NB: In this frank account of ViajeMe’s demise, founder¬†Wilton Pinheiro gives the low-down on what went wrong and lessons learned
ViajeMe¬†was a Brazilian travel inspiration startup founded in September 2011 by Wilton Pinheiro and Daniel Madruga, two entrepreneurs and engineers who had just sold their first and successful startup B2Learn.
Last December we decided to shut down operations, sell ViajeMe’s assets and move forward to a new challenge.
ViajeMe was the first inspirational travel website in Brazil. The country’s economy was growing strong, the startup scene was much better than in 2008 (when we founded our first startup) and there were investors willing to put their money into new business models.
Before launching ViajeMe, several industry specialists were consulted and the success of New York-based startup Wanderfly¬†was a reference for ViajeMe. So, there was a strong opportunity ahead.
ViajeMe’s target users were leisure travelers planning their next trip, but not yet decided about the destination and itinerary. The recommendation system was developed to receive as input the user’s interests, dates, budget and region, and output the best match destinations and itineraries.
Then the user could explore the destinations and get a snapshot about their trip: total cost, events around that time period, relevant friends from Facebook, weather forecast, general tips, travel packages and hotel deals. The money came from travel packages sold from the website and lead generation.
Beside the strong growth after launch, 20.000 Facebook fans in the first month and almost 10% conversion rate (trips requested), we started facing two big problems in Brazil after three months:
- Suppliers: to be really inspirational ViajeMe’s travel packages should be special, customized, themed, planned and flexible. It was very hard to find tour operators in Brazil willing to offer that.
- Demand: if you take all the Brazilians travelling abroad (7.7 million Total Pax in 2010), then you take the major obvious destinations from this list (do not need inspiration to find them) like Buenos Aires, Miami, Orlando, NYC, Lisbon and Paris, then you end up with a much smaller market (less than 1 million Total Pax) to explore and get enough money from commissions. [Source: ANAC - Anu√°rio do Transporte A√©reo]
So, after several tries and a few pivots, we’ve figured out that our system was much more useful for a tour operator or big online travel agent to engage their users at the inspirational phase. So we started to talk to several companies in Brazil and try to offer our system, 6,000 selected photos and itinerary data. Also we translated the website to English to explore new markets.
What led to ViajeMe‚Äôs decision to cease operations?
We raised seed money to bootstrap the company and validate the business model. After our second pivot we failed in these two goals, the money was almost over, the team was gone, so we had no indication that raising more money would help solve our business model problems.
We decided to stop our operations and focus on potential acquirers for our assets, as our product is still very much appreciated by our users.
What happens to ViajeMe‚Äôs assets?
Our assets are:
- Matching and ranking destination algorithm
- Data from more than 2,000 destinations
- 6,000 selected destination photos
- Travel Package management system
- And lot of knowledge about the Brazil travel market;
We are trying to reach a deal with two big tour operators in Latin America, but we are still open to talk to other companies out of Brazil.
Advice you would give to other startups, especially those in the same kind of space as ViajeMe?
I’d offer two bits of advice:
- The problem regarding travel inspiration is much more about the user’s time than their imagination. So try to save them time.
- To win the business model it will be very important to offer differentiated products. Try to partner with high value tour operators. I don’t believe that lead generation for giant OTA’s or booking websites will bring the money to an inspirational website.
What are you going to do next?
We are going to go back to market for a while. After five years running startups and only 29 years-old we feel that now is a good moment to learn new things, new markets and meet new people. We need a new adventure.
What was the single biggest issue (most complex?) which hit ViajeMe?
Unfortunately, beside the market and business model challenges we faced, our biggest issue with ViajeMe was related to bureaucracy and government.
We were advised that the least risky option to set up the company with investors in Brazil was an S.A. (Sociedade An√īnima – similar to a PLC in USA). We would avoid tax problems for all the partners and it would be easier to sell the company in the future. The issue is that this structure is meant for big companies, not startups, so the bureaucracy is huge and prohibitively expensive.
In the end we spent A LOT of time just setting up and maintaining the company and around 30% of all the investment on taxes or bureaucracy costs. It’s VERY sad and discouraging, but that’s the way it is in Brazil.
Did ViajeMe ever come close to its goal of VC investment?
We learned a lot and got a great exposure. That was part of the investors goal, but financially we are far from our goal. Maybe we will at least break even in the end.
It’s hard, frustrating and painful to give up on a dream, we can’t avoid that. But we did the best we could and I’m sure there’s a great new beginning for us in the near future.
“… Every new beginning comes from some other beginning’s end.” – Semisonic, Closing Time.
If anyone would like to talk about ViajeMe, travel, inspiration or Brazil, get in touch: email@example.com
NB:¬†In this frank account of ViajeMe’s demise, founder¬†Wilton Pinheiro gives the low-down on what went wrong and lessons learned