Travel Tech Essentialist #99: Delightful Cockroaches
When it was time to name this edition, I was between ‘Cockroach’ or ‘Delight’, so I went with a combo. Let’s see what this does to the open rate. It could go either way :-)
This week’s newsletter is sponsored by
Selected as Phocuswright’s 2022 Travel Innovation of The Year, @hotel is the first hotel booking platform for Instagram and powers a portfolio of travel brands on social media with 40M+ followers. Using this organic audience as a distribution channel for promoting their booking platform—which also allows for CUG pricing—@hotel made it clear at this year’s Phocuswright conference that social commerce will be the future of how consumers book travel.
1. To delight buyers, you must surprise them with unexpected value
We’re satisfied when an experience meets our expectations. But when it exceeds our expectations, we’re delighted. And it’s delight—not satisfaction—that drives brand loyalty. The challenge is that once a customer comes to expect that something extra, then they are no longer delighted. This creates both an opportunity and a challenge for brands. DoubleTree was the first hotel chain to offer guests a free cookie when they checked in. Soon after, many other hotels did the same, so guests came to expect it. DoubleTree had to think of something new to seek to delight their guests. The DoubleTree cookie became the symbol of a new internal culture where DoubleTree employees receive special training and are empowered to find unique ways to delight guests. Read +.
2. Customer service as a competitive advantage in customer acquisition
When I was at eDreams, we experienced several airline bankruptcies that left many of our customers stranded or with unusable tickets. We went above and beyond by refunding and/or finding new travel plans for our affected customers. As a byproduct, by responding at a time of greatest need, we gained their long-term loyalty. Travel companies spend millions in marketing for
customer transaction acquisition. Investing a fraction of this in customer service and in delighting customers will often lead to gaining long-term loyalty and to a more sustainable customer acquisition strategy fueled by word of mouth.
3. Be a cockroach
In his essay titled “Why to Start a Startup in a Bad Economy” written during the financial crisis of 2008, Y Combinator’s Paul Graham argued that a bad economy might be the best time to launch a startup. Graham’s advice: “The way to make a startup recession-proof is to do exactly what you should do anyway: run it as cheaply as possible. For years I’ve been telling founders that the surest way to success is to be the cockroaches of the corporate world. A startup's immediate cause of death is always running out of money. So the cheaper your company is to operate, the harder it is to kill.”
4. Relentlessly resourceful
Paul Graham described a good startup founder in two words: relentlessly resourceful: “If you want to know whether you're the right sort of person to start a startup, ask yourself whether you're relentlessly resourceful. And if you want to know whether to recruit someone as a cofounder, ask if they are. You can even use it tactically. If I were running a startup, this would be the phrase I'd tape to the mirror. "Make something people want" is the destination, but "Be relentlessly resourceful" is how you get there.” Read +.
5. High Agency
Great twitter thread (unrolled for your reading convenience) by George Mack on the importance of having High Agency. High Agency individuals push through in spite of adverse conditions or manage to reverse the adverse conditions to achieve goals. It combines resourcefulness, skepticism of the status quo, and taking control of your fate. Entrepreneurs will relate. Cockroaches too.
6. Q3 2022 revenue growth
Publicly traded OTAs and metas have posted strong growth vs Q3 2021. All of them also had an improvement vs pre-Covid Q3 2019 revenue.
7. Distribution should be part of product design
In a recent post -In the Next 30 Years, All Traditional Brands are Going to Die- I wrote that creating a great product is hard, but distribution is even harder. It’s the #1 challenge in consumer services. B2C works if you either have extraordinary virality to the product or have found a low-cost and scalable distribution channel.
In his Book Zero to One, Peter Thiel points out that Distribution should not be an afterthought to Product: “It’s better to think of distribution as something essential to the design of your product. If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business—no matter how good the product. Superior sales and distribution by itself can create a monopoly, even with no product differentiation. The converse is not true. No matter how strong your product - even if it easily fits into already established habits and anybody who tries it likes it immediately - you must still support it with a strong distribution plan.”
Zero to One, published in 2014, remains one of the most important books for startup founders, and Thiel dedicates significant attention to getting distribution right. One element that was not as relevant then, but is now, is the importance of having (or building) a community in the marketing and distribution of a product/service. Success is increasingly depending on having built-in direct distribution and sales, and that’s what a powerful community brings.
8. SaaS reset
The SaaS sector is undergoing a reset: on the public side, revenue multiples went down from 17x a year ago to 6x today. On the private side, funding is down 42% in Q3. This presentation by Accel dives deeper into how founders should think about their company valuation and how the public market dynamics impact private funding. The report concludes with six trends that Accel thinks have a strong chance of generating the future champions of the European and Israeli cloud ecosystem.
9. Uber adds Viator content and expands Uber Travel to 10,000 cities
Viator has been integrated into Uber Explore, a project launched in March to allow users to book activities and book a ride to the location. At launch, the content came from Yelp, and it now includes Viator and OpenTable. Explore is limited to 14 cities in the United States and Mexico City and Madrid, but Uber says it will add more markets in the future.
Launched in May in the United States and Canada, Uber Travel is now available to users worldwide. By connecting the Uber app to an email account, flight, hotel and restaurant reservations are automatically imported into the Uber app so travelers can book rides for their entire itinerary and earn 10% back in Uber Cash. Read +.
1. Fundraising and M&A
Deal Engine, an AI-enabled platform that automates airline ticket refunds and changes, closed $5.3 million in seed funding in a round led by F-Prime Capital with participation from Thayer Ventures, PAR Capital Management, Plug and Play.
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Thanks for your attention, and happy thanksgiving to my American friends!
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