Travel Tech Essentialist #109: Constraints

Mar 17

Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better - Nassim Nicholas Taleb

The last few years (and weeks) have been unusually challenging, and the rate of black swan events does not seem to be slowing down. Entrepreneurs are best-in-class when it comes to optimizing with limited resources. Entrepreneurs deal with constraints every day in good times. And they will figure out a way to survive and thrive during a storm of black swans as well.

Constraint drives creativity - Jack Butcher

This newsletter is sponsored by GeoSure

Named Fast Company Most Innovative Companies, data science startup GeoSure leads hyperlocal safety data. Designed for travelers, we pioneered local risk, first Women’s, LGBTQ safety, Health & Medical and scaled over 65,000 locations. We partner with leading brands worldwide, and are innovators in #newdutyofcare, with a mission to promote well-being, confidence, community safety. Visit us at GeoSure or on LinkedIn.

Correction

In the last Travel Tech Essentialist newsletter (#108), I included an incorrect URL link to a great report by Duetto. Apologies to you and Duetto for this mistake. Please download the report here: Targeting Greater Profitability In 2023: Trends & Predictions to Boost Your Revenue Strategies. It’s a highly worthwhile and extensive read on how to best optimize revenue management and profitability in 2023, with great contributions from industry insiders on what they believe are the main challenges and opportunities for hoteliers going forward.

1. Heroes

Paul Graham defines what it takes to be a startup founder in two words: relentlessly resourceful. The challenges faced in the last three years deserve a third word: heroic.

2. Travel Startup Funding report

Since 2005, travel startups received between 0.5% and 1.5% of all startup funding, one of the lowest percentages across all industries. This recent report by McKinsey presents an overview of the travel startup environment and how the funding landscape has evolved across geographies and categories (pre-trip, booking, transportation, hospitality, in-trip, business travel). It also examines the types of investors funding these businesses and the types of travel startups they choose to invest in. The report concludes by considering how the overall travel startup landscape could evolve in the coming years and what it would mean for travel companies and stakeholders in the startup space.

3. Non-constraining constraints

We have a tendency to focus on constraints and to think of them as a kind of adversity. This Harvard Business Review article (free link, bypasses paywall) suggests that constraints can be a form of advantage. When we own our constraints, magical things can happen — and the constraints can become tools to propel us forward.

4. Y Combinator Travel startups

Y Combinator announced its Winter 2023 batch of companies. One notable trend is that 69% of the startups for this cohort are business-to-business (B2B) software and services. Travel was not represented in this or the previous batch. Since 2009, 39 travel companies have gone through Y Combinator, of which 25 are still active, 6 are inactive, 7 have been acquired, and 1 is a publicly traded company (Airbnb).

5. Flatter is faster. Leaner is better. In-person gets more done.

In October, Brad Gerstner published an Open Letter to Mark Zuckerberg and the Meta Board urging them to tighten their belt and sharpen their investment focus. A month later, Mark Zuckerberg laid off 11,000 employees, or 13% of the company. This week, he sent Meta employees a letter outlining new measures in what he calls Meta’s Year of Efficiency. Meta will lay off an additional 10,000 employees through multiple rounds of cuts over the coming two months, close hiring for 5000 open roles, and cancel more low-priority projects.

Other themes in Zuckerberg’s letter:

Flatter is faster. Meta will remove multiple layers of management and ask many managers to become individual contributors.
Leaner is better. A leaner org will execute its highest priorities faster. Meta will focus on canceling projects that are lower priority and making the organization as lean as possible. After reducing its workforce last year by 13%, things started going faster. “Indirect costs compound and it’s easy to underestimate them”.
In-person gets more done. Zuckerberg was the first Big Tech CEO to aggressively lean into remote work early in the pandemic. Performance data since then shows that in-person performance is superior to remote work. The new hypothesis is that it’s easier to build trust in person, and that makes for more effective work.

6. Helping travelers get the most out of every trip

Amadeus’ Wolfgang Krips and Microsoft’s Corine de Bilbao co-authored a report titled Delivering Traveler Value: Inspiring, understanding and fulfilling expectations throughout the travel experience and beyond that explores how new technologies will make the experience of travel better and how a focus on the ‘purpose’ and ‘context’ of each trip can allow the industry to maximize value. The report draws on a survey of 2,400 business and leisure travelers in six key markets around the world with quantifiable findings and contributions from senior leaders from Amadeus, Microsoft, Meliá Hotels International, Expedia Group, TomTom, and American Express Global Business Travel.

7. Poll: will airlines spin off their subscription businesses?

Airline retailing and the search for better quality and more predictable revenue are trends that have accelerated in recent years. In my previous newsletter, I suggested that airlines might start to spin out their subscription businesses to better capture the upside value, given that:

Recurring revenue trades at twice the multiple
Equity markets are willing to pay more for airlines with lower volatility of revenue growth, i.e., more predictable revenue.
Subscription-based business models have dramatically outperformed the broader market.

I received quite a bit of direct responses about this, so I thought about conducting a quick poll to see if there is a dominant view on this matter.

8. A 10x smarter Google

Google just launched Generative AI across all of Google Workspace, available to early testers for now. According to Ben Parr (former editor of Mashable), this change makes Gmail, Slides, Docs, Sheets, and Images 10x smarter. Here are a few of the many things you will be able to do with their new AI:

Gmail: draft, reply, summarize, and prioritize
Docs: brainstorm, proofread, write, and rewrite
Slides: bring your creative vision to life with auto-generated images, audio, and video
Meet: generate new backgrounds and capture notes in Meet
Chat: enable workflows for getting things done
Sheets: go from raw data to insights and analysis via auto-completion, formula generation, and contextual categorization.

Read + Ben Parr. View this 2-minute video by Google

9. Transforming hospitality

Accor released a report titled Hospitality Ahead: Transforming How We Welcome, Engage and Manage that explores the ongoing changes impacting the hospitality industry and provides insights and perspectives on how to address these shifts. The report offers examples and recommendations for how to leverage these transformations into actionable and profitable business opportunities.

Furthermore, Accor is looking at subscription-based models to drive loyalty with the launch of ALL (Accor Live Limitless) PLUS Voyageur and ALL PLUS Ibis subscription cards tailored to their most valuable guests. Read +.

10. Financing and M&A

Australia-based nature-focused hospitality company Unyoked closed a $19 million round to expand solar-powered off-grid cabins and immersive nature experiences throughout Europe.
UK-based airport management software startup AeroCloud raised $12.6 million in a Series A round of funding.
Bach, an app for planning bachelorette trips and group travel experiences, raised $9 million in Series A funding led by Pritzker Group Venture Capital.
Amsterdam-based Transferz, a platform in pre-booked ground transportation, raised over $6.8 million in a funding round led by a consortium of individual business angels and family offices.
Since 2018, Wheel The World has been on a mission to provide accommodations and experiences for travelers with disabilities. The startup closed a $6 million pre-Series A round with Kayak Ventures leading the investment.
181travel, an Italy-based travel experience startup, raised €2.5 million in funding.
El Camino Travel closed $1.1 million pre-seed funding to be the travel industry’s first experiential marketplace for women.
WeSki closed a financing round with the participation of Roch Ventures and a group of industry insiders, including Waze founder Uri Levine, TravelPerk founder and CEO Avi Meir, and the founders of Flixbus. Read +.
Software-as-a-service group Travelsoft has acquired Travel Compositor, a B2B provider of travel booking engines, with the goal of becoming “the world’s leading SaaS leisure travel company.” Read +.

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Mauricio