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INTERVIEW: 12 Guys and 78 Emails Lead Travefy.com to $31 Billion Group Travel Market

12 Guys and 78 Emails Lead Travefy.com to $31 Billion Group Travel Market

Esti­mates of the size of the group trav­el mar­ket range from $31 to $87 Bil­lion and between fam­i­lies, col­lege stu­dents, wed­ding and events there is no short­age of groups desir­ing to trav­el togeth­er.  David Chait saw an oppor­tu­ni­ty when he and his friends had dif­fi­cul­ty coor­di­nat­ing a trip and after a suc­cess­ful 200 per­son MVP (most viable prod­uct) test are now see­ing 2% to 3% con­ver­sions of vis­i­tors to cus­tomers using their group trav­el book­ing engine at Travefy.com.

 

 

We had the oppor­tu­ni­ty to inter­view David recent­ly about his new busi­ness and how his gov­ern­ment job expe­ri­ence beat out work at McK­in­sey towards pro­vid­ing the knowl­edge to start this busi­ness.

You can lis­ten to David’s Inter­view here and read it below:

Roy:   This is Roy Weiss­man from MediaJobs.com. We’re talk­ing with David Chait at Trave­fy, a new start­up that solves the coor­di­na­tion headaches of group trav­el, find your best trip, col­lab­o­rate on details, book trav­el, and soon, to man­age expens­es.

David, I appre­ci­ate you tak­ing the time to talk with us today and learn more about Trave­fy. When did you start this ser­vice, and give us a sense, in your words, of what Trave­fy, where it fits into the mar­ket and kind of why you start­ed it.

David: Great. Well first­ly, thank you so much for the oppor­tu­ni­ty to chat with you and every­one today. Trave­fy start­ed about a year ago today, as with many ideas, through frus­tra­tions I was hav­ing in my own life. A group of us were plan­ning a friend’s bach­e­lor par­ty, and as you can imag­ine, 12 guys try­ing to deter­mine when and where we were going to go. We were 78 emails in with­out any idea. One of my friends, God bless him, decid­ed to grab the bull by the horns and said I think I know the right date. He booked a non­re­fund­able hotel room, and it worked for most of the peo­ple there, except for the guy get­ting mar­ried. I real­ized that there had to be a bet­ter solu­tion for help­ing groups to coor­di­nate all of their trav­el. That was real­ly the gen­e­sis of Trave­fy.

Real­ly, what Trave­fy does, we are a tool that helps solve all of those pain points that you find when plan­ning a group trip, whether it’s find­ing that right date or loca­tion, social­ly vot­ing and deter­min­ing what that best hotel or flight might be, and man­ag­ing painful expens­es to real­ly deter­mine who owes what and col­lect­ing that with­out the awk­ward con­ver­sa­tions of beg­ging for mon­ey.

Roy:   Now, when you – obvi­ous­ly, you had this need, you had the expe­ri­ence, but how do you know there’s real­ly a mar­ket for it? How did you deter­mine what the mar­ket is? Do you have a sense of the mar­ket size?

David: Absolute­ly. So first­ly, in terms of the mar­ket size itself on the data, we have group trav­el and leisure trav­el in this coun­try. It’s an indus­try where there are 1.6 bil­lion per per­son leisure trips per year in the Unit­ed States.

In terms of behav­iors, peo­ple are actu­al­ly book­ing online. The Unit­ed States is one of the most mature online trav­el mar­kets where 65% of all trav­el is booked online. So the mar­ket is there and the behav­ior is there.

Now on a more micro lev­el, for us it was very impor­tant to test out that we were actu­al­ly cap­tur­ing a solu­tion to a prob­lem that we already know exist­ed. So we have a very lean start­up men­tal­i­ty. One of the first things we did is we set out and we built a very sim­ple tool that solved the fur­thest upstream prob­lem we found, which was social­ly deter­min­ing your best trip. We built a tool where you can invite your friends via Face­book or email, pro­pose some dates and loca­tions, and actu­al­ly vote to define them. We put that out in the mar­ket, test­ed it at four uni­ver­si­ties around spring break time, and had an over­whelm­ing response. Hun­dreds of accounts, we had almost 200 trips come through the plat­form, and we real­ized that we were actu­al­ly reach­ing a prob­lem that exist­ed. From the…

Roy:   I don’t mean to inter­rupt you, but you said you had 200 peo­ple – 200 trips, actu­al­ly 200 groups of peo­ple were wait­ing to sched­ule this trip and they used Trave­fy to do it. When you say group trav­el, the first stuff that comes to my mind is I know there’s tons of group trav­el from a busi­ness per­spec­tive or vaca­tion, where com­pa­nies like Lib­er­ty Trav­el have group trav­el. Isn’t it kind of an elu­sive mar­ket, infor­mal group trav­el? Did you have any way of esti­mat­ing that, or was this test a key deter­mi­nant?

David: That’s a very good ques­tion. I think for us, we knew that the need was out there. This for us was num­ber one the way to test that. Peo­ple would exact­ly, to your ques­tion, want to just find a tool to help them solve that.

But you do bring up the very valu­able point that group trav­el itself is very frag­ment­ed. There’s a long tail of types of use cas­es, which is why we actu­al­ly start­ed tar­get­ing – I men­tioned we went to schools first. We found two very high­ly cap­turable seg­ments in the student/young pro­fes­sion­al mar­ket and the bachelor/bachelorette mar­ket because there’s a cer­tain moment in time that exists, there’s a cer­tain type of per­son in which we exist, where you can actu­al­ly start by reach­ing them.

Now for us, we’ve actu­al­ly been able to hope­ful­ly solve a lot of that prob­lem around the long tails because of our social inte­gra­tion. If you were to think of some­thing that involves a group trip, you’re invit­ed and you’re actu­al­ly invit­ing oth­er peo­ple to it. We actu­al­ly have a social or viral fac­tor of about 3x in terms of the num­ber of peo­ple that oth­ers invite to their trips. So while you have to find that pin­point to actu­al­ly reach our ini­tial audi­ence, we’re able to real­ly grow fur­ther beyond that. And we’re see­ing that now as we’re real­ly out the gate with our new­er, what we’re call­ing our beta per­son.

Roy:   When you did those 200 trips, what was the aver­age num­ber of  par­tic­i­pants per trip?

David:  Three to four.

Roy:   Three to four. Do you have a sense of what the aver­age spend­ing per per­son was?

David:   We don’t have that, because again, we put out a min­i­mum viable prod­uct, our MVP, to pure­ly test the social­ly vot­ing. We’re right now, now that we’ve added our hotel search engine and our soon to be released expense man­age­ment tool, see­ing what those expen­di­tures are. It’s too ear­ly to actu­al­ly put some hard num­bers around that.

Roy:   So when you did the 200 trips, were they book­ing the trips through you, or was it just coor­di­nat­ing?

David:  That was the beau­ty of it, it was just the coor­di­na­tion. We’ve since released our book­ing engine in which we’re start­ing to see con­ver­sions start­ing at 2% to 3% already to actu­al­ly book­ing through our offer­ings. But we were able to prove that even just the util­i­ty of try­ing to help you coor­di­nate already exists, and peo­ple want­ed that and need­ed that.

Roy:   You brought up the two mar­kets, the stu­dent mar­ket, and you said the bachelor/bachelorette wed­dings mar­ket. The wed­dings mar­ket is just an enor­mous mar­ket space. I would think that – I mean, I don’t know if you’re tar­get­ing that more than stu­dents, or you think that stu­dents is big­ger. Which one do you think real­ly has the poten­tial for you guys?

David:   Well, they’re very dif­fer­ent in terms of their behav­iors. If you were to think on the stu­dent mar­ket itself, you have close to 22 mil­lion stu­dents in the U.S. every year. We know that Gen Y takes an aver­age of 3.9, we’ll call that 4 trips per year. And that spring break moment alone, 38% of stu­dents go on some form of spring break. So from vol­ume itself, you have this very large moment where there are new stu­dents cycling in.

Now on the bach­e­lor and bach­e­lorette side, you have a lit­tle over 2 mil­lion wed­dings a year. We know from Brides.com that a key per­cent of brides them­selves are doing some form of bach­e­lorette. Also, because you typ­i­cal­ly are see­ing younger pro­fes­sion­als, their spend in trav­el will like­ly be a lot larg­er, a lot fur­ther out. What you see is a mix of prob­a­bly larg­er vol­ume on the stu­dent side, but larg­er spend on the bachelor/bachelorette side.

Roy:   Now, bachelor/bachelorette, isn’t that just nor­mal­ly local, like events? Like going to a bar or what­ev­er or a club?

David:   It varies. It varies from the local to, you know, we see a lot of trips come through which are let’s go to Vegas, let’s go to New Orleans, Mia­mi, those tend to be the hot spots that we see traf­fic go through. The beau­ty of a tool like Trave­fy is we can help those larg­er trav­el groups that want to go exot­ic to Las Vegas, coor­di­nate those hotels, soon to be able to coor­di­nate those flights and expens­es. Or even those that want that local trip. You know, I grew up in Jer­sey. Those that just want to take the road trip down to Atlantic City for the night still need to fig­ure out the dates, still need to help coor­di­nate all of that. So the util­i­ty is there for any part of that spec­trum.

Roy:   That’s great. Do you have any sta­tis­tics on the per­cent­age of bachelor/bachelorette par­ties that go out of town?

David:   That we don’t, and that’s a lot of what we’re try­ing to cull through is esti­mates around that. What we do know is that 80% are doing some­thing, and they’re on aver­age tak­ing four to five friends or bridal par­ty, how­ev­er they define it, with them.

Roy:   So that could be five peo­ple on the trip? That’s a nice trip.

David:   Exact­ly.

Roy:   So, I’ve got to believe, is there no one else doing this type of stuff out there? Are there any com­peti­tors? I mean, you’ve teamed up with obvi­ous­ly a major trav­el search engine. Expe­di­a’s huge. Isn’t any­one else doing this?

David:   Absolute­ly. I mean, part of the beau­ty of the trav­el space is it’s enor­mous and there are lots of dif­fer­ent needs out there. Even group itself, while that’s a niche with­in trav­el, is very broad. There’s a lot of great tools out there that already exist, and a lot of folks that are start­ing to enter that are try­ing to help solve the group prob­lem.

I think where we’re dif­fer­en­ti­at­ed from that com­pet­i­tive set is in our approach. I think that if I were to say ‘group trav­el’ right now, I could name you prob­a­bly ten great com­pa­nies, many of which I actu­al­ly per­son­al­ly use, but they’re going about it dif­fer­ent­ly. Some are focused on itin­er­aries. Some are focused on just metasearch options and vot­ing that way. We’re real­ly focused on the coor­di­na­tion issues at the fur­thest upstream, which is to help you find that date and loca­tion. Then let’s help you vote on that hotel and book it. Then let’s help you actu­al­ly man­age expens­es. We have, I’d say prob­a­bly a dozen par­tial com­peti­tors. We have very few direct com­peti­tors with the same ser­vice offer­ing, which is the fan­tas­tic thing about scal­able tech­nol­o­gy. You can real­ly find your niche in terms of who you sup­port.

Roy:   Who would you con­sid­er your great­est com­peti­tors, to one or two peo­ple?

David:   Well, I would con­sid­er our great­est com­peti­tor, prob­a­bly one of two com­pa­nies. One would be Trip­It, which to date is not a com­peti­tor at all. It’s a great com­ple­men­tary prod­uct for help­ing plan and share itin­er­aries. They have the abil­i­ty to poten­tial­ly move into the type of work and space we’re doing with an already built-in audi­ence. We think that we’re actu­al­ly able to inoc­u­late our­selves from that threat because of the social inte­gra­tion we have, which is a shared trav­el his­to­ry, the fact that you already have your friends invit­ed and what­not. Once we actu­al­ly get our­selves to a cer­tain scale, we have to have that same com­pet­i­tive advan­tage of some of those larg­er pre­vi­ous entrants.

The sec­ond one is a com­pa­ny called Trip­share, a sort of fan­tas­tic iPad-only prod­uct for help­ing you pin some flights and hotels and talk about them. It’s a great tool. Again, I think we dif­fer­en­ti­at­ed our­selves from them in the fact that we are open to any brows­er and any tablet or device so that we’re real­ly reach­ing that, what I would con­sid­er is prob­a­bly a broad­er audi­ence in that sense.

Roy:   Do you have a mobile app that you’ve cre­at­ed?

David:   No, we very pur­pose­ly have built our­selves on a respon­sive brows­er stack that’s work­able on any phone and it’s able to be viewed very styl­is­ti­cal­ly and won­der­ful­ly on a phone or a tablet. We real­ized that when we were doing test­ing, for instance, the first touch­point any­one has with Trave­fy is that they would receive a poll, a link in email say­ing you’re invit­ed to this trip, would you like to vote on your dates and loca­tions? We found that the last thing any­one want­ed to do is have to down­load a clunky appli­ca­tion to start respond­ing to this. What they can do on their phone is sim­ply click the link and they’re tak­en to a brows­er page that’s ful­ly worked and it’s ful­ly respon­sive.

Roy:   You talk about the social inte­gra­tion. What kind of inte­gra­tion have you done or are you going to do or might you do with obvi­ous­ly the major social sites, Twit­ter, Face­book, what­ev­er?

David:   So the way we’ve approached it is we all – and I would use myself as a use case, all of my friends in social net­work are real­ly parked in a lot of dif­fer­ent areas. I’ve got a lot of my con­tacts on Face­book. A lot of them are stored in my Gmail Google account. Some of them are stored in just, you know, I know this per­son­’s email.

What we want­ed to do is make sure when some­one starts plan­ning a trip, that they don’t actu­al­ly have to choose a path­way, like, I have to make this a Face­book event and invite Face­book friends, or I have to go to Google. What they can do is link all of those accounts and actu­al­ly invite whomev­er. When I go to start a trip, let’s say a fun July 4th week­end, I can link up my Face­book account and my Google con­tacts, and I can add John from Face­book and Jim­my from Gmail with­out me or them ever know­ing or see­ing the dif­fer­ence. It’s pulling all of that infor­ma­tion in. So that is the core of where we’re inte­grat­ed in that it’s a seam­less process, bring­ing in all of these net­works.

Beyond that, we also give peo­ple the tools that they’re able to share infor­ma­tion on their social net­works. We know that there’s a phe­nom­e­non, we call it the hum­ble brag, where peo­ple love to post on Face­book where they’ve trav­eled and what they’ve done. So at the end of the trip, we give that oppor­tu­ni­ty to actu­al­ly have Trave­fy put up there to say David’s off to Madrid, any ideas, or what­ev­er that post­ing folks would want it to be.

Roy:   When you say you can pull in, so in oth­er words you’re inte­grat­ed with Face­book?

David: We’re inte­grat­ed with Face­book. We’re inte­grat­ed with Google. You can also add in, if you have your own dif­fer­ent types of set up con­tacts, you can copy and paste emails and oth­er things and add that to your trip con­tact list.

Roy:   Are you doing any­thing with LinkedIn?

David:   Even­tu­al­ly. We have a much longer list of social areas that we want to inte­grate those con­tacts with, but we found through sur­veys and con­ver­sa­tions that we real­ly were cov­er­ing the broad­est swath of every­one with Face­book and Google con­tacts for this ini­tial roll­out.

Roy:   Right. You did your MVP with the col­leges and stuff. Where have you been get­ting your busi­ness from? I mean, when did you actu­al­ly launch the ser­vice offi­cial­ly?

David:   We put out that MVP towards the end of Jan­u­ary, and then we released our new­er ver­sion, called our beta out at DEMO Mobile in San Fran­cis­co in mid-April.

Roy:   So it’s rel­a­tive­ly – it’s like a month ago?

David:   Yes. It’s been a great month. We’ve seen close to a 35% rise in accounts since that release with no mar­ket­ing real­ly put behind it, just organ­ic growth. And again, we see that viral fac­tor. We’re poised to release our expense man­age­ment tool in short order, and that’s when we’re real­ly look­ing to real­ly push our­selves out the gate. So for us right now, it’s about num­ber one, that cus­tomer and user expe­ri­ence, and as we’re scal­ing up these new aspects, real­ly learn­ing to make sure that we knock it out of the park.

Roy:   Where have you been – how has the busi­ness been find­ing you now? Just word of mouth?

David:   Word of mouth. We’ve got­ten some good press. We have a very strong social media push in terms of con­stant Face­book post­ings and tweets we cre­ate. We love data. As you can tell, I love to rat­tle off num­bers. We’ve been doing some data ana­lyt­ics. We’ve got some great info­graph­ics out there. For us, it’s actu­al­ly been more about – we’re call­ing this our con­trolled data we’re in, which is real­ly just learn­ing the ways that folks are inter­act­ing with the site to make sure that we get that UX right before we real­ly pull that trig­ger, which we’re hop­ing to do in the next month or two. It’s open, any­one can come on and join a trip, but we’re not actu­al­ly push­ing yet.

Roy:   That sounds great. Have you been get­ting, have you seen, do you have any traf­fic sta­tis­tics yet or any­thing you can share?

David:   Well, I will tell you that we reached one of our very excit­ing mile­stones, which was we reached our first 1,000 base cus­tomer accounts, which is for us a very excit­ing thing. 1,000 peo­ple have come on to the site, start­ed plan­ning a trip, used it, toyed around. Which for us, again, as we’re in a con­trolled data and not push­ing, it was a good show and sign that we real­ly have some­thing that peo­ple want and need and can solve a real­ly big prob­lem.

Roy:   Well, espe­cial­ly con­sid­er­ing it’s bare­ly a month since you launched the ser­vice, that’s fan­tas­tic.

David:   Yeah, we’re very excit­ed, and we’re excit­ed for the future. We’re prod­uct guys and we love all the inno­va­tions we’re mak­ing. We love learn­ing from our users. So every day is an excit­ing chal­lenge.

Roy:   Where do you see your rev­enues com­ing from? What are your rev­enue mod­els?

David:   We pull rev­enue from three dis­tinct areas. Num­ber one, for any of that trav­el booked, we earn affil­i­ate com­mis­sions from our part­ners like Expe­dia. That can vary what that per­cent­age is, but for any trav­el booked, we earn that.

Our sec­ond is when we roll out this expense man­age­ment tool. What that tool will essen­tial­ly do is allow for the cap­ture of all expens­es, who owes what, who’s owed, et cetera, to real­ly help man­age that process. We also pro­vide the oppor­tu­ni­ty to do that expense set­tle­ment for you. So rather than at the end of the trip net­ting it out and me owing John $12, Sal­ly owes me $6 and I owe Bill $7, you can all just pay into a pool once or be paid out once, and what we do is we would charge a very small cash man­age­ment fee for that ser­vice.

Third, which is an area we nev­er real­ly touched on in the con­ver­sa­tion, is we actu­al­ly offer a B2B offer­ing of Trave­fy, which is a white label ver­sion of Trave­fy for trav­el agents and man­age­ment providers who love our tool as a way to actu­al­ly man­age cus­tomer rela­tion­ships that come in dis­joint­ed. So we earn a month­ly license fee for that.

Roy:   Of these three rev­enue sources, which one do you believe will be your most sig­nif­i­cant and why?

David:   I think at the end of the day the expense man­age­ment tool will like­ly be the most sig­nif­i­cant, because for that, num­ber one, inte­gra­tion with the book­ing and oth­er things allows the auto cap­ture of those expens­es. But also it has, on top of that, the addi­tion­al expens­es that you’ve incurred. That stream in many ways, because of that exam­ple, actu­al­ly requires all of our book­ing engine stuff to be there, so in many ways, they’re inter­re­lat­ed. But the actu­al scale of that stream is much high­er that we antic­i­pate that over time, that will be our more lucra­tive stream.

Roy:   That over time. So do you see the B2B ele­ment becom­ing any­thing sig­nif­i­cant?

David:   Oh, the B2B ele­ment has a huge, huge poten­tial, espe­cial­ly because, again, if you think about the way that we struc­ture our streams, what’s great about that is all of our expense man­age­ment tool and our book­ing engine are things earned on the back­end. You bring users and we have con­ver­sion fac­tors for what per­cent are book­ing, etcetera. Every­thing with the B2B is upfront because it’s a month­ly license fee. That’s a great bal­ance on our cash flows and a great ser­vice that these trav­el agents love.

Roy:   What’s stop­ping Expe­dia or any of these oth­er com­pa­nies from doing the same thing you’re doing?

David:   Well, I think a cou­ple things. Num­ber one, trav­el is an enor­mous mar­ket, as we know. While the size and scale of some­thing like a group trav­el plan­ner is very large, if you think about the scope and scale of these busi­ness­es, it’s not as large a change in their bot­tom line. I think you’ve seen a trend, while any of these guys could decide to come in and do this, you’ve seen a trend of let some­one else build, let’s have them test the mar­ket, and then we’ll come in and buy. Also for them, things like some­one build­ing a val­ue-added tool and lead-gen­er­a­tion is a key part of their rev­enue stream. So for them, this is actu­al­ly what a lot of their busi­ness comes from is this sort of push, so for them to actu­al­ly under­cut that type of inno­va­tion actu­al­ly push­es away a lot of their cus­tomers.

I’ll give you an exam­ple. Very dif­fer­ent scale, but Price­line and Kayak. Kayak is a metasearch engine. They earned their mon­ey off of lead gen­er­a­tion to the largest online trav­el agents. When Price­line bought Kayak last fall, in some of the ana­lyst reports, I believe they said that Expe­di­a’s rev­enues were com­ing from affil­i­ate push­es from Kayak. That’s why you had some­one like Price­line say, hey, I actu­al­ly val­ue you at a much high­er mul­ti­ple because you’re push­ing towards me, which is why I’ll buy you. But they nev­er actu­al­ly built their own. And that just seems to be the trend that you’re see­ing across the online trav­el space. Could it change? Absolute­ly. Again, we see these folks as part­ners, and they’ve been fan­tas­tic part­ners. We love the folks over at Expe­dia. We’ve had great inter­ac­tions with folks else­where. So we real­ly see them as part­ners.

Roy:   Where do you see the busi­ness in 12 months?

David:   In 12 months, it’s a very excit­ing ques­tion. In 12 months, we see our­selves real­ly scal­ing our user base and real­ly learn­ing from that. We’re on a cycle right now that all of our core fea­ture prod­uct devel­op­ment will be done by ear­ly fall, which means we’ll real­ly be push­ing that cus­tomer acqui­si­tion. We’ll at that point have learned a lot around our cus­tomer life­time val­ue, which means we can actu­al­ly put a lot more mon­ey back into help­ing sup­port these cus­tomers through rewards pro­grams and excit­ing oth­er things. But also learn­ing from the way they’re using.

So I think we’re going to see some very cool prod­uct inno­va­tions com­ing through based on the way that we see them trav­el­ing, see them using, and adapt­ing to that. A year from now, I’m excit­ed to see both that large user base that we antic­i­pate and are excit­ed about, but also what oth­er cool stuff we’re going to do.

Roy:   Where would you like to be in sub­scriber usage or cus­tomers, trips booked? Do you have any met­rics in that? Twelve months from now, would you like to say I’d like to see X amount of trips that have been booked or peo­ple have trav­eled or some­thing?

David:   Yeah, so we think of it more on an account and con­ver­sion basis. Where I see sort of my goals is I’d like to be at prob­a­bly around 200,000 active accounts with­in the year, and I’d like to see our con­ver­sions on book­ing be upwards of 5%, 6%, and on expense man­age­ment, clos­er to 10%.

Roy:     Do you have any rev­enue esti­mates?

David:   So again, it’s all based off of what those actu­al book­ings are. If you were to take – prob­a­bly some of your basic exam­ples would be if you were to look at, let’s say like an Orb­itz 10K. The aver­age hotel room goes for about $165 a night. I actu­al­ly don’t have the num­bers right in front of me, but you would put the con­ver­sion based off of that.

Roy:   So you’re think­ing the aver­age trip would be what? When a group books a trip, the aver­age spend­ing, what would you like to see that at?

David:   Again, we can think of it in dif­fer­ent ways. In terms of the actu­al book­ings through the site, you’re prob­a­bly think­ing around $500 as you’re talk­ing about any­where from two to three nights in a hotel room, poten­tial flights. When you’re talk­ing about expense man­age­ment, you’re prob­a­bly talk­ing upwards of $700, if not $1,000 for a lot of these larg­er trips because you’re cap­tur­ing all expens­es, includ­ing food, oth­er ser­vices, enter­tain­ment, etcetera.

Roy:   So with the expense man­age­ment, is that some­thing they’re going to do just man­u­al­ly inputting this stuff, or is it just for the expens­es incurred just through the book­ing?

David:   That’s the ques­tion ear­li­er on, do we have a mobile appli­ca­tion, and the answer for the prod­uct we have now is no, for the rea­sons we went into. We actu­al­ly will be releas­ing a very light­weight native appli­ca­tion for the pur­pos­es of cap­tur­ing those addi­tion­al expens­es. So any­thing that goes through Trave­fy will auto­mat­i­cal­ly go to your expense man­age­ment page. But you could also do things with the appli­ca­tion you’ll be receiv­ing like take a pho­to of the receipt when you’re out to din­ner, or email that receipt in, so every­thing can be cap­tured there. Or to your point, a very light­weight auto­mat­ic app to be released, just type in din­ner, Joe’s Restau­rant, $25. Here’s who used it.

Roy:   So that way it would be easy for every­body to keep track of every time some­body spends mon­ey, so at the end of the trip, you just push a but­ton and it says who owes what?

David:   Exact­ly.

Roy:   That would be great, because that’s a huge thing when peo­ple trav­el, try­ing to keep track of who spent what for who, and just enter­tain what­ev­er.

So at what point, you men­tioned that in the fall you’re going to have some core pro­gram­ming done. When do you think you’re real­ly going to hit your stride, real­ly ready to just get out there and start mar­ket­ing what you’re doing aggres­sive­ly?

David:   That exact time­line. So we’re in core prod­uct devel­op­ment prob­a­bly through the end of the sum­mer. The begin­ning of fall is real­ly the point when we’re going to take the great lessons from those con­trolled beta users, have that prod­uct out, and real­ly just be to what­ev­er per­cent­age we can put, 90%, 100%, what­ev­er it might be on, mar­ket­ing acqui­si­tion.

Roy:   At what point do you feel that your efforts will start real­ly pay­ing off? At what point will you say, wow, this is real­ly tak­ing off? Six months, a year, two years? When do you think that will occur?

David:   I think it’ll be about five, six months. I think that once we’re real­ly push­ing that out there come the ear­ly fall, we’ll get some great users on, we’ll get some great knowl­edge, and again, there’s that viral fac­tor in terms of invit­ing. What we’ll see is with the win­ter trav­el and then the spring break time because of where we’re going to be focus­ing some of our tar­get efforts, that’s real­ly going to be that core explo­sive moment. For us, if I had to put a real mark­er, I would put that around spring break 2014 as the moment where we already have a very good audi­ence cap­ture, but we can real­ly define our­selves as the nec­es­sary tool.

Roy:   It sounds like you’re real­ly focused on the col­lege mar­ket?

David:   Well, it’s an inter­est­ing ques­tion. We’re focused as our point of entry, but we rec­og­nize the util­i­ty every­where. In a space as crowd­ed as trav­el, again, we have a unique offer­ing, but trav­el itself is a crowd­ed mar­ket. We need to find the very good moment and points where we can cap­ture ini­tial users who can then, because of the viral fac­tor of the tool, spi­der out in terms of reach­ing oth­ers. And for that, stu­dents is real­ly a core place for us.

Roy:   Have you raised any fund­ing at this point?

David: Yes, we actu­al­ly, back in Jan­u­ary, we were very grate­ful to receive a grant from the state of Nebras­ka, a pro­to­typ­ing grant for the devel­op­ment of the expense tool to be released, and put against that the match­ing com­po­nent of the grant, we received a small angel fund.

Roy:   Can you say how much you were able to raise from all those things?

David:   Yes, togeth­er we raised around or just below $100,000.

Roy:   Have you been hir­ing employ­ees, or it’s just you, it’s you and your part­ner?

David:   There are four of us right now. There’s myself, my co-founder, and our CTO, Chris Davis. We have two oth­er good friends of ours who have been work­ing with us on devel­op­ment and design who upon future raise of a larg­er round will come on board full time.

Roy:   So in essence, at this point, nobody’s get­ting paid?

David:   My co-founder is get­ting paid. He left his job. He was a devel­op­er at Hudl, fan­tas­tic sports soft­ware com­pa­ny. He left them in March and has been on full time as a part of that ini­tial raise.

Roy:   When do you think you’re going to start gen­er­at­ing the mon­ey to hire the addi­tion­al peo­ple?

David:   We’re in the mix right now of rais­ing a larg­er seed round. We’re tar­get­ing $300,000 to $500,000. The mix of that close, which we’re hop­ing to hap­pen in the next month or so, and the addi­tion of rev­enues that we’ll start see­ing in the fall, we’re tar­get­ing num­ber one, the abil­i­ty to bring a team on board in the next few months. But in terms of a strong rev­enue gen­er­a­tion, we’re see­ing that, again, around the winter/spring time where we can real­ly move our­selves towards self-suf­fi­cien­cy.

Roy:   What do you see as – do you think you’ll still be in this busi­ness in five years, or do you think it’ll have been sold to Expe­dia or some­body like that?

David:    So in terms of our excite­ment and ded­i­ca­tion, we’re in it for that long haul, obvi­ous­ly. I think trends tend to say that once you have that vol­ume, you prob­a­bly will around that year 3–4 have those offers for join­ing some of the larg­er online trav­el agents and some great syn­er­gies. The way we think about this, and to be quite frank, is we’re not build­ing a com­pa­ny for the sake of sell­ing. We’re excit­ed about the prod­uct. We want to build it. For us, we don’t think of that as the ulti­mate goal. What we do think about is what are the best syn­er­gies that can help the com­pa­ny and its prod­ucts grow and devel­op? So those online trav­el agents hap­pen to be the best part­ners that if and when we get to that scale, that prob­a­bly is the smartest strate­gic move.

Roy:   Do you envi­sion, I mean, obvi­ous­ly the big mon­ey mak­er in trav­el is to actu­al­ly be whole­sal­ing the trips, putting the trips togeth­er. Do you envi­sion your­self get­ting into that end of the busi­ness?

David:   Absolute­ly. We’ve built our plat­form such that we can add in metasearch capa­bil­i­ties for all of the prod­ucts and offer­ings we have as well as direct rela­tion­ships with vaca­tion providers. So for us, we’re agnos­tic to the stock we’re serv­ing. We’re already hav­ing some great con­ver­sa­tions along those lines, and absolute­ly we’ll have a mix of OTAs stock of hotels and flights as well as some pro­pri­etary pack­ages, rela­tion­ships, etcetera.

Roy:   That sounds fan­tas­tic. What is your back­ground? How did you learn all this? How did you get to this point that you could start this busi­ness?

David:   Well, I had a pret­ty fun back­ground. After col­lege, I worked as a con­sul­tant for a few years. I worked at McK­in­sey & Com­pa­ny help­ing For­tune 500 com­pa­nies, non-prof­its, on large strate­gic ques­tions. Learned a lot about prob­lem solv­ing. It was a fan­tas­tic expe­ri­ence. After that, I actu­al­ly had an inter­est­ing ride. I came to busi­ness school at Colum­bia, but then I left after a semes­ter. I had a fan­tas­tic oppor­tu­ni­ty for an appoint­ment the Oba­ma Admin­is­tra­tion where I worked at Small Busi­ness Admin­is­tra­tion doing pol­i­cy work and real­ly work­ing with small busi­ness­es on their strate­gic ques­tions, their cap­i­tal issues, and a lot of those prob­lems. That was real­ly where I fell in love with star­tups. I fell in love with – as I men­tioned, I’ve always loved prob­lem-solv­ing, but real­ly loved the chal­lenges that small busi­ness­es were tack­ling. After that, I came back to school to fin­ish up my MBA. That was the moment where I knew I want­ed to work for a small busi­ness or a start­up, whether it was my own or whether it was some oth­er one exist­ing. I want­ed to help solve these excit­ing prob­lems.

As I men­tioned ear­li­er, the rea­son that Trave­fy came about was a per­son­al frus­tra­tion, which is where a lot of ideas come from. The bach­e­lor par­ty was a pain in the butt to plan, and real­ized that there had to be a bet­ter solu­tion. So that’s sort of where it came from. It’s excit­ing. You real­ly fall into things. But once you have that excit­ing pas­sion, you just run with it.

Roy:   Did you feel you start­ed this busi­ness based on your own expe­ri­ence or more based on mar­ket research that deter­mined there was a busi­ness oppor­tu­ni­ty here?

David:   I think both. They have to go hand-in-hand, because first off, I think you need to have a pas­sion for the prob­lem, but you need to prove that it exists beyond you. That’s real­ly how it start­ed. It start­ed with the notion that there’s got to be some­thing bet­ter, and then that trans­lat­ed into mar­ket research, cus­tomer dis­cov­ery, sur­veys, under­stand­ing are there com­peti­tors? Is this fea­si­ble? Do peo­ple want it? Then from there, that turned into, all right, let’s go for it.

Roy:   With your expe­ri­ence, you obvi­ous­ly have some phe­nom­e­nal expe­ri­ence at McK­in­sey, Colum­bia Busi­ness School, the Oba­ma Admin­is­tra­tion, out of all those dif­fer­ent expe­ri­ences, which one do you think gave you the great­est lev­el of knowl­edge or exper­tise to start this busi­ness? Which was the most influ­en­tial – not influ­en­tial, but just pro­vid­ed what you felt was the strongest expe­ri­ence to start this busi­ness?

David:   I would have to say with­out a doubt it was my time at the Small Busi­ness Admin­is­tra­tion. That real­ly goes to my fan­tas­tic boss and men­tor, who is the cur­rent admin­is­tra­tor, Karen Mills, who not only gave me the abil­i­ty to work with small busi­ness­es and learn about their needs, but also real­ly empow­ered me in terms of the abil­i­ty to take own­er­ship of projects and man­age­ment, which not only gave me the knowl­edge skill set, but the abil­i­ty to man­age a process and team, which has been vital in terms of run­ning a com­pa­ny and a start­up. So from both con­tent and devel­op­ment stand­points, I’d say I owe more than any­thing to the SBA time.

Roy:   That’s amaz­ing when you think about McK­in­sey teach­es peo­ple how to ana­lyze a busi­ness, just a phe­nom­e­nal com­pa­ny. Colum­bia Busi­ness School, one of the best busi­ness schools, and you felt your expe­ri­ence with the gov­ern­ment was the best one.

David:   Absolute­ly. You nev­er know where expe­ri­ences and knowl­edge are going to come from. Life is an excit­ing and inter­est­ing ride.

Roy:   It is pret­ty crazy. That’s why it’s inter­est­ing to hear where peo­ple get their great­est foun­da­tion to do some­thing. Many times, it is a sur­prise. It does­n’t mean that any of the oth­er ones were bad, just dif­fer­ent ele­ments and dif­fer­ent oppor­tu­ni­ties and dif­fer­ent envi­ron­ments can real­ly be influ­en­tial.

Is there any­thing you want­ed to men­tion that I did not ask you about that you think is sig­nif­i­cant or you want to just bring up?

David:   I think you’ve cov­ered a lot of the great ques­tions. The one thing I would say to any­one lis­ten­ing is we love feed­back and we thrive on feed­back. As we cov­ered through­out all of this, we’re still in the process of build­ing up some great new prod­uct fea­tures, think­ing about the mar­ket. Nev­er hes­i­tate to send us an email. Our con­tact infor­ma­tion is up on the web­site, and we real­ly and tru­ly read every piece of email and we real­ly and tru­ly take it to heart. I’d like to think of this con­ver­sa­tion we’re hav­ing, Roy, as just the begin­ning. I’d love to have future con­ver­sa­tions with any­one and every­one.

Roy:   How would they reach you? Just by going to Travefy.com?

David:   Yes. Go to Travefy.com. At the bot­tom, we have on our site map a con­tact us, which you can click. That’ll take you to email where you can reach us at contact@travefy.com.

Roy:   David, you’ve been fan­tas­tic. I real­ly appre­ci­ate you tak­ing the time and shar­ing all this valu­able infor­ma­tion about Trave­fy and giv­ing peo­ple a good per­spec­tive. I wish you guys only the best.

David:   Well, thank you so much. I appre­ci­ate the time. Have a great hol­i­day week­end.

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