TLabs Showcase on travel startups featuring Russia-based hotel search and booking site Ostrovok.
Who and what are you (including personnel and backgrounds)?
Ostrovok was founded in late 2010 by Serge Faguet and Kirill Makharinsky, both Russian entrepreneurs who studied at Stanford and Oxford Universities, worked at Google and Slide, and founded Silicon Valley companies Tokbox, YouNoodle and Quid which have raised over $40M to date from top-tier funds including Sequoia Capital and Founders Fund.
We have been joined by Evgeny Quirishev, one of the top programmers from Yandex who was previously leading development on the largest professional social network in Russia Moikrug, and was voted one of the top 100 internet professionals in the country.
Since then we have been joined by more than 40 other top professionals in marketing, engineering and hotel sales; most of them are coming from leading domestic and global internet companies.
What financial support did you have to launch the business?
We received $13.6 million in financing from General Catalyst Partners, Accel Partners, Niklas Zennstrom (Atomico Ventures), Peter Thiel (Founders Fund), Mark Pincus, Esther Dyson, Fritz Demopoulos and a number of other leading investors.
What problem are you trying to solve?
Russian consumers do not have a hotel booking product designed specifically for them.
Existing products have poor content, cookie-cutter inventory that is not customized for the local market, weak local marketing, and no support for the way Russians are used to purchasing products online.
Describe the business, core products and services?
We are a hotel-only OTA for Russian consumers to book hotels in Russia and around the world. We build our own inventory through our experienced hotel sales team; market it to Russian consumers with our unique understanding of local channels; and help them complete the transaction in a simple and efficient way.
Who are your key customers and users at launch?
There are 300 million Russian-speaking consumers in the former Soviet Union.
They are increasingly going online and spending money on travel. Russia has the wealthiest average consumer and fastest-growing internet use of all the BRIC economies.
Did you have customers validate your idea before investors?
The hotel OTA agency business model has already been validated extensively in multiple markets around the world.
What is the business AND revenue model, strategy for profitability?
We deliver bookings to hotels and receive commission in exchange. Our approach to profitability is primarily about scale.
SWOT analysis – strengths, weaknesses, opportunities and threats?
- We have by far the strongest engineering, marketing and hotel sales teams in the market.
- We have more funding than all other players combined, and a unique ability to raise another $50-100M in the near future.
- We already have the #1 largest database of travel subscribers in Russia, and are amongst the top-visited travel properties.
- Global players have started earlier than us and have stronger long tail inventory coverage.
- Building a user experience, marketing strategy and inventory base uniquely tailored to local consumers.
Who advised you your idea isn't going to be successful and why didn't you listen to them?
- Being unable to continue attracting enough high-quality talent in the many areas where we need such talent in order to succeed.
We have not received any negative feedback throughout the process.
What is your success metric 12 months from now?
Conversion rate from key marketing channels.
NB: TLabs Showcase is part of the wider TLabs project from Tnooz.