After two years, Everbread, a UK and Bulgaria-based startup that sells a much-hyped B2B airfare-shopping engine, recently closed its latest round of institutional fund raising.
It will be shifting its focus to Asia and moving its UK component to Singapore.
Everbread had a raise with EDBI, the corporate investment arm of Singapore’s 51-year old Economic Development Board, and the National Research Foundation (NRF), which is funded by Singapore's government.
The amount of the raise was not disclosed in the recent announcement, and EDBI does not typically disclose the value of the investments in its portfolio. A spokesperson for EDBI says it is the group's first investment in a travel company.
Everbread's CEO Alexander Staun-Rechnitzer tells Tnooz that the startup is still on a shoestring budget. He'll remain in Copenhagen.
A CFO hired in October, O Koo, has moved from China to Singapore. NRF is paying Everbread to find and hire engineers as part of a government strategy to bring data scientists to Singapore to work in a variety of fields.
Everbread will hire about 8 people in its Singapore offices in 2013, says Staun-Rechnitzer. These engineers will be experts in how to implement the startup's core software product, Haystack, in the back-end systems of clients. Up until now, Everbread only had a couple of implementation people on payroll.
Haystack claims to excel at parsing complicated transactions, such as split-tickets and virtual interline tickets. (See video, below.)
Brands that have been using Haystack include Jetabroad (see more details, below) and Cheapflights Media (owner of Cheapflights and Momondo).
Meanwhile in the past 15 months, Everbread has been in negotiations with three of the four global distribution systems (GDSs), says Staun-Rechnitzer, who adds that his company's financial backers, which still includes Bessemer, grasp the regrettable fact that the sales cycle is unusually long in this sector.
Three airlines have been testing Haystack for more than a year, according to company sources. But it may up until another two years before usage goes live and public announcements are made.
"A deal is there. It's so close," says Staun-Rechnitzer. "That's why investors are still giving us slack."
Backstory on Everbread
In 2009 Everbread was founded, and its executives, along with data scientists, led a team of eight developers in a project that took a little more than a year to create a more accurate travel search technology, using a novel technical architecture and clever algorithms.
The resulting project charmed industry insiders with its promise of filtering ticket information with greater efficiency than the technology used by GDSs and major airlines. The company's use of rack servers instead of mainframes meant that it could enable organizations to run airfare searches more cheaply.
Two months later, in July 2010, Everbread was beamed into tech media headlines when Google released a flowchart of the global "travel ecosystem" which name-checked the startup as a key player to watch.
Everbread's core product was a B2B fare-shopping alternative called Haystack, which inspired hope that it would be build on the documentation produced by data scientists at ITA Software.
At the start of 2011, it had strong revenue from customers, such as Radixx, AERTiCKET, and Ypsilon, who all continue to use the product.
But months earlier, officials at rival company Vayant sent a letter to Everbread alleging that the company had hired about nine of its ex-employees and used those software engineers to launch a competing product.
In November 2011, the legal dispute was settled, allowing both companies to move on.
But the long-running dispute inflicted severe damage.
We spoke to some former employees off the record. They say that, at its peak in early 2011, Everbread had 48 employees. Today, it has fewer than 30 on the payroll now and it owes some former employees and suppliers back payments.
A year ago, the company replaced co-founder Morten Lund with Staun-Rechnitzer, a co-founder and former COO of the company, in the role of CEO.
Staun-Rechnitzer says that in any other industry, a startup that had been running in place for as long as his company has would have been overtaken by competitors.
But the part of the travel distribution problem that Everbread is trying to solve is peculiarly complex and unglamorous, he says. That has apparently kept competitors away for long enough for the startup to live for another day.
"This project is damn hard to kill," Staun-Rechnitzer says, laughing. "It's been the craziest ride I've ever been on."
Everbread has enough funding to wait until the first major airline or GDS is in a position to fully integrate with Haystack, claims the CEO. Past funders include Bessemer Venture Partners, which invested near the start.
Staun-Rechnitzer suspects that a key reason for the delay by GDSs in approving Haystack integration has been internal politics.
"No self-respecting CTO of a hard-core information technology company would be first to line up as a fan of buying a technological solution from an outside vendor.... It might be misinterpreted as an admission of defeat, even though the product we're offering is only one part of the 20 or so major processes that his or her division oversees."
The CEO suspects that there have been internal battles at the major GDSs. On the business side, there are pro-Everbread people who see that they can add a technological solution and gain a competitive advantage by paying for a external vendor to provide a service. On the technical side, he thinks, there are tech people who insist they can build their own in-house solution within a couple of years.
It's almost a pride thing, though it's probably also about the risk of dealing with an outside vendor who might not understand all of their supporting systems.
Everbread isn't only focused on luring business from GDSs, though. While Staun-Rechnitzer doubts metasearch companies would be interested in his product, he says:
...there are GDS-like players out there, who are above Farelogix and Datalex, such as organizations who host airline data, for whom getting the Everbread kind of solution would enable them to catch up to the marketplace much faster and offer airlines and online travel agencies a shopping solution that's second to none.
GDS-like players that host airlines also need to offer the airlines they are hosting an incredible shopping solution.
Here's an example product: A company might combine an API from a provider that rates airlines, like Skytrax, with fare data to provide search results where consumers could see not just the lowest priced tickets but also the average third-party rating of the airline offering the ticket.
An airline, let's pretend one is called Imaginary Airline, may want to show selected options on its site. Haystack is a filtering tool that lets the airline provide fares on imaginaryairline.com to include results from an alliance partner on the chance that it will gain from upselling on a feeder route. Haystack lets you do that.
At the same time, why would imaginaryairline.com want to show its potential customers fares on airline that it doesn't have a partnership with and couldn't pick up feeder traffic from? But right now, it's technically impossible for GDS tools to filter results to show only flights from alliance partners and exclude non-alliance partners to gain the feeder traffic to its long-haul network. Haystack opens up opportunities for more airline profits.
The Jetabroad example
Two years ago, Jetabroad, an Australian online travel agency (OTA), began using Everbread's software as a content source. Jetabroad's co-founder and managing director, Darin Walters, says the company has been happy with the product.
You need to first understand how Jetabroad is different from other OTAs in Australia, and even many other OTAs worldwide.
Our startup focuses on air ticket sales. Roughly speaking 98% of our income comes from flights, and about 90% of our ticket volume is international flights.
We began selling tickets in October 2005 and in our latest financial year we did 130 million in ticket sales. It's been year on year growth. We're cash-flow positive. We're profitable.
We began using Everbread two years ago. If your question is, "Has Everbread been a positive contributor to that growth story?" then the answer would be, "yes."
We continue to use them as one of a variety of content sources. There are traditional GDS shopping tools and there are alternative shopping tools. Everbread is an alterna. We use both, plus a number of other flight content sources.
When a customer runs a query on our site, our engine will source the flight options from various sources, pull them in. We have logic built up over many years that combines, filters, and processes all of that fare content and serves it to our customers.
The traditional OTA is a website sitting up on a GDS. That may be too much of a generalization but, I just mean to say, it's not our model. Jetabroad is different in that we have multiple sources for fare content.
The other key differentiator for us in Oceania is that we're 90% international flights, meaning that most of our competitors are instead focus on selling domestic and Tans-Tasmania flights [between Australia and and New Zealand].
In this part of the world, about 80% of domestic flights are booked online but only about 10% of truly long-haul flights abroad are booked online. We're leaders of that 10% sector. Our tickets tend to be high-price, complex offerings.
That's where Everbread comes in. We use it to help facilitate dealing with the complexity of these long-haul, multi-destination tickets. We're talking about interline and virtual interline tickets, multiple connection points, pricing and availability challenges, and a lot more technical challenges and user experience challenges.
Yeah, we've been happy with Everbread. Like any relationship, it has had its ups and downs, especially given that Everbread has had ups and downs as a young company.
They remain a complimentary source of content to what we get from traditional GDS suppliers.
Why Asia matters
It's not just the usual talk of Asia's projected customer growth that is why Everbread is focusing almost entirely on that region now. It's also the nature of the plane tickets searched there.
There are many more possibilities for how to do a routing for flights around Asia because of the greater number of airports and airlines traveling long-haul, than there are in for domestic US routes, and Haystack's ability to cut through complexity is better illustrated with Asian itineraries.
Everbread draws on a combination of data sources, such as ATPCO, IATA and APTCO tax and fee information, OAG schedules, SITA fares, low-cost carrier direct APIs, and other sources. Its CEO says it generally works best as a supplement to the information a GDS provides.
If you're an OTA, you're comparing Everbread's API with what a GDS offers. The company says it lets you filter results by adjusting settings on 115 parameters. Because Everbread is a small company and this is its sole product, it will take the time to customize the settings for a client's needs.
In comparison, if you, as an OTA, buy an off-the-shelf solution from a GDS, you'll be getting a standard setup result that any number of agencies may have and that may not be tuned to your particular needs.
Everbread may have a lean operating structure, despite its funding raise. Yet its ambitions are vast. A proof of the high aims of the company is this video it made a while ago to describe its core product, Haystack: