SaaS Interviews with CEOs, Startups, Founders
1175 He'll Process $100m in Business Travel This Year
12 Oct 2018
Chapter 1: What inspired Avi to start TravelPerk?
Founded Travel Perks a couple years ago after an exit to Booking.com. They are focused on growing GMV gross volume through their platform. They're growing about 10x year over year. So about 12 months ago doing about 2.5 million. And again, business trips booked through their platform. Now that's up north of 25. They're taking between 5 and 10 cents per dollar through their platform.
So you can kind of back into revenue that way. They've got a team of 100 people, mostly engineering, 50 people in engineering and product, which is great. Burning cash, but makes sense, and they can do it because he's done a great job raising capital at around $30 million in a hot space, consumer-level product, and typically one dominated by enterprise solutions.
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. What's the business model? Is it pure play SaaS or, you know, pay per trip?
How do you monetize? Yes, we are the only free platform, the only free solution in business travel. We generate revenue from commissions that the suppliers pay to us, right? So it's like booking a common Expedia, but instead of selling leisure or vacations, we're selling business travel to companies. Okay, give me an example of that.
I mean, so like, what does an average trip look like that a consumer is booking with you? And what's the kickback you pay to the hotel you book the consumer at? Right. So the average trip will be simple. Let's say right now we have a lot of customers in Europe, U.S., Asia. So you'd have a salesperson flying from London to New York.
They'll be staying three, four nights in New York and they'll be flying British Airways, staying three nights in Manhattan and probably also renting a car sometimes to go out of New York. So we handle the whole package. And what incentive structure do you have?
I mean, if you're optimizing for like, let's say I'm making this up, the London right in in in Beverly, you know, in West Hollywood is willing to pay you more kickback wise than some other competitor hotel, but it's more expensive. What incentivizes you to keep prices low for consumers or these business travelers when your kickbacks are higher with other folks?
Yeah, we actually are partners of the biggest brands you can imagine in consumer travels. We are partners with Booking.com and Expedia and the likes. We're getting the rates from them. We don't negotiate directly with hotels. We get the supply from them. Oh, I see. We just sell at the same price. We're getting a kickback from the supplier. Roughly half of the commission we're getting.
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Chapter 2: How does TravelPerk generate revenue from business travel?
Are you taking like a thousand things and it's for their inside sales team typically? Yeah, we count by number of trips, right? Because you would have like one person flying a lot and one, you know, not flying a lot at all. So yeah, and then negotiate down, we'd get them a discount on the premium. So they got, I think like 20% discount on the premium. Okay.
But I'm just curious, like what volume was that kind of deal at? Thousands of trips or? 100K, I think it's 100K a year. Okay. Different to AOL. Got it. So 100K a year. So I can take 100K divided by 10 to basically say it's about 10,000 trips. Right. Something like that. Well, but there's obviously a little discount built in. Yeah. What's your team?
So, so actually before I get more into where you are today, so give me more of the backstory here. So when did you launch this thing?
Chapter 3: What does an average business trip booked through TravelPerk look like?
Yeah. So I sold, as you kind of mentioned in the intro, I sold my first startup to booking.com back in 2014. We need software for hotel management. So I've been in trouble on the business side of trouble for a while now. Was that a meaningful, I'll be sorry. Was that a meaningful financial exit for you? For me? Yeah. Okay. Okay.
I, the reason I ask is because I always find it's difficult to motivate somebody once they get rich. Yeah, I mean, everything is reality, right? But honestly, if your only motivation is making more money, then you're missing something out. So I just enjoy creating stuff. I write code. I'm a technical person, so I enjoy geeking out with my team. And then solving big problems.
I think it's awesome to solve big problems and seeing people happy about it. So yeah, it's not only about the money, right? So keep going there. So you exit that one to booking. Right. And then we stayed with Booking for a while. And then I left because I saw this opportunity to go to my co-founders. How many co-founders? We started off as three. So we have three co-founders. Yeah.
And then we saw this huge opportunity and we went crazy. How come nobody is paying attention? Everybody's looking at leisure travel because that's the fun part. You know, you're going on fun trips in Hawaii or who knows where in Barcelona, as an example. And that's the fun part. So everybody's focused there. Then you turn your look to business travel, which is the same size of leisure, right?
So there are roughly 50-50 of the total travel market globally. And then you have a 1.5 trillion problem that nobody's trying to solve. Or at least nobody's trying to solve the way we think that we solve, which is consumer-level product, great UX, free model, best inventory, biggest inventory in the world, et cetera. So nobody was paying attention. And then we decided, let's pay attention.
Let's just go for it. So we left Booking.com. And we started this business in 2015, just the beginning of three years ago. And just going back, I didn't realize this was public, but I believe it was actually public. I'm looking at my notes here. The Hotel Ninja is basically sold for what? It was about up to $20 million. I assume there was an earn out and things in that as well.
Yeah, I mean, the numbers were kind of made up by journalists. So we never publicly talked about the numbers. Okay, got it. Got it, got it, got it. Well, Priceline's public though, right? Yeah. I mean, so they, at some point, unless they rolled you up into some big thing, I mean, at some point they had to disclose that. They didn't disclose the full number. They didn't disclose it. Okay, good.
All right. So, okay, good. So back to what you're doing today. So you've raised a bunch of venture capital. Did you raise, have you raised capital in the past or is this the first time you're kind of going down the VC route?
um we kind of were bootstrapped before not because we didn't want to raise but just because nobody would invest like it was a was a very difficult sale hotel ninjas my favorite startup uh where we had 200 competitors doing exactly the same thing and hoteliers were the customers who didn't feel the pain points it was a very tough one uh so it's the first time we did raise a bit but this was like trial perk is the first time we actually raised a significant amount of money yeah and you raised how much today at 30
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Chapter 4: What are the challenges in the business travel market?
If you're a longtime listener of the show, make sure you email me beforehand. I'm doing something very special after the event. I wanna make sure you get an invite. There'll be a lot of people there you wanna meet, but I am doing and I'm being very careful about curating it. So send me an email real quick. Do it right now if you think you're gonna come.
That's email it to Nathan at Nathan Latka dot com and put SaaS stock in the title. Again, Nathan at Nathan Latka dot com. I hope to see you guys there. If you haven't got a ticket yet, you can get one at SaaS stock dot com. S-A-A-S-T-O-C-K dot com. All right. I'll see you guys there. So what are some of the internal metrics you track to determine if the business is doing well year over year?
Is it number of trips booked or transaction volume or kickback percent? What? Yeah, we're looking at GMV, gross mergers as volume, right? So it's a total volume in the system and then growth of that as kind of top line growth is how we look at it. And in that metric, we're doing pretty well. We're doing 10x year on year at the moment. GMV growth? Yeah. Okay.
And revenue growth is going hand in hand with that, right? So revenue growth is also 10x year on year. Got it. And can you give us a sense over the past 12 months what GMV was? Yeah, we're, um, we're getting close to, um, triple digits. So getting close to a hundred million a year. You think you'll break that this year? Yeah. He says with confidence. No, no, we're almost there. Good. Good. Good.
Happens. You never know. That's good. And just to be clear, to make sure I understand this correctly. So the past 12 months you've done call it between maybe like 10 and 20. So you've 10 X. So when I say 10 X, I mean, um, Year-on-year, every quarter. Look at quarter-based, and then year-on-year, same quarter last year. I see. Consistently in the last five quarters. Got it.
So if in Q2 here of 2018, you're going to call it $25 million, I can basically say go back one year, you're doing about $2.5 million. Yeah. That's great growth. What's driving most of the growth? It's a very competitive space. Yeah, actually, it's not. You'd be surprised. Really? Yeah. So leisure is competitive, but business isn't? Right.
We have a lot of competition, but it's not the same level, right? So we have like the old world, you have enterprise solutions. And if you think about, you know, the equivalent would be like Oracle, right? So we have Oracles of our worlds who are competing with us, but that's not almost, we're almost not playing the same game. So what's driving the growth?
A lot of inbounds, so most of the leads, most of the accounts we have, probably over 90% are coming inbound. Word of mouth, we have good content, we go to conferences, we talk about it. The thing is, people feel the pain. Nobody likes their business travel solution. I cannot find one person who says, I'm in love with my travel agent, unless she's married to him, right?
But that's the only time that actually, you know. Otherwise, it's a necessary evil of doing business. It's like handling with a human on the other side of the line called travel agents. So the biggest challenge we have is actually getting people to know about us and to know that there is a better way of doing business travel. It doesn't have to suck, right? It can actually be enjoyable.
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