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How did Francis Davidson create Sonder?

Sonder
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Francis Davidson Tanguay, CEO and co-founder of Sonder, a company that rents apartments on a short and medium-term basis for students, leisure and business trips. Sonder offers more than 1500 apartments in 13 cities in North America and Europe. The company is headquartered in San Francisco and employs 250 people worldwide.


THE PRESS
It was completely by accident that I incorporated Sonder in 2012, at the age of 19. I moved from Gatineau to Montreal to study philosophy and economics at McGill University. During the summer vacations, I wanted to sublet my apartment to go back to my corner and get my summer job back.

The problem was that thousands of students had the same plans as me! I said to myself: “Here, I’m going to rent it to tourists! If there are people renting their cottage in Tremblant, why not try it in Montreal? So I stayed in the city and did more than just pay my rent. I made a profit!

The following summer, I thought that I could offer a solution to many students like me and that this business model could be interesting. I took care of renting out six student apartments and managed to make a $30,000 profit.

THE EXPLOSION

It was in January 2014 that the company really exploded. With my co-founder Lucas Pellan, I made agreements with landlords, signed leases for 12 months, furnished and decorated the apartments. For eight months, I sublet them to students and professors. The other months, to tourists. More than half of our apartments in Montreal still have this model.

We decided to launch this model of apartment rentals to students in 11 cities. We made 1 million dollars in sales. It was an incredible year!

In some cities like San Diego and New Orleans, we realized that the student apartment model was not working well. We relied on short-term apartment rentals.

THE EVOLUTION

For short-term rentals, permits and rules must be obtained. From the beginning, we decided to work with the cities. From the beginning, we collected taxes and remitted them to the Quebec government – to the tune of 1 million – even though it still hasn’t legislated this new model.

What works best is when you work with real estate developers who are building new buildings. You sign a lease for 5 to 20 apartments even before the building is completed.

In New York and Vancouver, buildings will be built this year specifically for Sonder. It’s going to look like a micro hotel with 25 to 50 rooms. It’s going to meet the laws and the criteria of the hotel industry in those two cities.

We would like to do the same thing in Montreal, but to get a hotel permit, you need a restaurant on site, parking lots and a reception. With our business model, it’s economically unthinkable to have a reception and not useful to have a restaurant. We offer a large, fully equipped, two-bedroom apartment for less than the price of a single room hotel. Our clients have a code to access the apartment.

PARTNERSHIPS

We have a website, sonder.com, but what works best is our partnerships with Airbnb, HomeAway, Expedia and Booking. They put our apartments for rent on their site and get a commission for each rental.

The difference between Sonder and Airbnb is simple. Airbnb is a website that puts a person who has an apartment in contact with a person who wants to rent it. At Sonder, we rent apartments on different platforms and are responsible for the entire customer experience. We take care of security, we fight fraud, we make sure that garbage is taken out on the right day, that the cleaning is impeccable, that the residents of the neighborhood are satisfied, and we answer 99% of our emails within 30 seconds.

I’m now 25 years old and I finally didn’t have time to finish my studies…

But I am far from having regrets. In three years, Sonder will have an interesting offer of apartments in quite a few cities that can be easily named.

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