The travel startup fallout is here. Will anyone survive?
How many companies have become massive by merely inspiring people to travel? As the once-crowded market for travel inspiration apps and sites thins out, the answer may actually be zero.
The biggest travel startup success stories solve a real pain point, focused on planning, booking, or information on-the-go. That's why the many inspiration sites launched in recent years have been doomed from the start: users don't need a separate social network for that. When I hear "Pinterest for travel," I wonder what was wrong with actual Pinterest for travel. There were plenty of "Facebook for (pets/grandmothers/neighbors)" at one time, too. Few are left.
Just look at the fate of Dopplr, a buzzy Web 2.0 travel company out of Finland which sold to Nokia in 2009. The company, once hailed as "the great white, beautiful hope of the UK startup scene, was put into "maintenance-only" mode shortly after its exit.
It shouldn't come as a surprise that the crowded travel startup space is in the midst of an ugly, but necessary, shakeout. Seed-funded startups focused on "travel inspiration" have done the math and realized, there's just not much of a business there. Their investors have, too.
I have to cringe a little when I see a travel inspiration site demo that blares a big honking number like "$303 BILLION- The size of the online travel booking market." They should include another slide: "0.00000000000000001% -- The bite we're likely to take out of it." Even if every traveler possible joins the top travel inspiration site, they're not likely to take action and drive as much affiliate revenue as they would on a truly functional tool like Orbitz, Kayak, Priceline, Expedia, TripAdvisor or Y Combinator darling, Hipmunk.
Here are some of the carcasses and slow deaths of this round:
appears to be is gone. The company graduated from Dreamit Ventures incubator over the summer with $300,000 in funding from High Peaks and Quotidian Ventures. A chunk of its team was from Sweden, and after the summer in New York, they went back home. Tripl put up a splash page that said "After an amazing summer, Tripl is taking a well deserved rest. We hope to be back soon to let you discover the world through travel," but as of today even that's gone. I'm told a re-launch doesn't look likely, but founder Peter Sullivan would not comment on future plans. [Update: Sullivan notified the Dreamit community today that the site was calling it quits after it failed to raise more capital and an acqui-hire proved too complicated because of the company's Euro/US structure.]
Travel inspiration site Wanderfly announced its sale to TripAdvisor in October with a 62-word press release. Why so brief? Because TripAdvisor didn't buy the company for its product. A month after the deal and site is still there, but this was an acqui-hire. The seven-person company had raised $1.4 million from angel investors.
Social travel planning app Gtrot pivoted away from travel inspiration in March to focus on a dying category, local deals, possibly inspired by investor Lightbank's experience with Groupon. But Gtrot has now abandoned that ill-advised idea, too. As of last week, Gtrot.com redirects to Rang.com, short for Boomerang. And with that, the company has moved into another, equally as doomed category: social gifting.
Which leaves Trippy and Gogobot.
Trippy is also experiencing some turmoil, but CEO and founder J.R. Johnson says the company's outlook is positive. As reported by Tnooz, the company laid off a few senior level people. Johnson says the company is undergoing a "refresh" and is beefing up its product offering. He was scarce on details, but I suspect they have something to do with a more direct road to monetization than ads and affiliate fees. "We are committed to taking the time it takes to build a lasting brand in the travel space," he says, noting that TripAdvisor got its start in '99, and his prior startup, Virtualtourist, took eight years before it exited to Expedia. Trippy, backed by $1.7 million from Sequoia Capital, SV Angel, Brian Lee, Rob Solomon and True Ventures, has a better shot at raising more capital given its investors and Johnson's track record in the industry.
And then there's Gogobot. The company's CEO, Travis Katz, is not shy about taking shots at the competition. He touts Gogobot's 687,000 monthly active Facebook app users compared with Trippy's 4000, according to AppData. After Wanderfly's sale to TripAdvisor, he weighed in to say that TripAdvisor, a billion dollar company, was merely "looking for a quick fix to building its user base in social." He also said TripAdvisor, which has 53 million monthly active users on Facebook, is "getting faster at copying" GogoBot's innovations. The boldest yet may have been at PhocusWright's travel conference earlier this month, when Katz said, according to Skift, that Gogobot had invented and conquered social travel. [Update: Katz writes to say that Skift's post was not a direct quote, but a "crack at an attention-grabbing headline."]
One Gogobot "innovation" that TripAdvisor and its peers have not copied is its spammy
user acquisition engagement strategies. Similar to much-criticized BranchOut, the company uses Facebook wall blasts emails and notifications to acquire engage users. When Chris Dixon called Gogobot an "evil spamming machine" for sending notifications to Facebook friends, Katz quickly defended the practice, tweeting "Gogobot didn't 'spam' everyone you know on FB. You have 70 friends on the site and they got an email when you joined." [Update: Katz clarifies that Gogobot allows opt-outs for its email notifications and that Wall posts are not automatic.]
Kudos to Katz at least owning the aggressive tactic. Maybe he's taking a page from the way Kayak co-founder Steve Hafner ruffled the feathers of the first generation of online travel agents.
With 2.5 million registered users, Gogobot appears to be winning the user landgrab, no matter how annoying its acquisition tactics are. And with $19 million in the bank, it's by far the best-funded of the group.
This is all bad news for Wander, the hot travel inspiration startup that came out of TechStars NYC this year. It hasn't even launched out of a super small private beta run and already its category is withering in a world that's increasingly hostile to glossy, money-losing social media startups. Wander's founders would do well to stretch out the $1.2 million they raised from NextView Ventures, SoftTech VC, SV Angel, Google Ventures, Collaborative Fund, Red Swan and TechStars for as long as they can.
[Image courtesy Wikimedia]