future of travel, big data and startups

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® FUTURE OF TRAVEL, BIG DATA AND STARTUPS Hussein Kanji September 16, 2015

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Page 1: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

®

FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Hussein KanjiSeptember 16, 2015

Page 2: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Rapid growth of travel startups1,000+ startups founded since 2005

$7+ billion raised – half of it in 2014

alone New layer of intermediaries being

built

1HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 3: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Why?Huge industry: $7.5 trillion market growing faster than global GDP at 5.4% a year, w ith 1 in 11 jobs

Consumers are going online – global online bookings are growing twice as fast as overall market

30% of this is coming from emerging markets (China and India) and 1,800%+ growth in mobile alone

2HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 4: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Incumbents New leaders Lots of others

3HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 5: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

For every good idea, there are lots of very similar ideas

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Page 6: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

As a result, funding isn’t distributed evenly

Uber – 22%

Didi Dache – 22%

Airbnb – 7%

Trivago – 6%

HomeAway – 4%

Others – 51%

Qunar – 3%

Source: PhocusWright

5HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 7: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Not every startup succeedsOnly 10% of travel startups have been

acquired 20% or more have been shutdown

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Page 8: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

This means venture funds lose money. What does failure teach us about stats?

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Page 9: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Average venture fund (and startup) performance measures nothing Return multiples, fund sizes

<$100M1.68

Total value to paid in capital, small funds

1.75

Total value to paid in capital, large funds

1.78

North American angel returns

1.8

Return multiples, $250-500m funds

1.84

Return multiples, $100-250m funds

1.85

All VC-backed startups, Horsley-Keogh

1.9

All VC-backed startups, Venture Economics

1.97

Unicorn valuations

2.13

8HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 10: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Truth is, averages lieThe average salary for University of North Carolina geography graduates in the 1980s was over $100k

Michael Jordan, the highest paid athlete of all time, graduated from UNC in the 1980s

9HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 11: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Statisticians know how to deal with thisBut why rely on stats when you can rely on technology?

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Page 12: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

The market works around A/B testing, but this is a crude way of doing thingsA/B testing optimizes for the average

consumer The market is shifting away from

average and topersonalization, as computation, in-memory and cloud technologies improve

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Page 13: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Where tech can improve on averages

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Page 14: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

The future is hyper-personalization – using big data across every pointTravel industry is ripe for this – gains can be tremendous

But requires a unique combination: data science and knowledge about what drives travel

13HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 15: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Not unsurprisingly, the pioneers are the technology companies doing travelThe smartest firms have the smartest data scientists on their payroll

Are leveraging new software tools being made

available Airbnb and Booking.com are some of the

pioneers

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Page 16: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Airbnb need to personalize not just by users, but around hosts who would accept bookings

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Page 17: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Live planner example

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Page 18: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

The best companies right now are full-stackThey own the consumer experience

They are early adopters of technology, and are even building their own software packages (e.g. Aerosolve for machine learning)

But as the technology matures, will become more mainstream

17HOXTON | CONFIDENTIAL AND PROPRIETARY

Page 19: FUTURE OF TRAVEL, BIG DATA AND STARTUPS

Why aren’t more firms doing it?“ Big data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it” – Dan Ariely, Duke University

18HOXTON | CONFIDENTIAL AND PROPRIETARY