Mixing startup and corporate cultures in travel
If travel startups' idea isn’t urgent (a problem needing to be solved quickly) and something consumers will pay for, maybe it’s time to move on and do something else.
Travel startups take note – if your idea isn’t urgent (a problem needing to be solved quickly), pervasive and something consumers will pay for, maybe it’s time to move on and do something else.
Pretty sound advice when you look at the startup failure rate and the many me-too’s along the way in travel.
The comment came from Jason Nash, head of global marketing and product incubation for Travelport– perhaps not a company traditionally known for its startup mentality but something it is trying to address with the recently launched Travelport Labs.
Why now? Well, the rise of the likes of Uber, Airbnb and those consumer to consumer like business had got traditional companies thinking about disruption and not being left behind.
The interest is also being fuelled, says Nash, by cloud computing, meaning anyone can be up and running quickly and the ready availability of capital.
Cue startup incubators and early stage funds springing up all over the place in the past couple of years.
In recent weeks alone the Institute of Travel Managers unveiled an Innovation Lab giving entrepreneurs the chance to pitch their idea at its forthcoming conference. Similarly, Carlson Wagonlit Travel announced a partnership with Silicon Valley accelerator Plug and Play.
Both these moves come on top of Amadeus Ventures which launched at the end of 2013 andTravelport Labs in the middle of last year.
According to Nash, disruption is “starting to bite really heavily” into existing companies.
“We’re seeing businesses that have come from nowhere and in a few short years become multi billion dollar companies. The time to go from startup to billion dollar company has been compressed down from 10 years to about 18 months with the right idea.”
Those last three words are crucial, there’s no room for me-too, it’s casting the net wide for startups which have the potential to disrupt and Travelport Labs wants to be involved from the beginning.
He was speaking as part of a Tnooz-led session at Travel Technology Europe looked at why traditional companies are getting involved now, the benefits for each party and the potential pitfalls.
Travelport Labs has already had to whittle about 130 startups down to just a handful, so any fear of passing up on the next Uber?
Nash says you have to be in the market to find the startups.
“It’s the classic innovator’s dilemma, recognise what will cannibalise your business, identify them or be cannibalised. That’s why we want the net to be as wide as possible so that if we see the next Uber we will have a pretty good idea if there is a good market fit.”
Advantages from the corporate point of view are having to change the mindset, mixing the startup and big company cultures and hopefully finding and being part of an idea and helping it grow into something.
And for startups, Nash says that the expertise in terms of technology and the travel industry, mentoring, as well as the exposure to customers is where the value lies.
Startups on the panel including Cabforce co-founder and chief executive Andreas Hansson felt not having access to an incubator had forced the company, which was acquired by CarTrawler a year ago, to be non exclusive but conceded that there was a time to be independent and a time to part of something bigger.
Meanwhile, Andy Owen Jones, co-founder and chief executive of bd4travel, who has been on both sides of the startup-corporate marriage, warned big companies had to be careful not to stifle startups.
He also drew on his experience to talk about the DNA of big companies, its impact on startups and the need to play for keeping the startup mentality alive, within a corporate and plan for the inevitability of startup founders leaving the business.
“You have to have an asset that is not only identified with a few people. You have to learn to operate in a different way and protect it for long enough so you can build and get the scale out of it. It can work and you can get some benefits out of it but it has to be robust enough to survive the loss of a few key guys.”
But it’s not just about keeping the mentality alive there’s also a gap to be bridged between the how fast a startup moves versus the traditionally slower moving larger company.
Owen Jones said one of the hardest things is synchronising timetables between a small and big company.
“They might love what you do, need to see it and then you hear nothing for six weeks and then, they urgently need it. That’s the culture thing of understanding how to work with startups and that’s where an incubator helps.”
Nash added that while the secret for small businesses is agility and being able to and turn ideas round to a prototype quickly, startups need to be wary of losing control by letting one or two customers drive their roadmap.
“It might be a lucrative piece of work but it may change the trajectory of your business.”
A final question was raised on whether startups should be wary of being too reliant on the bigger company with Owen Jones saying the idea is only 20%, it’s about how fast and how well it can be executed.
Hansson agreed, only adding that an open dialogue is key between the startup and established company.
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