Travel Tech Essentialist #113: Space is the Limit
Why would you undertake any activity where you get your ass kicked every day, don’t get paid enough, and suffer through years of misery only to maybe find a problem worth solving? — David Friedberg talking about entrepreneurship.
Courage is not the absence of fear but rather the assessment that something else is more important than fear. — Franklin D. Roosevelt (similar versions also attributed to Mark Twain and Nelson Mandela).
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0. The most clicked link in the previous newsletter
The most clicked link in Travel Tech Essentialist #112 was Scaling Airbnb, Reid Hoffman’s interview with Brian Chesky at Stanford University.
1. Transpacific or transatlantic cargo flights may become unnecessary within 5-10 years
The cognitive dissonance with the recent SpaceX launch could not be any greater. According to the media, it was a failure. But for anybody with a minimum knowledge of what the objectives and results were, April 17 was an extraordinary success: lifting off, going through Max-Q and flying for 4 minutes to a height of 39 km. When it comes to rocket science, I place my trust in rocket scientists rather than journalists. Thanks to the new data collected, SpaceX is on track to send over 100 metric tons to orbit at a variable cost of under $2 million, a 50x improvement from Falcon 9 metrics. This breakthrough will revolutionize human and cargo transportation. According to Antonio Gracias (SpaceX board director) and Gavin Baker, transpacific and transatlantic cargo flights will be eliminated in 5-10 years. Listen to the clip.
2. Your company needs a space strategy. Now.
Harvard Business Review suggests that the decreasing launch costs and the advent of new satellite fleets are creating significant business opportunities, making space an important source of potential value for companies in various sectors like tourism and consumer goods. The article covers the four ways in which space can create valuable opportunities for your business: data, capabilities, resources, and markets. Read + Harvard Business Review.
3. David Friedberg on the meaning of entrepreneurship
70% of businesses are affected by the weather every year. This stat gave David Friedberg an idea in 2007: an insurance service for companies that would pay out when bad weather was on the way. He founded the company without knowing anything about insurance or the weather and sold it in 2013 to Monsanto for $1.1 billion. In 2011, two years before the sale, Friedberg gave a great talk (video or post) at the Stanford Entrepreneurship Corner about his experience and his learnings about entrepreneurship. Here are just a few:
Don’t say you’re going to do a startup or you want to be an entrepreneur. That’s the equivalent of saying, ‘I’m going to jump off a plane.’ Start with a problem that is meaningful.
Don't do a startup, and don't try to solve a problem via a startup if your goal is to have the status of a rockstar entrepreneur. It's a false premise with a 0.0006% chance of happening.
Very high opportunity cost. The probability of making nothing is 67%. Even if you raise money and have an exit, your median time is 49 months, and assuming there are three founders, your median payoff would be equivalent to $73,000 a year.
Get rid of luck. The fundamental premise of how to think about building a business is to figure out what you don’t know and then know it.
Learn to love the grind. The grind’s payoff: growth, buy-in, credibility.
Watch the video or read this post summarizing his talk
4. Rush of talent and capital to early stage
Startup funding globally decreased by 63% YoY, largely due to a drop in late-stage and private equity funding. David Friedberg recently mentioned (link) that 70% of companies that went public in the past three years are trading below the cash that they raised. Since it is the best companies that are in a position to go public, we should assume that 70%-80% of late-stage companies are below the preference stack (i.e. meaning that the founders’ and employees’ common shares are worthless). As a result, there will be a mass exodus of talent toward early-stage companies, and many investors who don’t want to deal with recaps are diverting their attention to early-stage startups as well. Listen to the clip.
5. So many great travel tech startups but so few venture rounds. Why?
Gilad Berenstein (founder of Utrip and now an early-stage investor) had a discussion with Stuart Greif (EVP Forbes Travel Guide) on the difficulties of investing in travel tech startups. He argues that the primary challenges that travel tech founders face when trying to raise venture rounds are Market Size on the B2B side and Business Model concerns on the B2C side. To address this, Gilad recommends that B2B founders showcase the breadth of their potential client base and their ability to increase revenue, while B2C founders should focus on unit economics and demonstrate their company's ability to generate meaningful margins. Read +.
6. Stock market performance for travel companies
Stock prices have appreciated so far in 2023 for 10 of the 16 travel companies in this analysis (gray bars), but only three companies - Trip.com, Booking.com and RateGain have seen their stock appreciate in the past 12 months (red bars). The three worst-performing companies all went public via a SPAC in the last 16 months.
7. Locals and tourists
See below a map of Barcelona. The red dots are photos taken by tourists, and the blue ones are photos taken by locals (yellow could be either). You can find hundreds more cities in this link. AI-powered “live like a local” itineraries could be an interesting use of this data.
8. Amazon doubles down on its return to the office
Data-driven companies are instructing employees to return to the office. In March, Mark Zuckerberg's Update on Meta’s Year of Efficiency declared that Meta's engineers perform better when working in-office. In a letter to shareholders published on April 13, Amazon CEO Andy Jassy confirmed its new policy for corporate employees to go back to the office at least three days a week and highlighted the benefits of face-to-face interaction: “We’ve become convinced that collaborating and inventing is easier and more effective when we’re working together and learning from one another in person…Serendipitous interactions help [innovation], and there are more of those in-person than virtually. It’s also significantly easier to learn, model, practice, and strengthen our culture when we’re in the office together most of the time and surrounded by our colleagues.”
9. Business travel as a competitive advantage?
If in-person work produces better results, then in-person meetings do as well. ARC data shows that, despite an increase over 2022, corporate travel flight bookings are still almost 25% below 2019 levels. Steve Solomon, CCO at ARC, expects a full recovery but can't predict when. A third of workers surveyed by Morning Consult noted corporate policy changes restricting travel. Read + Simple Flying. Maybe these companies will lift restrictions if they start losing clients, accounts, and market share to competitors that engage in face-to-face meetings. To be continued…
10. Have you ever floated through a tropical rainforest?
The Daintree Rainforest in Australia is the oldest rainforest in the world and a recent tourism initiative allows travelers to float through it. Watch the video, and if you’re in Australia, book your adventure here :-)
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223 open jobs on the Talent Network job board!
There are 223 open jobs from companies such as Hopper, Booking.com, Expedia, Airbnb, jetBlue, Kiwi.com, Amadeus, Navan, Trivago, TripAdvisor, TravelPerk, The Hotels Network, Inspirato, Despegar, eDreams ODIGEO, Selfbook, Grapevine, Fora Travel, HomeToGo, Outdoorsy, and Stay22. Browse and apply here.
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