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Editor’s Note: In our Skift Startup Stories series, we document travel startup issues, solutions, and lessons from a variety of angles, hoping to shed light on what separates the winners from the losers. You can read all of the stories in the series here.
Travis Katz, founder and CEO of trip-planning and local discovery site Gogobot, knows something about platforms as he did a stint as general manager, international, of MySpace in Europe in 2006.
You remember MySpace (RIP), right? It was the social networking rage before Facebook, until it wasn’t.
But Katz took a lot from his MySpace experience, which found him traveling around Europe for work and fun at a frenetic pace.
That helped Katz come up with the idea for Gogobot, which was founded in 2010 and has raised nearly $40 million in funding.
“So most people will go and travel once or twice a year and I was traveling like 30 times a year, and so I started to have this interesting insight on travel, which was that booking travel, I found, was pretty efficient and pretty easy,” Katz says. “I didn’t have any problems booking a flight or a hotel, but trying to figure out where I wanted to go, where I wanted to stay was actually really, really, really time-consuming.”
From his MySpace and Gogobot experiences, Katz has formulated plenty of startup lessons about platform reliance, community-building, mobile, fundraising and more.
Skift discussed these issues with Katz and the following are some of the highlights:
Don’t Become Reliant on Third-Party Platforms
“We started from day one at Gogobot looking to leverage the strength of Facebook while not becoming wholly reliant upon it,” Katz says. “Our goal was always to help you get better recommendations about where to stay or what to do in a destination, and we started by leveraging social signals. We started off letting you post questions to your friends on Facebook with the idea that your friends could answer on Gogobot and we could capture their answers as structured data that could also help other travelers.”
“We figured out pretty quickly that this wouldn’t work: It was too much friction for the average user and they tended to just answer in comments on Facebook rather than click through. We did, however, leverage data from the open graph such as friends’ check-ins to help surface places that were popular in your network, which worked much better. Fortunately, we had the foresight to know there were risks in becoming overly dependent on a single platform, and took a few steps early on to insulate ourselves.”
Others in the travel industry, such as TripAdvisor, certainly leverage Facebook but aren’t dependent on the platform. On the other hand, in the gaming sector Zynga became overly reliant on Facebook and is still facing big problems as its user base declines.
Building A Community is Easier Said Than Done
Katz says he and another Gogobot team member learned the “tricks of the trade” when it comes to community-building at MySpace.
After launching MySpace in various European countries, Katz recalls he’d inevitably get a call from a representative of the largest media company in that country demanding a 50 percent joint venture with MySpace with the threat that MySpace would be destroyed unless it agreed.
Katz said he’d tell the would-be partner that building a community wasn’t as easy as it appeared.
He thinks MySpace was a great laboratory for building community engagement, and Katz took some of those lessons over to Gogobot.
“So a lot of it’s about understanding the psychology and knowing what resonates with people and then just being able to measure every single thing that you do and say, “OK, let’s try this’ and then we’ll measure and determine whether it moved the needle or not,” Katz says. “You have to sort of look at each feature as an experiment that you can use to better the experience and overall better your growth metrics.”
“A lot of it comes down to how do you create the right feedback loops for people so they can feel like what they’re doing was helpful and useful. We added a lot of gamification to the process with reviews, leader boards, badges and different things and really thought about how can we make this more fun, how do we make it more engaging and how do we make it more personally meaningful. We really focused a lot on that community of creators as the engine of what grows Gogobot.”
Competing Against the Big Guys
Katz believes imitating a competitor isn’t necessarily a bad thing if the startup puts its own twist on things.
“There’s nothing wrong with following,” Katz says. “If you see something that you think is really working you can say, ‘Is there a way that we can adapt that?’ But you should definitely measure it and figure out does it actually work or not. If it’s not moving your numbers, either you’re doing it wrong or it’s the wrong thing to be focusing on.”
Gogobot, which uses metasearch among its revenue streams, has nearly $40 million in funding and competes against rivals with much greater resources.
“You’re never going to be able to outspend your rivals,” Katz says. “So you have to focus on what are the things that you can do that your rivals either can’t do very easily because they don’t have the skills in-house or they’re focused on other things. Or perhaps they’re unlikely to do it because, for them, the opportunity looks too small and so they’re not going to resource it appropriately.”
Leisure Travelers Only Vacation A Couple of Times Annually
Tons of travel startups have failed because they didn’t realize that travel isn’t an everyday thing.
The challenge for travel companies is to create engagement with their apps so they don’t have to constantly spend money reacquiring customers especially when people may only take one or two vacations per year, Katz says.
“When we first launched our mobile app, after about six months we were looking at the data and realized about 80 percent of the searches people were doing were current-location searches and that people were using it not just for their once a year trip but also to decide where should they go for dinner tonight. Where should I go this weekend? I want to find a hiking trail, and so people were really engaging with the content on a pretty regular basis.”
When Gogobot revised its mobile app several months ago the company thus focused on “helping you find places to go, where to stay, where to eat, where to play, whether you’re on a big trip or you’re going away for the weekend or you’re in town for the weekend,” Katz says.
In several cities, Gogobot also debuted a GoGo This Week feature, which identifies recommendations of things to do on your business trip or home city based on your interests.
Katz says the focus on current-location searches and things to do has triggered a “five-fold increase in frequency of use of people using the app.”
Make Sure the Startup Is Well-Capitalized
Katz concedes that fundraising isn’t the most fun part of the job of heading a travel startup.
“As a CEO of a company I think your number one job is to make sure your company is properly capitalized because if it’s not, if you don’t have money to pay people’s salaries, your team is not going to get very far,” Katz says. “So it is something that you have to really focus on and focus on early. I think you have to be able to tell a story that is compelling for investors and if they think your story is compelling and your team is compelling then there’s certainly a lot of money out there.”
Travel isn’t for every investor, though.
“Travel is a challenging sector to build a business in and the investors know that,” Katz says. “The reason it’s so challenging is that it’s a very high-ticket price, low frequency event. Most people are only booking once or twice a year and so building a brand in a low-frequency environment is hard. We met with some investors early on who said, ‘We just don’t really like the travel space. We don’t really get how it works.’ So you need to find the ones who understand it, who understand where the opportunities are.”
Katz says all of Gogobot’s board members, including Roger Lee of Battery Ventures, Satish Dharmaraj of Redpoint Ventures and HomeAway CEO Brian Sharples, are current or former entrepreneurs.
So it is not just about shopping for a venture capital firm or strategic partner.
“You want to make sure you find both a firm that you like but also an individual partner,” Katz says. “That partner has to really believe in your vision because they’ve got to sell it to their partnership.”