Tuesday, September 30, 2008

GoPlanIt - interview with COO Jimmy Ku on the day the Dow imploded

It is start up interview and profile week here at the BOOT. Earlier this week we talked with Yen Lee of UpTake about how he felt cashing a $10,000,000 cheque moments before the Dow went into (the first of many) freefall(s). Then I posted an exchange with Our Explorer CEO Dave Cunningham about his efforts to match tour guides with lost tourists.

Today I had a chance to speak with GoPlanit COO Jimmy Ku. You’ll recall that GoPlanit was the only travel company to be part o the high profile start-up competition TechCrunch50. My earlier profile of them is here.

Discussions around money

On any normal day our interview would have focused on GoPlanit's plans to move from beta to a full release, how they would generate traffic and thoughts on balancing editorial and user generated content. Unfortunately this is not a normal day. On this day Washington degenerated into a $700 billion game of “I like George Bush less than you do” driving the Dow down 778 points (check out this interactive graphic on nytimes.com tracking the decline of the Dow with the counting of the nae votes– registration required). Unsurprisingly it meant we spent time talking about GoPlanit’s plans for raising their first full round of funding. As the Crunchbase profile states and Ku confirmed GoPlanit have raised $500k in seed capital. This is enough to support current efforts and the team of 7 but Ku admits that they will need more.

Thankfully for GoPlanit the profile boost of Techcrunch50 participation has opened a huge number of doors as they look for funding. As Ku put it Techcrunc50 guaranteed me “days of back to back meetings”. But even Ku admits that the horror on the Dow going to make it tougher. “Anyone not scared [about the Dow decline] is probably lying” said Ku “but good products will still make money and VCs will still invest in those that can succeed”

Discussions around traffic

It is too early for Ku to share any traffic numbers with us but we did discuss GoPlanit’s marketing tactics. As expected the focus will be on SEO through user and editorial content. GoPlanit needs to take time to develop each destination it is planning to launch through connecting tot a “respectable source” of content and information, building out the links to providers and setting up the framework for attracting user generated content.

Sidebar - While discussing this I noticed that both TripIt and TripAdvisor are bidding on the keyword phrase “planning a trip” (as you can see in this poorly cropped photo image).

This seemed odd to Ku. He said (and I agree) that you want to attract the people looking for a destination not someone generically searching for a trip planning tool.

Discussions around the founders

The idea behind GoPlanit is best drawn directly from CEO Steve Chen’s presentation at Techcrunch50. In short the founders separately experienced the pain of trying to organise large holidays. In Ku’s case he found himself as the designated organiser for group holidays with friends. In CEO Chen's case it was in organising his honeymoon and his general experiences post a career with Accenture as an event organiser in the Bay Area. Chen and Ku are also joined in the founder club by CTO James Chen, most recently of CNET, Rotten Tomatoes and HotorNot.

My take

I like the idea and as with many start up interviews with travel content/tool companies, if they can generate the traffic, then the ad revenue will follow. The CPM rates and advertising desire for good consumer travel eyeballs is strong enough to survive this economic Bush-wacking. The challenge is raising the money to support the product to attract the eyeballs on a day no one can get $700 billion from the US government.

Related News

Monday, September 29, 2008

Our Explorer - pitching to be "the eBay" of tour guides

Recently a contact introduced me to Dave Cunningham the "Chief Exploring Officer" of Our Explorer. Our Explorer is an online market place for tour guides - not books, but physical people. Local accredited tour guides register for the service and build a profile page setting out their expertise and prices. Consumers come on the site, select a destination and then are provided with lists of guides that are experts in that location. Tours can be booked directly on the site. Guides have the capacity to lodge their professional qualifications. Fellow consumers can also leave testimonials in a classic eBay trust building activity. Our Explorer takes a 10% cut from the guides - no transaction fees for the consumer.

This is a great idea. I get the value proposition to consumers here. Giving consumers access to truly local guides - an alternative to just riding the generic tourist bus.

The biggest challenge that Dave and the others at Our Explorer have is that they are in the classic "Fax Machine" business paradox. The great fax machine problem was that everyone could see the benefit of a fax machine but is was useless unless their were lots of them. You would only buy a fax machine if the person you wanted to sent a fax to also bought one. In other words, in the early days of the fax machine you need to take a leap of faith that other people would buy one too. In the case of Our Explorer, the guides have to join first, taking a leap of faith that the customers will come. Our Explorer need a critical mass of guides to generate the customer interest. They need to generate that critical mass before the consumers were ready to book. It is not a chicken and egg story where you debate which came first - in this case lots of patient guides had to come first.

Cunningham thinks he is there. He claims to have cracked the 595 guide mark and adding 89 a month. I don't know if that is magic number to hit critical mass - but it sure is fantastic start. Lots of great potential here in affiliate marketing, especially if they can develop an API to feed this into the booking path of travel transaction sites.

If you are interested in a little more colour, below is an email interview exchange with Cunningham. What do you think about this business?

BOOT - Where did the idea for Our Explorer come from?

Cunningham -
it came from a trip in South America I did with another of the founders Anne McDonnell. We had the services of private tour guides in Peru, Bolivia and Mexico. The first thing we noticed was that the type of tour guide you got on the day was out of our control as the hotel or local travel agent just provided them. Perhaps there would be a personality clash, you may share nothing in common or the guide may be of poor quality. So we wished we could book private guides in advance. Second thing we researched while talking to the guides is they all just got business from travel agents, at 30% commission - I knew we could get them worldwide access to travellers on the web for lower cost. We agreed it was an opportunity to take commercial.

BOOT - Tell me more about the background of the founders

Cunningham -
Me [JPMorgan investment banking for 3 years, Founded a Chinese Real Estate company for 5 years. Overall Chief Exploring Officer] , Jean Liu [Expertise in Web Marketing for Chinese companies and now heads up the marketing efforts in China for OurExplorer - based in Shanghai. Ray Walsh [is a computer science graduate and leds the technical direction and strategy for the site development and growth] Anne McDonnell [Project manager in Investment Banking - Heads up the relationships with our suppliers - tour guide acquisition strategies]

BOOT - how hard is it to launch a destination, sign up guides?

Cunningham -
Getting the critical mass of 500 tour guides initially was very tough as when you ask the tour guide to register we have zero traffic to the site. But partnerships with several tourist guide organisations around the world really helped us to the 500 tour guide point. Now we get over 80 organically registering per month as the value OurExplorer give them is now clear.

BOOT - How much money have you raised and who from?

Cunningham -
the project has been financed internally by all the co-founders thus far. No external fund raising required as we believe in this project and the upside some much.

BOOT - What do you need to do to the product to take out of beta?

Cunningham -
OurExplorer needs to implement 5 more enhancement features e.g. improved messaging system and restructuring to increase conversion rates etc

BOOT - What's next?

Cunningham - OurExplorer goes live in Chinese to the high growth Chinese travel market at the end of October.

UPDATE - Joris of AKOPSO www.akopso.com posted a comment below wondering about how Our Explorer goes about selecting guides and the need for official licences. The comment is below and here is Cunningham's (of Our Explorer) response sent to me by email.
As OurExplorer displays tour guides from all over the world it is sensitive that the specific licences and requirements for licences varies from country to country. Therefore when a tour guide registers their services on OurExplorer they upload their licence only when they feel it is appropriate and required for the specific tour they offer. Of course, a visiting client can request to see a licence copy from an OurExplorer tour guide at any time.

Friday, September 26, 2008

Uptake - near perfect timing on the second round of fundraising

Last week I carried the story of UpTake taking in a second round of $10mm to bring total amount raised to $13.95mm. In original post I wondered aloud why they had needed to raise a second round so close in time to the first round. Unfortunately due to some overzealous spam filtering in my gmail account I did not receive a reply to this pondering from Uptake CEO Yen Lee in time before the story was posted. That said, it looks like Yen's timing on this round could not have been better. Uptake announced the raising on September 16. September 17 the Dow closed down 450 points or more than 4%. In other words it seems they managed to close the deal moments before the recent round of AIG and Lehmann led shocks that are almost certain to dry up start-up company investment funds. Companies post this dark week on Wall Street are going to find it much harder to raise money as investors hunker down and wait for more clarity (or queue up from free tax payer funds as part of the bail out bonanza!).

As to valuation - Yen below says that "the valuation was very fair" and "we didn’t necessarily need to raise the round ". This is usually code word for an "Up Round" (where the valuation is higher in Series B than Series A). But is doesn't sound like the valuation was dramatically increased.

Finally Yen is on the hunt for talent (see interview below for details). With money in the bank and people in under-funded business looking nervously at their bosses this should be a good time to recruit.

Below is a slightly edited version of my email interview exchange with Yen that should have gone with the original post. If you want some background here my earlier interview with Yen.

BOOT -Who joined the Round?

Yen -
Trinity Ventures led the round and Shasta Ventures, who led Series A, co-invested. Trinity has been looking at online travel for many years without pulling the trigger but they were really excited about our business model and specifically how we would solve the consumer acquisition challenge. Specifically, how our technology approach allowed us to create an infinite number of niche pages (e.g. Monterey romantic hotels) to dominate the torso and tail on SEO.

BOOT - How much and at what valuation?

Yen- We aren’t disclosing specific terms other then to say we raised more then $10M. Referring in advance to my answer to Q7 below, we didn’t necessarily need to raise the round now, so the valuation was very fair.

BOOT - What are the plans for the money? What about international destinations and non-eng languages?

Yen - ... building a search application is not for the faint of heart – nor is it cheap! Especially since we make the investment to not just spider all the travel content we can find but also to structure it. Despite the strong progress we have made, we think we are just getting started, so most of the money will be for continued product development. We are absolutely committed to helping consumers globally with their travel decision making. We don’t know the specific timing of when we venture outside North America although we will have a better estimate by end of Q1, 2009.

BOOT - If people are part of the plans (ie recruitment) what are the main areas that you need to attract people? Has hiring become slightly easier recently with economy downturn?

Yen- Yes, headcount is the lion’s share of our expenses and will continue to be as we scale our offering. Are you offering me a soap box to help with recruiting? Then ... we are continuing to look for engineering talent. Specifically more problem solvers on each of our three technology layers. We need engineers with domain knowledge in spidering the web and mining unstructured data, natural language engineers with experience parsing text to extract sentiments, and data warehouse developers who have built multi-stage data processing pipelines. We also need engineers who have built ranking algorithms and contextual targeting solutions. Finally, we need application and UI engineers.

Silicon Valley is really a little micro-economy unto itself and the increasingly tumultuous macro-economic conditions haven’t affected our little corner of the world – YET. While there is certainly more candidates out there now, it has less to do with the macro-economy then the number of engineers and others from Silicon Valley stalwarts like Yahoo, eBay and even Google who are looking for opportunities to show what they can accomplish in a nimble, focused environment. We are also seeing more candidates from the earlier generation of vertical search companies that generally just reprocessed already structured data and therefore found it challenging to differentiate and get market traction.

BOOT - the Site was constructed around organic search marketing. Any need with this new money to expand into spending money on market (paid search or otherwise)?

Yen - Nope. We are growing 30% month on month and have no plans to deviate from our successful playbook.

BOOT How are monetisation plans going?

Yen - We have been pleasantly surprised by the number of consumers clicking on paid leads. We certainly haven’t emphasised that on our site, but the consumers tell us we offer them all the information they need to decide whether that hotel or attraction is a good fit, so checking rates and availability is the natural next step.

BOOT Series A was just a couple of months ago. Why the need to raise again so soon?

Yen- We didn’t necessarily to raise now, but there is an old adage that the right time to raise is when you don’t need the money! And our decision was made easier given the shaky macro economic environment, our confidence that we have proven our approach works and we are ready to scale, that we have known the Trinity Ventures team for a long time and wanted to work with them, and that they made a very fair pre-emptive offer.

Thursday, September 25, 2008

Financial Collapse. George Bush in charge. We're all doomed!

Lots of people are asking me about financial crisis. Two types of questions I get asked. The first is "how did this happen" and the second "is the travel industry doomed as a result"

On the question of "how" I have just read an article that gives the best explanation I have come across. In today's online version of the New York Times, Vikas Bajaj writes a great piece called "Plan’s Basic Mystery: What’s All This Stuff Worth?". In it he goes deep into the strange asset/securitisation products that were put together by Bear Stearns, Lehman etc and caused this whole mess. Worth a read (login required).

Despite the madness of these products and chaos that has resulted from their collapsed I am convinced that the Travel industry will not only survive this crisis but will come out the other end thriving. You might call me an optimist but my view is based on history.

The travel industry in America bounced back from 9/11 in a quarter. In fact the whole online merchant hotel business (and retail for that matter) was created out of the ashes of that tragedy. Hotels gave cheap rates to Expedia, Travelocity and Orbitz etc. Expedia completed its acquisition of Travelscape and soon after bought HRN/Hotels.com.

In Asia, the whole business ground to a halt during the SARs crisis. Hong Kong and the region around it could not pay travellers to come visit. Now Macau is the centre of the gaming and Asian hospitality market. Bali has suffered through two horrific attacks and proposals for bizarre religious laws. Yet manages to survive and fight back each time.

In Europe London and Madrid also suffered horrific attacks in recent years. Yet still the customers flock to Spain and UK the for holidays and breaks.

Travel has survived tragedy and shocks before and will do so because at the core humans love to travel. But the secret to survival is reinvention, not hiding and hoping to ride it out. Growing through 9/11 came from reinventing online hotel distribution. SARs from reinventing the Asian hospitality industry. To get out of this Wall Street induced melting Bull will require the industry to once again find efficiencies in distribution, marketing and supply management. Mobile anyone?

Note - an observant reader (ok my mother) has pointed out that my melting "bull" reference doesn't work given the obvious udder on our molten friend above.

thanks to my number one anonymous commentator for the photo

Tuesday, September 23, 2008

The BOOT on an IAGlbog Podcast - Don't Panic

Addison Schonland of the Innovation Analysis Group and their podcast series interview yours truly today. We talked about the state of the online travel industry given the market turmoil and up and down bounce of the oil price. About 10 mins long and have a listen. You will here me as the eternal optimist.

Friday, September 19, 2008

Casino Economics: Wynn EBITDA per room per day is higher than their ADR

I am becoming more and more fascinated by the economics of running a Casino. They are the largest hotels in the world, yet the hotel is clearly a mere means to the end of making money from gambling, retail and entertainment. I was looking at Wynn a presentation at given at a Goldman Sachs Conference in June. Below are shots of two of the slides. Look at the Average Daily Rate for Wynn for Q1 2008 - $298 (comparing very favourably to Bellagio and the Venetian). Then look at the slide on EBITDA per room per day. Wynn lists their EBITDA per room per day at $378. Read it again. At a property with an ADR of $298, the business can generate an EBITDA of $378 per room per day. Amazing! Have I read this right? The revenue from gaming (and to a lesser extent retail and entertainment) makes the room revenue seems all but irrelevant. What a business!

ADR Slide

EBITDA per room per day slide

Thursday, September 18, 2008

Better late than never to go dancing with Matt

I am about 10 million or so views behind the rest of the blogosphere in posting the dancing Matt video. A reader made contact and insisted I put it up. In case you haven't seen it, it is absolutely fantastic. Surprisingly moving. Can't decide if my favourite is the DMC in Korea, the Huli Wigmen of PNG or zero gravity over Nevada. Watch it

Uptake takes in another $10 million in a Series B with Trinity Ventures and Shasta

Uptake (nee Kango) has announced a series B fund raising round of $10 million lead by Trinity Ventures (early investor in Starbucks) and including Shasta. UpTake blog post here. TechCrunch story here.

You will recall that Uptake is doing review meta-search. Indexing all of the user and editorial content on hotels and destinations.

This makes total raised to date $13.95mm after the series A announced back in July of $3.95mm (led that time by Shasta) but I now hear was closed in December 2007. I have an email exchange going with the Uptake PR people so hopefully will have some additional comments from CEO Yen Lee very soon. Am particularly interested in marketing plans, people plans and the need for a second round so soon after the first.

Tuesday, September 16, 2008

BOOT hits a thousand subscribers. Only another 999,000 to go

The BOOT has hit a speedometer moment of 1,000 feed subscribers. The number has been fluctuating by as many as 100 a day (something to do with when people access their RSS readers) but am very happy with the results. That said, this week TechCrunch hit a million so definitely need to put things into perspective.

GoPlanIt - the Travel representative in the TechCrunch50

The second annual TechCrunch50 conference is over. This is the start up demonstration conference organised by web-celeb and CEO of Mahalo Jason Calacanis and uber blogger Mike Arington of TechCrunch. The conference profiles 50 web/tech start-ups, which compete for a $50,000 prize.

This year's travel nominee/competitor (there only ever seems to be one) was GoPlanIt.

GoPlanIt is a trip planning site. Enabling consumers to add activities, trip itineraries, maps and commentary to a trip plan. Naturally it comes with reviews and social networking/sharing/mobile access elements. It's difference from a "standard" web 2.0 planning site is that you can hit the PlanIt button and have a trip itinerary automatically recommended and built based on the behaviour of other users. This of course can then be modified and edited. The only downside is the that it takes time to build up the necesary history nad connections. Hence the service is currently only available in America. Here is the TechCrunch review/profile.

Being the travel nominee for 2007 was a great kickstart last year for TripIt. Since being part of TechCrunch50 they have raised another round (including an investment from Sabre). Just recently announce that the CEO of Mozilla Corporation (John Lilly) joined the TripIt board. Just this week king of the blogs Robert Scoble asked his readers/twitterers which online travel services they used. TripIt was mentioned again and again in the replies. You can re-read my interview with TripIt CEO Gregg Brockway here.

You can see a video stream of the GoPlanIt presentation here by CEO and founder Steve Chen and the presentation of the eventually winner - Yammer (TechCrunch Profile)

Monday, September 15, 2008

Lastminute has a turnover in the region of Euro 2 Billion (Guardian)

Historical piece by Zoe Wood in last weekend's Guardian on 10 years of lastminute.com. Have a read if you want to reminisce about London during the dotcom gold rush. But here is the important paragraph on the gross bookings numbers for Lastminute.com - especially as we have not seen a public result from the now private Travelocity for almost 2 years.
"McCaig [Lastminute CEO] is pleased the company is no longer beholden to the public markets. Sabre has since been bought out by private equity firms TPG and Silver Lake Partners. Lastminute.com has a turnover in the region of €2bn (£1.6bn) but McCaig refuses to be specific." (my emphasis)

The TSA marked you as a terrorist? Then simply change your name

Great story over at Upgrade: Travel Better (Mark Ashley's industry blog) about Mario Labbé - a Canadian that found himself in the infamous Homeland Security black book, ensuring that he spent hours with customs officials everytime he crossed the US/CA border. Solution - he changed his name to François Mario Labbé. Problem solved. Check out the full story here.

XL Collapse: 1700 staff carrying 2.3 million passengers

G-XLAK - XL Airlines by R82 Photography.
I have one little angle to add to all of the stories circulating on the collapse of UK Tour Operator XL Leisure Group. This part of one of the BBC stories on the collapse summarised for me the biggest problem facing traditional tour operators - more so that increases in fuel prices
The group, which carried 2.3 million passengers last year, has 1,700 employees worldwide.

That is one employee for every 1,350 passengers carried. Any of you out there working of an online player will know that that is is an extra-ordinarily small ratio compared to the numbers enjoyed in the online sector. For example Expedia lists 7,150 employees on the back of 13 million transactions a quarter. Sure the average booking value of a tour operator will be higher than a OTA but the tour operator model simply requires too many employees for new economy survival.

UPDATE - received a note from Timothy J O'Neil-Dunne of T2impact. Pointed out that once you add up all of the charters for all of the 5 legal entites (for example Air Malta) the the number of passengers is closer to 3.9 million pax for 2007 (According to published data). As Timothy points out that actually compares well to other airlines. He quotes United’s current numbers at 130 employees per plane.

Thanks to R82 Photography over at flickr for the photo.

Alitalia Deathwatch: Administrator Fantozzi says the airline is running out of fuel

Alitalia Cargo 747-200F by matt.hintsa.
Alitalia's death has been called too many times for the pall bearers to be called up just yet. But this time is sounds more serious that any other occasion. The Air France/KLM buyout seems dead, Berlusconi's rescue plan appears to be nothing but hope and prayer and now we hear from the banrupcy adminstrator Augusto Fantozzi that "There are difficulties relating to the supply of fuel which could put some flights at risk" (c/- the BBC). Fantozzi put it even more dramatcially in a quote in an AFP report
"Up to tomorrow (Sunday) we have guaranteed flights, but not on Monday because no-one will supply us with kerosene [fuel],"
If you are holding Alitalia tickets then make sure you have insurance and a back up plan. My guess is that we are going to see a death and rebirth along the lines of Swiss Air becoming SWISS and Sabena becoming SN Brussels not the fade from view of the likes of Pan Am and Ansett.

thanks to matt.hintsa over at flickr for the photo

Tuesday, September 09, 2008

The BOOT on a temporary pause - work is calling - back Sept 15

All - work is all consuming at the moment. Lots of travel, 2009 planning and more. Am going to take another week off the blog. Back on Sept 15.

Tuesday, September 02, 2008

BOOT is on the Road: In London Sept 1-5 - UPDATE

All - looks like work commitments are going to keep me from being able to meet up today (Tues) or tomorrow (Wed). Hopefully next time. Thanks to all that expressed interest.