read, podcasts,  books, magazines, I try to absorb it all, right?

From a Harvard business review. Love it. Podcast like SaaStr love hearing about software leaders, in their journeys, right? How they handled the things that were thrown at them. Dave Kellogg, the senior vice president of Salesforce way back. He’s got a fantastic blog. Brilliant. So those are some of the things I lean on, to learn you know more about. And then of course, there’s for hospitality organizations, like AAHOA, are, even the brands, Marriott, and Hilton, have excellent, resources, blogs that really keep you up to date on, on how the hospitality industry is going.

Donald Thompson: No, it’s awesome. One of the things I like to ask my guests, especially those that I know a little bit about, so you’re married, you have kids, your wife is a successful professional in her own right. Tell me a little bit about family ages of your kids and then how do you guys keep it together personally, professionally, when you’re both chasing really, really hard, at some aggressive goals.

John Erhart: Yeah. We’ve got a 15 year old son, 11 year old daughter and I feel for everyone, we’ve been on all these zoom meetings and there are those with much younger kids, and I don’t know how they’re getting through this, right? Ours are of the age that, in this environment, we can put them in their corners and they’ve got, their tasks, their schoolwork remote, that they’re taken care of.

But yeah, there’s some juggling and you really need to be on the same page. And I’m lucky, you know, that I’ve got a partner, that has a lot of the same, goals, right? And is willing to be flexible with me because and it’s not easy, when running the business and having the buck stop here, requires a lot of dedication and time.

Donald Thompson: Yeah, that’s right. When you think back now, you’ve been running Inn-Flow since when, when did you found the company? When did you start it?

John Erhart: So we took it to market in 2014.

Donald Thompson: Nice.

John Erhart: Six years.

Donald Thompson: And so, you know, without going into a lot of detail, but you guys are a successful business. I mean, last I understood 500-600 hotels are using your product.

And so when most businesses don’t make it past that one or two, year mark, right? You guys have done, pretty well. What are some of the things you’ve learned as a business leader along the way that, you’d like to share.

John Erhart: You know, I think, not rushing things. There’s two thoughts on it.

One, you know, hurry up, create a minimal viable product, get it out there. You hear that from, a lot of startups. You do need to make sure that you have thought through implementation, support. These are very important things.  So, that minimal viable product, just make sure that, you know.

Donald Thompson:  It works.

John Erhart: It works, but you can then, then you have made time to listen to the customers.  We went to the first trade show and had just a great response, signed up a bunch of clients, the first thing I did was stopped doing sales. And that’ll freak out a lot of people, that are with a startup.

But I wanted to concentrate on implementation and support and get that feedback, those first clients, because whatever you think that your product and how it’s going to be used, someone’s going to use it in a different way that you didn’t think about. And being able to be nimble and agile from the very beginning is the most important.

So that you can take that feedback, you can iterate, right? And you can build out that support an implementation team. I think that’s been a real key to our success and key hires. We’re really proud of the implementation that we do and the support that we provide. That kind of comes down to, are the decisions that were made in hiring, which was one of the kind of the struggles, in getting the company, to this point.

Hiring the right people cause hires are very important, very critical at the beginning. And, making the decision in some roles, do you get somebody that’s from the industry, meaning hospitality or do you get someone with the expertise in that role? And, made the decision, early on for our training and implementation staff, to bring in former hotel controllers.

You know, our core applications, accounting, they understand the industry. And they handle the implementation, the tier two support. They are able to provide more than just support, but really operational, you know, guidance, to our, our clients and our clients really appreciate that.

Donald Thompson: I mean, you said a powerful nugget that applies across technology businesses. Are you looking for somebody with that industry experience or experience in the role. And it’s a big decision because if you’re looking for a very niche industry experience, that limits your hiring pool, which is already typically very competitive for your most talented people. But if you put it out and say, wait a minute, we need specific sales experience, specific marketing experience, and I’m going to wrap around the domain expertise with our implementers and developers, you now have a much larger portfolio of folks to choose from.

And then also you get new ideas. Right? People are not focused just on what the industry has done. And so that’s, that’s a powerful statement that you described. You also use offshore development, and that’s a big thing in the technology space, whether to build development in house onshore in the United States, or whether to build a team right offshore, try to get the cost efficiencies, but then there’s communication, time zone, different things. How have you thought about that decision? And how have you made it work successfully?

John Erhart: We got lucky, with the first, with the first hire there. I think the biggest problem in offshore development, is having a stable team, right? And we have all of our senior developers that we hired in the first year are still with us today.

Our retention has been fantastic and that’s attributed to the office manager there. I think it’s maybe a, also the culture of the company. And like we’re using zoom right now. We do this every day with everyone in our India office. We have over 50 employees right now and we get together every single day and see everyone face to face. So I think that’s also helped they see and feel they are part of the company. But yes, you know, communication, at the beginning was more difficult, in that you really have to detail what it is that you’re looking, you know, the performance criteria, it has to be very detailed. But that’s something that really just makes you sharpen your pencil, when you put your thoughts together. And I look at that now as really something that was positive and we’ve been growing that office. So for us it really works.

Donald Thompson: No, that’s awesome. And great advice. My friend, it was great to talk with you. I’m really excited for your future growth. I know that there’s some real legitimate headwinds out there, but I also know that the underlying foundation of your company is strong, what you’re trying to do strong. And as everybody pushes the other side, I look for big things for Inn-Flow into the future.

So I really appreciate you taking some time and sharing with our guests, John. It was good talking to you, my friend.

John Erhart: Don, thank you for having me. Good. Great talking to you. Take care.

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The Donald Thompson Podcast is hosted by Walk West CEO, mentor, investor, and Diversity and Inclusion Consultant Donald Thompson.

Music for this episode provided by Jensen Reed from his song, “You Can’t Stop Me”.

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