What Creating a Hospitality Startup Is Really Like, with David Millili

Episode Transcript

David Millili: It just needs to be done in the right way. And hospitality is always that fear that it’s going to take away from the relationship with the guest. On my podcast, we had one guy who said it perfect. The technology and the AI should enable the guest to do what they want to do quicker and then for the hotel to have more opportunity to do what they need to do best for the guest, not replace the front desk person or replace housekeeping with a robot or things of that nature. 

Robin Trimingham: Welcome to the Innovative Hotelier podcast by Hotels magazine with weekly thought provoking discussions with the world’s leading hotel and hospitality innovators. Welcome to the Innovative Hotelier podcast brought to you by Hotels magazine. I’m your host, Robin Trimingham. Every step forward that we take into 2023, it becomes more clear that the successful hospitality model of the future won’t just focus on PR or amenities, it will be a fusion of the best aspects of AI, digital marketing, sustainability and cultural tourism. So I thought it would be interesting to chat about where some of these new hospitality sector ideas are coming from, how they’re being nurtured, and an interesting way that some of them are finding funding. My guest today has been voted one of the 100 most influential voices in hospitality and needs little introduction. Join me now for my conversation with David Melilli, CEO of Logic and Mentor at the NYU, Jonathan M Tisch Center of Hospitality Innovation Hub Incubator, or AI hub as it’s referred to by those in the know. For the last 50 years, Groupe GM has been a leader in the luxury cosmetic amenities industry. The group proposes a 360 solution from manufacturing to distribution, with over 40 international brands in its worldwide distribution network. Groupe GM offers different shapes and sizes of eco friendly products in hotels all over the world. Discover more on www.GroupeGM.com. That’s group with an E .com. Welcome, David. It’s great to get a chance to chat with you. 

David Millili: Thank you. It’s great to be here. 

Robin Trimingham: Well, I understand that you too, are a podcaster, so I think they’re going to have trouble getting us to stop this in a timely manner. But we’ll see how we do. To start us off here, can you briefly explain to everybody what the Tisch Center of Hospitality is and why they decided to establish an innovation hub incubator or HI hub, as I understand everybody calls it? 

David Millili: Correct. Yeah. Well, NYU is one of the top hospitality schools in the nation. And really part of the program is to really help drive entrepreneurship and help the students with that. And so the incubator really was created, obviously, to give a place for the students where we could match them with industry leaders, investors and really help them get their ideas moving in the right direction. 

Robin Trimingham: So this is sort of like the idea behind an MBA, but with a different twist. 

David Millili: Correct. If you looked at the mentors and investors, it’s a wide variety. And even the students who come in with their ideas, it’s really interesting, especially for someone like myself who’s older, you get most of them are younger students. So you get to kind of peek in the way that they’re looking at innovation and technology versus maybe somebody who’s a little bit older. 

Robin Trimingham: That must be fascinating because the world is just changing so fast. I’ve got a niece who’s in university now and she’s studying IT and engineering, and it’s just almost a completely different language. Tell us what sets the incubator apart from other tech startup incubators. 

David Millili: The majority of that is that it is hospitality focused. You have to be either a current NYU student or alumni. So it’s all around the university. We’ve had everything from reservation platforms, food and beverage ideas, event management and Dr. Ritchie, who is the head of the incubator, he’s really done a great job. And even to the point where they’re now launching a Keep It Simple security where we’ll actually be able to have a fund where we can invest outside of just the pitch competition into these businesses. 

Robin Trimingham: Well, that’s interesting. What first attracted you to the program? Why did you decide to become a mentor? 

David Millili: Well, I was very fortunate. I was based in New York City for many years, and I was able to teach at NYU a distribution course. So I was already connected to the university. I’ve known Dr. Ritchie for many years, and I advise a lot of start ups when I’m out in a full time position. And I really just like the idea of helping small companies or start ups learn from someone like myself who’s been through those things where they can not make the mistakes they can think through better. How do they position their company, go to market, making sure they’re getting their financials in order. So for me, I like to learn. And so this incubator has been fantastic because there’s been all sorts of companies that, just like you said, things have changed. I mean, if ten years ago you would have thought you’d be in the back of somebody’s a stranger’s car getting a ride to the airport or when you landed, you’d stayed at somebody’s some stranger’s house, you would have said, Yeah, you’re crazy, No one’s going to do that. So I love seeing these ideas. And like I said, it makes you really look at the industry through the eyes of these young students. 

Robin Trimingham: I couldn’t agree with you more. And I think it’s fascinating the way that everything is developing. What sort of venture capitalists are backing the program and what’s the criteria for the incubator program? Guess what I’m trying to ask you here is what are they looking for when they’re evaluating applicants? 

David Millili: Well, so for the incubator, like I said, you have to be an NY student or alumni. The pitch day, the winner as we whittle it down to three, win some cash. It’s anywhere from 2500 to $5000. But really it’s the opportunity for the company, the founders, to get exposure to what are the venture capitalists looking for? And each one’s different. There’s all different types of flavors. You’ve got seed funding Series A, and so the venture capitalists that are part of the incubator are really seasoned or have an interest in hospitality and tech. So it’s really a good match for the founders and the students. 

Robin Trimingham: I’ve had a bit of experience with startups myself from both sides of the street, also being part of building a startup and also on the advisory side. So I’ve seen a few things in my time and I’m sure as much as you get some absolutely spectacular pitches and presentations, you also must see a few that kind of leave you scratching your head, if you will. What is your advice for somebody who’s preparing to make a pitch? 

David Millili: Well, you use the perfect word and that’s prepare. I mean, make sure that you know exactly the problem that you’re solving. And I always use the example. I was advising a company. I was talking to the founder and I said, what’s the perfect hotel for your solution? And she said, Oh, hotels that are 300 rooms or larger. And I said, How many hotels are in the United States with 300 or more rooms? She just got a blank face. And I said, You’re dead. When you get in front of that investor, you need to know the market, the landscape, the competition. It’s almost like being an actor. You really got to be able to handle criticism when you’re a startup because I mean, the VCs, advisors, people like you and me, we’ve seen almost all of it and we know where the pitfalls are. So if you’re a founder, my advice to the founder would be be open to that criticism and advice because it could really save you a lot of time. So that perfect example, she then changed her investor deck around that 300 type hotel and we started role playing, going through the questions. And it really helped her just start to think and again, find a mentor. If you can’t get to an incubator or be part of an incubator, make sure you find someone who can help you because you can learn a lot from somebody who’s been through this before. 

Robin Trimingham: Yeah, I think you’re absolutely right. There’s nothing like a lifetime of business experience to give you a perspective on what works and what doesn’t, and you really can’t overstate the importance of practicing your pitch. It’s one thing to have your pitch deck and the most beautiful illustrations of your process or whatever it is, but it’s another thing entirely to be able to explain it to somebody who has never heard of this before, because the thrill of being involved in an incubator is is a brand new idea to the marketplace. 

David Millili: Yeah, I agree. And I think you have to be, you know, specifically hospitality. I mean, there’s so many different systems and touch points at a hotel that a lot of times founders don’t understand that their audience might. It depends on the level of that VC or how many deals they’ve done. So there’s some times where somebody has got a new fund. They haven’t invested in hospitality, they’re interested in hospitality, but in their mind, Marriott owns and operates every hotel. It’s not a brand. They don’t understand ownership versus management company. They don’t understand that a hotel needs a property management system, a central reservation system, a channel manager. A lot of these. Sometimes first time investors just think it’s all connected and it’s easy and it’s not. So again, think one of the things too, is to make sure you do the research and know who your investor, who you’re getting in front of, what companies they’ve invested in prior. And that can sometimes help you because you’ll know what they like by looking at the companies they’ve invested in. 

Robin Trimingham: I think you’re raising an equally interesting point when you talk about the internal hotel systems. Do you find that your applicants really understand just how married to some of the legacy systems that these really big brands actually are? 

David Millili: We’re hospitality hotels. We are a slow moving industry to adopt new technology. The adoption rate as far as, say, apps for hotels or hotel brands is not as great as airlines. You’ve got things like Mobile Key, which still hasn’t taken off, and there’s always just this balance between the management company ownership and what’s best for the guest. So can that management company get the budget from the owner to implement these new technologies and can they see an ROI on it or see an impact on guest satisfaction scores? So a lot of the I would say founders so far through the NYU incubator, they still need a great education on the systems and how things really operate at a hotel. And I always suggest that they get a job at a hotel if they want to be in this business and work some of the jobs, because that’s a key component. 

Robin Trimingham: I think that’s a very interesting point because, yeah, there’s nothing like living the pain of working every job on the front desk to make you appreciate what kind of innovation really is needed. Talk to me about the effect of your incubator program. What’s the difference between how a successful applicant arrives and then how they’re transformed as a result of their time working within the incubator program? 

David Millili: Well, I think what’s nice is, you know, what we do at NYU is we’ve got the applicants who submit their pitch decks. We give them guidelines and criteria on what they need to present. Right there kind of tells you whether they’re listening or not or whether they really care. Because if I tell you I need these ten things and you give me three, then I know you’re not serious about this. You’re not really interested in winning or learning. And so from those, say, ten applicants, we’ll whittle that down to about 5 or 6 and then three will actually win. But what I think it’s doing is it’s just like we said earlier, it’s just helping these founders really understand how to structure and get that education on how to go raise money. My first company, we didn’t know what we were doing. We had created a booking engine for independent hotels, and my business partner sent out executive summaries to venture capitalists saying, Can I get your opinion on this? And we were fortunate enough one company bid and we raised some money, but we had no idea what we were doing. We didn’t. We were lucky enough. We found some mentors, some consultants that believed in what we were doing and helped us along the way. But again, this is all about NYU. It’s about helping these companies and these founders understand how to navigate and learn the landscape of the industry and raising capital and then also building those relationships that can last for a very long time. So I’ve still actually just got an email in the last company that I was advising from last semester, I just got an email today where they’ve made some tweaks and changes and they’re not paying for it, but I’m there helping them and giving them guidance. And you know, it’s a good feeling on both sides. It’s good for them to learn and it’s good. I feel good knowing that I’m helping them. 

Robin Trimingham: Yeah, that’s definitely the name of the game, being able to give back because of all the experience and the knowledge and the connections that you’ve accumulated over your lifetime. You mentioned your very fortunate path to success, but I think we, in fairness, we should tell all of our listeners it’s not usually nearly that easy. And a lot of startups, they can get turned down 20, 30 times. And just because you don’t make it into one program doesn’t mean that you don’t have a great idea. It’s a matter of sort of aligning the stars, if you will. You have to be in the right place at the right time, in front of the right people who are looking presently for whatever it is that you’re talking about or the problem that you’re going to be able to solve. I was reading that you’re developing a learning lab. I think you’re calling it with a digital tech stack. And this I found absolutely fascinating. Tell me if I understood this right. Are you guys using AI to run models on some of these ideas to figure out if they’re viable or under what circumstances they would be most viable? 

David Millili: Not yet. But we’re looking at creating an environment where companies can some established companies and some new companies can figure out how they work best together. I like where you’re going with the AI component and and trying to figure out if these companies are successful or not. But again, I think the thing that’s interesting about having a company and raising capital is, like I said earlier, it’s kind of like you got to like you said, you’ve got to be used to or got thick skin being rejected because when you try to launch a company, you try to get a job as an actor. It’s not like being a sports player where you can see what that guy or a woman can do. You can see that she can hit the tennis ball this way. He can. Throw a football this way. So you’re right, it’s subjective. But we’re going to we’re going to create a lab where companies can collaborate together, some existing companies alongside with those new companies. So it’s about also having technologies and having the students have exposure to these technologies that they might not have if they work certain jobs in a hotel. 

Robin Trimingham: Did you know that offering top cosmetic brands is a delight for your guests? For the last 50 years, group has been a leader in the luxury amenity industry. The group proposes a 360 solution for manufacturing to distribution on cosmetic amenities and dry accessories, with over 40 international brands such as Guerlain Nukes, Atelier Cologne. The group offers different shapes and sizes of eco friendly products in hotels all over the world. This is possible thanks to its worldwide distribution network. Thanks to their Care about the Earth Program, you can offer your guests top cosmetic products with a reduced environmental impact. Discover more on W-w-w dot group gmail.com. That’s group with an E gme.com. Can you chat to us a little bit about a couple of the projects that the incubator is nurturing or maybe a couple of your biggest success stories, if you will? 

David Millili: It’s too new. We’ve done three semesters, so it’s too early to say if there’s any success stories. I think we’ve all felt good. The mentors and the investors and the companies we vote at the end. So the three finalists are based off of our input as judges for lack of a better term. And I think we all felt good with where those companies were headed. Don’t have any winners yet, but you’ll probably hear about it because I’m sure one of them is going to hit and they’re obviously going to be highlighted that they came through the NYU incubator. 

Robin Trimingham: I think you’re making an excellent point in that even having been through an incubator or gotten through your first round of funding with a VC, it doesn’t mean that the road is paved with gold going forward, that there’s still a very long road to success and a process, and you’d have to kind of just very I don’t want to use the word methodical because that has a negative connotation, but you really have to be motivated to just keep putting one foot in front of the next, making one new contact or one new relationship as often as you can and building on things. 

David Millili: Yeah, you’re right. Money doesn’t equal success, just like people say. Money doesn’t equal happiness. There’s some great stories of companies that have taken very little funding and exploded in our billion dollar companies. And there’s others who I know, a company that I spoke to several years ago, they raised $175 million and they went out of business about two years ago. So that $175 million didn’t guarantee them anything. There’s a couple other companies in hospitality right now that myself and friends and other colleagues, we look at it and we go, How much did they raise? What did they do? How’s that possible? What are they going to do with that money? So again, what I tell people is when you take in money from venture capitalists or private equity or even friends and family, it’s just like being a salesperson. The thing that matters is sales revenue, the way you manage your expenses. And so there’s always this fear of, Oh, the VCs are bad. They want to take control of your company. No, they don’t. They don’t want that. It’s just like the banks don’t want to own your house. They want you to pay your mortgage and pay it off. That’s what they want because that’s what they’re in the business of. Lending money. Vcs are in the business of investing in companies that they think will succeed. They also are there to help mentor and guide them and help them. But they’re not sitting there. Some diabolical plan on how do they put a couple of million dollars in a company to take it over in two years? And a lot of people think that, which is really a shame. 

Robin Trimingham: Yeah, you’re absolutely right. I think the other side of this one is that if you are fortunate enough to get some VC money and somebody comes to your office and the first thing you want to do is show them your thousand dollar ergonomic office chairs, there’s a really big problem. You have to understand that at the end of the day, the purpose of the money is to enable you to be a business, to be a viable, functioning, going concern. And if with any luck at all, maybe the VC is going to get a get their money back and B, get a return on their investment, depending on how you guys structure your deals. 

David Millili: You’re right. And I tell people when you build out your plan, you’re going to have to state what you want to spend money on. And it’s very interesting because people forget about after the money or after the job. And so I was helping a company several months ago interview employees, and I was telling the employees, I said, you need to also let the CEO know what you need to be successful, what tools you need, what trade shows you need to go to. You can’t take this position and then wake up the next day and be like, Oh yeah, I want to go to this trade show. We don’t have the budget. I can’t go, Oh, I need this tool, I need this, that connection to, Oh, I don’t have the budget for that. So it’s the same thing. To your point, when you take in this money, you’ve got your plan. You need to stick to it. And if you’re going to change, you need to communicate that. So another big key component, which is important for entrepreneurs and students, is to make sure they’re communicating as challenges come up, mean things happen, But it’s much better to communicate it than say, Oh yeah, I was going to tell you three months ago this problem was happening, but I thought, just communicate it, leverage the relationships, call. If you’ve gone through the NYU incubator program and you’re having an issue, call one of those mentors. Go back and look at the list and say, Who’s the right person and shoot a note through LinkedIn, which is great, and say, Hey, could you help me with this problem? Or do you have any ideas? And I think sometimes people are just afraid to ask for that help. 

Robin Trimingham: Yeah, I think you’re right, because none of us want to look like we’re not experts. Like we don’t have it all together. But I think you also are making an excellent point that especially new business people really need to think about what I’m going to call the opportunity cost of their decisions. There is an opportunity cost of not having the forward thinking mindset, of not doing your budgeting properly, because then when an opportunity comes up, guess what? As you just said, really big problem and things are not going to work out. And the biggest opportunity cost of all is the one where you think that you can hide the problem. Oh, well, we just won’t tell the VC. Oh well, it’ll sort itself out next month. Always a bad decision. I’m always interested in the AI space. I talk to a lot of people in and around the AI field in all different capacities through what I do here. And there’s been a tremendous amount of chatter around the idea of humans versus AI in the hospitality space. What’s your take on the way the industry is transforming or not? 

David Millili: Well, I think there’s there’s a little bit of a fear there in our industry around AI. So, for example, my current company, we use AI to help hotels, price rooms. And there’s a little bit of pushback that, oh, is the AI smarter than an actual revenue manager, for example? Well, a great example is if I told you that there was a car you could get into and it was going to crash one time out of every thousand drives and there was another car that you get into and it was going to crash, say, 80, 90 times ever out of every thousand. Which car are you going to take? 

Robin Trimingham: Excellent analogy. 

David Millili: Yeah. And that’s what’s happening now with Tesla and some autopilot and things of this nature. The AI is actually helping. So you usually need somebody in the car and things of that nature. But we’re changing. I mean, we have a young generation that’s adopted voice and they don’t want to text, they don’t want to email, they want to talk into something. They want to send you a voice, a voice recording, or they want to come into their house and just don’t want to say it because something will go off in my house. But they want to say that name and put on the radio or put on music and hospitality, I think is got to start to adopt that because it’s where things are going. It just needs to be done in the right way. And hospitality is always that fear that it’s going to take away from the relationship with the guest. On my podcast, we had one guy who said it perfect. The technology and the AI should enable the guest to do what they want to do quicker and then for the hotel to have more opportunity to do what they need to do best for the guest, not replace the front desk person or replace them housekeeping with a robot or things of that nature. So that’s my $0.02. 

Robin Trimingham: Yeah. No, I couldn’t agree with you more. I would love to see a large hotel lobby where the employees were on the front side of the desk, if there was one at all. And they’re actually talking to people. Hi. Where are you from? What are you going to be doing today? Do you need some directions? Can I help you order some lunch? Whatever. Just offering extra service as opposed to being stuck behind a counter and not having the time to think of anything to assist a person. 

David Millili: Well, I think a lot of that goes into training. And, you know, probably the biggest joke or as I’m talking to people is it’s hilarious when you approach a front desk with your bags at 8:00 at night and the first thing the person says to you is checking in. And what you really want to say is and be a smart ass and say, No, I’m just from the neighborhood. I’m just walking around carrying these bags to give a little extra calories burned by lugging them around. And then how many times does that person not taking the opportunity to your point to to interact with the guest. So I went to a World Travel mart, stayed at a property in London. It had a kiosk for check in. It worked perfect. Got to my room in five minutes, which is exactly what I wanted to do after taking a flight from Phoenix to London. Didn’t want to go through somebody stumbling around and asking me questions and taking my credit card. And guess what? I was so excited because I was able to get right to the bar and get a glass of wine and the bartender was fantastic. Interact asked me questions. So the technology enabled me to check in, get to my room, get to the bar in a manner that was enjoyable and it didn’t lose anything. I didn’t ever feel like because again, the bartender was fantastic and that was really a great place for me to interact with someone. 

Robin Trimingham: I think there are so many applications where I modern technology touchless convenience makes so much sense. One of the properties that I represented in the past was a mountain resort with something like seven wings of the hotel. And if you got to your room and your key card didn’t work, you were faced with about a half mile walk as a girl in high heels back to the front desk at the end of a really long day to say, my key doesn’t work. Or if you had your cell phone with you and you call the desk, okay, they’ll send somebody. But then you’re standing there stuck outside your hotel room door like 15 minutes till a reasonable person can get there to assist you. How much better would it be from the guest perspective if the touchless key could just be reset while you stood there? Yeah, it’s a fascinating world. And what I love being involved in all of this because it just changes every day. So look in a crystal ball for us and give us one piece of advice that anybody who was thinking about an innovation for hotels could latch onto. What would be your suggestion? 

David Millili: Well, I think think it’s got to be something that again, I think it can come down to pain. What pains you when you travel, what would you like different from your guest experience And that could be anything from exactly what you’re saying. How do you check in? How do you get your key? How do you customize the experience? All those things, I think, look to solve problems, look to make things better. And I think out of that will come good. I mean, I think in 1999 I was working on a project and it was for the Internet. It was a disaster. But while I was doing that, I realized that all the independent hotels that I was kind of doing this survey on in Times Square, that none of them had a reservation platform for their website. It was emailing back and forth and we said, Well, that’s kind of silly because the Marriott’s got one, the Hilton’s got one. So we built in 1999, one of the first online booking engines. And then through that process we learned we that company 911, a lot of things happened. But my second company, we learned, hey, that booking engine is great, but the website doesn’t look so good. They don’t know who the webmaster is to put the link on and they don’t know how to e-market they don’t know how to do SEO. 

David Millili: So the second company was booking engine with web development, with SEO, with hosting the email, and we pivoted. We continually innovated. When Mobile came out, we said, Hey, guess what? We’re going to give you a mobile website for free. We were making money on the bookings and guess what? Social media came out and we said, Oh, I need a Facebook page. And we said, Guess what? We’ll host. We’ll manage it for you. You run the hotel, we’ll do that for you. We’ll work with you. Think as you look to problems, sometimes you can create something new and sometimes you can just make something that’s existing better. But I think if you for those the students I’ve been talking to and NYU is committed to innovation and making sure that the people that are mentors and investors are really helping the students that you have to think through what’s the problem you’re solving? And that’s my challenge with some of the companies I’ve seen is you’re another blank, but it’s nothing different. You’re not solving something, you’re not reducing pain. So for me, that’s where I always looked at things. And we all do that. We all have these inventions we come up with in our own head when we’re something’s going wrong in our house or traveling. And those are sometimes the best ones. 

Robin Trimingham: I couldn’t agree with you more. We’ve just got about a minute left here. If somebody’s listening is interested in learning more about the Innovation Hub, how can they find out about it. 

David Millili: So they can just Google NYU Innovation Hub, which is one thing. They can also email. Dr. Richie That’s Arc 104@nyu.edu. And again, for mentors and venture capitalists, anyone can join the program and can inquire about being part of it. But the only requirement for the companies is that it be an alumni or a current student. 

Robin Trimingham: David, thank you so much for your time today. You’ve been watching the Innovative Hotelier podcast. Join us again soon for more up to the minute information and insights specifically for the hotel and hospitality industry. You’ve been listening to the Innovative Hotelier podcast by Hotels magazine. Join us again soon for more conversations with hospitality industry thought leaders.