Startup pitch: Travo raises $2.4M to simplify business travel
Travo is an LA-based travel startup that streamlines the reservation process for business travelers who do not use travel agencies to book their trips.
With data analytics, Travo tries to quickly find the best airfare, accommodation, and transportation choices and package its recommendations in “a perfectly-timed itinerary”.
The company has received a $ 2.4 million seed round of funding from investors including Great Oaks Ventures, Dennis Phelps, Dan Shin, Baroda Ventures, Valence Ventures, TYLT Lab, Seung Bak, and Rob Sweeney (managing director at Goldman Sachs).
In November, the company launched its app and platform in an invitation-only, beta format.
A Q&A with Tae Lee, founder:
Tell us how you founded the company, why and what made you decide to jump in and create the business.
For many small businesses I’ve been a part of, signing up with a travel agency or a managed travel service is very low on the priority list.
At the same time, I’ve always felt that the gap for trip planning assistance between managed corporate travel vs. DIY leisure focused OTAs is too great. Even though I had no experience in the travel industry, I knew there was a significant market being underserved.
I’ve had successes with startups bringing innovation in a wide-range of industries. I’ve previously grown companies from 20 to 250 employees as the chief operator and been part of three successful exits in digital media, ad tech, and consumer electronics. So why not travel?
After all, the trait I saw for what determines an entrepreneur to bring disruptive technology to market has never been industry experience. More than anything, every successful startup I’ve been part of had one common trait: speed. Move fast, fail fast, and when something works, as Jeff Weiner would say, “next play”.
Size of the team, names of founders, management roles and key personnel?
Travo is comprised of 10 employees. Every employee is in product and/or engineering with a background in big data, game theory, and algorithms.
We raised a $ 2.4 million funding round led by leading institutional and angel investors.
Estimation of market size?
Business Travel is approximately 1/3rd of travel – but we start with a much smaller segment of business travel. Our initial target market is focused on travel planners and travellers within a specific demographic we have yet to disclose.
Short term, it’s everyone trying to make travel planning fast and easy. There are a LOT of solutions out there and we’ll learn from their successes and failures.
Long-term, our competitors are corporate travel agencies who currently help business travellers plan and book travel.
Although our product won’t be able to completely replicate the services offered by travel agents, we believe many travellers prefer to have control over their trips as long as it’s fast and easy.
Revenue model and strategy for profitability?
We have partnerships with some of the best OTAs and directly with brands in the hotel space. As we do not book on our site, we’re happy to pass along highly qualified traffic to our partners for commissions.
What problem does the business solve?
Let’s say you’re going to an event in Paris that starts at 10AM on a Tuesday and ends 5PM on a Wednesday. Now think about the logistics for that trip.
- Do you know what day you need to leave to get there on time?
- Once you’re there, how are you going to get around?
- Where are you going to stay?
- After your meetings, based on traffic conditions and your transportation, when are you going to need to leave to get to the airport on time so you don’t miss your flight?
- How much is all this going to cost, and does it combine the right level of comfort, price, and timing that is in tune with a business trip?
With Travo, we can generate a scientifically calculated end-to-end itinerary in around a minute so you can feel confident in your trip planning.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
We tested many features and even platforms at different stages of developing the product. In the beginning we started too wide and too feature heavy.
In fact, our first version of the product (which was completed in February) had more features than our product does today.
However, I believe this is a death sentence for many startups. In the beginning, nobody knows who you are. Which means, if it takes you longer than a sentence to describe what your product does, people tune out and don’t know what you really do.
Throughout all the changes and pivots we’ve made, the biggest realization we came to was determining we WON’T do.
For example, we don’t do post-booking itineraries like TripIt or Worldmate does. We don’t do bookings on our site because that would lead to a need for a massive customer service team (which is not our core competency).
We don’t do corporate travel restrictions and backend financial integrations that companies such as Egencia and many others are doing. Rather, we are partnering with the best companies who do these things extremely well.
Why should people or companies use the business?
We make business travel planning simple, fast, and cost effective.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
We’re going to be razor focused on a particular demographic of users. This means marketing at events that they attend, being where they are on the web, and offering promotions that encourage change in user behavior.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
We’re not interested in turning TRAVO into a nice little business. I think the investors and I started this company to shoot for the moon in what is arguably the largest and the most competitive industry.
So, in three years we’ll either be out of business or we’ll be one of the most successful startups in travel.
I’m obviously betting on the latter but it won’t be easy. The biggest challenge with any travel startup is customer acquisition and how much your spending to acquire that customer.
The other challenge comes after you’ve successfully acquired a customer to try your product – how you’re going to change user behavior?
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
I think “wrong” is a strong word as there’s pretty much a solution to any travel need at this point. Companies in this space have been around for a long time and have innovated a great deal.
However, there are parts of the travel industry that I think would benefit from applying more focus.
For us, that is helping business travellers with the actual planning of the trip before they make selections to book.
Logistically, it’s pretty complex piecing together a unique trip based on preferences of the traveller while simultaneously taking into account price, location and time requirements.
What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style… and why?
One of the companies I have a ton of respect for in the trip planning space is Roadtrippers. They have a fantastic road trip planning tool that is easy to use and like Travo, looks at your trip from start to finish and recalculates based on choices you make.
Developing this product, we can certainly appreciate how complex things are to make a product like that run smoothly.
I’m not sure how big the road-trip market segment is in the US, but these guys do 3+ million unique users per month. That’s a whole lot of Roadtrippers!
Which company would be the best fit to buy your startup?
Great thing about the travel industry is there is no shortage of companies making investments in the travel space. I think software companies from Microsoft to pure-play travel companies like Priceline all can make acquisition in this space.
As for us, it’s not a topic we even think about. We’re more focused on turning Travo into the best solution for business travellers and building a profitable, fast growing business that can stand on its own.
Describe your startup in three words?
Business travel simplified
Business travel booking tools are facing more competition from upstart companies like NexTravel, Rocketrip and, to an extent, Expensify.
The 28 million small businesses in the U.S. and the countless unmanaged solo entrepreneurs out there are also looking for consumer-grade solutions to travel booking, like the ones being floated by Cinch Travel and 30 Seconds to Fly.
All of these startups have feature sets that somewhat compete with what Travo is promising.
But the market seems to be large enough to offer plenty of segments and players for all. Market research firm Phocuswright has estimated that more than 70% of all business travelers are unmanaged.
Travo certainly faces a lot of potential upside if it can effectively cut business deals with online travel agencies and global distribution systems — plus add direct links to travel suppliers like Lyft.
It’s to be praised for having sought ought good mentorship with advisory board members like Kathy Misunas, ex-CIO of American Airlines and ex-CEO of Sabre, and Flo Lugli, a consultant who was former EVP of marketing at Wyndham and a senior executive at Travelport.
User acquisition is always tough and, with the product still in beta-testing, it’s hard to judge what the word-of-mouth marketing will be. But we’re eager to see what Travo gets up to next.