Travel Tech Essentialist #93: Argument-Driven

Sep 13, 2022

“If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” — Jim Barksdale (former CEO of Netscape)

“A weak argument founded on poorly-interpreted data is not better than a well-reasoned argument founded on observation and theory. Stop going all googly-eyed at statistics. Metrics are tempting. They promise easy answers. Resist! Be skeptical! Have no tolerance for poor arguments made with data. Keep intrinsic motivation alive.” — Richard Marmorstein

This week’s newsletter is sponsored by

Celitech helps travel-related companies (like Expedia and Kayak) offer co-branded international cellular dataplans using one-click eSIM technology. The B2B company offers a proprietary eSIM API, enabling its partners to generate new ancillary revenues & mobile engagement while helping their int’l travelers save up to 80% on data roaming. To schedule a live demo check https://celitech.com/

1. Be argument-driven, not data-driven

Great post by Richard Marmorstein, a software engineer at Stripe, on being argument-driven, not data-driven. Data-based decisions are often the way to go, but not always. But, as Richard states (read his quote above), data is only a tool for making good arguments, not an end in itself. Read +

2. In the next 30 years, all traditional brands are going to die

By now, you probably know that Kim Kardashian launched a private equity firm, Skky Partners, which she co-founded with Jay Sammons, a former partner at the investment firm Carlyle Group.

In the All-In podcast, David Friedberg had an interesting take on the future of consumer businesses. He said that every traditional brand will be destroyed in 30 years by influencers who have built audiences through content creation and who are now creating businesses (even Private Equity firms) on top that compete with the traditional incumbents. He is predicting the end of faceless brands and the evolution of the influencer as a business leader.

Friedberg believes that traditional brands not oriented around authentic and original content creation as their primary differentiating foundation will not survive. Instead, we will see individuals and influencers that create content build and distribute consumer goods and services more efficiently because they have scalable and massive distribution built in. In the future, advertising and marketing will be replaced by content creation which will drive awareness and sales. Essentially, direct distribution and relationship with millions of users at a low cost.

We are just at the beginning of the influencer + business combination, and the travel industry seems a natural environment for this combination to succeed. Could we see travel companies doing M&A deals with influencers or giving them significant ownership shares to access their hard-earned distribution power? It seems to make more sense than pouring billions into marketing channels that generate transactions today but don’t necessarily build loyalty and preference. “Travel-as-a-Service” startups like Spotnana, Xeni, Dharma, Plazah, Luxury Travel Hackers, Drimer or Tripscout make it easy for small and large influencers to build travel services into their brands. They are addressing a potentially large and growing market. Read + Travel Tech Essentialist.

3. The $14 billion payment opportunity for airlines

New McKinsey 24-page report on how payments innovation can help airlines improve customer experience and the bottom line. Airlines could realize approximately $14 billion in value by strategically addressing payments. This figure includes revenue from payments, as well as value in cost savings (Exhibit). The $14 billion payment opportunity is in addition to the $40 billion in value at stake from airline retailing—combined, this is equivalent to around $10 per passenger. The 24-page report looks at six value-creation levers to capture the payments opportunity

Increase customer reach and conversion by attracting customers in new markets and improving the payment experience to increase sales
Grow ancillary services, and make them easier to purchase
Enhance loyalty programs by drawing on insights from customer data.
Provide flexible exchange policies and easier refunds
Become part of the corporate payment ecosystem
Reduce working capital costs and payment costs by optimizing fees and payment terms

4. Building an efficient marketing machine: the fuel & the engine

Emily Kramer and Kathleen Estreich wrote a useful framework for getting the mix of marketing activities correct, the right set of people on the marketing team, and high-impact work out the door. They call it the fuel and the engine. The fuel is all the stuff that you say (out loud, in writing, or visually) to your audience. The engine is all the channels and processes you use to get the fuel out to your audience, plus the tools and metrics you use to track your marketing and growth efforts. When you combine the fuel and the engine, your business grows fast. This post explains how to create a marketing strategy and team based on the fuel-engine concept. Read +.

5. The non-hotel new hotel

This month, RH (formerly Restoration Hardware) opened its hospitality concept: RH Guesthouse New York. They don’t want people to call it a hotel. Their website states many other things that they are not:

We don’t have a full bathroom, we have two, in every room.
We don’t have mattresses, we have FreshBeds, for a deep restorative sleep.
We don’t have minibars, we have freshly stocked gourmet pantries.
We don’t have an excercise room, but do have a gym in every room.
We don’t have silly rules like breakfast ends at eleven

They do have rules, though, such as no children, no pets, a maximum of two guests per room, no foldout beds, no thumping music, no photographs, no posting the property on social media, and no loud or grumpy guests.

RH Guesthouse is trying to create a new product for travelers seeking privacy and luxury. Good luck to them and to all those seeking to reinvent the travel experience, be it for the masses or for the few. Read + Robb Report and/or visit RH.com.

6. A robot vacationing with his family

Stable Diffusion is a machine learning model that generates digital images from natural language descriptions. The image below was generated when I typed: “A robot vacationing in the Amazon with his family.” You can enter your text here and see what image comes up :)

7. Update on Travel Tech Essentialist Talent Collective

Two months ago, I launched Travel Tech Essentialist Talent Collective to make it the best place to hire high-caliber travel tech talent worldwide. The quality of the more than 100 candidates who have signed up and are open to new opportunities has surpassed my most optimistic expectations. A bit more about these candidates:

Top 4 functional expertise: Sales/Partnerships/Business Development; Product/PM; Data Science; Growth
Coming from the world’s major OTAs, airlines, hotel groups, metasearches, GDS, travel tech companies, corporate travel agencies, TMCs and some of the most promising and dynamic travel startups.
Candidates from 22 countries. Europe 58%, USA 25%
And what’s more important: several hires already enabled!

→ If you are a travel company that is actively looking for professionals with deep experience in some of the leading travel companies: join now.

→ If you are a candidate looking for new opportunities and want to stand out and get hiring companies to come knocking at your door, sign up (for free).

→ And if you know of any travel companies that have had to lay off employees and want to help them find a job: share this link with them.

8. Google will disable Book on Google for flights

Google will disable the Book on Google functionality for flights for non-US users on September 30, 2022, and for US users on or after March 31, 2023. As of May 25, 2022, the Book on Google option for hotels was discontinued. Users will continue searching and finding flights on Google, but not booking them on Google. In essence, Google is moving away from the potentially messy business of getting closer to the traveler and is happy to continue its lucrative advertising business that generates tens of billions from OTAs, airlines and hotels.

This brings me memories of September 13th 2011, when I (as CMO of eDreams at the time) was invited by Google to attend their global announcement of the launch of Google Flights in NYC. The concern was that Google would be giving airline content priority over OTA content (even though we could come up with better fares for a large % of itineraries) and that Google Flights would concentrate an increasingly larger share of initial flight searches. It turned out that the impact was not as dire as initially feared.

9. The Product Market Fit survey

Sean Ellis (author of Hacking Growth and early growth leader at Dropbox) discovered a leading indicator of product/market fit: Just ask users “how would you feel if you could no longer use the product?” and measure the % who answer “very disappointed.” After benchmarking 100 startups, Sean Ellis found that the magic number for product/market fit was 40%. Companies that struggled to find growth had less than 40% of users respond “very disappointed” in the survey, whereas companies with strong traction almost always exceeded that threshold.

Here is an example of the survey as a live poll for this newsletter that you can vote on…😅

10. Funding and Deals

Barcelona-based package tours specialist Exoticca raised a €20 million venture debt round. The company expects to close 2022 with €120 million in revenues.
Hospitality platform Frontdesk closed $13 million in Series B financing, bringing the short-term-rental startup to $22 million in total equity financing. The round was led by Stormbreaker Ventures with support from JetBlue Technology Ventures.
HotelOnline, a Kenya-based revenue management company, acquired East African hotel software provider HotelPlus. HotelOnline was valued at $24 million pre-deal. Read +.

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Have a great week,

Mauricio

Travel Tech Essentialist