Benchmarks on how to build and scale to $100 million in ARR
What should my gross margin be? How much should I be spending on R&D as a % of revenue? How does my growth rate compare to peers in the market? What does “typical” and “best-in-class” look like? Entrepreneurs would love to have answers to these type of questions, but private market financial benchmarks are elusive. Private companies lack reporting requirements that would make their benchmarks known, and investors of private companies keep their portfolio company information private. Until now. Bessemer Venture Partners has made over 200 cloud investments and has one of the largest cloud portfolios of any VC in the world, and they have just released Scaling to $100 Million based on results from a decade of cloud investments. This is meant to be the industry’s benchmarking report for cloud companies. Great charts, data, lessons and templates that will help you model your business around these benchmarks to achieve your goals.
Choosing your North Star metric
Lenny Rachitsky writes a great newsletter and previously led initiatives in growth and community at Airbnb. Nailing your north star metric(s) — the top-line metric that all company priorities are aligned around — is crucial, as all energy and brainpower will flow in that direction. This can be hugely effective but it can also be dangerous. By maintaining a laser focus on a single metric for too long, teams risk short-term thinking, missing new opportunities, and sacrificing the user experience. In Choosing your North Star Metric, Lenny details the various categories of north star metrics, shares data and case studies to provide lessons for narrowing in on your own north star metric and when to broaden your lens or pivot your approach. He also offers a framework for choosing a north star metric, depending on each type of company.
Magic metric: Immediate Time to Value
Kieran Flanagan, SVP of Marketing at Hubspot wrote about the importance of reducing the time it takes someone to realize the value they’re getting from your product or service. With Calendly, for example, the user that receives a calendar link gets immediate value, as they can see available times and book a time without needing to sign up or create an account. An immediate time to value will drive users to signup for their own account, send the product to others, and the cycle repeats. Read more.
NDC as a cornerstone of modern travel retailing
A new Amadeus report, NDC 2021 and the Path to Industrialization, gives an overview of where we are today in terms of NDC readiness, sheds light on some of the barriers that still exist to reach full industrialization, and shows what modern travel retailing could look like. Modern consumers have the same expectations of travel companies as they do of brands such as Amazon or Netflix. According to this report, NDC will lead the way in how the travel industry meets and anticipates the needs of the modern digital consumer.
The pocket guide of essential Y Combinator advice
Here are the 22 pieces of advice for startups that Y Combinator considers as the most important and transformative. Whether common sense or counter-intuitive, this guidance is likely to help. Here are a couple of them to get a taste:
- Spending any time worrying about your competitors is nearly always a very bad idea. Startups are more likely to die of suicide than of murder.
- Avoid chasing big deals with large companies which represent amazing, company validating relationships. They seldom end well for the startup.
- Growth is not always the right choice. If you have not yet made something your customers want (i.e. have not reached product market fit), it makes little sense to grow.
- Once launched, do things that don’t scale. Get your first customer by any means necessary, even by manual work that couldn’t be managed for more than 10 customers.
Use behavioral science to boost your conversion rates
People don’t always act rationally, which makes it important to understand irrational human behavior. The field of behavioral science sits at the crossroads of psychology and economics, looking at the effects of cognitive, emotional, and social factors on decisions and, ultimately, actions. The application of behavioral science is typically called behavioral design. Kristen Berman, founder of Irrational Labs shares four concrete examples of experiments that saw significant shifts in conversion rates when they used behavioral design to drive product design—and why they worked. She then shares five behavioral design strategies you can apply to your own product immediately. Read more.
Business travel outlook remains cloudy
According to a WSJ article, business travel for intracompany meetings and training make up about 20% of business travel, and this is a category that will likely be replaced the most by online alternatives. Trips for client meetings and closing deals are picking up again, but some research points to a permanent disruption likely amounting to 19% to 36% fewer business trips overall. Some other data points:
- HRS Group, a London-based business travel company that helps big companies negotiate discounts at hotels, believes business travel in 2022 will be down 30% compared with 2019.
- Food maker Mars, which has 130,000 employees in 80 countries, said it plans to cut its future business travel globally by at least half compared with 2019.
- Deutsche Bank’s airline analyst projects US corporate travel will get back to only 50% or 60% of what it was in 2019 by the end of this year.
- Delta Air Lines CEO said corporate spending in March was only 20% of what it was in 2019 for his airline. That doubled to 40% by June, and expected to reach 60% in September.
A guide to seed fundraising
Another Y Combinator guide, this one by Geoff Ralston (President of YC). A Guide to Seed Fundraising is a summary of what startup founders need to know about raising a seed round. When to raise, how much to raise, at what valuation, rules to follow, what not to do while dealing with investors, etc…
Year to date stock performance
OTAs and intermediaries have the four best stock price performance year to date among this list publicly traded travel companies. eDreams and Lastminute top the list, with increases of +71% and +47% respectively.
Funding and M&A
- FLYR Labs (JetBlue Ventures’ very 1st investment) closed a $150 million Series C to continue developing its Revenue Operating System, a deep learning platform to forecast airline demand and set airfare prices.
- Less than six months after raising $75 million, Pacaso — the US vacation home co-ownership proptech platform — announced that it raised $125 million at a $1.5 billion valuation.
- Hotel distribution and technology provider SiteMinder closed a $74 million funding round from Fidelity Management. The investment is being positioned as a pre-IPO round for the Australia-based company.
- A new corporate travel platform called Spotnana launched this week with $41 million in funding and backed by industry veterans. The NY-based API-friendly platform is “not just a booking tool or a better UI; it’s like an AWS for travel”, said its founder.
- Headout, a New York based marketplace for make same-day bookings for tours, events and activities, raised $12 million to expand to 300 cities and hire over 150 employees.
- Barcelona-based Ukio raised a seed round of $9 million. The company offers rentals of one month or longer, featuring a turnkey premium experience in prime city locations. It was founded early last year and has grown to more than 100 apartments between Barcelona and Madrid.
- Atomize – the Swedish hospitality revenue management specialist raised $4 million.
- RateGain will acquire hotel distribution provider MyHotelShop, which launched in Germany in 2012 and works with around 2,500 properties and chains. Terms of the acquisition by the India-based company have not been disclosed.
Expedia users can now find (and book) content from GetYourGuide directly on the platform. The partnership between both companies was announced this week.
Almost a year ago, Amazon launched Amazon Explore, offering virtual tours led by locals. Now, the company is including small group experiences, so up to seven people can book and attend the same live experience together, but from different locations.
Emirates is now the first airline to launch a virtual reality app and everyone can check it out. #FlyEmiratesFlyBetter #EmiratesAirline
Breeze Airways is coming strong: just this week the company announced they will be buying 20 more Airbus A220 jets. “Breeze will take delivery of its first A220 next month, on October 26. After that, Breeze will take delivery of a total of 80 A220s at one per month for the next six and a half years.”
Launched less than a year ago, the US-based Pacaso lets people own a fraction of a luxury home. Now they raised $125 million and have just announced that they will be expanding to Europe by the end of the year.
The NYC-based startup Headout has just raised $12 million to expand to new locations. Really inspiring to hear this conversation with Varun Khona (Co-Founder and CEO) to understand more about the business and their strategies.
Investing in travel post-pandemic
Chris Hemmeter is the founder of Thayer Ventures, one of the most active VCs in the travel ecosystem. He recently wrote an assessment on investing in travel post-pandemic: where are we now and what do the next 18 months hold. He highlights specific opportunities within the alternative accommodations, outdoors tourism and the remaking of the hotel tech stack. He also writes about how the travel technology as an investment category has now come into focus as a magnet for SPAC, private equity and greater venture investment.
What do Gen Z travelers want from online travel brands?
More Gen Z travelers booked air, hotel and car via an OTA than any other online channel like direct websites, metasearch or retail travel agent websites. More than 1/3 Gen Z travelers booked a dynamic package in 2020, the highest occurrence of any generation. Beyond OTAs, Gen Z travelers are more open to other intermediary options such as booking via Google or travel subscriptions. Nearly one in 10 Gen Z travelers reserved a hotel room in 2020 through Google’s booking function and 46% say they are likely to spend up to $100 annually to join a travel subscription service.
Proptech startup funding on track to break industry records in 2021
The expansion of accommodation models has given rise to new technologies and startups that address new needs by owners, property managers and other parties in the hospitality industry. Data released today by JLL suggests that opportunity abounds in the sector’s startup landscape, with over US$9.7 billion of funding activity in the first half of 2021, the most active first half on record. The number of startups across the real estate industry has grown in the past decade from under 2,000 to nearly 8,000. Access the detailed report (58 pages) here: Transform with technology – Shaping the future of real estate.
The Sequoia Guide to Pricing
A lot of startups treat pricing as a math problem or, worse, an afterthought (the average SaaS startup spends just six hours on its pricing strategy, according to Price Intelligently). Pricing is as much an art as it is a science, one that relies as much on marketing and psychology as it does on classical economics. This Sequoia Guide to Pricing covers strategies that can help you figure out the right price for your product—and end up with happier customers and more profit in the process. The guide offers actionable tips and a worksheet can help you assess your product’s perceived value and the accuracy of its price.
What exactly is AirAsia up to with its super app ambitions?
AirAsia continues on its quest to become one of Southeast Asia’s leading super apps with the launch of AirAsia Ride in Malaysia. AirAsia now offers food delivery, ride-hailing, flight ticket booking, grocery shopping, and an e-commerce platform for beauty products. Its new product lines are operating in Malaysia, Singapore and Thailand, with aspirations of rapid expansion into other countries, as AirAsia super app’s head of commerce Lim Ben-Jie explains in this interview with Tech Wire Asia.
Ads, privacy and confusion
Cookies are going away, but we don’t know what online privacy means or what happens next. The consumer internet industry spent two decades building a complex and chaotic system to track and analyze what people do on the internet, and we’ve spent the last 5 years arguing about that. Between unilateral decisions by some big tech platforms and waves of regulation from all around the world, all this is going to change. But we don’t have any clarity on what that means, or even what we’re trying to achieve, and there are lots of unresolved questions. Read more – Benedict Evans.
Exploring the role of cryptocurrency in travel
The fact that the travel sector has many layers of intermediaries makes it a potentially interesting space for companies to come up with new models and approaches using cryptocurrencies and blockchain technology. In this interview with PhocusWire, Rohit Talwar (CEO of foresight consultancy Fast Future) explores the potential for cryptocurrencies to create new opportunities for the travel industry. Talwar highlights some of the emerging crypto experiments in the travel sector and gives his view on who will be the winning brands and players.
Travel + Leisure Group launches a new subscription service
Wyndham Destinations rebranded to Travel + Leisure Co after its acquisition of Travel + Leisure in January 2021. It just launched a new subscription service called Travel + Leisure Club, offering members access to preferred pricing on itineraries inspired by Travel + Leisure magazine, concierge services and exclusive experiences for an introductory rate of $9.95 per month (regular pricing is $19.95). Savings average 25% off retail rates on more than 600,000 hotels and resorts as well as exclusive pricing on more than 345,000 activities, car rental and flights. The platform is powered by a “secret sauce” made possible through Wyndham Destinations’ $92 million acquisition of travel tech platform ARN in 2019 which includes supplier direct and third-party aggregated inventory. “That’s the reason we acquired ARN. That’s the core of our tech stack” said Travel + Leisure Group president.
Y Combinator travel startups
According to Marc Andreessen, General Partner of Andreessen Horowitz, “Y Combinator is the best program for creating top-end entrepreneurs that has ever existed.” The likes of Airbnb, Stripe, Dropbox, Coinbase and Rappi are alumni. Looking at the companies that are going through Y Combinator today could point to the leading companies (or categories) in the future. These are the Y Combinator travel and transportation companies since the beginning of the pandemic:
- Ancana (Mérida, Yucatán, Mexico) – Marketplace to buy managed vacation homes through fractional ownership
- Stayflexi (San Francisco) – Modern operating system for hotels and vacation rentals
- Newzip (Nashville, USA) – Neighborhood advice from local experts
- Tilt (Bengaluru, India) – Bike-share for Indian campuses
- zingbus (Gurugram, India) – Platform for bus travel across Indian cities
- Tippi (Mexico City) – Convert any Airbnb or hotel room into your next office
- Ribbon (San Francisco) – Ticketing and payments for experiences
Funding
- Kocomo, a Mexico City-based proptech startup, raised $56 million in debt and equity. Kocomo leverages technology to create a marketplace to purchase, own, and sell co-ownership interests in dream vacation homes.
- South Korean H2O Hospitality, a hotel technology specialist, raised more than $30 Million in Series C funding. Its Series B investment of $7 million was announced 18 months ago.
- MaaS Global closed a €11 million Series B, bringing its total raised so far to just under $75 million. The Finland-based startup is the creator of Whim, a planning app for ground transport services including buses, taxis and e-scooters.
- Tickitto raised a seed round of $4.5 million. The UK-based startup offers an API for accessing tickets to events and other activities.
- Montreal startup Angel Host closed a seed funding round of $5.2 million for its vacation rental technology.
- Thatch, a mobile app that helps travel content creators monetize their content, closed a $3 million seed round.
- Bay-Area trip planning startup Wanderlog attracted $1.5 million in seed funding from General Catalyst.
- Group adventure travel startup YouTravel.Me secured a $1 million funding. The startup uses a matchmaking algorithm to connect like-minded travelers for small group adventure trips organized by travel experts.
- FLYR Labs acquired Faredirect and xCheck, two startups specialized in ancillary revenue and airfare marketing technology. These two acquisitions further strengthen FLYR Labs’ revenue management solutions for airlines. Congrats to these three companies, and particularly to xCheck and founder Tim Underwood, to whom I’m thankful for his sponsorship and support of this newsletter. Read more.
Atomize is a Swedish revenue management specialist in hospitality. They kept their growth during the pandemic, and now the startup has raised €3.4 million in a pre-IPO funding round.
From September 27th to 30th Barcelona will host IAAPA Expo Europe: a part-expo, part-conference event focused on the leisure industry. Gotta keep the fun going in the travel industry, right? It’s a great opportunity for anyone interested in connecting with international attractions industry leaders and decision makers.
I’m always curious about the generational shift and its impact on an industry, so I really enjoyed this article highlighting three key Generation Z behaviours and what travel brands can expect from them.
The pandemic brought attention to the Chinese market in many different ways. Now, when we are looking into the path for recovery, this post brought some interesting data on what is the current scenario for the travel market in China – and for Chinese tourists.
European Summer is soon over (already!?) and we all witness how the delta variant has impacted travel in Europe – but now there is lots of data and graphics to detail the aftermath.
Space travel insurance is now a thing.
With the aim to become the market leader for environmentally friendly and sustainable tourism in Europe, DER Touristik and Deutsche Seereederei are joining forces. To kick-off, the joint venture will be responsible for the operations of 16 hotels and resorts, located in Germany, Austria and Switzerland. Nice timing.
Launched right before the pandemic, Wanderlog helps travelers with the logistics of their trips with a platform that makes it easier to plan and share travel info – as an alternative for the combo: spreadsheet and copy+paste. And now the founders announced that they have just raised $1.5 million to further grow the platform and its features.
Finnair seems very committed with their goal to become carbon neutral by 2045 – and that’s reinforced through their purchase of 20 electric aeroplanes from Heart Aerospace.
Thatch announced a $3 million seed round led by Wave Capital. The startup helps travel creators better connect to their followers and get money for their recommendations, tips and perspectives on travel experiences.
A luxury vacation home which has several owners – this is what a Mexico City-based startup makes possible through their business. And now Kocomo raised $56 million to advance on that goal.
Just today TNMT published a great leaderboard with an overview on the 75+ startups shaping the next era of aviation around the globe. Exciting to see new players taking on the opportunities that the crisis has opened up for the industry.
With travel restrictions still in “limbo mode” around the globe, many travellers are confused about testing and quarantine requirements these days. I’ve been really enjoying tools and graphics that aim to make life (and travel) easier these days, like Bloomberg’s Travel Tracker.
From Montreal, Angel Host recently announced that they raised $5.2 million. They now expect to use the funding to continue building its tech tools and expanding its team of vacation rental professionals.
Offering more than 15,900 tours in over 130 countries around the world, YouTravel.Me now raised $1 million. The European startup plans to use the money to further develop their online platform for matching like-minded travelers to small-group adventures organized by travel experts.
I really enjoyed listening to this episode of Amadeus Travel Tech Talk where two employees share insights on four main travel trends identified by Amadeus. What they say can also provide indicators on what we all can expect for the travel industry during the rest of 2021.