STARTUP STAGE: Chozun offers blockchain system for experiences and loyalty

Chozun

Australian entrepreneurs Teresa Truda and Zia Word pivoted the focus of their app to Chinese outbound millennial travelers after they were accepted into Chinaccelerator, a Shanghai-based startup accelerator.

Chozun is based on a cryptocurrency - the CZN token - that is used to perform transactions, reward interactions and manage loyalty in the platform.

Describe both the business and technology aspects of your startup? 

Chozun is a travel destination experience, loyalty and lifestyle ecosystem powered by a cryptocurrency that's backed by blockchain and smart-contract technology.

The ecosystem exists to make sure travelers are matched to the best personalized local experiences and services using proprietary artificial intelligence and data science and allows users to build loyalty across multiple verticals as well as globally.

What inspired you to create this company?

We were inspired to create our company because we were frequent travelers ourselves and had the pain points we are now solving. Teresa actually came up with the initial idea when we were both on a work trip to the US and found we were wasting too much time looking for things to do, places to go ‐ trawling sites, reviews but being inundated with noise.

We wanted an easier solution that told us what to do when traveling, based on how we liked it, not others. 

We decided before diving into building the company to validate our idea and identify if others had our pain points when traveling. We did this really manually through asking people to text us initially!

We found that others, in fact a majority of travelers, suffered the overload of noisy and irrelevant information when trying to find what to do and where to go in destinations.

Along the journey, we also learned that there was a huge opportunity to improve loyalty for millennial travelers. Given we are our audience, we were inspired and passionate to make a change and revolutionize travel.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company?

Strengths

• High user retention
• Strong: well-bonded, highly experienced team
• Just over $1 million in revenue
• Proprietary technology and development of proprietary protocols for use on our blockchain
• Inventory already on the blockchain and crypto-driven loyalty

Weaknesses

• Need more resources to keep up with demand
• Incumbents rapidly coming into market

Opportunities

• Ability to tap into more than 225 million Chinese outbound travelers
• Spending is increasing year-on-year, focused on ancillary spending (not including flight and hotel). Average spend is $306 daily. Spending has been increasing steadily for the last five years. Indeed, from our own data we have seen an increase in 2017 on spend
• Outbound Chinese travel is in its growth stage, expected to reach maturity in 2021 (rising by 50.5%)
• Omnipresence: increase the platforms on which we reach customers

Threats

• The travel space has recently become very hot, and this has brought about a number of new potential competitors coming in and the want for existing players to broaden their technology reach
• Expense of key opinion leader marketing could get costly
  
  

 What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

When searching for what to do and where to go in a destination, there is a lot of noise and irrelevant information across multiple touch points, which makes it both time-consuming and painful to find things you will love. 

There is little context to travel discovery. We aim to be almost the Netflix of destination discovery and booking. Authenticity is often lost - with fake reviews and non-transactional feedback. Traditional loyalty programs do not serve or appeal to the millennial traveler.

Traditional "points" get lost. Brands are unable to keep millennial travelers engaged and find it hard to identify niche tastes within travel.

The current high costs, slow supply chain and lack of focus make the travel destination market bloated, inefficient and expensive. The industry needs to stay ahead and more effectively service what will be the highest-spending group of travelers by 2020 (millennials, and further to that. Chinese millennials).

So you've got the product, now how will you get lots of customers?

Initially, it was through word of mouth and making corporate partnerships to deliver our service to big companies with many employees that then used our service in a leisure capacity as well. We organically and sustainably grew our customers, by taking the approach of having quality customers that we could rely on to give us honest feedback and spread the word about their Chozun experience.

Now, our upcoming initial coin offering (ICO) is a great way for us to attract customers and brand advocates. We already have a product in market, and the ICO will enable potential customers and ICO investors to make the journey from bystander to advocate much more quickly than the traditional cycle since they have a vested interest.

We are also working on some huge partnerships to to allow other brands and companies to plug into our loyalty program and CZN.

We are working with a number of global and niche influencers, doing some really neat events and online activations we know haven’t been done yet, and we can’t wait to share it with our existing and new customers.

Lastly, we intend to keep listening to our customers, finding out what they want and endeavouring to delight them at each part of the customer journey. Long-term ‐ building our ecosystem and community to truly make it valuable and exciting will drive word-of-mouth growth. 

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market? 

Before we even began to build anything, we gathered a group of friends and colleagues and asked them to text us when they wanted to find what to do or where to go on their travels. Since they all traveled a lot, we became inundated with texts. This helped us validate not only do we have a real pain point, but what are the kinds of thing they want?

From there we built a clunky prototype and beta tested in market for a few months. Before embarking on the journey with crypto and blockchain, we asked our existing customers if they saw a need for it and if they wanted it - overwhelmingly a 98% positive reaction.

How and when will you make money?

We currently make money as a small cut from transactions, but as a general rule, we negotiate a discount and are able to pass on that discount to users.

However, going forward we will be using our crypto to make money from the transactions, meaning the fee is greatly reduced - though we still have the ability to make money. We also work with brands who buy into the crypto and pay a fee to set up unique and exclusive events within our upcoming loyalty protocol.

What are the backgrounds and previous achievements of the founding team, and why do you have what it takes to succeed with this business?

Teresa, Will and Zia have all worked together for over seven years in various iterations. Teresa and Zia created an e-commerce shoe store they sold in 2015. Teresa has been in tech for 12 years and worked with huge global brands. Zia has been in tech for over 12 years, including being part of a startup that sold to Sony, working on a cutting-edge travel entertainment platform. Will was part of successful startup Venuemob.

We have started, built and sold businesses previously and have worked in both tech and travel across Australia, the UK, China, Asia and the US.

What's been the most difficult part of founding the business so far?

The realities of running a startup are something we feel isn’t spoken about enough. The biggest difficulties for us have been the times when we didn’t think we had enough runway to carry on (emotionally and financially).

We’ve needed to accept that we don’t know everything and part of the journey is that we were and are always still learning.

Always challenging ourselves with the question: "How are we going to continue to make this particular business a sustainable business?" And making sure we have the answer to keep pushing, progressing and growing the business alongside our passionate team.

We only had our own savings and a small investment from SOSV through Chinaccelerator, and since then we have managed to expand to 22 cities and create a sustainable model from which we can now enter the rapid growth stage. The journey has been a tough one and will continue to be, however we’ve realized to every challenge, there is an outcome that can drive us to a better solution.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

We think making something sustainable is a great start. We have had very little outside investment so far. Of course with the ICO, that’s about to change, but we’re ready.

Alot of travel startups raise money too early to be super aggressive before really working out how that is sustained. That, as well as our proprietary technology, our passionate audience and the amazing features and evolutions we have planned for our company create the special sauce that elevates us above the rest.