future of travel, big data and startups
TRANSCRIPT
®
FUTURE OF TRAVEL, BIG DATA AND STARTUPS
Hussein KanjiSeptember 16, 2015
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
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
Incumbents New leaders Lots of others
3HOXTON | CONFIDENTIAL AND PROPRIETARY
For every good idea, there are lots of very similar ideas
4HOXTON | CONFIDENTIAL AND PROPRIETARY
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
Not every startup succeedsOnly 10% of travel startups have been
acquired 20% or more have been shutdown
6HOXTON | CONFIDENTIAL AND PROPRIETARY
This means venture funds lose money. What does failure teach us about stats?
7HOXTON | CONFIDENTIAL AND PROPRIETARY
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
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
Statisticians know how to deal with thisBut why rely on stats when you can rely on technology?
10HOXTON | CONFIDENTIAL AND PROPRIETARY
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
11HOXTON | CONFIDENTIAL AND PROPRIETARY
Where tech can improve on averages
12HOXTON | CONFIDENTIAL AND PROPRIETARY
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
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
14HOXTON | CONFIDENTIAL AND PROPRIETARY
Airbnb need to personalize not just by users, but around hosts who would accept bookings
15HOXTON | CONFIDENTIAL AND PROPRIETARY
Live planner example
16HOXTON | CONFIDENTIAL AND PROPRIETARY
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
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