October 7, 2025 • 36 mins
In this episode of SaaS Scaling Secrets, Dan Balcauski interviews Richie Khandelwal, co-founder of PriceLabs, a revenue management platform for vacation rental owners. Richie shares his unique journey of building PriceLabs into a global operation while working demanding full-time roles at Bain and scaling MindTickle. They discuss the origins of PriceLabs, managing a side hustle turned full-time business, and the importance of prioritizing tasks and customer-centric solutions. Richie also explores the challenges and strategies of pricing both in hospitality and SaaS software, emphasizing the need for explainability in algorithms and balancing trust and accountability in team management. Lastly, Richie advises CEOs to resist the urge to be the smartest in the room and focus on hard work to achieve B2B scaling success.
01:12 Meet Richie Kahndelwal of PriceLabs
01:42 The Journey of Building PriceLabs
02:24 Balancing Full-Time Roles and a Side Hustle
07:36 The Decision to Go All-In on PriceLabs
13:04 Management and Leadership Insights
18:57 Balancing Trust and Accountability in Business
21:01 Building a Remote Trust-Based Culture
21:27 Defining and Maintaining Company Values
24:34 Challenges of Pricing in SaaS vs. Hospitality
27:34 Psychology of Pricing Automation
28:47 Explaining Pricing Models to Customers
31:06 Balancing Algorithms and Customer Psychology
33:45 Common Misconceptions in Pricing
35:53 Advice for Scaling B2B Companies
Guest Links
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
richie-khandelwal (00:00):
It's a problem that started from my own
(00:03):
home trying to rent an extraspare bedroom.
And through that I realized thatthere is no good way to price
homes.
I feel like a lot of investorsare guilty of this pushing
founders and businesses intowrong direction of even before
it's like the baby hasn'tstarted to take steps, but
you're asking them to run.
if we are not failing, we arenot trying hard enough,.
(00:25):
And so how do you create thatenvironment where people feel
comfortable taking risks?
Trust means I can question you,and I expect you to have the
right answer, but you don't haveto ask me before you go do
something.
Dan Balcauski (01:01):
Welcome to SaaS Scaling Secrets, the podcast
that brings you the insidestories and leaders of the best
scale up.
B2B SaaS companies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today I'm excited to welcomeKahndelwal and co-founder of
PriceLabs a revenue managementplatform for vacation rental
owners.
Richie has built price laps intoa global operation, managing
over 400,000 units across 95countries, and he built his
(01:23):
entire business as a side hustlefor six years while
simultaneously scalingMindTickle from 40 to 400
employees.
Richie, great to have you onSaaS Scaling Secrets.
richie-khandelwal (01:32):
Hey Dan.
Thank you so much for having me.
Excited to speak to a fellowKellogg alum
Dan Balcauski (01:37):
I am very excited for that as well.
Good to have you on the program.
Just to start us out withRichie.
For listeners who aren'tfamiliar with PriceLabs can you
give us a quick elevator pitch?
What do you do and who do youserve?
richie-khandelwal (01:47):
for sure.
PriceLabs is a revenuemanagement and dynamic pricing
platform for the hospitalityindustry.
We are particularly focused onshort term rentals and
independent hotels, and when Isay dynamic pricing, basically
we are the folks who's adjustingyour prices When you're looking
up to book a home or a hotel,and maybe you go two days later
(02:09):
and the price have changed, itmight be our algorithms changing
those prices.
Dan Balcauski (02:14):
Well, I, as a fellow pricing nerd, am super
excited to dive into that worldwith you, and hopefully we get
some time to touch on that laterin our conversation.
I wanna start early on.
So you had this fascinating sixyear period where you were
running PriceLabs whilesimultaneously working at Bain,
and then Skyling Mind scalingMindTickle.
It's not a typical founderjourney.
(02:34):
Could you, I guess, walk methrough how you managed to build
a global business on the sidewhile having such demanding
full-time roles?
richie-khandelwal (02:41):
For sure.
For sure.
So, firstly because we areKellogg alums, right?
PriceLabs started when I was atKellogg.
So, if you imagine last semesteror if you remember our last
semester, right?
It's a ton of time and so I hada ton of time in the last
semester, plus I had a delayedjoining date at Bain.
I wanna say I was starting inOctober or November, right?
And Kellogg wraps up, I wannasay maybe in May.
(03:03):
And so see, I also had like fourmonths to really spend on this
problem statement with nodistractions, right?
Post that, I think just like oneof the themes that hopefully
comes through as we talk aboutthis, right?
One of the things that I'vealways believed in is.
want to prioritize a few thingsthat you want to do really well.
And then that may mean you maynot do some other things really
(03:24):
well.
And so, so I think I was at Bainor at Mindle that's where I
picked and prioritized my timeto saying this is like the few
years of my life where I'doperate with limited
distractions and just get intoit.
On both sides of like, whetherit was my core work or or
PriceLabs different on bothsides.
(03:45):
Happy to get into it, if that'sof interest.
Then
Dan Balcauski (03:48):
Yeah.
Well, I guess, first of all, didwas this a open secret that you
were hustling on nights andweekends building, building a
company while you were workingor were you trying to keep this
off the radar?
richie-khandelwal (03:59):
Yeah.
Yeah.
So, at Bain not as much.
Also we were not we didn't thinkof just to go a little bit back
into the history of PriceLabsright?
We didn't think of building thisas a business in itself, right?
It's a problem that started frommy own home trying to rent an
extra spare bedroom.
And through that I realized thatthere is no good way to price
(04:22):
homes.
And so that's kind of how westarted on this problem
statement.
And we built something and weput it out with a free to use
tool, right?
Where people could just use itfor free.
and so, it was only very lateinto my bane time when we
actually started to think aboutmonetizing this, right?
Otherwise, it was a free nottrue open source, but free to
(04:42):
use software that we had put outthat people could use.
And so, but at MindTickle it wasan open secret.
At cle, So I was in the six yearjourney for two years.
I was at Bain at four for fouryears, or four, four and a half
years I was at cle.
And at Bain you can imagine thatit's a lot more intense work.
Time is scarce, right?
So that just meant it was laterin the evenings or weekends,
(05:05):
right?
And thankfully in consulting,the weekends are sacrosanct,
right?
You're not generally yourweekends are not getting
touched, right?
And and so, so at Bain it wasmostly those weekends, right?
And some some weekday nights.
And mind it was little bit morethe reverse, right?
In a startup, you can imagineweekends are not as sacrosanct,
right?
But but you have relatively morecontrol on your hours.
Dan Balcauski (05:28):
Well, I guess most people struggle to find
time for side projects, evenwith regular jobs.
And you were doing this whileworking at some of the, most
intense places I can imagine.
Both Bain and a scaling startup.
I guess what was your mentalframework or philosophy that
made it sustainable for you?
richie-khandelwal (05:42):
yeah.
I think one, it's a pro, it wasa problem statement that I
really enjoyed working on,right?
It's often you hear you shouldnot work on things that you
enjoy because then they, thenthey don't feel like, your
enjoyment becomes work.
But it was just a problemstatement that I really enjoyed
working on.
And so that, that gave a littlebit of that drive, right?
But outside of that I think forme the way I operate is still
(06:06):
the time I'm solving a problemthat I am enjoying.
I'm going to work on it.
Don't.
Feel overwhelmed, right?
So I was able to comcompartmentalize because of
that.
And also like again said, rightthere, there were some choices
that I made to simply saying,Hey I am I'm like, these are the
two things that I'm going toprioritize.
I'm going to deprioritize a fewother aspects of my life.
(06:30):
So in the first.
Let's say pre Kellogg, I wastraveling a lot.
I was backpacking, I was goingthrough various countries,
backpacking, living in hostels,and doing all of that, but post
Kellogg for that five or sixperiod, year period, bunch of
those things went on hold andand like the core work became
the highest priority, if thatYeah.
Dan Balcauski (06:50):
no, it makes perfect sense.
richie-khandelwal (06:51):
there were also times where I would just
say to my co-founders, Hey, forthe next.
Month to month, I need to spendmaybe more than 24 hours a day
at my work because something'sgoing on.
And I had good partners tosaying they understood.
Okay.
That means we'd have likelimited attention that Richie
can bring in for that time.
And so, so yeah, I mean,prioritizing and stepping back
(07:13):
where where you need to.
Dan Balcauski (07:15):
Yeah.
Well, you mentioned making notmaking your passion your job
unless you get jaded on it.
I at one point probably asecret.
I haven't revealed this podcastfor, at one point I considered
becoming a dance instructor butmade that decision against it
for exactly that reason.
Also, we'll have to sharebackpacking tips at some point.
I've I've, I haven't I maybe Iaccelerated post Kellogg in that
part of my life.
Versus you well.
(07:36):
After I, I guess after six yearsof running PriceLabs part-time,
I guess something shifted around2020.
You just had to go all in.
What was that inflection point?
What finally convinced you tomake PriceLabs your full focus?
richie-khandelwal (07:45):
Yeah, it was, so it's not always one thing,
right?
It was a mix of three things forme.
Both PriceLabs and MindTicklewere scaling
Dan Balcauski (07:54):
I.
richie-khandelwal (07:54):
well and both required dedicated attention.
Myle, of course, was a lotlarger.
Had had gone from 40 to 400people while I was there for
four years.
Was leading finance operations.
All things go to market fromsome perspective, right?
Secondly, in the PriceLabsmarket, some of our competitors
had started to raise money or dosome more, right?
(08:15):
And so it was a little bit likeenemy of the gates kind of a
situation, right?
And third, I was gettingmarried.
So again, like I said you canonly do few things really well,
and so for me it was like I haveto drop one of my two passions,
PriceLabs and mind tick one ofthose two to make sure I have
time for my married life aswell.
So, so that's the trifecta ofreasons, right?
(08:39):
That, that led to saying, let'sjust go all in on one side.
Dan Balcauski (08:43):
Very important.
Those family considerations comein.
I'm sure.
Yeah.
The so it sounds like it was a,there's market consolidation or
maybe not consolidation butdefinitely some traction in
terms of who you're up againstfamily situation.
And then also the maybe maturityof the, your existing sort of,
full-time job at mine cycle.
So, I guess, yeah, both sides ofit so those blended factors, I
guess, I, I.
(09:04):
Spent more time on this becauseI think, you probably have an
interesting perspective becauseI, I don't, I don't hear of a
lot of, founders that, spendsuch an extended time doing a
product as a side hustle andthen end up with a, a company as
successful as PriceLabs istoday.
I guess looking back, is thereanything, from running that as a
si running PriceLabs as a sidehustle that taught you about
(09:25):
building business you might nothave learned otherwise?
If you'd gone maybe atraditional full-time founder
route from day one.
richie-khandelwal (09:31):
Yeah.
I think, one, it's really hardto look back at success and
really pick out points that workwell.
But what I can do is in my head,contrast and compare to saying I
know some people who have gonehead first into building a
startup saying they're going tobuild a startup and some really
smart people that I know andwhere they haven't delivered.
So I like with that framework, Ican say what worked for
(09:54):
PriceLabs the very number onething that I would say is and
it's just obvious, so we won'tspend time on it, but you should
be solving for customers, right?
Whatever end audience thatyou're trying to solve for that
success will follow, right?
Don't preempt success, right?
Solve for the problem statementthat you're solving for, right?
And I think that's a, that's anadvice that's been given a
(10:15):
thousand times.
So I won't elaborate on that toomuch.
The one common thing that I seethat often I see people struggle
with is the day they startthinking about seriously
building a company, right atthat moment, they start thinking
about, how do I make this into ahundred million dollar company,
right?
Or whatever, X million dollarcompany, right?
(10:35):
And my thought or advice wouldbe, you want to start with.
In a place that has good enoughtime, right?
Big enough time for your dreamsto to come true, right?
But you start building thebusiness with thinking, how do I
make a million dollars from thisbusiness?
Or and then when you get to thatmillion dollars you don't
immediately jump to, how do Imake this into a hundred million
(10:57):
dollars business?
You jump to how do you make thisinto a$10 million business?
And then from a$10 millionmaybe, whatever the next mile
milestone is, right?
25 50.
Think that way rather thanrather than from day one
thinking a hundred milliondollars, right?
Because that sometimes can pushyou into making decisions that
may not be right for the stage.
And, I'd say this openly, but Ifeel like a lot of investors are
(11:19):
guilty of this pushing foundersand businesses into wrong
direction of even before it'slike the baby hasn't started to
take steps, but you're askingthem to run.
Or not Sprint in a sprint inlike Olympics a hundred meter
race.
Yeah.
Dan Balcauski (11:34):
It sounds like there was some amount of.
And that created some naturalsort of breathing room for you
to really sort of get maturityon your view of the market and
the product, et cetera.
That wasn't as pressing as like,oh my God, if we don't get a
paycheck, I'm gonna be eatingramen for the next 10 years.
Or I need to meet some investorhurdle criteria and therefore
(11:55):
maybe need to do some unnaturalthings.
And because this was a sidething, it allowed you guys a
little bit of space to, toapproach that more
pragmatically.
richie-khandelwal (12:02):
Be conscious into two ways, right?
One again, going back to yoursolving for customers, right?
And number two I would also say,which is sorry, a ortho gonna
point to what we are talkingabout, but I would also say we
had limited time and moneyright, that we could spend on
this, right?
So And that frugality, I believeallowed us to prioritize for
(12:23):
right things, right?
When you have abundance, itleads to waste.
Right?
And so, like just we were ableto prioritize, Hey, I have three
hours today, or two hours today,or half an hour today.
What is the one thing that Ireally need to get done
absolutely need to get done.
And so, so it really helped usprioritize in a very frugal way
or.
(12:43):
I only have x many dollars.
Where do I spend this dollar?
Which is the most right place tospend this dollar at?
And so, so it really helped usin those two places we had
limited time and limited money.
Dan Balcauski (12:55):
Yes.
Well, this is the old necessity,the mother of invention, but
those constraints also breedcreativity, and I'm not sure
there's probably multiple ofthose business cliches that are
applicable there.
Look like you've got this reallyinteresting background.
I, IT.
Kellogg, MBA Bain Consulting,that's a lot of high achieving
type A environments.
As you've built and scaledPriceLabs which, any startup has
(13:17):
constraints as we were justtalking about.
If you fill that with a bunch ofKellogg MBAs you, it'd be hard
to make unit economics work withthat kind of fixed cost.
I guess.
How has your approach tomanaging people evolved from
those early experiences, Iguess, have you had to modify
your how you think about leadingdifferent types of teams?
richie-khandelwal (13:34):
Absolutely.
Absolutely.
And I learned a ton on this frommind.
CEO, Krishna I learned a ton.
But like, just for context,right?
In consulting, everyone thatyou're working with is so smart,
so driven, right?
They already have a goal inmind, they're going to get
there, right?
And so, so it's fantastic.
(13:55):
But also while in consulting,all of us are working on problem
statements that are ambiguous.
The career path isstraightforward, right?
So, if you do X, you're going toget y.
If you do Z, you're going to getwhatever, right?
Dan Balcauski (14:07):
Yeah.
richie-khandelwal (14:08):
that is not the case at all.
Firstly, I can't not necessarilycan't, but most people won't be
able to hire the same level oftalent across the board, right?
Who's driven will get thingsdone, right?
You have a mix of talent thatyou bring in, right?
And on top of that.
also don't just have problemsthat are unstructured, but the
(14:30):
payouts, the couriers,everything is unstructured,
right?
Unlike unstructured andambiguous, unlike a consulting
role where the problems areambiguous, but the career paths
are straightforward, right?
And so that requires reallybalanced approach to leadership
where you're truly figuring outevery single day, how can I
create a work environment?
brings out the best in mytalent.
(14:51):
And that may mean things.
That may mean for some peopleyou want to push them harder,
right?
And for some people you may wantto give them good constructive
feedback so that they candevelop better, right?
people you may need to giveassurance, and you have to find
the right mix what you'recomfortable with, right?
But it doesn't operate verysimilar to how consulting
(15:13):
operates.
The so Krishna always like hedid a fantastic job at this in
terms of building culture,right?
He really brought everyonetogether in building the right
workplace such that you wereproud of the workplace, you're
proud of where you were working.
so you were driven to achievemore, right?
Whether that was the problemstatement that you were solving,
(15:35):
whether that was the people thatyou were working with.
And so you were proud of theplace that you were at, and that
is what gave you the drive.
And one other tip that I wouldgive you is on this one of my
favorite books is drive which
Dan Balcauski (15:47):
it dead pink?
richie-khandelwal (15:48):
by Daniel Pink.
Yes.
Dan Balcauski (15:50):
Yeah.
richie-khandelwal (15:50):
Really talks about how you think about
management.
In these environments, right?
A lot of our management isaround structured environments.
So, you're thinking a Fordfactory, right?
And how do you produce morecars?
And then a lot of our managementprinciples come from that
environment, right?
But this book driver was also abig eyeopener for me to think
(16:14):
about.
How do you think about some ofthe practices that we install?
In a regular corporateenvironment and they may not
work in as unstructuredenvironment.
Dan Balcauski (16:23):
how would you I guess are the ways that you
would.
Think about contrasting maybethe management, like, so say you
were a, manager at Bain versus,the manager of team at PriceLabs
I guess, or any scaling startup,I guess.
Are there, is there a differencein sort of management philosophy
that you think is applicable?
I guess are there ways that youthink about creating that
(16:43):
environment where people dotheir best work?
That may be a nuance that youwouldn't expect if you're only
in one.
richie-khandelwal (16:50):
Yeah.
It varies.
It varies, right?
Example rarely a consultingenvironment would I encourage
people to take risks, right?
You're not, you're rarely,you're saying, oh, go take a
risk.
If you fail, it's okay.
You don't, you can't afford tofail.
In a consulting environment, atleast with Right?
Versus here you have to feelextremely comfortable with
(17:13):
failures, right?
Because if we are not failing,we are not trying hard enough,
Dan Balcauski (17:18):
Yeah.
richie-khandelwal (17:19):
right?
And so, so how do you createthat environment where people
feel comfortable taking risks?
People feel okay with failures,right?
But then next day they come backand still feel like, okay, I'm
in a place where my efforts arerewarded and not the outcomes
just.
Dan Balcauski (17:39):
one of the things that was going on in the back of
my head as you were talking interms of taking risk is that,
one major distinction between, amanagement consultant industry
that maybe is serving Fortune500 clients versus, a startup is
like, the startup has this.
Much bigger existential risk oflike, if we don't move fast
enough, either someone's gonnacome and eat our lunch or we're
(17:59):
gonna run out of money.
And so this, yeah, this abilityto take risks is needed because
if you're not finding the.
Maybe unspoken path, like youcan't just go against sort of,
or just do what everyone else isdoing, expecting that you're
just gonna be faster.
It requires some amount oftaking a different path, and
that needs to be sort ofinculcated in how the employees
(18:23):
are thinking about their owncareers and jobs.
richie-khandelwal (18:25):
Exactly.
Exactly right.
And it all goes back to themfeeling that they can trust you.
Them feeling that they areagain, like their efforts are
what are, what is valued morethan just the output.
And so, so are you creating thatenvironment?
Where you're able to, you'reable to reward people and and
(18:48):
communicate to them that theirefforts and efforts really
matter.
To do that I'd cut that lastline out as I said the
Dan Balcauski (18:54):
oh.
richie-khandelwal (18:56):
Yeah.
Dan Balcauski (18:57):
well, so you mentioned, this trust.
Being sort of foundational inthis trust-based approach.
But I guess, also, I mean thatall being said, obviously you
have a business to run.
You have these existentialrisks, so you still have to
maintain and hit bus, hit goalsto keep the business moving.
I guess.
How do you think about,balancing those two in terms of
like, okay, yes, I trust you,but that also gonna keep you
(19:18):
accountable.
How do you think about that?
richie-khandelwal (19:21):
Yeah.
Yeah.
I think, so you like, comes frombeing open, right?
Open about, Hey, this is wherewe want to go, right?
And you want to get buy in fromeveryone to saying and
especially at an earlier stage,right?
If you're 50 people or if you'relarger than with your leadership
team or L one team, right?
(19:42):
But you want to get a buyin fromthem to saying.
we agree to this, right?
If not let's sit for a couple ofhours, let's hash it out.
Where do we disagree?
What do we think the risks are?
Whatever, right?
But you get, get to anagreement, right?
Once you get to an agreementthen you don't have to shy away
from questioning or being directand stern where needed, right?
(20:04):
Doesn't mean that you don'tquestion right?
Trust means I, I can questionyou, right?
And I expect you to have theright answer, but you don't have
to ask me before you go dosomething.
As an individual say you're amarketing leader, you, I trust
you to make the right choices,and you're going to make, go
(20:26):
make the right choices, right?
But as a business leader, I cancome to you and.
Ask you questions about why didyou do this?
Why not this et cetera, right?
And so, so, so, I'm not sure ifthe duality of that makes sense
but in practice both have tohappen, right?
But it starts from thatopenness, why we are doing
something and being very clearabout that.
Dan Balcauski (20:47):
No, it makes perfect sense.
So there's a you open your thisopenness encourages, a lot of
communication, even potentiallyuncomfortable communication.
But then it still allows ittrust is an ongoing, evolving
thing within that dynamic.
Are you distributed with your,in terms of your personnel and
offices?
I know you're serving customersin 95 countries, I guess, do
(21:07):
you, are you do you have broadrange of offices or are you guys
remote.
richie-khandelwal (21:12):
So we are remote, right?
Which is, which adds a layer ofcomplexity to all of this,
right?
Dan Balcauski (21:16):
Yeah.
richie-khandelwal (21:17):
we
Dan Balcauski (21:17):
Well that was gonna be my, that was gonna be
my follow up.
So is your I guess what have youlearned about, enabling that
trust-based culture, I guess asyou are spread across remote
sites?
richie-khandelwal (21:27):
Yeah.
Yeah.
I think one of the things whichI think we instinctively knew
and most people alsoinstinctively know, is that you
want to define some level ofculture very early on of who
either the founding team is or.
Your initial maybe 10, 15, 20,30 employees are right.
And take that, codify it, andyou want to interview against
(21:51):
that very strictly.
And a lot of people start thatway, but then quickly get
diluted because they're not ableto fill the roles fast enough,
et cetera.
And so, so I think that's onething that we have done fairly
well is what I feel that eventhough and to your question by
the way, going back.
I think today we have members inmultiple countries.
We have, India is a big hub forus.
(22:14):
Philippines is has a team us.
We have multiple states inEurope, a few different
countries.
Spain is a big hub for us, buteven within Spain, you're now
expecting, like, there arepeople from all countries in
Spain, right?
We also have Portugal,Netherlands then we have a
couple of people in latam.
So everyone's coming from a verydifferent upbringing or cultural
(22:37):
values from their society, Butwe, when we interview, we are
really looking for, and we arecommunicating back as well to
saying, Hey, these are ourvalues, right?
If you believe you don't fitinto this you should know this
at day one, that these are ourvalues.
And if you believe you don't fitinto this, then you may not not
be the right fit.
And like if I our values arecustomer centricity, and I don't
(22:57):
think so.
There is a, there's an org outthere that doesn't say customer
centricity, right?
But our values are customercentricity.
That with, you have to know theproduct really well.
I don't care which team you'rein, you have to know the product
really well.
And what that means is when youjoin, even though we are a
startup.
We spent three weeks for youdoing onboarding, whether you're
hr, whether you're finance,sales, whatever.
(23:19):
You're doing these three weeksonboarding because you have to
know the product, you have toknow our customers.
You have to answer supporttickets really well, right We
have this like a happyworkplace, which comes from you
don't just say there is aproblem, you raise your hand and
say, I want to work on thisproblem.
And it could be anything.
You might be a product managerand you say, Hey, we have a
compensation problem.
(23:39):
Raise your hand and say, I wantto work on the compensation
problem and let's figure it out.
We have autonomy because we areremote.
And so no one's going to monitoryou to do your work.
And so we have autonomy and wehave a trust thing in that right
where we trust you to do yourwork.
But you only get so manystrikes, right?
If you get strikes no one'sgoing to set up a standup with
you every day to get work done,right?
(24:00):
You have to do it and you haveto communicate.
And if you get strikes, right?
So, so some of these just helpus.
We make sure that we arestrictly thinking about this
when we are hiring someone.
And and if it's a borderline,then our approach to it has
been, if it's a bottom line,we'd probably do a second
interview.
If it doesn't work, then we sayno to the candidate.
They could be fantastic withtheir skill, but if they don't
(24:21):
fit culturally, then it's notthe right place.
Dan Balcauski (24:24):
So being very intentional about the company's
values and then beingintentional about building that
into the hiring process andscreening against those that
totally makes sense.
I wanna shift gears a little bitand talk about the actual
business you've built.
There's an interesting dynamichere where you know, you're
helping vacation rental ownersoptimize pricing, but you also
have to figure out PriceLabsitself as a SaaS product.
(24:47):
In your mind, how do these twopricing challenges differ?
I guess what's it like being inthe pricing business while
having to solve your own pricingstrategy?
richie-khandelwal (24:54):
They are one, I think we are not optimized on
our own pricing strategy, right?
I don't think so.
Any business feels that theyare.
But they're fundamentallydifferent, right?
Because when we pricehospitality, we are, talking
about data at terabytes ofscale, right?
And so Data coming in.
We are evaluating thosepatterns.
We are trying to make ourartificial intelligence models
to come up with what the pricingshould be and take bets on that,
(25:17):
right?
And So many bets, right?
We are taking thousands of betsevery day, right?
For a property and for acrossthe world.
We are taking millions of betsevery day.
As to if at this price does itget booked, right?
and second in that market alsothe recurring customer usage is
lower, right?
So you can take a lot of betsright?
(25:38):
You can say, Hey, today I'mtrying to price this home at
$200.
Tomorrow I'll try to price ittwo 20 and day after tomorrow,
I'll try to price it at one 90and see what the elasticity of
demand is right In, softwarepricing, you don't have that.
Do you have customers that arerecurring some of them that are
also talking to each other?
And and you have to gen, proveyour ROIA lot more.
(25:59):
Also, the ticket So it itchanges that as well.
So the way we think about ourown pricing is driven from a
balance of the ROI that wedeliver.
Customer perceives that ROI anda balance of how competitors are
also doing this, right?
And so Of those threefundamentally different, and
probably we are doing it wrongbut fundamentally different than
(26:20):
how we think about pricing ahospitality business.
Dan Balcauski (26:24):
Yeah, it's well, I bring it up because I
remember, I don't know if youhad the chance to take his class
when he was there, but professorEric Anderson I remember I took
a whole class a whole quarter onpricing.
And we learned all these reallycool techniques.
Of, which I'm sure are reallyapplicable to the algorithmic
pricing side of the businessthat you just mentioned.
I like, we had cases where wewere managing Chicagoland
(26:47):
grocery stores and we were thebrand manager for minute made
orange juice.
And depending upon if ourcompetitors were on sale that
week or whatever, we had allthis.
Register transaction data.
And then I remember trying toapply those techniques when I
was a, product leader in a SaaScompany and realized like,
actually none of this stuffworks because of exactly all the
(27:07):
problems that you just outlined.
I was like, okay, this isactually quite different.
Let me go deeper into the booksand see if there's something
here that I can use.
But it's it is, it's fascinatingbecause it, the, it's, although
pricing maybe looks the same ata 30,000 foot view when you get
down to those distinctions youmentioned of like, yes, high,
highly transactional or is arecurring, or it could be quite
(27:28):
different.
I'm curious one of thefascinating challenges, you much
face in, in building these.
These algorithms is, you'reasking property owners to
essentially hand over one oftheir most important business
decisions to software.
How do you think about thepsychology of pricing
automation?
I guess what have you learnedabout what makes someone
comfortable, like letting analgorithm, set their prices?
richie-khandelwal (27:50):
Yeah.
So, so strange, right?
So when we started out in 20 14,20 15, right?
We built this best in classartificial intelligence black
box model, right?
That does things for you, right?
GPT or And something comes backand you're like, wow, right?
Something happened.
But with that pricing model, wehad no way to explain why we
(28:10):
have come up with that price.
Thing it was black box, right?
It was even black box for usmore often than not.
Similar to how, again, I go backto charge GP, like it's really
hard to explain why did it saythat?
It said it because you have aton Algorithms working together
in a black box model andspeaking something out.
and so
Dan Balcauski (28:27):
And if you ask it, it will lie to you and give
you
richie-khandelwal (28:30):
Exactly
Dan Balcauski (28:31):
that wasn't exactly the reason.
richie-khandelwal (28:32):
and here's the thing about, about LLMs
versus pricing models, right?
LMS are allowed to hallucinate.
We are not allowed tohallucinate, right?
We can't hallucinate to saying,oh, your house was supposed to
be a hundred dollars a night,but we priced it at$10 a night.
We can't hallucinate, right?
and so we we went back, we wroteeverything right from building
our AI models in a veryexplainable way, right?
(28:57):
so, As you're thinking about aday's price, you should be able
to see factors that impact thatprice And so, so, so, so as
we've built over the years, youcan see factors that are
impacting prices.
We have improved theexplainability of it.
You can also drill down and seecharts and graphs of why that's
happening, what's happening inmarket.
(29:18):
That, that leads us to sayingshould potentially, you're
expecting high demand in thismarket and you should be holding
on price or you're expecting lowdemand on, in this market, you
should be dropping your prices,right?
And so, so you can look at allof that explainability as you
go, as you drill and drill intothe product, right?
And then as people build comfortwith that, then they start
(29:39):
thrusting to saying, okay ifI've looked at five different
price points and understand thedrill down, then I understand
the remaining nine five shouldwork well, right?
And It's this the psychologything that you talked about,
right?
While with a black box model, wecould have potentially had a
better pricing, but even wecouldn't explain it.
And we almost went to a verycrazy backwards step of building
(29:59):
a statistical model.
So that it's explainable andit's highly In terms of we know
what it's going to say.
Dan Balcauski (30:05):
And so, I so explainability was key, I guess,
was that I assume, was thatdriven directly by customer,
sort of resistance to adopt theblack box model?
richie-khandelwal (30:15):
feedback, right?
Customer feedback and customerquestions.
Customers asking us, Hey why isit priced this way?
And us realizing, actually, wecan't even answer why is it
priced this way?
And so being that, so thecustomer centricity value,
right?
At that point you can wiggleyour way out of it just by
saying whatever, but the realcustomer centricity is being
(30:37):
honest there.
Hey, actually, we also don'tknow why it is priced this way.
Let us build something that wecan explain to you.
Why is it priced this way?
Dan Balcauski (30:44):
I'm curious.
'Cause we're both in thispricing world, but obviously
approaching a very differentangles.
I say I stay all my entire timein the latter category versus
the former.
But, I'm curious, given your.
Experience there.
Like how much of like pricingsuccess do you think is really
about the quality of thealgorithm versus understanding
the customer's psychology or isit balance between the two?
richie-khandelwal (31:06):
So, so, in in hospitality markets, right?
You're dealing at scale.
a lot about quality ofalgorithms, In and there is no
recurring purchase there, right?
Or at least you're not going togo stay at the same hotel every
single night.
You're not, you like, you won'tremember it.
You won't remember how much youpaid for that hotel the next
(31:28):
time you check in, right?
Versus in software pricing.
There is a lot of memory type toit, right?
And so you have to approach itdifferently.
And there are a lot of thosethings that you mentioned really
come in, right?
Where it's not just the thealgorithm, right?
But it is also the ICP, right?
(31:48):
And having said that in a truerevenue management sense, I
think of breaking them downinto.
Your pricing, which is thealgorithmic part of it, right?
This is what the true ROI ofsomething is, right?
And then on top of it, I thinkof promotions and discounts,
(32:09):
right?
Promotions and discounts aretied to your personnel, ICP, If
that makes sense.
So let's say if I am operatingin.
In geo where ROI is similar, butpeople's behavior to buy is
different, right?
I take my price, I'd add on adiscount layer to it or a
(32:29):
promotion layer to it, right?
And that would become my netprice.
But if you think of go back tolike the like the four piece of
marketing, right?
One is pricing, one ispromotion, right?
The promotion is really what?
You're doing it for the ICP inmy head.
And pricing is what you're doingfor the algorithmic side, the
ROI side et cetera, that youwant to deliver?
Dan Balcauski (32:49):
There's a I guess one, one way you might separate
those two as well is likethere's a maybe sort of a core
market-based algorithm.
And then there's, transactionlevel additions that you may
tack on.
'cause even in the SaaS world,right?
You may have the list price.
Like, hey we have our good,better, best options.
These are the price lists.
(33:09):
But then there's some amount ofdiscretionary discounting given
to the sales team to negotiatewith clients.
Or there's potentially marketingmay be running, oh, we're
running a Black Fridaypromotion.
That that layers on,modifications, depending upon
timing, seasonality, orindividual sort of customer
demands, use cases.
richie-khandelwal (33:28):
Absolutely.
Absolutely.
So you're thinking of those twoas two distinct things, right?
You want a very good corealgorithm that comes up with
what should be the right pricefor something, and then you're
layering on the market factors,right?
Which is your competition ordiscount or something else to
saying what should be the finalachieve price?
Dan Balcauski (33:45):
This is a question I often get asked, but
I'm gonna, I'm gonna flip it toyou as it what's one thing about
pricing that most people getwrong in your experience?
richie-khandelwal (33:54):
If the value is not clearly established if
not, value is not the rightword, if the standards or
benchmarks are not very.
It's not very clearlyestablished.
The low cost product actuallydoes not win.
So in, in vacation rental world,let's, let me give that example,
in a hotel, I know what a fourstar and five star means, and I
(34:19):
if I see a cheap four star, I'mgoing to buy that because I know
I'm going to get relatively thesame service across all four
stars, right?
But in vacation rentals, have nomeasure of quality.
To saying what is good, And soif I see a lower priced product
I may not always buy that,because especially if it's like
(34:40):
ridiculously discounted, right?
I'm not saying if it's like 5%lower, but let's say if it's 50%
lower, you have all the homes inGatlinburg that are at$300 a
night and you have one home at ahundred dollars a night, like I
don't know.
I don't know if I want to riskmy experience on this a hundred
dollars a night home.
so sometimes going too far awayfrom the pack can have
(35:01):
detrimental consequences.
Dan Balcauski (35:03):
So there's some, in the hotel example, there's
some.
Broad standardization that helpsconsumers make informed choices.
And when you're moving to marketthat maybe choices are not as
clearly defined or relevant orthere's not a clear metric that
you could use to, to compare sothen, so what I heard there is
that price then also has anadditional weight of a quality
(35:24):
indicator.
And so you're saying if it's lowprice, it must be low quality
because I don't have these otherfactors to help me weigh.
richie-khandelwal (35:30):
measure this, right?
I don't know how to measurethis.
So I'm just going to assumelower price means lower quality,
especially because everythingelse is bunched up in one place,
right?
And so that, that can besometimes counterintuitive as,
starting a new business, right?
And so again if you're doingthat, you may want to go with a
strategy saying, this is ourlist price, but because you are
(35:51):
our first few clients orwhatever, right?
or
Dan Balcauski (35:53):
I I absolutely love that Richie, I could talk
to you all day, I want to berespectful of time.
wrap us up, just to take us onsomething the audience could
take away, I guess, if you hadto.
What advice would you give otherCEOs trying to scale their B2B
companies?
If I gave you billboard and youcould put anything on it for
these other B2B SaaS CEOs tryingto scale their companies, what
would it say?
richie-khandelwal (36:15):
Oh, for the CEOs.
I'm not sure if this is gonnafly well, but resist the urge to
be the smartest in the room
Dan Balcauski (36:23):
I.
richie-khandelwal (36:24):
try to be the most hardworking in the room
Dan Balcauski (36:26):
Resist the urge to be the smartest in the room.
Love this has been fantastic.
If listeners wanna connect withyou, learn more about Price
Labs, how can they do that?
richie-khandelwal (36:32):
You can find PriceLabs@pricelabs.com and if
you want to connect me, find me
Dan Balcauski (36:38):
Well, I will put links to, LinkedIn and price
Select website in the shownotes.
Thank you so much, Richie.
That wraps up this episode ofSask Scaling Secrets.
Thank you, Richie for sharinghis journey and insights.
For our listeners, we foundRichie's insights valuable.
Please leave a review and sharethis episode with your network.
It really helps the podcastgrow.
It's a problem that started from my own
(00:03):
home trying to rent an extraspare bedroom.
And through that I realized thatthere is no good way to price
homes.
I feel like a lot of investorsare guilty of this pushing
founders and businesses intowrong direction of even before
it's like the baby hasn'tstarted to take steps, but
you're asking them to run.
if we are not failing, we arenot trying hard enough,.
(00:25):
And so how do you create thatenvironment where people feel
comfortable taking risks?
Trust means I can question you,and I expect you to have the
right answer, but you don't haveto ask me before you go do
something.
Dan Balcauski (01:01):
Welcome to SaaS Scaling Secrets, the podcast
that brings you the insidestories and leaders of the best
scale up.
B2B SaaS companies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today I'm excited to welcomeKahndelwal and co-founder of
PriceLabs a revenue managementplatform for vacation rental
owners.
Richie has built price laps intoa global operation, managing
over 400,000 units across 95countries, and he built his
(01:23):
entire business as a side hustlefor six years while
simultaneously scalingMindTickle from 40 to 400
employees.
Richie, great to have you onSaaS Scaling Secrets.
richie-khandelwal (01:32):
Hey Dan.
Thank you so much for having me.
Excited to speak to a fellowKellogg alum
Dan Balcauski (01:37):
I am very excited for that as well.
Good to have you on the program.
Just to start us out withRichie.
For listeners who aren'tfamiliar with PriceLabs can you
give us a quick elevator pitch?
What do you do and who do youserve?
richie-khandelwal (01:47):
for sure.
PriceLabs is a revenuemanagement and dynamic pricing
platform for the hospitalityindustry.
We are particularly focused onshort term rentals and
independent hotels, and when Isay dynamic pricing, basically
we are the folks who's adjustingyour prices When you're looking
up to book a home or a hotel,and maybe you go two days later
(02:09):
and the price have changed, itmight be our algorithms changing
those prices.
Dan Balcauski (02:14):
Well, I, as a fellow pricing nerd, am super
excited to dive into that worldwith you, and hopefully we get
some time to touch on that laterin our conversation.
I wanna start early on.
So you had this fascinating sixyear period where you were
running PriceLabs whilesimultaneously working at Bain,
and then Skyling Mind scalingMindTickle.
It's not a typical founderjourney.
(02:34):
Could you, I guess, walk methrough how you managed to build
a global business on the sidewhile having such demanding
full-time roles?
richie-khandelwal (02:41):
For sure.
For sure.
So, firstly because we areKellogg alums, right?
PriceLabs started when I was atKellogg.
So, if you imagine last semesteror if you remember our last
semester, right?
It's a ton of time and so I hada ton of time in the last
semester, plus I had a delayedjoining date at Bain.
I wanna say I was starting inOctober or November, right?
And Kellogg wraps up, I wannasay maybe in May.
(03:03):
And so see, I also had like fourmonths to really spend on this
problem statement with nodistractions, right?
Post that, I think just like oneof the themes that hopefully
comes through as we talk aboutthis, right?
One of the things that I'vealways believed in is.
want to prioritize a few thingsthat you want to do really well.
And then that may mean you maynot do some other things really
(03:24):
well.
And so, so I think I was at Bainor at Mindle that's where I
picked and prioritized my timeto saying this is like the few
years of my life where I'doperate with limited
distractions and just get intoit.
On both sides of like, whetherit was my core work or or
PriceLabs different on bothsides.
(03:45):
Happy to get into it, if that'sof interest.
Then
Dan Balcauski (03:48):
Yeah.
Well, I guess, first of all, didwas this a open secret that you
were hustling on nights andweekends building, building a
company while you were workingor were you trying to keep this
off the radar?
richie-khandelwal (03:59):
Yeah.
Yeah.
So, at Bain not as much.
Also we were not we didn't thinkof just to go a little bit back
into the history of PriceLabsright?
We didn't think of building thisas a business in itself, right?
It's a problem that started frommy own home trying to rent an
extra spare bedroom.
And through that I realized thatthere is no good way to price
(04:22):
homes.
And so that's kind of how westarted on this problem
statement.
And we built something and weput it out with a free to use
tool, right?
Where people could just use itfor free.
and so, it was only very lateinto my bane time when we
actually started to think aboutmonetizing this, right?
Otherwise, it was a free nottrue open source, but free to
(04:42):
use software that we had put outthat people could use.
And so, but at MindTickle it wasan open secret.
At cle, So I was in the six yearjourney for two years.
I was at Bain at four for fouryears, or four, four and a half
years I was at cle.
And at Bain you can imagine thatit's a lot more intense work.
Time is scarce, right?
So that just meant it was laterin the evenings or weekends,
(05:05):
right?
And thankfully in consulting,the weekends are sacrosanct,
right?
You're not generally yourweekends are not getting
touched, right?
And and so, so at Bain it wasmostly those weekends, right?
And some some weekday nights.
And mind it was little bit morethe reverse, right?
In a startup, you can imagineweekends are not as sacrosanct,
right?
But but you have relatively morecontrol on your hours.
Dan Balcauski (05:28):
Well, I guess most people struggle to find
time for side projects, evenwith regular jobs.
And you were doing this whileworking at some of the, most
intense places I can imagine.
Both Bain and a scaling startup.
I guess what was your mentalframework or philosophy that
made it sustainable for you?
richie-khandelwal (05:42):
yeah.
I think one, it's a pro, it wasa problem statement that I
really enjoyed working on,right?
It's often you hear you shouldnot work on things that you
enjoy because then they, thenthey don't feel like, your
enjoyment becomes work.
But it was just a problemstatement that I really enjoyed
working on.
And so that, that gave a littlebit of that drive, right?
But outside of that I think forme the way I operate is still
(06:06):
the time I'm solving a problemthat I am enjoying.
I'm going to work on it.
Don't.
Feel overwhelmed, right?
So I was able to comcompartmentalize because of
that.
And also like again said, rightthere, there were some choices
that I made to simply saying,Hey I am I'm like, these are the
two things that I'm going toprioritize.
I'm going to deprioritize a fewother aspects of my life.
(06:30):
So in the first.
Let's say pre Kellogg, I wastraveling a lot.
I was backpacking, I was goingthrough various countries,
backpacking, living in hostels,and doing all of that, but post
Kellogg for that five or sixperiod, year period, bunch of
those things went on hold andand like the core work became
the highest priority, if thatYeah.
Dan Balcauski (06:50):
no, it makes perfect sense.
richie-khandelwal (06:51):
there were also times where I would just
say to my co-founders, Hey, forthe next.
Month to month, I need to spendmaybe more than 24 hours a day
at my work because something'sgoing on.
And I had good partners tosaying they understood.
Okay.
That means we'd have likelimited attention that Richie
can bring in for that time.
And so, so yeah, I mean,prioritizing and stepping back
(07:13):
where where you need to.
Dan Balcauski (07:15):
Yeah.
Well, you mentioned making notmaking your passion your job
unless you get jaded on it.
I at one point probably asecret.
I haven't revealed this podcastfor, at one point I considered
becoming a dance instructor butmade that decision against it
for exactly that reason.
Also, we'll have to sharebackpacking tips at some point.
I've I've, I haven't I maybe Iaccelerated post Kellogg in that
part of my life.
Versus you well.
(07:36):
After I, I guess after six yearsof running PriceLabs part-time,
I guess something shifted around2020.
You just had to go all in.
What was that inflection point?
What finally convinced you tomake PriceLabs your full focus?
richie-khandelwal (07:45):
Yeah, it was, so it's not always one thing,
right?
It was a mix of three things forme.
Both PriceLabs and MindTicklewere scaling
Dan Balcauski (07:54):
I.
richie-khandelwal (07:54):
well and both required dedicated attention.
Myle, of course, was a lotlarger.
Had had gone from 40 to 400people while I was there for
four years.
Was leading finance operations.
All things go to market fromsome perspective, right?
Secondly, in the PriceLabsmarket, some of our competitors
had started to raise money or dosome more, right?
(08:15):
And so it was a little bit likeenemy of the gates kind of a
situation, right?
And third, I was gettingmarried.
So again, like I said you canonly do few things really well,
and so for me it was like I haveto drop one of my two passions,
PriceLabs and mind tick one ofthose two to make sure I have
time for my married life aswell.
So, so that's the trifecta ofreasons, right?
(08:39):
That, that led to saying, let'sjust go all in on one side.
Dan Balcauski (08:43):
Very important.
Those family considerations comein.
I'm sure.
Yeah.
The so it sounds like it was a,there's market consolidation or
maybe not consolidation butdefinitely some traction in
terms of who you're up againstfamily situation.
And then also the maybe maturityof the, your existing sort of,
full-time job at mine cycle.
So, I guess, yeah, both sides ofit so those blended factors, I
guess, I, I.
(09:04):
Spent more time on this becauseI think, you probably have an
interesting perspective becauseI, I don't, I don't hear of a
lot of, founders that, spendsuch an extended time doing a
product as a side hustle andthen end up with a, a company as
successful as PriceLabs istoday.
I guess looking back, is thereanything, from running that as a
si running PriceLabs as a sidehustle that taught you about
(09:25):
building business you might nothave learned otherwise?
If you'd gone maybe atraditional full-time founder
route from day one.
richie-khandelwal (09:31):
Yeah.
I think, one, it's really hardto look back at success and
really pick out points that workwell.
But what I can do is in my head,contrast and compare to saying I
know some people who have gonehead first into building a
startup saying they're going tobuild a startup and some really
smart people that I know andwhere they haven't delivered.
So I like with that framework, Ican say what worked for
(09:54):
PriceLabs the very number onething that I would say is and
it's just obvious, so we won'tspend time on it, but you should
be solving for customers, right?
Whatever end audience thatyou're trying to solve for that
success will follow, right?
Don't preempt success, right?
Solve for the problem statementthat you're solving for, right?
And I think that's a, that's anadvice that's been given a
(10:15):
thousand times.
So I won't elaborate on that toomuch.
The one common thing that I seethat often I see people struggle
with is the day they startthinking about seriously
building a company, right atthat moment, they start thinking
about, how do I make this into ahundred million dollar company,
right?
Or whatever, X million dollarcompany, right?
(10:35):
And my thought or advice wouldbe, you want to start with.
In a place that has good enoughtime, right?
Big enough time for your dreamsto to come true, right?
But you start building thebusiness with thinking, how do I
make a million dollars from thisbusiness?
Or and then when you get to thatmillion dollars you don't
immediately jump to, how do Imake this into a hundred million
(10:57):
dollars business?
You jump to how do you make thisinto a$10 million business?
And then from a$10 millionmaybe, whatever the next mile
milestone is, right?
25 50.
Think that way rather thanrather than from day one
thinking a hundred milliondollars, right?
Because that sometimes can pushyou into making decisions that
may not be right for the stage.
And, I'd say this openly, but Ifeel like a lot of investors are
(11:19):
guilty of this pushing foundersand businesses into wrong
direction of even before it'slike the baby hasn't started to
take steps, but you're askingthem to run.
Or not Sprint in a sprint inlike Olympics a hundred meter
race.
Yeah.
Dan Balcauski (11:34):
It sounds like there was some amount of.
And that created some naturalsort of breathing room for you
to really sort of get maturityon your view of the market and
the product, et cetera.
That wasn't as pressing as like,oh my God, if we don't get a
paycheck, I'm gonna be eatingramen for the next 10 years.
Or I need to meet some investorhurdle criteria and therefore
(11:55):
maybe need to do some unnaturalthings.
And because this was a sidething, it allowed you guys a
little bit of space to, toapproach that more
pragmatically.
richie-khandelwal (12:02):
Be conscious into two ways, right?
One again, going back to yoursolving for customers, right?
And number two I would also say,which is sorry, a ortho gonna
point to what we are talkingabout, but I would also say we
had limited time and moneyright, that we could spend on
this, right?
So And that frugality, I believeallowed us to prioritize for
(12:23):
right things, right?
When you have abundance, itleads to waste.
Right?
And so, like just we were ableto prioritize, Hey, I have three
hours today, or two hours today,or half an hour today.
What is the one thing that Ireally need to get done
absolutely need to get done.
And so, so it really helped usprioritize in a very frugal way
or.
(12:43):
I only have x many dollars.
Where do I spend this dollar?
Which is the most right place tospend this dollar at?
And so, so it really helped usin those two places we had
limited time and limited money.
Dan Balcauski (12:55):
Yes.
Well, this is the old necessity,the mother of invention, but
those constraints also breedcreativity, and I'm not sure
there's probably multiple ofthose business cliches that are
applicable there.
Look like you've got this reallyinteresting background.
I, IT.
Kellogg, MBA Bain Consulting,that's a lot of high achieving
type A environments.
As you've built and scaledPriceLabs which, any startup has
(13:17):
constraints as we were justtalking about.
If you fill that with a bunch ofKellogg MBAs you, it'd be hard
to make unit economics work withthat kind of fixed cost.
I guess.
How has your approach tomanaging people evolved from
those early experiences, Iguess, have you had to modify
your how you think about leadingdifferent types of teams?
richie-khandelwal (13:34):
Absolutely.
Absolutely.
And I learned a ton on this frommind.
CEO, Krishna I learned a ton.
But like, just for context,right?
In consulting, everyone thatyou're working with is so smart,
so driven, right?
They already have a goal inmind, they're going to get
there, right?
And so, so it's fantastic.
(13:55):
But also while in consulting,all of us are working on problem
statements that are ambiguous.
The career path isstraightforward, right?
So, if you do X, you're going toget y.
If you do Z, you're going to getwhatever, right?
Dan Balcauski (14:07):
Yeah.
richie-khandelwal (14:08):
that is not the case at all.
Firstly, I can't not necessarilycan't, but most people won't be
able to hire the same level oftalent across the board, right?
Who's driven will get thingsdone, right?
You have a mix of talent thatyou bring in, right?
And on top of that.
also don't just have problemsthat are unstructured, but the
(14:30):
payouts, the couriers,everything is unstructured,
right?
Unlike unstructured andambiguous, unlike a consulting
role where the problems areambiguous, but the career paths
are straightforward, right?
And so that requires reallybalanced approach to leadership
where you're truly figuring outevery single day, how can I
create a work environment?
brings out the best in mytalent.
(14:51):
And that may mean things.
That may mean for some peopleyou want to push them harder,
right?
And for some people you may wantto give them good constructive
feedback so that they candevelop better, right?
people you may need to giveassurance, and you have to find
the right mix what you'recomfortable with, right?
But it doesn't operate verysimilar to how consulting
(15:13):
operates.
The so Krishna always like hedid a fantastic job at this in
terms of building culture,right?
He really brought everyonetogether in building the right
workplace such that you wereproud of the workplace, you're
proud of where you were working.
so you were driven to achievemore, right?
Whether that was the problemstatement that you were solving,
(15:35):
whether that was the people thatyou were working with.
And so you were proud of theplace that you were at, and that
is what gave you the drive.
And one other tip that I wouldgive you is on this one of my
favorite books is drive which
Dan Balcauski (15:47):
it dead pink?
richie-khandelwal (15:48):
by Daniel Pink.
Yes.
Dan Balcauski (15:50):
Yeah.
richie-khandelwal (15:50):
Really talks about how you think about
management.
In these environments, right?
A lot of our management isaround structured environments.
So, you're thinking a Fordfactory, right?
And how do you produce morecars?
And then a lot of our managementprinciples come from that
environment, right?
But this book driver was also abig eyeopener for me to think
(16:14):
about.
How do you think about some ofthe practices that we install?
In a regular corporateenvironment and they may not
work in as unstructuredenvironment.
Dan Balcauski (16:23):
how would you I guess are the ways that you
would.
Think about contrasting maybethe management, like, so say you
were a, manager at Bain versus,the manager of team at PriceLabs
I guess, or any scaling startup,I guess.
Are there, is there a differencein sort of management philosophy
that you think is applicable?
I guess are there ways that youthink about creating that
(16:43):
environment where people dotheir best work?
That may be a nuance that youwouldn't expect if you're only
in one.
richie-khandelwal (16:50):
Yeah.
It varies.
It varies, right?
Example rarely a consultingenvironment would I encourage
people to take risks, right?
You're not, you're rarely,you're saying, oh, go take a
risk.
If you fail, it's okay.
You don't, you can't afford tofail.
In a consulting environment, atleast with Right?
Versus here you have to feelextremely comfortable with
(17:13):
failures, right?
Because if we are not failing,we are not trying hard enough,
Dan Balcauski (17:18):
Yeah.
richie-khandelwal (17:19):
right?
And so, so how do you createthat environment where people
feel comfortable taking risks?
People feel okay with failures,right?
But then next day they come backand still feel like, okay, I'm
in a place where my efforts arerewarded and not the outcomes
just.
Dan Balcauski (17:39):
one of the things that was going on in the back of
my head as you were talking interms of taking risk is that,
one major distinction between, amanagement consultant industry
that maybe is serving Fortune500 clients versus, a startup is
like, the startup has this.
Much bigger existential risk oflike, if we don't move fast
enough, either someone's gonnacome and eat our lunch or we're
(17:59):
gonna run out of money.
And so this, yeah, this abilityto take risks is needed because
if you're not finding the.
Maybe unspoken path, like youcan't just go against sort of,
or just do what everyone else isdoing, expecting that you're
just gonna be faster.
It requires some amount oftaking a different path, and
that needs to be sort ofinculcated in how the employees
(18:23):
are thinking about their owncareers and jobs.
richie-khandelwal (18:25):
Exactly.
Exactly right.
And it all goes back to themfeeling that they can trust you.
Them feeling that they areagain, like their efforts are
what are, what is valued morethan just the output.
And so, so are you creating thatenvironment?
Where you're able to, you'reable to reward people and and
(18:48):
communicate to them that theirefforts and efforts really
matter.
To do that I'd cut that lastline out as I said the
Dan Balcauski (18:54):
oh.
richie-khandelwal (18:56):
Yeah.
Dan Balcauski (18:57):
well, so you mentioned, this trust.
Being sort of foundational inthis trust-based approach.
But I guess, also, I mean thatall being said, obviously you
have a business to run.
You have these existentialrisks, so you still have to
maintain and hit bus, hit goalsto keep the business moving.
I guess.
How do you think about,balancing those two in terms of
like, okay, yes, I trust you,but that also gonna keep you
(19:18):
accountable.
How do you think about that?
richie-khandelwal (19:21):
Yeah.
Yeah.
I think, so you like, comes frombeing open, right?
Open about, Hey, this is wherewe want to go, right?
And you want to get buy in fromeveryone to saying and
especially at an earlier stage,right?
If you're 50 people or if you'relarger than with your leadership
team or L one team, right?
(19:42):
But you want to get a buyin fromthem to saying.
we agree to this, right?
If not let's sit for a couple ofhours, let's hash it out.
Where do we disagree?
What do we think the risks are?
Whatever, right?
But you get, get to anagreement, right?
Once you get to an agreementthen you don't have to shy away
from questioning or being directand stern where needed, right?
(20:04):
Doesn't mean that you don'tquestion right?
Trust means I, I can questionyou, right?
And I expect you to have theright answer, but you don't have
to ask me before you go dosomething.
As an individual say you're amarketing leader, you, I trust
you to make the right choices,and you're going to make, go
(20:26):
make the right choices, right?
But as a business leader, I cancome to you and.
Ask you questions about why didyou do this?
Why not this et cetera, right?
And so, so, so, I'm not sure ifthe duality of that makes sense
but in practice both have tohappen, right?
But it starts from thatopenness, why we are doing
something and being very clearabout that.
Dan Balcauski (20:47):
No, it makes perfect sense.
So there's a you open your thisopenness encourages, a lot of
communication, even potentiallyuncomfortable communication.
But then it still allows ittrust is an ongoing, evolving
thing within that dynamic.
Are you distributed with your,in terms of your personnel and
offices?
I know you're serving customersin 95 countries, I guess, do
(21:07):
you, are you do you have broadrange of offices or are you guys
remote.
richie-khandelwal (21:12):
So we are remote, right?
Which is, which adds a layer ofcomplexity to all of this,
right?
Dan Balcauski (21:16):
Yeah.
richie-khandelwal (21:17):
we
Dan Balcauski (21:17):
Well that was gonna be my, that was gonna be
my follow up.
So is your I guess what have youlearned about, enabling that
trust-based culture, I guess asyou are spread across remote
sites?
richie-khandelwal (21:27):
Yeah.
Yeah.
I think one of the things whichI think we instinctively knew
and most people alsoinstinctively know, is that you
want to define some level ofculture very early on of who
either the founding team is or.
Your initial maybe 10, 15, 20,30 employees are right.
And take that, codify it, andyou want to interview against
(21:51):
that very strictly.
And a lot of people start thatway, but then quickly get
diluted because they're not ableto fill the roles fast enough,
et cetera.
And so, so I think that's onething that we have done fairly
well is what I feel that eventhough and to your question by
the way, going back.
I think today we have members inmultiple countries.
We have, India is a big hub forus.
(22:14):
Philippines is has a team us.
We have multiple states inEurope, a few different
countries.
Spain is a big hub for us, buteven within Spain, you're now
expecting, like, there arepeople from all countries in
Spain, right?
We also have Portugal,Netherlands then we have a
couple of people in latam.
So everyone's coming from a verydifferent upbringing or cultural
(22:37):
values from their society, Butwe, when we interview, we are
really looking for, and we arecommunicating back as well to
saying, Hey, these are ourvalues, right?
If you believe you don't fitinto this you should know this
at day one, that these are ourvalues.
And if you believe you don't fitinto this, then you may not not
be the right fit.
And like if I our values arecustomer centricity, and I don't
(22:57):
think so.
There is a, there's an org outthere that doesn't say customer
centricity, right?
But our values are customercentricity.
That with, you have to know theproduct really well.
I don't care which team you'rein, you have to know the product
really well.
And what that means is when youjoin, even though we are a
startup.
We spent three weeks for youdoing onboarding, whether you're
hr, whether you're finance,sales, whatever.
(23:19):
You're doing these three weeksonboarding because you have to
know the product, you have toknow our customers.
You have to answer supporttickets really well, right We
have this like a happyworkplace, which comes from you
don't just say there is aproblem, you raise your hand and
say, I want to work on thisproblem.
And it could be anything.
You might be a product managerand you say, Hey, we have a
compensation problem.
(23:39):
Raise your hand and say, I wantto work on the compensation
problem and let's figure it out.
We have autonomy because we areremote.
And so no one's going to monitoryou to do your work.
And so we have autonomy and wehave a trust thing in that right
where we trust you to do yourwork.
But you only get so manystrikes, right?
If you get strikes no one'sgoing to set up a standup with
you every day to get work done,right?
(24:00):
You have to do it and you haveto communicate.
And if you get strikes, right?
So, so some of these just helpus.
We make sure that we arestrictly thinking about this
when we are hiring someone.
And and if it's a borderline,then our approach to it has
been, if it's a bottom line,we'd probably do a second
interview.
If it doesn't work, then we sayno to the candidate.
They could be fantastic withtheir skill, but if they don't
(24:21):
fit culturally, then it's notthe right place.
Dan Balcauski (24:24):
So being very intentional about the company's
values and then beingintentional about building that
into the hiring process andscreening against those that
totally makes sense.
I wanna shift gears a little bitand talk about the actual
business you've built.
There's an interesting dynamichere where you know, you're
helping vacation rental ownersoptimize pricing, but you also
have to figure out PriceLabsitself as a SaaS product.
(24:47):
In your mind, how do these twopricing challenges differ?
I guess what's it like being inthe pricing business while
having to solve your own pricingstrategy?
richie-khandelwal (24:54):
They are one, I think we are not optimized on
our own pricing strategy, right?
I don't think so.
Any business feels that theyare.
But they're fundamentallydifferent, right?
Because when we pricehospitality, we are, talking
about data at terabytes ofscale, right?
And so Data coming in.
We are evaluating thosepatterns.
We are trying to make ourartificial intelligence models
to come up with what the pricingshould be and take bets on that,
(25:17):
right?
And So many bets, right?
We are taking thousands of betsevery day, right?
For a property and for acrossthe world.
We are taking millions of betsevery day.
As to if at this price does itget booked, right?
and second in that market alsothe recurring customer usage is
lower, right?
So you can take a lot of betsright?
(25:38):
You can say, Hey, today I'mtrying to price this home at
$200.
Tomorrow I'll try to price ittwo 20 and day after tomorrow,
I'll try to price it at one 90and see what the elasticity of
demand is right In, softwarepricing, you don't have that.
Do you have customers that arerecurring some of them that are
also talking to each other?
And and you have to gen, proveyour ROIA lot more.
(25:59):
Also, the ticket So it itchanges that as well.
So the way we think about ourown pricing is driven from a
balance of the ROI that wedeliver.
Customer perceives that ROI anda balance of how competitors are
also doing this, right?
And so Of those threefundamentally different, and
probably we are doing it wrongbut fundamentally different than
(26:20):
how we think about pricing ahospitality business.
Dan Balcauski (26:24):
Yeah, it's well, I bring it up because I
remember, I don't know if youhad the chance to take his class
when he was there, but professorEric Anderson I remember I took
a whole class a whole quarter onpricing.
And we learned all these reallycool techniques.
Of, which I'm sure are reallyapplicable to the algorithmic
pricing side of the businessthat you just mentioned.
I like, we had cases where wewere managing Chicagoland
(26:47):
grocery stores and we were thebrand manager for minute made
orange juice.
And depending upon if ourcompetitors were on sale that
week or whatever, we had allthis.
Register transaction data.
And then I remember trying toapply those techniques when I
was a, product leader in a SaaScompany and realized like,
actually none of this stuffworks because of exactly all the
(27:07):
problems that you just outlined.
I was like, okay, this isactually quite different.
Let me go deeper into the booksand see if there's something
here that I can use.
But it's it is, it's fascinatingbecause it, the, it's, although
pricing maybe looks the same ata 30,000 foot view when you get
down to those distinctions youmentioned of like, yes, high,
highly transactional or is arecurring, or it could be quite
(27:28):
different.
I'm curious one of thefascinating challenges, you much
face in, in building these.
These algorithms is, you'reasking property owners to
essentially hand over one oftheir most important business
decisions to software.
How do you think about thepsychology of pricing
automation?
I guess what have you learnedabout what makes someone
comfortable, like letting analgorithm, set their prices?
richie-khandelwal (27:50):
Yeah.
So, so strange, right?
So when we started out in 20 14,20 15, right?
We built this best in classartificial intelligence black
box model, right?
That does things for you, right?
GPT or And something comes backand you're like, wow, right?
Something happened.
But with that pricing model, wehad no way to explain why we
(28:10):
have come up with that price.
Thing it was black box, right?
It was even black box for usmore often than not.
Similar to how, again, I go backto charge GP, like it's really
hard to explain why did it saythat?
It said it because you have aton Algorithms working together
in a black box model andspeaking something out.
and so
Dan Balcauski (28:27):
And if you ask it, it will lie to you and give
you
richie-khandelwal (28:30):
Exactly
Dan Balcauski (28:31):
that wasn't exactly the reason.
richie-khandelwal (28:32):
and here's the thing about, about LLMs
versus pricing models, right?
LMS are allowed to hallucinate.
We are not allowed tohallucinate, right?
We can't hallucinate to saying,oh, your house was supposed to
be a hundred dollars a night,but we priced it at$10 a night.
We can't hallucinate, right?
and so we we went back, we wroteeverything right from building
our AI models in a veryexplainable way, right?
(28:57):
so, As you're thinking about aday's price, you should be able
to see factors that impact thatprice And so, so, so, so as
we've built over the years, youcan see factors that are
impacting prices.
We have improved theexplainability of it.
You can also drill down and seecharts and graphs of why that's
happening, what's happening inmarket.
(29:18):
That, that leads us to sayingshould potentially, you're
expecting high demand in thismarket and you should be holding
on price or you're expecting lowdemand on, in this market, you
should be dropping your prices,right?
And so, so you can look at allof that explainability as you
go, as you drill and drill intothe product, right?
And then as people build comfortwith that, then they start
(29:39):
thrusting to saying, okay ifI've looked at five different
price points and understand thedrill down, then I understand
the remaining nine five shouldwork well, right?
And It's this the psychologything that you talked about,
right?
While with a black box model, wecould have potentially had a
better pricing, but even wecouldn't explain it.
And we almost went to a verycrazy backwards step of building
(29:59):
a statistical model.
So that it's explainable andit's highly In terms of we know
what it's going to say.
Dan Balcauski (30:05):
And so, I so explainability was key, I guess,
was that I assume, was thatdriven directly by customer,
sort of resistance to adopt theblack box model?
richie-khandelwal (30:15):
feedback, right?
Customer feedback and customerquestions.
Customers asking us, Hey why isit priced this way?
And us realizing, actually, wecan't even answer why is it
priced this way?
And so being that, so thecustomer centricity value,
right?
At that point you can wiggleyour way out of it just by
saying whatever, but the realcustomer centricity is being
(30:37):
honest there.
Hey, actually, we also don'tknow why it is priced this way.
Let us build something that wecan explain to you.
Why is it priced this way?
Dan Balcauski (30:44):
I'm curious.
'Cause we're both in thispricing world, but obviously
approaching a very differentangles.
I say I stay all my entire timein the latter category versus
the former.
But, I'm curious, given your.
Experience there.
Like how much of like pricingsuccess do you think is really
about the quality of thealgorithm versus understanding
the customer's psychology or isit balance between the two?
richie-khandelwal (31:06):
So, so, in in hospitality markets, right?
You're dealing at scale.
a lot about quality ofalgorithms, In and there is no
recurring purchase there, right?
Or at least you're not going togo stay at the same hotel every
single night.
You're not, you like, you won'tremember it.
You won't remember how much youpaid for that hotel the next
(31:28):
time you check in, right?
Versus in software pricing.
There is a lot of memory type toit, right?
And so you have to approach itdifferently.
And there are a lot of thosethings that you mentioned really
come in, right?
Where it's not just the thealgorithm, right?
But it is also the ICP, right?
(31:48):
And having said that in a truerevenue management sense, I
think of breaking them downinto.
Your pricing, which is thealgorithmic part of it, right?
This is what the true ROI ofsomething is, right?
And then on top of it, I thinkof promotions and discounts,
(32:09):
right?
Promotions and discounts aretied to your personnel, ICP, If
that makes sense.
So let's say if I am operatingin.
In geo where ROI is similar, butpeople's behavior to buy is
different, right?
I take my price, I'd add on adiscount layer to it or a
(32:29):
promotion layer to it, right?
And that would become my netprice.
But if you think of go back tolike the like the four piece of
marketing, right?
One is pricing, one ispromotion, right?
The promotion is really what?
You're doing it for the ICP inmy head.
And pricing is what you're doingfor the algorithmic side, the
ROI side et cetera, that youwant to deliver?
Dan Balcauski (32:49):
There's a I guess one, one way you might separate
those two as well is likethere's a maybe sort of a core
market-based algorithm.
And then there's, transactionlevel additions that you may
tack on.
'cause even in the SaaS world,right?
You may have the list price.
Like, hey we have our good,better, best options.
These are the price lists.
(33:09):
But then there's some amount ofdiscretionary discounting given
to the sales team to negotiatewith clients.
Or there's potentially marketingmay be running, oh, we're
running a Black Fridaypromotion.
That that layers on,modifications, depending upon
timing, seasonality, orindividual sort of customer
demands, use cases.
richie-khandelwal (33:28):
Absolutely.
Absolutely.
So you're thinking of those twoas two distinct things, right?
You want a very good corealgorithm that comes up with
what should be the right pricefor something, and then you're
layering on the market factors,right?
Which is your competition ordiscount or something else to
saying what should be the finalachieve price?
Dan Balcauski (33:45):
This is a question I often get asked, but
I'm gonna, I'm gonna flip it toyou as it what's one thing about
pricing that most people getwrong in your experience?
richie-khandelwal (33:54):
If the value is not clearly established if
not, value is not the rightword, if the standards or
benchmarks are not very.
It's not very clearlyestablished.
The low cost product actuallydoes not win.
So in, in vacation rental world,let's, let me give that example,
in a hotel, I know what a fourstar and five star means, and I
(34:19):
if I see a cheap four star, I'mgoing to buy that because I know
I'm going to get relatively thesame service across all four
stars, right?
But in vacation rentals, have nomeasure of quality.
To saying what is good, And soif I see a lower priced product
I may not always buy that,because especially if it's like
(34:40):
ridiculously discounted, right?
I'm not saying if it's like 5%lower, but let's say if it's 50%
lower, you have all the homes inGatlinburg that are at$300 a
night and you have one home at ahundred dollars a night, like I
don't know.
I don't know if I want to riskmy experience on this a hundred
dollars a night home.
so sometimes going too far awayfrom the pack can have
(35:01):
detrimental consequences.
Dan Balcauski (35:03):
So there's some, in the hotel example, there's
some.
Broad standardization that helpsconsumers make informed choices.
And when you're moving to marketthat maybe choices are not as
clearly defined or relevant orthere's not a clear metric that
you could use to, to compare sothen, so what I heard there is
that price then also has anadditional weight of a quality
(35:24):
indicator.
And so you're saying if it's lowprice, it must be low quality
because I don't have these otherfactors to help me weigh.
richie-khandelwal (35:30):
measure this, right?
I don't know how to measurethis.
So I'm just going to assumelower price means lower quality,
especially because everythingelse is bunched up in one place,
right?
And so that, that can besometimes counterintuitive as,
starting a new business, right?
And so again if you're doingthat, you may want to go with a
strategy saying, this is ourlist price, but because you are
(35:51):
our first few clients orwhatever, right?
or
Dan Balcauski (35:53):
I I absolutely love that Richie, I could talk
to you all day, I want to berespectful of time.
wrap us up, just to take us onsomething the audience could
take away, I guess, if you hadto.
What advice would you give otherCEOs trying to scale their B2B
companies?
If I gave you billboard and youcould put anything on it for
these other B2B SaaS CEOs tryingto scale their companies, what
would it say?
richie-khandelwal (36:15):
Oh, for the CEOs.
I'm not sure if this is gonnafly well, but resist the urge to
be the smartest in the room
Dan Balcauski (36:23):
I.
richie-khandelwal (36:24):
try to be the most hardworking in the room
Dan Balcauski (36:26):
Resist the urge to be the smartest in the room.
Love this has been fantastic.
If listeners wanna connect withyou, learn more about Price
Labs, how can they do that?
richie-khandelwal (36:32):
You can find PriceLabs@pricelabs.com and if
you want to connect me, find me
Dan Balcauski (36:38):
Well, I will put links to, LinkedIn and price
Select website in the shownotes.
Thank you so much, Richie.
That wraps up this episode ofSask Scaling Secrets.
Thank you, Richie for sharinghis journey and insights.
For our listeners, we foundRichie's insights valuable.
Please leave a review and sharethis episode with your network.
It really helps the podcastgrow.
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