Sonder
- Sonder's downfall has stunned the short-term rental company's cofounder."I've poured my heart and soul into building this company," Francis Davidson told Business Insider.Davidson previously said pulling off Sonder's deal with Marriott was the "hardest thing."
For the short-term rental company Sonder, teaming up with Marriott was a lifeline.
In a LinkedIn post about five months ago, the San Francisco firm's cofounder, Francis Davidson, said that pulling off the Marriott deal was the toughest challenge he'd ever faced.
"Making this deal happen — along with the multi-party, complex capital raise I orchestrated — was the hardest thing I've ever done," Davidson wrote in the June post commemorating his last day as the company's CEO.
Now, Davidson told Business Insider that he's left stunned by the company's bankruptcy plans and its subsequent downfall following the collapse of Sonder's partnership with Marriott.
"I've poured my heart and soul into building this company, starting as a college student in 2014 and through the pandemic," Davidson said on Thursday.
Davidson added, "We all felt good about the positive momentum we were seeing in June when I left, and so to then see that the business has now run into a brick wall, it's just shocking to me."
Sonder's licensing deal with Marriott, which allowed Marriott Bonvoy members to book Sonder stays directly through the hotel giant's platforms, imploded on Sunday when Marriott announced that the agreement had been terminated due to "Sonder's default."
The breakdown of the licensing agreement between Sonder and Marriott sparked chaos and confusion for many guests who were blindsided and forced to leave their accommodations with little warning.
On Monday, Sonder said it plans to file for Chapter 7 bankruptcy and liquidate its US business. The company, which managed thousands of short-term rental units, including apartment-style and boutique hotel accommodations around the globe, also said it would "initiate insolvency proceedings" in the other countries where it operates.
Sonder, a firm once valued at over $1 billion, said it "faced severe financial constraints arising from, among other things, prolonged challenges in the integration of the Company's systems and booking arrangements with Marriott International."
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Marriott signed its 20-year licensing agreement with Sonder in August 2024, prompting Sonder to rebrand as Sonder by Marriott Bonvoy.
Sonder's shares surged more than 125% after the announcement of the deal, which Davidson, in his LinkedIn post, called "pivotal" and a "major milestone."
The cofounder, who resigned just days after the company had completed its integration with Marriott, said in his June LinkedIn post that building Sonder when he was in college was an "epic journey."
"In its first 5 years the company was a rocketship. It grew from $0 to $143M in revenue by 2019. We were valued at $1.1B and had boundless ambitions," Davidson wrote.
He wrote that in 2019 alone, Sonder signed up nearly 10,000 units, which the company expected would add half a billion dollars of annual revenue when opened.
The company had even bigger plans for 2020, Davidson wrote. Then the COVID-19 pandemic hit.
"Revenues collapsed overnight, burn shot up," Davidson wrote.
"We'd built a business that we thought could get through any shock, including clever arrangements where we'd get relief from property owners we worked with in the event of a recession," he continued, adding, "But what unfolded over the following few years was far worse than anything we'd seen in historical data, or ever imagined was possible."
