The global travel industry is experiencing unprecedented
growth. The World Travel and Tourism Council estimates travel contributed more
than $8.3 trillion to the global economy in 2017 and predicts that number will
grow to $12.5 trillion by 2028.
That upward trajectory is fueling an active startup
ecosystem.
Around the globe, entrepreneurs are working on disruptive solutions
to fix inefficiencies and address pain points, with work spanning from
small-scale individual developers in remote corners of the globe to well-funded
initiatives in tech epicenters.
According to Phocuswright's State of Travel Startups data, there about 2,000 active travel and mobility tech startups have been founded globally since 2008, and venture capitalists invested $31 billion in them in 2017, up from $19 billion in 2016. And the allocations in early 2018 - $4 billion in the first six months across 160 deals - put this year on pace to set a new record.
But what’s not evident in those figures are the thousands of
struggling startups, the ones being dismissed by investors or shutting down
after years of trying to make it.
Travel is a complex arena for entrepreneurs. So much
potential. So much risk. So many moving parts.
For the second piece in our series on startups, we go to the
front lines to gather insights from three startup founders.
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Tao Tao is co-founder and COO of GetYourGuide. The
Berlin-based company launched in 2009 and has 420 employees in 16 cities around
the world. GetYourGuide has sold 15 million tickets for tours and activities
through its website and app, with six million of those sold in 2017 alone. The
company has also raised $170.5 million in funding. Tao and his four co-founders created GetYourGuide from an idea that developed while they were in college.
Avi Meir is co-founder and CEO of TravelPerk, a platform for
managing and booking corporate travel. Founded in 2015, the company is based in
Barcelona and has 140 employees, and more than 1,000 companies that use its software.
To date, TravelPerk has raised $30 million in investments. Prior to launching TravelPerk, Meir co-founded Hotel Ninjas, which Booking Holdings acquired in 2014.
Amit Saberwal is founder and CEO of RedDoorz, which has more
than 500 budget properties in 16 Indonesian cities, Singapore and the Philippines.
Founded in 2015, RedDoorz handles distribution, pricing, marketing, customer service
and technology for properties under its brand, but it does not own them. RedDoorz
has raised $20 million in funding. Before launching RedDoorz, Saberwal was chief business officer at MakeMyTrip.
On getting started…
1. Pick a market that really feels big. When we started in
tours and activities it was very, very unsexy, but it felt very, very big. When
we went to these trade conferences … we’d see pictures of balloon rides, horse
riding, speedboats, and then you go to the stands and everyone is selling
hotels here, hotels there. The question was, is just nobody selling it, or is
there no demand? And the answer was there was a lot of demand it just wasn’t
sold and distributed properly. Tao
2. Experience in travel was important for us because our
industry is pretty complex, and it’s not something you appreciate when you are
starting and coming from the outside. I’ve been in travel for 14 years, and I’m
still very much a beginner. And having experience in startups is different than
coming from big corporations. In startups, you have to deal with everything –
if you work for a massive corporation and your part is X, you typically don’t
get exposed to the other parts of the business. Meir
3. Because I was a hotelier and worked for an online travel
agency, I knew exactly the problem which I needed to solve, and I
didn’t have to spend a long bit of time trying to understand the industry.
It also added to the credibility of the company and allowed me to attract the
right talent. Saberwal
4. You have to be an infinite learner. Your only super power as
an entrepreneur in the early days is your ability to learn more quickly than
anyone around you. Tao
5. Pick really, really good co-founders with complementary
skill sets. People you trust and people who you also feel have the learning
super power - who can evolve as the size of the role evolves. Out of our five
co-founders, four are still around, which is a long time, and all of us still
have significant roles with significant responsibilities. Tao
Your only super power as an entrepreneur in the early days is your ability to learn more quickly than anyone around you.
Tao Tao - GetYourGuide
6. If you want to be a part of building something big and
having an impact, I would encourage you to join a late-stage startup. From a
learning point of view that’s probably the best path. If they are really
convinced they want to do it [create a startup], my advice would be get great
advisors. My advisors were priceless. Meir
7. I always fancified myself to be an entrepreneurial guy. When
I was at MakeMyTrip I wore several hats. But when you are an entrepreneur, I
figured out it is the difference between reading about driving a car and
actually driving a car. It’s a completely different experience. It was sobering
in a way. Saberwal
8. You need to have a very strong conviction about why you do
something the way you do. Meir
On funding…
9. There’s a lot of money right now. Investors are looking for
opportunities. I would say you should make sure you are raising money from the
right investors - who know the industry, who looked at other companies and
decided you are potentially the winner. Meir
10. Fundraising is going to take longer than you think it is, so
start well in advance. It will take a minimum six months. You have to balance
out between building the business and doing the fundraising. And therefore, if
you are a CEO, you better have a solid operating team because a lot of your
effort will go to fundraising. Saberwal
11. The way to pick an investor is to pick for culture. I would
use the same criteria as you would hiring an employee. Does the investor share
in the vision? Is the investor a good culture fit? It’s about shared values,
shared behaviors. Because that is fundamentally how you make decisions, how you
go through tough situations, how you handle conflict and challenges. Tao
12. In the early stages you might be in a situation that you
just want to take any money, but eventually the attempt always should be to
have a well aligned, balanced board, which has a thought process similar to
yours but which is not exactly yours. You need someone pushing your boundaries
also. Saberwal
13. Make reference calls on potential investors. And you
shouldn’t do the reference calls where it went great, you should do the
reference calls where it didn’t go so well. Our VCs advised us - talk to my
worst companies, deals where it went south, deals that were a zero. Talk to
them, and then you know who I am. Tao
On growing…
14. Don’t get distracted.
You should either be building your product - writing code,
building a website - or you are selling - on the phone, on email, talking to
customers, getting them to pay real money for your product. Many founders spend
too much time networking, but they’re not building or selling, and they end up
running out of cash before they have anything to show for it. Meir
When you are an entrepreneur I figured out it is the difference between reading about driving a car and actually driving a car. It’s a completely different experience.
Amit Saberwal - RedDoorz
15. In the growth stage, you need good planning. It is an art,
and it is an art we underestimated. In the early days you just grow, grow,
grow, and you don’t really need to plan because growth just happens. But over
time you want to think about strategic growth, targeted growth, sensible
growth. Tao
16. When you are growing, you also need great execution. At the
core it’s radical focus, challenging and questioning everything you do and
figuring out what makes the boat go faster. Tao
17. One of our biggest challenges is how can we keep scaling at
this speed. We’re talking about 6X year-on-year growth in about two years. Think
about how you can keep up with the growth without diluting the culture, with
still being able to hire the right people. Meir
18. A huge mistake - and one of the single largest failure points
that I’ve seen in the Southeast Asia ecosystem - is that people decide to
accelerate geographical expansion too quickly. Our philosophy is get one city
right before you move on to the next city, get the country right before you
move on to the next country. Be quite measured in the way you grow. Saberwal
On opportunities…
19. The longer an incumbent has not been growing but
has market share, there is usually an opportunity for disruption. Tao
Many founders spend too much time networking, but they’re not building or selling, and they end up running out of cash before they have anything to show for it.
Avi Meir - TravelPerk
20. On the business travel side, I don’t know how, but
if someone can fix airlines, I think there is a huge opportunity. I just think
it’s a very capital-intensive area and very monopoly driven. But I think we can
all agree if air travel can be better, we would all be better off. Meir
21. We feel we are in a hot spot because hospitality has not
been disrupted in the last 50, 70 years. The whole franchise model and
management model, it’s not in favor of the property owners. I think we are
doing something that has an opportunity to completely disrupt the industry. Saberwal
22. The longer you work in travel the more cynical you become.
Ask anyone in travel where there’s opportunity and always they say there’s no
opportunity. That’s the blindness you develop over time in your own industry.
So I don’t think people in travel are a good judge. Tao