Online Travel Agency Kiwi Has a Plan to Fight the Giants

The largest online travel multinationals — Booking Holdings, Ctrip Group, Expedia Group, and TripAdvisor — are too powerful. They swallow all the marketing and financial oxygen, making it difficult for young startups to compete and thrive. Or so the conventional wisdom goes. A possible exception may prove the rule: Kiwi.com, a travel tech startup based in Brno in the Czech Republic. This online travel agency processed $925 million in gross bookings last year. For 2018, the company forecasts it will book revenue of about $200 million, based on its run rate thus far. It expects it "will way exceed" the value of plane tickets it sold last year, by at least 25 percent year-over-year. About a quarter of its sales will come from U.S.-based ticket buyers. Yet Kiwi has said it has raised only about $1.7 million, or €1.5 million, in funding. One reason: Venture firms shy away from funding startups that are going up directly against the large tech incumbents on product — or rely too heavily on the platform companies to acquire and keep customers. As we noted five years ago, well-funded travel startups struggle to prove that they can achieve scale and get into the position where their unit economics are so attractive that they spur even more growth without being dependent on, or easily challenged by, the largest online companies. We can name a couple of examples of companies that have gotten to a certain level of success but then face an uncertain path to scale globally. HotelTonight, an online travel agency, has been in limbo. In 2016, Hipmunk sold to SAP-owned Concur. Corporate travel tech giant acquired Hipmunk, a price-comparison search engine, in 2016. That’s a respectable outcome, but a disappointment for investors who poured in $55 million. Against that backdrop, how will Kiwi perform? A Flightless Bird? Unlike Hipmunk, Kiwi is an agency, servicing travelers. It has also grown faster. Last year, Deloitte named Kiwi the fastest-growing technology company in Central Europe, by revenue. Today the startup has around 2,100 workers. Kiwi's traffic saw global growth of 69 percent in the third quarter, year-on-year, according to analytics firm SimilarWeb, which aggregated desktop and mobile web traffic (not including Kiwi's apps) for all of the brand's domains. For example, in the month to August 18, Kiwi received 7.4 million unique visitors — 12 percent of which came from U.S. users. The growth hasn't been enough to attrac