TLabs Showcase - Off&AwayNewsBy Kevin May | June 14, 2010Share This article was originally published on TLabs Showcase focus on startups featuring Seattle, US-based Off&Away.Who and what are you (including personnel and backgrounds)?A team of online retail and travel folks who want to make shopping for amazing travel experiences fun and rewarding. The company was founded by Doug Aley (CEO) and Michael Walton (VP product), two serial entrepreneurs who have also done stints at Amazon (both) and Orbitz (Michael).Andrea Rogers (director of marketing) and Patty Hagar (director of supplier relations) round out the travel experience from brands like Alaska Airlines, Expedia, Travelocity, CheapTickets, and WorldSpan.We have an amazing and incredibly efficient design and development team with backgrounds from Farecast (now Bing Travel), Mpire, and Jott Networks, plus an incredible supporting sales, account management and customer service crew.What financial support did you have to launch the business?We’re backed by Madrona Venture Group - the same team that invested in Farecast.com (now Bing Travel), VacationSpot (now part of Expedia), and Amazon.com, among others.What problem are you trying to solve?We’re trying to put normal people in suites that would be otherwise unattainable from a cost perspective, experiences typically reserved for celebrities. We’re also trying to help increase brand awareness and incremental bookings for our partners without diluting their rates.Describe the business, core products and services?Off & Away gives travelers the opportunity to win amazing hotel suite experiences for about the same price as a standard room. We offer this through a new type of auction called a pay-to-bid auction.In Off & Away auctions, customers pay $1 for every bid they cast and the bids they cast increase the price of the auction by a fixed amount (typically $0.25).Auctions start out with a 12-24 hour timer. In the last minutes of the auction, every time a bid is cast, the clock is reset up to 30 seconds giving everyone a fair chance to bid.The person left standing when the clock runs out wins the amazing suite experience. All of the people who were outbid get to apply the value of the bids they cast towards a standard room at the auction hotel, or at any of the hotels in our network of 50,000 hotels.If you book with the auction hotel, you actually get more than your money back to book your stay.If you are planning to travel to any of the destinations Off & Away serves (New York, LA, San Francisco, Miami, Chicago, etc.) and are planning to spend $100-$200 / night on a room, you’re better off starting with Off & Away, giving yourself the chance to win a truly memorable experience.And if you don’t win, Off & Away gives you your money back to spend on the room you would have otherwise booked, all at the best published rates on the Web (compare with Expedia, Orbitz, Travelocity).Who are your key customers and users at launch?We have an amazing list of partners at launch including Intercontinental, Wynn Las Vegas and Encore, Morgans Hotel Group, Kimpton, The Pierre New York, The London NYC, Andaz, etc.Our customers are those who want to have the opportunity to massively upgrade their travel experience and those who want to have fun booking travel.Did you have customers validate your idea before investors?Yes, we vetted the concept with a customer panel before presenting to the partnership at Madrona. Really, what’s not to like? An opportunity to stay in a killer suite for the same price as a normal room, and if I don’t win, I stay in the room I would have booked anyway.So the concept was great, now we need to take care of the execution and product experience.What is the business AND revenue model, strategy for profitability?We take a commission on every room we sell, similar to online travel agencies. We also make some money off of “casual bidder” revenue – those people only planning to travel if they win an auction.If you lose an auction and decide not to book with us, you forfeit your bids. We use much of this forfeited bid revenue to fund additional incentives for other customers to book with our partners.SWOT analysis – strengths, weaknesses, opportunities and threats?Strengths: We have an insanely talented and nimble development team that allows us to innovate at a rapid pace (we do weekly releases). We also have the support of Madrona, one of the most seasoned travel and ecommerce investors around, and an incredible team of advisors from travel, retail, and social spheres. Weaknesses: We’re a small company in an incredibly competitive industry. Our biggest challenge will be scaling inventory in the face of a lot of new models competing for air-time with partners. And, with a model that’s new and unfamiliar. Opportunities: Our biggest opportunity is to tune the current model. There’s a ton of learning that happens after launch and we need to take that learning as well as the feedback we’ve received from customers (THANKS ALL!) and work it in as quickly as possible. From a total opportunity perspective (forest through trees), the auction model we use is applicable across several other “experience” segments. We’re pursuing these aggressively. Threats: We worry more about the next new innovative model stealing mind share before we’ve had the opportunity to reach scale (and making sure we stay ahead of that curve) than we do about larger companies pursuing our model.Who advised you your idea isn't going to be successful and why didn't you listen to them?We had a few people in the old guard of the travel industry tell us that people wouldn’t want to buy travel this way, that what they really needed were more travel productivity tools, review sites, etc.We didn’t listen to them because frankly, shopping for travel online is boring and tedious, and there are way too many companies trying to make us more productive when we book travel and when we’re actually traveling (thanks TripIt, we’re big fans).We thought we could make shopping for travel actually exciting and fun while offering customers great value. If we deliver against that proposition, we think customers will come back and we’ll be successful.What is your success metric 12 months from now?We have a few: How many people’s travel plans we’ve massively upgraded – that number is in the tens of thousands.How many auction non-winners we’ve placed in rooms for our partners – that number is in the hundreds of thousands.How often customers return to shop at Off & Away – several times per year. Most online travel companies have abandoned the idea of lifetime value of a customer as there is so little brand loyalty in the online travel space. If you look across all of the different booking sites, we believe there is so little brand loyalty because there is so little differentiation in site experience and customer value proposition.In fact, do a little experiment:Open five browser windows and bring up all of the usual suspects. Notice how similar they are in layout, language, and hell, even color scheme. They’ve been in the game so long that they have massively “optimized” and it’s very difficult for them to innovate because customers expect a certain experience. We think it’s up to smaller companies to offer that different experience and that ultimately, innovation and differentiation will win the loyalty of customers.TLabs Showcase is part of the wider TLabs project from Tnooz.