pain point
414 days ago
 

The state of some travel startups and why some are missing the (pain) point

NB: This is a viewpoint from David Litwak, founder and CEO of Mozio.

Last year I wrote a piece entitled Three Reasons Why I Don’t Use Recent Travel Startups, casting a rather downbeat eye over a number of travel services trying to make their way in the market.

The piece was a bit controversial, I expressed some views about how I didn’t find many social travel or inspiration and discovery apps to be useful, and said that Hipmunk wasn’t a big change from Kayak.

When Tnooz suggested I write an update on my views, I ran it by a friend and she jokingly asked: “Who are you going to insult this time?”

First, an update on the views I expressed a year ago, and then some new opinions.

1) Travel inspiration/discovery need to think like Pandora

Right now these companies are either dead or treading water. Trippy pivoted to become “Pinterest for travel”, WanderFly got acqui-hired by TripAdvisor, GTrot pivoted from travel discovery to local discovery and then completely out of the business altogether and into a social gifting startup called Boomerang.

Gogobot is still plugging away, but I tried to use them for a recent trip and the lady who responded to my requests was a Gogobot employee, not a user, so perhaps not a good sign?

I stand by my previous opinion that Google Images, Wikitravel and asking friends on Facebook are all good enough, and that this is still a big data problem.

Take Pandora, the “music discovery” engine came out of years of music theory research and fine tuning algorithms – a great example, so perhaps these companies need to approach travel discovery like Pandora approached music discovery.

I don’t need one of these apps to tell me that Rome is some place I should probably go. That’s the equivalent of Pandora telling me that I should probably check out the Beatles.

I want them to know that I like Eze, France, and suggest Saint Paul de Vence. For these startups to be useful they need to be so comprehensive that they allow me to discover little gems all around the world, the travel equivalent of the indie punk rock band.

But even once someone nails the algorithm, the current business models won’t work: upselling hotels and flights won’t work as the “inspiration and discovery phase” is too far up the funnel for most people to convert.

Again, the best hope is to model something off of Pandora or Stumbleupon, who have been able to monetize discovery.

2) Hipmunk seems to be starting to act like the rest of the OTAs

My previous opinion was that while Hipmunk was an improvement, it wasn’t different enough to inspire enough people to transfer away from Kayak or Expedia naturally. I still stand by that.

I interpreted the $15 million Hipmunk raised last summer as the brand’s realization that, as a travel search engine that offered flights and hotels, like hundreds of others out there, they needed to pour more money into marketing.

I started seeing Hipmunk advertisements on MUNI buses in San Francisco, and their monthly uniques went up by 2-3x.

Now, some new views and predictions on where the real problems reside where startups can make a difference:

1) Distribution is key because eyeballs are so expensive

If a person only travels once a year, then it is going to be very difficult to reach them directly. There is a reason Expedia is still the industry leader despite little innovation over the past decade, and it’s because they’ve been around the longest.

If they already go to Expedia, the easiest way to reach a traveler is to piggyback off of Expedia’s traffic.

B2B travel companies, or consumer facing companies that have the opportunity for a lot of partnerships and referral traffic, are where the most potential is at. It costs so much to acquire an eyeball in travel, that the easiest way is often to cut in the guys who already have them with some type of revshare model, or focus on an area that they are lacking in.

That means any new consumer-facing travel app is facing an uphill battle acquiring customers, and should think long and hard how they fit into the travel industry ecosystem.

Limos.com partners with a lot of OTAs and airlines. Startups focused on taking on hotel channel management, like Dashbell, can have instant revenue once they lock in a few major customers.

Viator and Grayline, though not exactly startups anymore, partner with major airlines and OTAs for tours and activities. Wanderu is trying to be the ITA for buses and trains; SilverRail, an ITA for rail.

If you don’t have any clever distribution channels, you better have some massive financial backing and clout. Room77 was able to get a $30 million dollar round from Expedia and Hipmunk’s $15 million round is another example.

But if you are a mere mortal, think of what place you can fill in the massive puzzle that is the travel industry, and use that as a launch point.

2) Multi-modal’s time is approaching but not quite there yet

Until you can get results on a multimodal search engine that are at least 90% as comprehensive as doing a search on all the individual transportation sites, all-in-one transportation sites will be useless.

The problem with current alternatives is that for a San Francisco to Los Angeles search, one of them suggests BART as the only way to get to the airport, but as a local I know there are at least 20 other options including more than a dozen shuttles and airporters, Uber, Sidecar and Lyft, so I immediately don’t trust them anymore.

Right now multimodal search gives mediocre results for most forms of transportation and legs of a journey, and savvy travelers figure this out pretty quickly.

Mozio’s initial goal was to built a multimodal, point-to-point search engine, until we realized the timing wasn’t right: other forms of transportation need to aggregate themselves to make it possible.

Wanderu and SilverRail need to succeed in aggregating buses and trains. Each one of these industries is so massive and so fragmented that any startup that thinks they are going to effectively aggregate the world’s transportation through pure hustle is naive.

The smartest companies in this sector have started with a similar focus, and Waymate is one of my favorites. They have also honed in on a niche use case: the Deutsche Bahn in Germany, and used that as a launching point for their entire engine.

They are using a specific use case to build a user base while they work on making Waymate more comprehensive. KelBillet has seen good user growth in France and GoEuro just raised a lot of money to take a crack at the same problem. Focus on a sector, a country or region, and let the industry catch up to you.

3) The focus shouldn’t be “multi-modal” but “point-to-point”

Once the various forms of transportation do aggregate, it will be easy for Orbitz and Expedia to add buses and trains as well. Then they will be multimodal, and have all the brand recognition compared to the startups, who will be fighting an uphill battle and won’t even be unique anymore.

So the smartest way to get in on the “multi-modal” revolution is to go one of two ways, either be a Wanderu, SilverRail, Rome2Rio (since it’s now pivoted to B2B) et al, and be the resource the big guys will use for their buses, trains, ferries and transfers, or focus your resources on a different type of booking experience.

Orbitz and Expedia won’t be changing their booking flows anytime soon, they have all been too thoroughly A/B tested and they are afraid of conversions dropping.

The real value add of the new travel startups won’t be the fact that they have buses and trains, it will be that a user could go to them and better compare the ramifications of taking a bus that arrives in the center of a city vs. a flight that arrives at an airport an hour and a half away.

They will be able to figure out that while the flight may be 2 hours shorter, after getting to and from the airport and security they might as well just have taken the bus.

Additionally, they will be able to figure out that they are being flown into a remote airport and it will cost them as much as their plane ticket just to get a taxi to their hotel.

If you don’t get in on the data side of the multimodal revolution, you better be ready to present a more natural travel search than the big guys, because in the end they will probably have the same data you do, but 20 years more of name recognition.

NB: This is a viewpoint from David Litwak, founder and CEO of Mozio.

NB2: Pain point image via Shutterstock.

 
 
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  1. Dan Taylor

    The travel landscape has been carved up. Google taking more and more of search results and monetizing users on the way out. Google mostly displays either brand leaders or niche players in specific destinations. Even if you had a interesting travel offering it’s not easy to get traction.

     
  2. Christina Trapolino

    David,

    What a spot-on assessment. I have to say – the Pandora analogy for travel discovery is essentially what we’re working on right now at TravelShark, and we couldn’t be more excited about it. For those unfamiliar, Pandora was built around something called the Music Genome Project, which was based on the idea that each song has a “genetic” structure made up of 150-500 attributes. Similarly, we believe that each venue (hotels and restaurants, to start with) has attributes which make it unique but still fit within a certain frame of reference. So, to drive discovery of new places to eat (or new hotels to stay in, or new cities to visit – eventually, anyway), we take all of the user generated content about a place and turn it into an “Essence” (it looks like a word cloud to the user) that shows only the most frequently mentioned and most unique phrases that describe it.

    Our data scientists believe that personalization exists as a scale, and a user moves along that scale based on how much data she is willing to share with us. When we don’t know a user, we are limited to making suggestions — typically, these are based on where she is located physically and what she’s seeking at the moment (coffee shops in Denver, for example). Once she tells us a few places she enjoys, we’re able to apply a machine-learning algorithm to tell her what places she’ll enjoy next — and at that point, we upgrade from suggestion to recommendation. If she likes a locally owned coffee shop in Seattle that’s dog-friendly and has a great patio and she also likes Indian restaurants with authentic desserts, we will be able to suggest a quirky coffee place in London or a diamond-in-the-rough Indian spot in Chicago — and we can do this because we know that she likes places with certain atmospheric attributes, not just because we know she likes coffee and Indian food. In fact, there’s a good chance we’d be able to peg a pizza place that fits her preferences — even if she’s never told us she likes pizza. At that point, we can confidently say we’ve got a personalized experience to offer.

    We’re still in early alpha at this point, but we’re so incredibly energized by the opportunity we see in assessments like yours, David! We agree that there’s a vacuum in the market — the pain for travelers includes stuff like review fatigue and a broken discovery marketplace. When we’re ready to show the world what we’ve created, we hope you’ll be willing to kick the tires. :)

     
    • John Pope

      Christina,

      Congrats on your recent pivot and a truly ambitious vision – sounds impressive.

      How are you able to aggregate so much sentiment data and analysis on all the world’s hotels and restaurants so efficiently? That really does sound like a massive undertaking – not to mention the large team of seriously clever data scientists required to develop the machine learning algorithms necessary to produce the magic.

      There are others who’ve started down the path you’re on, too, so it should be interesting to watch how the space pans out.

      Looks like we all can expect big things from Travel Shark, in the near future.

       
      • Christina Trapolino

        Thanks for the congrats, John! :)

        It’s definitely a massive undertaking — and we’ve been paying close attention to the successes and the missteps of others in this space. We’ve invested heavily in the talents of serious NLP programmers and machine learning scientists for that very reason. As far as how we’re able to aggregate so much data efficiently…well, I can’t give away too much at this stage, but I can certainly credit our brilliant data team for what they’ve accomplished so far.

         
        • John Pope

          You’re playing it very cagey, Christina.

          How bout you just whisper it to me then? Promise I won’t tell a soul. ;-)

          Looking forward to seeing what’s behind the kimono (as a new friend likes to say).

          Good luck.

           
    • Jussy/Hutchy

      Very interesting, what happens when you pool data into your algorithms from other sources such as foursquare, urbanspoon etc?

       
      • Christina Trapolino

        Those sources absolutely help expedite the user’s journey from suggestion to personalization. We’re still working things out internally – but we definitely have some hypotheses about how to use those data to validate preferences for the user.

         
  3. Nicole Glaros (@nglaros)

    Great stuff by a great CEO.

     
  4. David Feldsott

    @John Pope

    There’s nothing to stop people from being exponentially better – that’s what innovation is all about :)

    But exponential is quite different than incremental! Most travel startups only provide incremental benefit; an extra widget here, a slightly sleeker interface there. It’s not enough to win over the average consumer. Yes, it might help bring in the early adopter, but that won’t be enough to scale.

    Personally, I see two major ways to bring exponential value to a travel-focused startup.

    1) In essence, build a SIGNIFICANTLY better mousetrap, as you John Pope said. A slightly better one isn’t enough to win over John Q. Public. I don’t have suggestions in this area; this is just about pure innovation.

    2) Add more value upstream or downstream from the user. Personally, I follow the 7-Step Travel Planning Process: Inspiration, Research, Planning, Validation, Booking, Travel Experience, and Sharing.

    Most travel startups focus on one area (maybe 2) in the above travel process. By attacking pain points either upstream or downstream from your target consumer, you add exponential value; you become their one-stop shop.

    For example, my startup plans to attack 6 out of 7 of the travel planning steps (everything except Inspiration, which is too visually-intensive from a mobile perspective in the emerging markets). So rather than being another “incremental” search engine, try also improving the validation phase or the on-board travel experience. Most startups don’t accomplish this and that’s how you can separate yourself from the pack.

    @Drew Meyers – Not for quite awhile; our goal is for a beta to be available before the World Cup in 2014 since our target consumers are tourists and backpackers (at least initially). We don’t see a “first-mover advantage” in this market. A couple of companies already compete here, just not very well. As @David Litwak indicated, it takes a long time to work with many mom & pop bus companies in South America. Besides being a consumer solution, we are also essentially attempting to create a GDS (like Wanderu is too) for the bus industry which doesn’t really exist right now.

     
    • John Pope

      @David Felsott

      Great comment.

      Agree wholeheartedly, and it appears we’re attacking the problem from a similar perspective – we, possibly over-ambitiously, are looking to satisfy all 7 aspects of the travel experience/purchase life-cycle. But, as a wise man once said, “The fool didn’t know it was impossible, so he did it.”

      I think you’re absolutely right, most/many travel start-ups don’t shoot high enough and settle for incremental innovation – I think that strategy is made doubly popular these days by Eric Ries’ “Lean Startup” mentality. I just wrote a comment earlier today on another Tnooz thread that echoes your sentiment from above, almost to the word.

      http://www.tnooz.com/2013/06/10/news/introducing-the-largest-travel-metasearch-engine-in-the-world-google/

      The article is speculating and talking about the recent developments of Google Maps, and its utility as a new multi-modal and meta-search tool seamlessly integrated into Maps directly – and, integrated to people’s Google+ account. (Take note Mozio – the G Maps continual evolution is just starting, and they’ll be able to track the data you’re also providing them in real-time)

      Again, agree completely, adding exponential value compared to the incumbents is the only way to fly, drive, cycle or walk.

      Sounds like you’ve got something special down there at PanTrek HQ. Looking forward to it. :-D

       
  5. David Feldsott

    I almost wish David hadn’t written this fantastic and truthful article because what he advocates is exactly what I am working on. PanTrek is a travel startup aggregating bus and ferry travel information from Mexico to Chile. There’s very little online data out there for South & Central America. Hopefully these sage words don’t encourage more competition for me.

    Startups need to find a niche in the travel space that is un/under-developed and attack that vertical to solve that pain point. They can’t compete against the Priceline’s of the world unless they are exponentially better. The switching costs are too high for many consumers otherwise.

     
    • Drew Meyers

      How long until you launch your site?

       
    • John Pope

      David F,

      Good luck with your project. Interesting countries and routes, I’m sure. Can’t wait to check you out, as we’re traveling in SA next year.

      Re: “They can’t compete against the Priceline’s of the world unless they are exponentially better. The switching costs are too high for many consumers otherwise.”

      So what’s to stop someone from being exponentially better? It’s not as hard, or insurmountable as most people may think – Predatory Thinking is the key to success. Just simply build a better mousetrap, or as Dave Trott says, “Just go upstream from the problem.”

      That’s where all innovation starts. Not necessarily where all businesses start, but definitely where ALL innovation starts. ;-)

       
    • David Litwak

      Thanks David. Would love to chat more about what you are up to. I’ve traveled extensively around Latin America and understand the transportation infrastructure down there on a surface level, so I’d be curious how you are going to solve the many problems, specifically how you are going to deal with the fact that so many of these bus lines are informal, they yell at you on the street to pick you up, might be in old school buses, etc. The bigger luxury bus lines are one thing, those smaller ones, I’d be curious if you have a solution for that. Regardless I like your angle though.

       
  6. Jussy

    Great thought provoking post David!

    Regarding Point 1, i think of it more like Last.fm scrobbling functionality than Pandora. Now scrobbling isnt that popular anymore because we already have a music library and itunes but we dont have a library of all our trips. I’ve often wondered why Tripit or even Expedia etc dont ask you about your trip when you returned from it or before you leave, simple information to categorize it, rate it etc. What i think we need is the iTunes of travel that focusing on organizing personal travel data and utilizes other platforms via api’s to enter the booking flow.

     
    • John Pope

      Tripadvisor? Cruise Critic?

       
      • Jussy

        Yup, Simplehoney, SeatGuru etc. Are all too niche and reactive.
        They’re all close but far from a cigar, mostly due to the point you make above John. Scrobbling combined the seamless collection of the data, in this case music we’re listening too, with the review of the data though a fun interface (a heart icon etc) then suggested other music we may like based upon those preferences.

         
        • John Pope

          I think you’re right, they’re no cigars (at least no Cohiba Esplendidos) – and, I also think you’re on to something.

          Perhaps, we know what you’ll be focusing your energy on, in future. If so, you should reach out – as we’re thinking almost the same thing as you, Jussy.

          We’re certainly open to collaboration. :-)

           
          • Jussy

            I’m always interested in collaborating with fellow travel hackers. Catch me on my twitter account in the link above!

             
          • John Pope

            Like your style “Hutchy” – and the fact you’re a fellow Canuck makes it all the more special to introduce myself.

            Used to live in BC (all over) for most of my (pseudo)adult life, too. And will be heading back as soon as a strong enough wind blows me.

            Have followed – do the same and I’ll DM you tomorrow. Past my bedtime here in Blighty now, but look forward to catching up, and exchanging plans to change the world.

            Namaste.

             
    • David Litwak

      I just think those things are a lot harder to quantify. Much of the time the cool places you visit, like the Eze or Saint Paul de Vence to use my previous examples, aren’t part of an Expedia or TripIt itinerary. There has to be more data. I liked stumbleupon because I can actually discover cool travel things through Stumbleupon right now. I mentioned earlier music is easier because there is established music theory, augmented/diminished chords, atonalities that you can analyze, travel is much more difficult, so I think the algorithms need to get better.

       
    • Drew Meyers

      Totally agree with you in terms of what the travel industry needs. No one is even remotely close to executing on it though.

       
  7. Tedd Evers

    Good points here. The Eze – Saint Paul de Vence example is a great way to quickly cut through the clutter and find relevent places. The challenge in travel discovery is to easily come up with places, hotels, activities that match one’s tastes without asking too much of the user. Pandora is an excellent analogy (Shazam even better) though it often needs fine-tuning to capture preferences that vary depending on one’s mood, setting and circumstances. True, we don’t need suggestions for a band or a place we already like. But it creates trust, which makes further recommendations more credible, drawing the user in and inviting discovery.

    And while solving existing, well-defined “pain points” are great for pitching VCs, I think focusing on enjoyment has greater potential. iPhones bring plenty of daily pain via fumbled phone calls and chronic mis-spellings — but apparently millions of us don’t mind. Marc Andreesen once said that “giving people something new that they can do that they find exciting and useful is a more predictable path to success than solving a pain point.” This principle has worked well for us at TripTuner.

     
    • Drew Meyers

      Tedd-
      Curious how people are using your site? Self professed skeptic of anything in the “inspiration” space…but would love to be proved wrong.

       
      • Tedd Evers

        Hi Drew, thanks for the comment. Our users say they are finding new places to go that they hadn’t thought of before, that our recommendations are solid (one woman said “it’s like it knows me”) and that they are “planning trips as a direct result” of using our site. Very high engagement rates, intent data and other metrics are promising as well.

        RE: skepticism on travel inspiration I think every entrepreneur needs to be both staunch optimist, with an unwavering belief in his or her vision, and paranoid skeptic at the same time, to ruthlessly measure what’s working (or not) and adapt according to customer feedback and performance data.

         
    • John Pope

      Kudos, Tedd.

      I think you guys have a fantastic app, and the makings for a very good business, indeed.

      Once you get deeper and richer content of the destinations for users to browse through, you’ll simultaneously gather more user taste, interest and preference data – which is by FAR the most valuable data, without any question at all – and continually be able to fine “tune” your algorithm, and the results you deliver to different users. It’s the ultimate opportunity in refined personalization.

      You should also try to get people to sign in – perhaps with some kind of an incentive – in order to generate better profiles, and further increase the value of the data. That is where all the real money is – that s**t is literally digital gold.

      Your UI is simple, slick and intuitive, the UX does what’s expected – just providing more content about the destinations, such as things to do, places to go, places to eat and more images or video is all that’s missing.

      And, you’re absolutely right, your app is fun, enjoyable and engaging (read: addictive) to play with, and change the tuning sliders to see where and what the results are that come back.

      I’d say you guys are definitely one to watch. Really, really well done. You may very well be sitting on a digital gold mine, IF you can build enough awareness. There is no more data potentially as valuable as what you guys can aggregate, in this industry.

      How long has the site been live for?

       
      • Tedd Evers

        Hi John, thanks so much for the thoughtful feedback and compliments. We launched our public beta in October 2011 to zero fanfare and the sound of crickets, but that was perfectly fine…and expected. We were less focused on creating buzz and more on building a solid product. A year later we were fortunate to have the New York Times include us as one of “10 travel web sites worth bookmarking,” which provided more traffic and user feedback to refine our platform.

        There’s much more work to be done and you provide a number of great ideas. Richer and deeper content would be nice I agree, but we’re more focused on providing an easy, fun way to access relevant content and provide context within the burgeoning, fragmented pool of big data.

        You’re absolutely correct there are many opportunities with what we’ve created. My job is to make sure we focus on the right one at the right time. Stay tuned!

         
    • David Litwak

      I’d push back on the “what’s great for VCs” part. Plenty of VCs got wrapped up in travel inspiration and discovery and now most of them have lost their money. It varies by cycle, in the past 6 months or so there has been a resurgence on B2B focus, and on companies that are actually making money, which bodes well for us. Before that it was a lot of consumer apps along the lines of what you were saying though. I’ve found that these travel startups that are solving less of a defined problem are the ones who have been able to get the most VC funding from big names.

       
    • John Pope

      Let’s face one fact that any sensible observer of the digital space should be able to recognize by looking at the data/results of the biggest (in terms of audience) and most successful (in terms of value) Internet technology start-ups, they all have ONE single thing in common that stands out against all other metrics.

      And that goes for companies like:

      Google, Facebook, Twitter, MySpace, LinkedIn, Yelp, Foursquare, Tripadvisor, Wikipedia, Digg, StumbleUpon, Zynga, Angry Birds, WordPress, Tumblr, Pinterest, Instagram

      ENGAGEMENT – Every single one of them had NO business model when they launched, and it only was introduced after people started using and heavily engaging with the applications. Most every one of them could be considered fun to use, and most of them extremely addictive. Most all of them were initially built with little to no external money – VC or institutional money came well after significant traction was already established.

      And, another characteristic that has been wrongly described as a negative characteristic of an application or start-up previously in this article is, NONE of them solved a “pain point” that couldn’t have already been solved by using other previously available solutions e.g. Travel inspiration or discovery apps like “Gogobot” vs. “Google Images, Wikitravel and asking friends on Facebook are all good enough.”

      For example:

      Google – Yahoo, Alta Vista
      Twitter – texting, news media, email
      Facebook – MySpace, Friendster
      MySpace – no real previous pain point
      LinkedIn – recruitment agencies, CV/Résumés, job boards,
      Yelp – Yellow Pages, telephone book
      Foursquare – no real pain point
      Tripadvisor – word of mouth
      Wikipedia – Encyclopedia Britannica, MS Encarta
      Digg, StumbleUpon – bookmarking, w.o.m., no real obvious pain point
      Zynga, Angry Birds – too many other options to list
      WordPress – Blogger, BlogSpot, standard website
      Tumblr – WordPress, Twitter
      Pinterest – no real pain point
      Instagram – Flickr, iPhoto, PhotoShop.com, etc.

      With all the examples above, all of them had preexisting alternative solutions that were “good enough” – but none of those preexisting solutions survived (but for a couple), or continued to be used for the same purposes as the newer, fresher applications became known for.

      Travel, in general, is tough because people usually only travel once or twice per year, so establishing consistent engagement is doubly difficult. But that doesn’t mean there isn’t a consistently engaging solution that somebody hasn’t already defined out there.

      I agree with Tedd that focusing on enjoyment and delighting people is a far better way to approach being an entrepreneur – putting smiles on people’s faces and making people’s lives better with a solution that nobody previously recognized as a problem, also increases the potential to hit homeruns. Most of the examples listed above demonstrate exactly that fact.

      And as far as playing the songs that VCs are currently singing, that’s a fools game because VCs are nearly ALWAYS behind the innovation curve – if you hear a VC say “x or y is hot right now”, you should probably do something else. One of the sayings I like to use is: “Those who can, do. Those who can’t, become VCs.” The reasons they’ve become VCs is because they’re fresh out of ideas themselves a.k.a. Not willing to put their money or time where their mouth is – as many of you know, they typically don’t invest with their own money, anyways.

      The bottom line is: There are no sure fire rules to swear by. Anybody who tells you differently- they’re kidding themselves. Don’t let them fool you too.

      If you hear someone say in reference to what to do as a start-up, “you gotta do this” or “you can’t do that” – other than possibly, “Do whatever is in your heart, and what you, yourself, know best, and what you’ll love doing for the next ten years, or so.”

      Anything short of that, you should just go get a job. Because this life ain’t easy, it ain’t for those who don’t deal well with rejection or naysayers, and it especially ain’t for the faint of heart.

      Remember this one salient fact, just 2% of people create what the other 98% use.

      P.S. David – the bigger brand(s) I was referring to previously relating to Mozio was a couple pesky little start-ups based in Mountainview CA and Redmond WA, called Google and Microsoft, respectively. Integrating the same functionality onto their mapping platforms WILL definitely happen, in future, when it finally finds itself on their “To Do Lists.” Hopefully, similar to the recent example of Waze, you’re able to realize the level of adoption and engagement necessary before they develop the exact same solution in house. I’m sure that was already on your SWOT Analysis, under massive Threat. Best of luck.

       
  8. Wayne Lopez

    David, this is a pretty good read and as you mention your experience seems to be with sites that deal with travel infrastructure and related processes. But my question is, what is your thought about sites that are on the fringe that see travel as more of a segment or genre as part of a larger offering. Case in point, we launched a company 2 months ago called Ayoopa that is an online rental marketplace for travel gear. Maybe you could call it Airbnb for travel “stuff” (in the collaborative consumption mode). While I’m certain we are not the only startup in this vein, what advice or thoughts do you have about fringe travel startups and the problems they could and should solve? Thanks in advance.

     
    • David Litwak

      Not sure Wayne. Honestly, it seems that companies in travel that are really something else, like HotelTonight, do the best. I think it was the founder of HotelTonight, or someone at the company anyway, who mentioned that they weren’t really a “travel company” but an ecommerce company selling perishable goods that just happened to be in the travel sector. Seems like you are kind of similar in that you are adjacent to travel in some way but are really a collaborative consumption company. Airbnb is as well, and they are probably the biggest travel startup success along with HotelTonight. Says something about the travel industry and how hard it is, that the two biggest successes really had more in common with other industries than travel.

      I’ve seen other startups that are “kinda” travel falter though because they couldn’t decide what they were. They wanted to be a “marketplace for x” but it was very easy for other marketplaces to duplicate it. Or they were doing things government programs were working on, like bikeshare, etc., or that were low margin.

      But honestly I don’t claim to be a business expert in anything, travel included, and your question is more appropriate for someone who has years of experience across multiple business sectors.

       
  9. John Pope

    David,

    If I wasn’t pretty certain that you had man parts, I’d feel compelled to ask you out on a date.

    All very sound observations and fair commentary on the current state of the travel start-up scene – although, I’d disagree on your assessment of some of the likely winners (but I’ll keep it hospitable for those involved) – as these are opinions I may have written myself.

    Now for the downside; thought I’d play Devil’s Advocate to all the praise you’re getting. Wouldn’t want you to get too big a head, after all. ;-)

    I’ve just been demoing Mozio, and discovered, although a useful (albeit slow) point-to-point and multi-modal application for discovering routes to US (only?) airports from wherever one may be, it doesn’t do a number of things you, yourself, have highlighted above as elements required for a “useful start-up” application, such as:

    - Where’s the revenue? The routes I chose (Toronto to Buffalo & Buffalo to JFK) I couldn’t book it. The Toronto to Buffalo result was only a drive option (could have gotten that on any mapping app), and the Buffalo to JFK route gave just 2 results – as I’m familiar with both these routes, I know there are many more options (not withstanding, the lack of ability to book). I’m guessing it’s early days for you, but I’d have thought you’d have solved the content aggregation problem well before launch – and certainly before publishing candid critiques of your contemporaries in the travel start-up eco-system.

    I can see that there’s revenue opportunities (i.e. Book It call to actions) on some locations/routes, but not on many that I tried.

    - US only content – I know you alluded to it in your post about narrowing the focus of your market, but the Internet, and Tnooz, satisfies a large global audience. I take it your plans are to eventually source international content, as well? You cited Pandora as a shining example of proper start-up strategies, and the thoroughness of their content and deep understanding of music DNA, stating:

    “Take Pandora, the “music discovery” engine came out of years of music theory research and fine tuning algorithms – a great example, so perhaps these companies need to approach travel discovery like Pandora approached music discovery.”

    So my question is, why weren’t you “eating your own dog food” and heeding your own advice, before launching Mozio to the world by also gathering deep rich, structured data on your domain?

    @Gillian also mentioned Hopper above, wondering if they were ever going to launch – e.g. “which, admittedly, is looking more and more like Color every day.” Knowing, perhaps, a little bit more than Gillian does about this “stealthy” soon-to-be-launched, start-up enigma, they have also taken the time and effort to have deep, rich content aggregation and the technology infrastructure necessary to deliver a Pandora-like experience from day one. A strategy I, too, strongly believe in – granted they have the sufficient resources and industry chops in order to adopt and execute such a plan.

    As I’ve said here on Tnooz previously, you only have one chance to make a great first impression. I believe this a problem that many start-ups make – especially due to the “Lean Startup” mentality that has permeated throughout the start-up world recently. The problems being, if your MVP is a great idea and pushed into the world for all to see; then the bigger, more resource rich brands can typically replicate it very quickly and launch their own (probably better solution) to their already existing audience before the “Lean Boys” ever get an opportunity to be unique and scale because of their unique value prop – as you, too, said in your article.

    So why did you put your app out there before aggregating as much content as possible? So that you can fend off future potential rivals, by having a tremendous head start on both technology and content, and likely have a much better chance at adopting a bigger audience. As you’re fully aware, the bigger brands will also copy your idea if they see you guys gaining any traction, so why not target early adopters in a larger geographic area? Perhaps, to be attractive enough for a quick acqui-hire exit by a big brand?

    Anyways, the point I’m trying to make is simply: Why didn’t you follow the same rules you’re advocating, both in this, and your previous article? You know, the “pot v kettle” axiom.

    I say all this with the caveat that, you’re a man after my own heart. And, I’m (atypically) trying hard not to be a git, this time. :-D

    Peace. And, good luck with Mozio.

     
    • David Litwak

      So addressing your points:
      1) Doesn’t make much sense to do a search from Toronto and complain about the results and then acknowledge we only operate in the United States. Right there is your problem.
      2) We have poured zero marketing dollars into Mozio right now because it isn’t as comprehensive as we like. We are integrating several nationwide carriers right now and waiting on some others. However, we have enough coverage, basic limos and shuttles in ~25 markets that we can start making money off the traffic that is referred to us, so why not.
      We are making money off of the limos and shuttles we do have in there. And when you have good distribution channels in travel you have the opportunity to make a good first impression multiple times. Launching now allows us to refine the booking flow to optimize conversion, figure out tweaks that help drive bookings etc., all things that will help us gather stats and help our cause.
      3) Perfect is the enemy of good enough.
      4) Our market is less you and more the big OTAs. No, they will not duplicate us, because they don’t want to go form 200-400 partnerships and integrate with antiquated backend systems, it isn’t worth it for them. However, if we can go to Expedia, Orbitz, Kayak, and all 200 of the search engine, it’s a huge business by itself. It’s one of those cases where by virtue of being one of the big players they can’t be the impartial source of data really, and they have no interest in trying.
      5) We provide driving directions and transit as a complimentary service, and planning on monetizing them later in ways I would prefer not to discuss, but that’s beside the point because we make commission off of every other form of transportation on that site.
      6) Mozio ditched the multimodal strategy a long time ago and is focused completely on transfers and local ground transportation options.

      My own advice was definitely NOT “be perfect before you launch to the world,” I don’t know where you got that from my essay. We were in SF only for 5-6 months because that’s where we had comprehensive coverage and once we brought on a national brand that had service in 25+ areas we decided it was a smart time to make all U.S. search possible.

      Kayak doesn’t include Southwest, are you holding that against them? I imagine in any of these search engines they started out with 5 or 6 major carriers and the others came on later. From what I remember EasyJet and RyanAir and many discount airliners weren’t a part of them for a while.

      My advice was to focus on a particular market (which we are doing), focus on distribution (which we are doing, our first partnership closed and has been referring traffic), to focus on being the source of data (which we are doing), and that if you are focusing on travel inspiration/discovery (we are not), then to approach it like pandora and quit just slapping pretty interfaces on existing photos. You are comparing apples to oranges.

      Regarding my article a year ago: the general point of that one was focus on a problem that we are actually having, quit arranging pretty pictures to inspire me or giving me marginal improvements on what existed etc. We are doing that I think too.

      So I don’t agree that we aren’t following our own advice.

       
      • John Pope

        David,

        Nice. I respect the lack of formality and getting straight to the point.

        You’ve just written two, self-described, controversial, critiques on a litany of fellow travel start-ups offering a, shall we say, obliquely candid opinion of why they’re missing the pain point. Were you then thinking that the favor wouldn’t be returned?

        I offered an opinion, albeit not as learned as yours, from the perspective of a user, not a competitor.

        1) I did several searches for routes that I’m very familiar with, similar to the same criteria you used, and subsequently criticized in your first blog post about another application. London, UK (where I live) was not in your predictive database – Toronto (where I grew up) was. As a first-time user should I just guess that your site is US only? Or, should I think, hey if it’s in the database they’ll likely have relevant results? If you deem that to be my problem, then you’re new at this game – I performed a basic User Test the way it’s typically done (intuitively).

        2) Not sure how marketing spend comes into it – that wasn’t something I commented on, nor intended to imply. As far as making good first impressions multiple times, I’ll leave that one alone. Your optimization comments are fair – however, can you not recognize the contradiction? You’re evaluating other start-up apps, and then applying different criteria to your own app.

        3) Wise words indeed. Reminds me of the original version by Voltaire “You can’t let the perfect be the enemy of the necessary.” Also, refer to last sentence of #2.

        4) As a general user, I’m assuming that I’d qualify as your potential market. When I referred to the “bigger brands”, I wasn’t thinking the dominant OTAs – but I’d agree, all the integrations wouldn’t be worth their time and resources, or a big enough an opportunity. The rest is beyond my pay grade.

        5) Understood. Driving directions and transit. Monetization strategy looks to be pretty straightforward; I’ll look forward to learning about your future secret sauce.

        6) Re: ditched the multimodal strategy a long time ago. Understood. But, isn’t multi-modal, by definition, offering different alternatives – modes of transportation, in your case – to solve the same problem, i.e. getting to the airport from your place of origin? My bad, if not.

        Re: “My own advice was definitely NOT “be perfect before you launch to the world,” I don’t know where you got that from my essay.” Nowhere in my comment did I say “be perfect before you launch to the world” – I merely commented on the Pandora example that you, yourself, used as an example of the way to do it in your post. Was that wrong?

        I wasn’t comparing anything about other brands outside what was brought up by you already. I did, however, compare the same criteria against your start-up, as you did against many others. The Kayak / Southwest example is a red herring – Kayak couldn’t include Southwest, as you know. But are you asking if I would criticize Kayak if they made spurious claims against somebody else, then yes, I probably would – but then again, I’m a sucker for criticizing hypocrisy.

        My basic point here throughout was that it takes serious gumption to critique others when:

        a) You don’t live up to the same “high” standards you’ve just purported others of being guilty of.
        b) You critique others who haven’t employed the EXACT (see: “My advice…” paragraph) same strategies you deem as being exemplary. Even when some of those applications and brands have already received wide critical claim, and SIGNIFICANTLY MORE traction than you’ve achieved yourself. That takes nuggets.

        I was merely pointing out that you don’t practice what you preach. That’s all.

        Didn’t mean to hurt your feelings. ;-)

         
        • David Litwak

          Haha don’t flatter yourself, no feelings hurt, you are welcome to criticize away. I don’t expect myself to be exempt form criticism, but you’re still wrong.

          I understand what you are pointing out and I don’t agree with you one bit. Let me spell it out for you though since you didn’t get it, here are the points I made:

          1) if you are travel inspiration or discovery, which we aren’t, you should take note and do x. Pretttttty hard to be hypocritical on that one since I’m not even in the space, but a user just like everyone else who happens to have some knowledge of the travel industry.

          2) Hipmunk is acting like an OTA, not sure what is hypocritical about that either.

          3) distribution is key: we are closing deals with top travel brands to get distribution, again, where is this hypocrisy? we are doing exactly that.

          4) multimodal isn’t there yet: again, we pivoted away from multimodal, so yeah, still practicing what I’m preaching. . . . and fwiw when people refer to multimodal they generally are referring to buses, trains and planes, not going to and from the airport, but whatever, semantics, you get the point.

          5) it’s about point to point. again, not sure where you see this rank hypocrisy. We decided not to play this game, and frankly didn’t even pass judgement on the ones who are except to call out the ones we thought were good, Waymate, GoEuro etc.

          The point about marketing spend was that it’s a soft launch, and while you may not find it useful for your locations, it’s been useful enough to enough people that we have bookings, and has let us learn and modify things. I suppose when you have an outspoken founder like me that draws more attention to perhaps an unfinished product, “soft” launches aren’t really possible haha, but whatever, not a huge concern. For what it’s worth TNooz actually published this article without notifying me after I forwarded them a 1st draft to look over. so I woke up to a bunch of emails, etc., didn’t really appreciate that because I was going to ask for a date so we could make sure things like search boundaries were in place before we got referrals etc., but that’s beside the point, BECAUSE . . .

          it seems like you just went on our site and tried to find something wrong, so you can then come back and scream “hypocrite, you aren’t perfect either.” The point wasn’t that we were flawless or we had executed completely on everything we were working on. I never claimed to have “high standards”, some of the companies, like Wanderu and GoEuro that I complimented, haven’t even launched yet. The point was I thought they had a good trajectory and philosophy about solving problems in the industry.

          The point was that these are the problems you should be focusing on and how you should be looking at the industry, here are some companies that are doing it, here are some that aren’t and are instead assembling pretty pictures to inspire me, etc. The point was that this is where we think the money is going to be made, and we are acting on it. The coverage isn’t great yet, but it’s getting there, but if your strategy is to criticize us just because we are a work in progress and therefore not perfect either, that’s lame. You should be able to extrapolate and see where we are going.

          Also, I could care less if they have received “critical acclaim” and have traction. When you raise 10 million dollars you can buy traction and critical acclaim. And you have no clue what our traction is like either since most of the deals that are in the works are B2B.

          And I don’t need a completed product to have an opinion. And thank you for saying I have ‘nuggets’, I do, and it’s worked pretty well for us so far :) It’s a calculated decision, to run a piece like this, but the attention it’s given us and the acclaim we’ve gotten from like minded people has definitely made up for anyone who it’s offended.

          *mic drop*

          Didn’t mean to hurt your feelings ;)

           
          • John Pope

            Great stuff. All very well reasoned and logical arguments. How could I possibly argue with that?

            I should have never even considered questioning your obvious authority and deep industry insight, as well as debating what other “savvy” start-ups should be doing – my lame-ness-ness is duly noted. It’s always enlightening for one to get a reality check from a true sage.

            Good luck with your venture, and its inevitable tremendous success. I’ll look for you rollin’ with Zuckerberg, sometime soon.

            I’ll be sure to let you know when you’ll have a chance to return the favor, and critique our model and execution – you should have a field day.

            Night night, Dave – back to Heat v Spurs now. I’m done.

             
  10. David Urmann

    “the best hope is to model something off of Pandora or Stumbleupon”

    Great post.. I think this comment is something to think about and how it might be applied. Travel startups have all had difficulty engaging users but these two models can provide some good ideas.

     
  11. Kristjan G

    Great article David. One of the best I have seen on the subject.

     
  12. Steve Sherlock

    thanks David for your well thought out treatise!

    I think many of your observations make sense and help by pointing out to any budding entrepreneur, perhaps what to avoid. (i.e. if big data can do it, combined with existing profiles and travel history – then maybe try something else)

    I guess the really difficult thing is that many entrepreneurs either don’t have enough lateral insights networked into their brains and/or many years of experience in a particular sector, from which to leverage out a genuine innovation.

    Hence they slightly improve something instead of creating something that “no one yet even knows that they want or need”. So in that respect I agree with you comment: “Focus on a sector, a country or region, and let the industry catch up to you”.

    Otherwise you end up like Hipmunk needing oodles of money for marketing because you are not different enough, nor building valued and rare content with a powerful business model. (been there done that :-)

     
    • David Litwak

      Haha I like the sound of a “treatise.” I agree on the experience in industry/lateral thinking. We fell into this trap ourselves when we started, not fully understanding the industry and all its parts.

      I get approached a lot by startups with the exact same pitch “we want to build a comprehensive trip planning tool.” My first response is to rephrase the question for them so they realize how ridiculous they sound, as, “so what you are saying is that you want to solve the entire travel industry?”

      We were never that ignorant but were definitely a bit naive ourselves when it came to how you have to operate in this industry, so it’s been a learning experience.

       
  13. heddi cundle

    Gosh David, you totally left your filter at home. Outstanding article!! One thing to add that is the biggest pain in travel: price fluctuations. With myTab.co and our Match myCash feature, not only do we gain pre travel algorithms but also use this to stabilize the travel industry. Customers get exclusive deals and the industry hits their revenue margins ahead of time, at a fraction of traditional advertising/marketing costs. Just to keep within your article – it’s not about up-selling based on algorithms, it’s about taking crowd-funding to a new level and making the data work for a customer & industry win/win. That separates us adults from the kids :)

     
  14. James Harland

    David,

    Thanks for the mention and support of SilverRail. I definitely agree with your take, and the focus on both point-to-point and following the eyeballs are ones we are following. I also agree with your take on Waymate, GoEuro and Kelbillet all being interesting businesses. It will be good if they can turn that niche focus into wider market adoption.

    Great article.

     
  15. mo

    The hotel space looks ripe for disruption. Booking.com, hotels.com and others all offer the same interface, the same hotels and inaccurate information concerning occupancy. Hotelsweep.com promised to cull those hotels not a part of these major sites and for a while did a great job, but now the site has gone dormant. Perhaps someone could pick up the slack.

     
  16. Paige

    Thanks for the Dashbell mention David!

    I would love to see more startups dig in on the B2B side to help solve the issues that are plaguing travel. Having created and failed doing a consumer travel startup before, I now understand now the need to fix the deeper issues of the industry. In the future this will also allow more consumer startups to be successful and viable (i.e. easier access to inventory/availability & better systems/training for the hotels, activity providers, etc).

    Great article and solid arguments.

     
  17. Saurabh Nanda

    David, what’s your take on startups dealing with in-destination tours & activities (or offbeat experiences)?

     
    • David Litwak

      Do you mean things like Vayable?

      I’ll admit my expertise is much more focused around the transportation infrastructure, but from talking to friends deeply involved in tours and activities, I agree with the opinion that Vayable-like marketplaces are appealing but fringe. They have great PR, being able to point out that they can give tours of the Tugboat Graveyard in Staten Island that no one else offers, but still fringe.

      Many of these AirBnB type sites forget that with AirBnB you don’t have to commit your time really, just spare space. With Sidecar, Lyft, Vayable, you essentially become a driver/tourguide. The spare inventory is your time, and very few people have that much spare time. Also to make it scalable for distribution, things need to be more formalized, have strict times that people will give certain tours etc., and then you are almost approaching running a normal tour agency . . . Gidsy was just acquired by GetYourGuide, I think those startups like Vayabe and Gidsy are going to stay small.

      Re activities aggregation: I think there have been a lot of activities startups that have failed for the same reason that “multimodal” startups have: “scuba diving” is such a large industry in itself, much of which hasn’t been aggregated, that if you are trying to tackle “all activities for everyone, everywhere” you are a bit naive.

       
      • Saurabh Nanda

        What about sites like GetYourGuide (which snapped up Gidsy recently)?

         
        • David Litwak

          They are the equivalent of Expedia and Orbitz etc., deal with traditional transportation and will be a good distribution channel for Gidsy. But I’m not sure what their intention with Gidsy is, they could shut down the product, they just got a massive amount of office space in Berlin and might be looking to put the Gidsy team on a completely different project, I dunno.

          GetYourGuide is similar to Viator as a destination for tours, and for right now I think they are the best option for a one-stop shop for tours and activities. There isn’t really meta-search for activities yet.

           
          • Alex Bainbridge

            Gidsy is already closed and team incorporated into the GetYourGuide team.

            Not sure GetYourGuide IS the equivalent of Expedia / Orbitz….. as Expedia / Orbitz have consumers buying flights & hotels – i.e. its possible to promote tours & activities to these customers. GetYourGuide has to build their own demand via other routes (hence quite different)

            You could have an entire debate about who is the best option for one-stop shop for tours & activities….. I don’t agree with your conclusion – Viator are still ahead by a small margin (by booking volume, followed by Expedia). Booking volume equates to engaged suppliers, better descriptions, accurate data and subsequently lower customer service issues….

             
          • David Litwak

            Not the equivalent necessarily, I guess I meant that in that they are big, a defacto place to go for tours and activities. I didn’t intend to get into a debate about whether viator or getyourguide is ahead, I don’t care, thats like debating whether orbitz, expedia or travelocity are bigger, who cares, they are all huge and industry leaders.

            The point was I think when it comes to tours and activities and a portal to sell them, they are similar, they have advertisements/videos and reach out to the consumer. I’m sure they have partnerships as well.

            Anyway, I don’t know that much about the space, was just saying my impressions.

             
      • Ariel Ephrat

        What do you think of a mobile solution to what Vayable is doing?
        Obviously it wouldn’t be able to provide a bungee-jumping experience, but it may be a viable substitute for a graffiti tour of NYC or the like…?

         
        • Alex Bainbridge

          Ariel
          That would be like inventing food retail before you have invented farming.

          You can have a mobile strategy/solution without having a mobile app. Pay attention to what Paige has said below…..

           
          • Ariel Ephrat

            I’m not sure I understand. David mentioned that many people don’t have enough spare time to lead local tour experiences. What if they only had to do it once, in the form of a mobile GPS guided tour which travelers looking for unique experiences could download (for a small fee). It would be an additional PASSIVE revenue stream for many people (think App Store for tours)

             
          • David Litwak

            Ariel, that already exists, there are virtual tour companies. That’s kind of like a better guidebook though, so not a substitute, the point of a tour is that you don’t have to do anything, for now that really requires a human.

             
  18. Igor B

    David great article!

    I agree point to point is the key to how people want to interact with travel tools.

     
  19. Gillian Morris

    Great job summarizing the state of the industry, David. You’ve echoed a lot of the points I made at a Travel 2.0 presentation in New York recently: http://www.slideshare.net/gillianemorris/how-to-start-a-travel-startup-18693289

    Basically, if you are a typical founder (ie, a white male college grad with some disposable income and a high tolerance for risk), you are not anything like your target market. Hipmunk is perhaps the best example of a site that was built to appeal to the founder demographic without properly considering whether it was what the market really wants.

    You’re not mentioning Hopper here – which, admittedly, is looking more and more like Color every day – but as far as I understand it looks like they’re working on the kind of highly tailored recommendation engine you’re describing. Inshallah it might come into public beta someday…

    I still maintain that there’s enormous potential to inspire and inform travel plans with social data (you can see a bit of how we’re trying to do this at tripcommon.com), but agree that the current options are too far up the conversion funnel. It’s undeniable that travelers are influenced by where their friends have been and where they’re going. Here’s hoping we can figure out how to deliver this information to people at a relevant and useful point in their travel search process.

     
    • Matt Radack

      “Basically, if you are a typical founder (ie, a white male college grad with some disposable income and a high tolerance for risk), you are not anything like your target market.”

      I couldn’t agree more, although many of these startups (including Hipmunk) seem to be doing quite well with female customers.

       
  20. P. Jason King

    So, you are interested in “Bad” Comments, why not let us do a piece on what “we” really find, our “Ghost” stories are not only real but the scariest – especially when you relize they effect the entire traveling public and our industry.

     
  21. Charles Ehredt

    David has outdone himself.

    Last year´s article was one of my top 3 on Tnooz (for saying it like it is) and this one is even better – with some pretty sage advice to founders who don´t yet understand how complicated this industry is.

    Chuck

     
 
 

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