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The once lavishly funded tours startup Zozi says it is still healthy, though it had to lay off many employees. The restructuring will have Zozi de-emphasizing its consumer product to "double down" on its B2B reservation service unless another player swoops in for its assets.

Zozi, a decade-old tours and activities company based in San Francisco, parted ways with founder and CEO T.J. Sassani in January over what the company characterizes as “strategic differences,” Skift has learned.

The acting CEO is Elon Boms, a board member and investor who is based in the northeast U.S.

Zozi this month laid off a large percentage of its employees, as was first reported by TechCrunch. The company offers a backend reservation management and payments platform for what it describes as “thousands” of tour operators, plus a consumer-facing marketplace of experiences, such as skydiving workshops and cat yoga sessions.

Zozi is one of the most lavishly funded companies in the ranks of tours and activities startups, having raised at least $44 million, including a $30 million Series C in 2015 that was led by Pritzker Vlock Ventures, with investor Richard Branson of Virgin Group participating.

Zozi tells Skift it closed on more funding in January. But the amount and investors were not revealed.

It wouldn’t be far-fetched to believe that some sort of transaction, given the circumstances, may be in the offing.

Interest seems mixed. An executive at another company said the company was evaluating Zozi’s assets for a possible transaction, speaking anonymously. But an executive at a different player said his or her company had not requested to look at Zozi’s books. Nor did this company know the identity of Zozi’s new acting CEO when we asked.

Boms did not respond to a question about whether he would relocate to Zozi’s San Francisco headquarters to manage affairs. The company did say, through a spokesperson, that the acting CEO role is temporary, and “we’re actively evaluating candidates for a full-time CEO based in San Francisco.”

Boms did send this statement:

“As our acting CEO, I’ve just completed a restructure to double down and focus on our SaaS (Software as a Service) product, which grew our revenue nearly 3x last year, and will comfortably 2x this year. March was another record-breaking sales month for Zozi …”
Boms added: “Our business is in the strongest position ever driven by healthy core metrics….

“We’ve re-tooled for the next phase of Zozi and are enthusiastically charging ahead, and we sincerely appreciate everyone who has contributed to our mission to date.”

The company laid off more than half of it staff, according to two former employees, who spoke anonymously. But a company spokesperson said those claims were “inaccurate” and that “the restructure impacted 38% of the team.”

It isn’t apparent when — or if — a new CEO will be appointed.

A company spokesperson said Thursday it had parted with founding CEO Sassani “due to strategic differences.” Sassani did not respond to requests for comment.

A year ago he told Skift that, while the company had “put on autopilot” its consumer-facing marketplace (which was its original offering) to build out the company’s Advance reservations platform, he intended to put “a lot more attention back on the consumer piece” in 2016.

The need for a restructuring was a contrast from last summer when Sassani said that Zozi was “the most stable company on the market.”

Zozi had seemed to have the cash on hand to make a claim that it had made a $6 million bid for Zerve, an activities platform.

Zerve announced on June 30 that it would be shutting down. However, it wasn’t clear what form that $6 million bid would take and whether there was less than met the eye in that regard.

Zerve didn’t accept the offer and closed. A rival booking software company, FareHarbor, claims it on-boarded “up to 90 percent” of Zerve’s clients to its system.

Zozi’s decision to focus on its SaaS business, namely its backend online booking software, makes sense. Another vendor that has transitioned some clients from Zozi to its own software platform over the years says that, when it looked at the transaction records of the tour operator, it showed that Zozi’s software typically processed customers sourced from other consumer marketplaces, such as TripAdvisor-owned Viator or GetYourGuide, and “hardly any” reservations from

On Thursday a company spokesperson said, “While we’re not halting our consumer business, we scaled it back to double down on our SaaS business.”

The company may be basing that decision on the rising cost of acquiring customers online. Zozi did its share of using digital marketing to promote its products. But it is getting tough to build a consumer brand through search marketing and so-called growth hacking today.

In June 2015, Sassani said its consumer site had “a few thousand” activities available but that by 2016 it would have “tens of thousands.”

An unscientific check Thursday of the site suggests that Zozi fell far short of that inventory goal for bookable activities. Of those listed, fewer than 75 had more than 100 TripAdvisor reviews – suggesting many of the other operators may not be serious revenue generators.

A couple of years ago, Zozi is said to have done a transaction with WebReserv, a reservation platform. The potential value of the deal wasn’t maximized, according to an executive at a competitor vendor. Zozi tried to force the clients of the WebReserv system to migrate to Zozi, but it lost many instead, claims the competitor. A similar situation happened with another apparent acquisition of GISO (Get In Sell Out).

One of Zozi’s larger rivals, Viator, was acquired by TripAdvisor for $200 million in 2014.

Zozi did not say if it was open to being acquired — but signs point to that outcome. It also isn’t clear what value Zozi would offer to a potential buyer.

Possible acquirers include TripAdvisor, the top consumer-facing digital player in tours-and-activities. In 2016, TripAdvisor increased its number of bookable activities by 70 percent to more than 55,000. But it hasn’t done much regarding backend tech to manage reservations and inventory.

Another possible acquirer would be Airbnb, which has not done much to offer business-to-business software services to tour operators, despite having launched a tours product, Trips, late last year. It isn’t obvious, though, that Airbnb would be interested in that sort of B2B business.

Other companies that offer B2B tours and activities tech systems for suppliers and marketplaces, in addition to the ones noted above, include Bookeo, BookingBoss, Checkfront, Coras, Palisis, Peek, Rezgo, Treksoft, Varitrip, and Xola.

The sector is considered hot. In the past month, Marriott got into activities, and Royal Caribbean got in deeper with tours.

But despite such interest and ample funding, the sector has seen many startups fall by the wayside. It’s also seen more infighting than innovation.

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Tags: activities, tours, tours and activities, zozi

Photo credit: Tours and activities companies like the one providing this skydiving experience are users of the California startup Zozi's booking software. World Skydiving Center

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