GetYourGuide, a young travel company founded in 2009, made a splash in travel industry news last week with the announcement of a $50 million investment by KKR, a prominent NYC-based investment company. For new travel company entrepreneurs – or those in any industry, for that matter – GetYourGuide has all the hallmarks of a Cinderella story: humble students working through the night, unaware they’re on the brink of creating a multi-million dollar company. Not long ago this blog had a post that relates to the GetYourGuide story, “Top Start-up Tips for the Travel Industry”. Accordingly, this announcement provides a great opportunity to see how well this Cinderella story validates our travel start-up guidance in the areas of: value; planning and attitude.
Look Behind the Curtain
Finding and analyzing applicable success stories is an important part of every start-up’s preparation. After all, the quickest and least expensive lessons to learn are those taught by other people in similar circumstances. For entrepreneurs, it’s often a challenge to get a look behind the curtain and see trials and challenges. Young companies tend to downplay or omit their difficulties once they’re on a successful path.
In the case of GetYourGuide, the investment announcement creates the impression of upward trajectory since its founding in 2009 – with little to be learned except the need to start off with a can’t-miss idea. A little digging reveals a very different and much more insightful narrative.
“When we re-launched GetYourGuide on a cold winter day 2010, we had no idea what we were about to get into. We were a group of science & engineering students, spending our nights building a travel website…We wanted fellow students to sign up as local tour guides and make some extra money by showing travelers around town. At that point in 2010…there were only a few students signing up to be tour guides….apart from my mother, there was no customer ….
Our re-launch in 2010 was the very last attempt for success…. we promoted a few local sightseeing tour companies on our marketplace platform. Within days we saw first bookings coming in…. Fast forward 6 years later, and we are now one of the major online travel companies with more than 200 employees and a global product offering and customer base.”
Almost without exception successful companies have their “behind the curtain “moments, and anyone following in their footsteps will have them as well. Since working through discouraging times often showcase the best lessons to learn, its vital entrepreneurs leverage what they can learn from “overnight” success stories to gain good answers for the question, “what could go wrong?”
How does GetYourGuide match up to our advice in the areas of industry knowledge; identifying competition and refining or revising the start-up concept?
Industry Knowledge: in this area, we state, “…a start-up needs a good grasp of the travel industry and travel technology in order to articulate why its proposed product/services make sense.”
Match-up: the company doesn’t match up well in this area; there’s no sign the original GetYourGuide concept was influenced to any significant degree by industry research.
In fact, it seems the original product/service was focused as much on solving the problem of students finding part-time work, ("We wanted fellow students to make some extra money by showing travelers around town") as it was on creating value for the traveler.
Identify Competition: finding competitors - companies already providing supplying the same or similar product/services - is one of the most conflicting and difficult challenges faced by entrepreneurs.
Match-up: As was the case with industry knowledge, there’s no sign the founders vetted the original concept against existing competition.
Refine or Revise: armed with a solid understanding of the travel landscape, travel trends and knowledge of potential competitors, take another look at the start-ups proposed product/services and re-evaluate them. Do they still seem innovative, unique and compelling?
Match-up: GetYourGuide aligns a bit better with this guidance. After a year of operation, no real customers (only the mother of one of the founders) and little student tour guide response, the company did revise their product/service. In fact, they show themselves as being innovative (or desperate) enough to partner with their original competitors; local tour companies.
By abandoning the idea of providing students with part-time work, and strictly focusing on bringing value to paying customers ( travelers), their successful business model of brokering travel traffic with established tour companies began to flourish.
Ideas Needs Plans
As Antoine de Saint-Exupéry stated almost one hundred years ago, “A goal without a plan is just a wish.” The point of our guidance in the areas of planning and appraisal is to prevent start-ups from investing time, emotion and money into an idea that still needs improvement.
Business Plan: the purpose of a business plan is to express – in concrete, actionable, terms - the value proposition of a start-up idea: the goods and/or services it will provide; who will purchase them (and why); and the business model for offering them.
360 Appraisal: this appraisal uses the business plan as a framework to give the start-up concept an objective review from all sides: customers; colleagues; travel industry professionals and financiers.
Match-up: since there’s no evidence GetYourGuide did any of these things, the company doesn’t match up well. On the other hand, their 2009 experience validates this guidance. They did a poor job of investing time (a year), emotion, (“We had just failed our peer-to-peer student guide project and in an all-or-nothing moment, we promoted a few local sightseeing tour companies on our marketplace platform) and money (a year of operating expenses).
Had they talked to customers, they might have discovered travelers didn’t find the value of student-run tours to be compelling. Had the company spoken with students, it would have quickly learned they had little interest in part-time tour guide work. More importantly, had GetYourGuide reached out to local travel companies, its value to them as a broker of traveler interest might have been discovered much earlier – and with less reliance on pure, good fortune.
Attitude Fosters Success
In this context, attitude should not be confused with wishful thinking. Rather, it should strike an even balance between risk-taking, confidence and flexibility.
Stay Focused & Discerning: there will never be time to do everything that needs to be done. Discern absolutely critical tasks and stay focused on their completion before turning attention to anything else.
Don’t be a Hero: trust the people around you; acknowledge superior skills; delegate tasks and get out of the way.
Be Steadfast: don’t get discouraged by bad news or become euphoric from good news. Wait for all the facts and reach an objective conclusion.
Listen & Hear: listen and pay attention to customer & supplier feedback, it’s the quickest way to know what’s working and what’s not.
Embrace Change: like a battle plan, business plans rarely survives a first contact with the marketplace. View setbacks and surprises as normal part of start-up life, not necessarily bad news
Match-up: there’s not enough information on the first two to make a judgement. However, it seems clear the company did well on the third; the founders didn’t get discouraged and throw in the towel after a year of failure.
GetYourGuide excelled at the fourth and fifth attitudes. They paid attention to the lack of student guide sign-ups and poor customer response. Perhaps – looking back - it seems obvious for them to have done so, but failures are often tied to a stubborn refusals to believe such symptoms are fatal; won’t respond to having more money thrown at them; and are bound to turn around (somehow) in the next month or two.
Instead, the founders displayed the crucial ability to embrace change – and that made all the difference. Was there an inordinate amount of luck tied to the change? Yes – and following other guidance earlier would have prevented the back-against-the-wall position they found themselves in by 2010. But a willingness to react to adversity with change is always a fundamentally good tactic – even if it doesn’t always lead to $50 million announcement.