Noam Toister, Bookaway Group
Launched in 2018, Bookaway aims to help the fragmented and predominantly offline ground transportation industry move to online distribution. It has raised more than $70 million in the past year and made a string of acquisitions including Plataforma 10 in Latin America and 12Go in Asia.
During his honeymoon in the Philippines, founder and CEO Noam Toister had the idea for Bookaway after he became frustrated with the offline process for booking a bus to a local tourist destination.
What experience from previous startups and professional life do you bring to travel?
My only real job before being an entrepreneur was managing a camping store. I did a backpacking trip for about a year when I was 21 and when I came back I wanted to stay in the same vibe and state of mind. So, I started working in a camping store selling equipment and ended up managing that store for a few years.
The idea for Bookaway was very intuitive for me. It’s obviously a product that a traveler would use and I think having some experience in other startups before, that weren’t related to travel, and building a few products that reached some market share and made money put me in a very good position to start this company and avoid making many obvious mistakes.
One of the obvious mistakes that entrepreneurs make is doing something that is too comprehensive and tries to solve too many problems at once.
One of the things I did was to build a very simple product, so the first version of Bookaway was a Wix website that people would pay with PayPal and get an email with the ticket. It was very obvious it worked because it sold even though it was a really bad website with a horrible user experience, so it was obvious there was an opportunity.
The second thing is making sure that you’re building something that people will pay for, for sure. If you tell them, "If I do one, two, three for you, would you pay me?" and they say, "Just take my money and shut up," then you’ve got a good idea. If they tell you, "That would be nice to have, maybe I’ll try it," it’s probably not the best idea.
Bookaway has grown through acquisition so far; does this remain the strategy?
It was never our strategy. It was something that emerged as an opportunity and made a lot sense for us and the companies we acquired. We haven’t turned into a private equity company but we are opportunistic about it. If we see companies that have synergies with us and will allow us to expand our market share in different geographies, or different demand base, then we will definitely look at it now that we have earned the experience of doing M&As. It wasn’t something that was our forte as a startup in the first place but today we feel confident about how to do it.
Investors are advising founders to tighten their belts with the looming threat of a recession. Will Bookaway be tightening its belt?
To begin with we tried to build a sustainable company and we’ve made it through the worst crisis a startup can imagine. We were a travel startup, geographically focused in Asia, when COVID started, so we really experienced the drop down to near zero at some point and we made it through. So, we feel confident about our ability to make it through different crises.
Yes, I think companies should tighten their belts and make sure they are building a product that is sustainable not just growing by throwing money at it. This is the way we built the company to begin with so we’re in a good position today. We also closed a funding round shortly before markets collapsed so that was good timing for us.
Do you think the fact that you offer smaller transactions on average and a percentage of it is necessary journeys, and perhaps that the demographic is backpackers and more frequent travelers, helps you through whatever the next crisis might be?
The short answer is that it does. Offering a product that is less expensive in many routes is definitely an advantage when there is a crisis. However I think that the boom we see right now in travel, the pent-up demand that is exploding everywhere is really hiding any crisis. If there is any decline in travel happening because of the crisis, it’s hard to recognize it because there is such huge demand now. We might see it in 2023.
The other part of it is that our services are not exclusive to backpackers at all. The places we serve are some of the most amazing places in the world, they just don’t have airports.
Our service starts where Kayak ends. Everyone traveling in certain countries wants to go to these destinations. So, if you’re in Peru, you want to get to Machu Picchu and whether you want a very affordable bus or a luxurious train you can book it on Bookaway, so we have the high-end product of private transfer and luxury train products and the more backpacker products of buses and vans. The point is that it’s kind of a gap in the market. While you’re booking everything else online - the hotel, the flights and probably the experiences - getting there is still not very easy to book online, it doesn’t matter whether you’re a high-end traveler or a backpacker.
So looking at your funding of roughly $70 million in the past year alone - you said further acquisitions will be opportunistic. Do you see particular gaps?
We have a lot of geographies where we’re not the strongest. We are strong in Asia, we are pretty strong in Latin America, but we haven’t still reached North America at all and we haven’t looked at Western Europe too much until now. Africa is also a big opportunity. So, besides that it’s the technology part.
If you look at the market, most of what we’re trying to do is digitize the market. We try to provide operators with the right technology to be able to go online and sell. So, these technology opportunities are always interesting for us.
What are the challenges of buying disparate companies and continuing to offer them as separate brands/platforms?
There are several challenges. Some of them are challenges you would experience in any M&A but for us they were intensified because of COVID; we did them on Zoom. We did not meet the entrepreneurs that we bought and partnered with until a lot of time after the deal.
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The challenges start from cultural challenges because when you buy companies that are from different geographies there are definitely cultural gaps, language gaps and mentality gaps that you need to bridge. Also there is an expectation gap that you need to manage very carefully and make sure your vision is aligned with the vision of the executives of the company. You need to make sure that what you’re aiming towards, that they believe in it as well and that you are able, along with them, to communicate it to their employees. We’ve managed to do it very well because we’ve had very little employee churn since the M&As.
After that there is the challenge of managing disparate brands. It’s something that even Expedia addressed recently with its strategy. It’s a dilemma because on the one hand you have a brand that has its authority and strength and is recognized in the market. On the other hand you have different teams, in different subsidiaries working on the same product so you’re basically doing things twice and you’re not very efficient with your funds.
Our approach, and it is our approach and each company can solve it differently, is that speed is more important than efficiency at this point of our life. We believe that leaving most of the decision-making at the lower levels makes the company move much faster and gives the employees and managers a much bigger sense of ownership and responsibility. Obviously we have our goals and KPIs and things that are strategically aligned, some of them are technical as well but we do try to let each brand manage itself as much as possible.
What do you believe is the greatest challenge in bringing ground transportation online?
The greatest challenge is probably the connectivity to the operators. Getting them working with online systems that are able to connect to online travel agencies. Most of the market today does not work with any online technology. They do work with software but the software does not connect to anything or, if it does, it talks in such a different language than what you would expect in the market, that it's super hard to connect with them. That’s the process that most companies are going through today.
Are operators open to the technology? Do they want to go online?
I think they are very open to it. It varies between regions and operator sizes but we have not had any operator churn. Once an operator starts working with us the only reason they would stop is if we decide they don’t give a good enough service to the customer.
Operators benefit from working with us significantly. They get new customers, they get smoother operations and they can manage their businesses more efficiently so there is definitely demand for it. There was a problem in the supply of a product that’s a fit for them until now.
In your latest round of funding you mentioned putting it toward new financial models. What did you mean by that?
I can’t elaborate too much. We try to assist the ecosystem in more ways than just giving them the software and getting them more customers. We’ve done things in the past where we’ve helped some operators go through difficult times during COVID and providing payments in advance for deferred services and it’s something we would like to expand along the way.
One of the obvious mistakes that entrepreneurs make is doing something that is too comprehensive and tries to solve too many problems at once.
Noam Toister - Bookaway
It’s not such a mystery. If you look at different B2B markets, you see that in the end the marketplace is able to assist the supply side in a lot of ways because you’re able to predict what are going to be the sales of that supplier or operator. When you know that you feel empowered to give them different financial services to help them expand their business or go through seasonality and so on.
If it hadn’t been for the pandemic, how would Bookaway be different now?
It’s kind of sliding doors, isn’t it? I guess there’s a universe where the pandemic didn’t happen and Bookaway continued to grow at an organic pace. I think we would be in a similar position as we are today because we’re growing at 3x year-on-year, and if you extrapolate that you would probably get to a similar point as we are now, only we would have arrived to it organically.
What is about ground transportation that excites you?
This is actually travel and traveling. Flying is flying; it’s an experience that’s not exciting, it’s not joyful. Hotels is the hotel which is great but going from place to place is the actual travel experience. You’re going from place to place and you have no idea what you’re going to find there. The experience itself is something between anxiety and a lot of curiosity, and at Bookaway we try to get the experience more toward the fun and curiosity and reducing the anxiety when you have no idea how you’re going to get to your final destination so this is really what excites me. For me buses, ferries, trains is traveling.
Do you see emerging technologies such as decentralized marketplaces and metaverse fitting into ground transportation?
I think it’s very early for these technologies in general and definitely in travel. There are maybe one or two ideas related to blockchain that are very interesting today but I think it should probably be implemented in flights first before it gets to our segment. Our segment is so backward that you need to get to a QR code for boarding the buses before we get to blockchain.
Do you see any emerging technologies generally that have big potential for in travel?
I don’t know if it’s new technology but it is an innovation. What Airbnb is doing is very smart and probably will find its way to different verticals which is a better, and more curated, way of searching things. As you get a lot of data about your service, whether it’s a hotel or a bus, you’re able to break it down to different characteristics and be able to offer a customer something they want but didn’t know how to look for. For example, next year I’ll be able to show you this is the most luxurious transport experience in Thailand. I think that kind of curation and organization is something that is probably coming to different verticals in travel.
If you could flick a switch and change something immediately at Bookaway, what would it be?
If I could take the market five years forward instantly and have all the operators working with our software and connected seamlessly that would would leap us forward.
If you did that would you still have a business model? What would you work toward then?
This is where we would have already fulfilled our vision. The market today is mostly sold offline, 10 to 20% is maybe sold online so it’s hard to buy it. Even after everything is connected there is a period, we see it in different markets, of educating the customer to buy online and make sure that they understand it’s a better experience, and it doesn’t happen instantly.
If you look at the Latin American markets there is much more connectivity there than there used to be but still the adoption of buying tickets online is not at the place that hotels are. It’s growing but it takes more time so even after it’s connected there is still a few more years of market education.
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