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Friday September 25 2009

Running with the press. Travelstart newsworthy stories 21/30

We have had our fair share of press over the years. And most of it has been good. Its been about where the industry is going how consumer behaviour is changing, how we think Internet is going to affect the aviation industry, prices and awards we have won, new launches and other things.

There were also times when the press misquoted us to create some sensations. A Swedish journalist wanted to talk about how it is to be a foreigner setting up shop in South Africa. She wrote an article instead about the fact that Travelstart had received a SIDA loan of 50.000 €. And here I was living in paradise spending taxpayers cash. I used my blog to tell the truth and the story died.

A defining moment for our company with the press was in January of 2000 when we sold the company. We were still perhaps  6-7 people. We had hardly any sales, definitely no profits, no technology, no USP, no patents and hardly no clue. And here’s what happened.

We had been in talks with a German firm and we agreed to do a deal. We signed the papers just before Christmas 1999 and I told my staff. We celebrated over a Christmas party and all was well. Coming back to work after New Year I thought there might be an angle and perhaps we should tell the press.

I hired a PR firm to quietly leak the news to the largest financial newspaper in Sweden. They loved the story and while I was on a business trip to New York and Los Angeles, with the new owners, the newspaper called me. It was New York morning and I was having breakfast in my room at The Holiday Inn Times Square.  The journalist asked about the deal, the structure, the money involved etc. She was lovely to speak with and very engaging. I didn’t think much about it afterwards.

The next morning I landed for some meetings in Frankfurt. When I switched on the cell phone my voice mail said something like: “you have 25 new messages.” I normally had one or two if it was a hectic day. Most messages were from different journalists from all kind of papers and TV. I didn’t know how to deal with these matters so I deleted all the messages and thought they would call back. What I didn’t know was that the financial paper had put me on their first page, and we were all over the place in Sweden.

I spent most of the Frankfurt day in a whirlwind with jet lag, answering calls from newspapers asking me all kind of questions like how to become successful and other impossible questions. The traffic on our website jumped 20 times and business was good. I was overpowered by the whole thing and remember thinking that this is great, but we haven’t done anything different.

As I got back home in the evening the press waited for me to take pictures and ask more questions. The next day the second wave came.  Now we were in the tabloids sharing experiences in business and telling others how to make millions. It was bizarre. Even the local newspapers had got hold of the story and put us on first page plus they plastered my picture on the news bills all over town. One newspaper called and asked if I thought it was an advantage to be a Christian to become successful. I said no, and he had no story. Our bank that in those days thought we had leprosy send me flowers.

As I came back to our office staff came up to congratulate me. And I told them that nothing has changed we were still talking about the same deal we did 4 weeks earlier, only difference now was that the world knew about it. But to them it was suddenly real.

I spend a large part of the morning answering phone calls regarding everything from my role models to asking for donations to transport Jews out of Russia. There were some really absurd ones I can tell. SAS agent service previous arrogant behaviour was exchanged with royal treatment so my staff were happy.

In the afternoon I went to Stockholm for some meetings and a national TV appearance. I had a meeting with a person from the management team of American Express. He told me the shock I had caused in the team. Who was this guy, what was this company? How could they have missed this Internet thing? We laughed and he later joined us.

At 6 PM it was time for the TV interview and I was wasted from the last three days happenings. They interviewed me at Arlanda Airport just before flying back home. When asking what we were going to do with the money I said, “ Ill buy some ice-cream for my kids” referring to some years before when we never could afford to even buy our kids ice cream. That’s about the only thing I remember from the interview. By the time I got back home the interview was just going to go live on prime time news. I didn’t want to see it, and I still haven’t to this day. But everyone else in the country did. I just wanted to sleep.

Travelstarts 15 minutes of fame was really fun and I wouldn’t want to be without it. When the press starts to run everything changes. It opened up doors for Travelstart that are still very valuable. It also thought us valuable lessons, like there’s a new edition of the paper coming out tomorrow, meaning news today forgotten tomorrow. And it taught us that yes there are people that actually do believe what’s in the news. It also taught us that when people think you have money everything become exponentially more expensive, which is probably one of the reasons IKEA fosters a culture of stinginess.

PS:

Amex 10 years later is still suffering from not taking Internet seriously enough in the early days. The retrenchments and shut down of offices in Sweden has been like nothing else in the history of travel. Even though they are doing a lot of things right today, they are still trying to catch up.

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Wednesday September 23 2009

The karma of the office space. Travelstart office stories 20/30

Blog 20-30-1

One of my former colleagues once told me that he heard that you should be careful about moving offices because the company culture can easily be distorted. As I recall he was referring to the pre dot com bubble Swedish Internet juggernaut Spray. The start up darling who had everything going for them until they moved offices and then later collapsed. I don’t know whether this is true or not but being a bit fanatic when it comes to finding underlying truths and subtleties, I find these things fascinating.

Travelstart has its bit of DNA from the walls of our offices.

Blog 20-30-2

Our company started in a Kärn Kaffes old coffee roastery in Helsingborg, Sweden. The city used to be famous for it’s coffee roasteries. Coffee was the dot com of its days. This small town of less than 100.000 people had several prominent roasteries; Kärnkaffe, Tellus Kaffe, Brinks and most famous of all Zoegas. Mr Zoegas was a Christian, Italian chap who combined his two interests mission work and business. His passion took him around Africa where he discovered coffee beans, which was exactly what poured out of our walls when we started renovating our offices. We occupied the previous management floor, with 2 huge beautiful safe vaults and one walk in vault with a 45 cm thick door, were we stored our servers.

Blog 20-30-3

How we loved those offices. It was industrious, concrete walls, high ceilings large abundant spaces. Lots of room to socialize in bright open spaces. It was to this day my absolute favourite office. I think all our staff loved the space. I had my own room with space enough for tons of books and a meeting area. This was a dynamic room. The offices also had its own showers which I used a couple of times after running during lunch breaks. Customers and airlines that visited us, could not believe that they came to a travel company, they all thought we were into advertising or something artistic. I liked that! Space must be creative. Travel posters were banned.

Blog 20-30-4

After five or so years the lease was about to expire and the landlord got very greedy so we decided to move. The move sent the company “spiritually” to the dark ages. As much as we loved the vibe in the old office I hated it in the new one. And I think most of my colleagues can agree. We called the new space “the pit”. With the move the atmosphere evaporated and much of the drive and energy was gradually lost. In Sweden we recently moved into our third office in ten years. Lets hope it works.

In South Africa we have had a different journey. We rented a beautiful building in Gardens called Avalon.

Blog 20-30-5

It was excellent space for creativity but useless for processes. There was a dischord in ensemble and somehow we never got it right.

Blog 20-30-6

Blog 20-30-7

We were forced to move offices because we were growing and our old space was useless for customer service. We moved into offices in Woodstock. These offices were just right size wise. We had high hopes that this would be the right home for our South African business. But even though our South African, MD Mrs Leeanne Melton was project leading the move and the decoration of the place she said she was shocked once we moved in. And I agree. The company was simply not in its right element and didn’t like the place. There was this dischord all the time.

Blog 20-30-8

We didn’t have to suffer very long. Our landlord decided after one weeks occupancy to sectional title the buildings and gave us notice to get the hell out of there. We had just spent 70.000€ renovating and the outlook of us getting the money back were slim to none. We used lawyers and advisors but decided not to stay. So we started to look for new offices.

Blog 20-30-9

Another friend of mine offered us space in his building. We looked at it and loved it. Located on the 7th floor with bright open spaces in the middle of CBD. We said yes and after 2 months and another 50.000€ in renovation we moved in. 

Blog 20-30-10

From that day we went into profit in South Africa. From that day all the things that we battled with before was gone. Staff was suddenly more motivated, management suddenly had control, customers started to love us. It was like a new company all of a sudden. Gone was the start up chaos. The baby matured in a week. The dischord was gone and out came just beautiful harmony.

Blog 20-30-11

These are different experiences from office moves and it has made me a firm believer that a company is a being and it has it´s favourite spaces where karma can thrive.

Blog 20-30-12

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Wednesday September 23 2009

Setting up shop in South Africa. Travelstart up stories 19/20

When we originally planned to set up shop in South Africa we had a couple of different plans and budgets we were playing around with. After all we had no clue how it would work and how the uptake would be to our service. We also didn’t know where the market was going in Scandinavia and how well we were going to answer to market needs. In short who the hell knows anything about the future.

So we did what I believe is the right thing to do, plan for different scenarios but at the same time being open that it can be something completely different. The only thing we didn’t have was an escape plan. And I am happy for that now. Our original idea was a small South African shop with some 5 to 10 employees servicing the local market. Our South African business was also going to service other English speaking markets that we expected to grow.

We rented office space in an old factory building where we had the opportunity to grow if needed. Our launch was delayed 1,5 years due to technical delays and management issues. We lost momentum and landed in a tailspin of hesitancy. So we let out our office space to a small start up selling funeral policies to black people. They later flopped big time and never paid the rent. Meanwhile I rented a desk in an office hotel for start-ups called Bandwidth barn. The good thing with the Barn was the vibe and the young people. Suddenly I could go to work have meetings and build to do lists. Slowly the momentum came back. Building a company or project is simple; its about doing stuff, ticking off to do lists.

The first set of management team I hired wouldn’t work very well for the long run, but they did a great job setting things up so we could get going.

As we came closer to launch we needed a larger office than the 10 sqm five of us were crammed into. We got a beautiful old building called Avalon and had every single furniture item specially designed for us. We hired customer service agents, finance people and I got myself a PA for the first (and probably last) time in my life.

The launch was delayed another couple of months. We trained our customer service staff and slowly resentment from our team back in Sweden started to set in. But I was too busy to even bother about that now. We worked at warp speed to set everything up. I wanted this company to become perfect. We worked with marketing, we worked with our blogs, we worked the press we worked with the “feeling” and culture. I had great help in forming our brand strategy from two amazingly talented designers Anne Sophie Leens and Damian Stephens. It was a creative chaos and order at its best.

Then in July of 2006 we launched our beta site. Newspapers wrote about us. But on the booking front not much happened. A few bookings and a couple of calls. People running around the office, waiting for the flood. A couple of weeks into beta I got tired of waiting so I ordered that we went to alfa. Big launch. Boom. Bookings started to roll in. I was in heaven. It was a done deal. I thought

The next day, nothing. I couldn’t believe it. The next day again, nothing. The third nothing, the second week nothing. By the second week I thought there was something not right.  The staff just sat there doing nothing all day. Trying to look busy using MSN watching gossip news on the computers. One of our customer service people was looking at me as I was going home one evening saying, “ It will come”. I just thought about the end scenes in the movie “Bugsy”. Bugsy Siegel standing in the bar at the newly built Flamingo hotel, that he bet his life on, while the rain was pouring down and staff were trying to look occupied in an empty hotel.

Eventually we cracked the code and got our marketing calibrated for the South African market, but it took us a couple of months,

By the time bookings started to roll in we found that most of the staff actually wasn’t up for the task at all and had to be replaced. Our manager had personal problems at home and eventually had to leave so the whole day to day operation landed in my lap. I had not been a daily leader in my company since 2002. I was not good at it then much less now. So between my PA and me we were trying to figure out how to manage customer service, payments, staff, payrolls and all other practical stuff. Slowly but surely we found that our finance was in a mess and when addressing the recruitment firm who had sold us our financial manager we found that they refused to take her back. So finance landed in my lap as well. The positive was that bookings came in. On the negative side. Everything in operation had to be redone.

The budget for the venture exceeded with 200% and I was very worried. When planning for the project I never planned for failure so there was no abort button, which I’m glad for now. But I was worried for a while.

We eventually managed to turn everything around replacing every single soul, except two from customer service, that are with us still today, doing a great job.

We employ close to 40 people in South Africa today and of the different scenarios we planned we are not really doing any of the original ones. The scale and scope of things has become way bigger and we have just started…

 

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Wednesday September 23 2009

Selling the business. Another insider story in the world of etravel 18/30. Travelstart 10 year anniversary.

God works in mysterious ways and so does the world of flee markets that trade in selling and buying companies. Businesses are a commodity that’s really hard to put a price on. I read the other day that Nolan Bushnells, chairman of Tapcode, the founder of “pong”, was offered to buy Apple for 50.000 USD some 20 years ago. Yahoo declined to buy Google for 1 million USD only some 10 years ago. Ericsson was offered to buy Ericsson for close to nothing some 20 years ago. Even Phil Knight wanted to offload Nike several times in the early days when he was in a shitty mood. I have been no different.

I sold the company back in 2000 because I was offered too much money. My plan was to invest in a new project. But the shares I received, as payment got worthless after the buyers defaulted. So I repurchased the business. After the restructuring and getting the company in shape after three years I got fed up and wanted to sell again.

After short listing of possible candidates we decided to go with Norwegian company HQ Norden in Oslo. They produced the usual prospect hyping our company and the growth prospectus of the Scandinavian market. The prospect was sent to all possible and impossible companies. We got some crap offers and some really nice cash offers, but nothing we felt comfortable with. Time went and that’s not good when you want to sell. Its probably like sharing bedroom with a woman when you know you are going to divorce. Must be hellish. So it was for me but even more for our management team. They didn’t know what to do: build or “dress the bride”.

Just when we were about to pull out of the whole thing a serious buyer emerged. HQ had came up with this really brilliant idea of buying out a fairly large corporate travel company called VIA travel group that recently had done a somewhat poor IPO and was currently undervalued. They had a small OTA arm with two brands. So HQ pitched the idea to a small boutique firm called FSN capital. And it went something like this (but in Norwegian); Buy out all shares in VIA travel group. Delist from the stock exchange + buy Travelstart. Split out the OTA business from VIA. Make Travelstart the locomotive for the newly formed OTA business. Make a shitload from selling off the OTA entity and then have the corporate arm for free and sell it off or relist it. The FSN people liked it and went ahead but didn’t want anything to do with HQ. Long nose, you have no friends in the capital market.

FSN acquired VIA travel group for 500 mill nok and offered us some money for our shares. The offer sounded ok considering I was sitting in South Africa and was restless. We had not yet launched in ZA and the management team and me was not a happy couple any more.

The due diligence started and we are a quite transparent company with careful book keeping always with money set aside for emergencies. So the buyer found more positive things than negative. They wanted more and more documents. After six months of dealings our company was on its knees. This greedy little Norwegian firm had sucked every inch of life energy out of us. The final drop was when they asked me to start commuting between South Africa and Oslo/Sweden as part of the deal to run the show. I kicked them out. We lost a lot of positive momentum that took us a year to recover from. The sad part of the story is that my manager and me parted in a bad mood and it was all because of the bad blood that emerged during this extremely long due diligence period.

What happened next was that the manager for VIA´s OTA business, Martin Jörgensen, got fired by FSN. In fact they fired everyone. He then went straight to another investment firm; NORVESTOR and pitched them the exact same idea that HQ pitched to FSN: A Scandinavian OTA roll up.

They bought the idea, put Martin on the board who then tried to sell me the idea of being the locomotive in this roll up. But I had had it by this time and suggested they should do Seat24 and Swedish Travel Group, which they did. They are now called Etraveli. They recently acquired the little that was left of VIA´s OTA business for close to nothing.

So in retrospect:

  • HQ didn’t get a cent for their great idea
  • Martin Jörgensen got his revenge
  • Swedish Travel Group and Seat24 founders made exit
  • FSN were too greedy and lost
  • I kept my company and we keep doing what we do best
  • Norvestor will make a killing when they sell Etraveli.

Some win some loose

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Friday September 18 2009

Taking customer service too far. Travelstart-up stories 17/30

One of my former colleagues, Torbjörn Karlsson, was an ex politician who got tired of working the spin-doctors. He reprogrammed himself to work in travel. I had him as a pupil in one of my first classes, that I designed, in how to use the Internet as a travel consultant. This was a course the Swedish school system bought for something called The Travel Academy. Thorbjörn was a charmer and I was always a sucker for people persons.

So when opening Travelstart I asked Thorbjörn to join me. We had lots of fun. He was our spiritual support because he always made us crack up, while we were busy being busy. He never took anything really serious and had a very easy outlook on life. Thorbjörn had time to read the newspapers, I didn’t. So the mornings always started with him referring to all big and local scandals. During the height of dot COM he would always relate to the latest deals and they always made me sick. We could always talk about literature and music and he knew both very well.

Thorbjörn was a charmer, as I said, and there wasn’t a customer who didn’t like him. We were trying to become a real online travel agent in those days. As such I didn’t want any personal service but a very simple no flair correct but un-personal service.

But this is not how things came out. I happened to hire some very strong individuals who did things, which they thought, was right. And the gospel according to my colleague Thorbjörn was personal service. Therefore he always processed the fewest customers but by far the most dedicated Travelstart followers. We addressed him about this and said he had to direct customers to the website. But people didn’t care, they wanted to talk to him. And so it was.

I guess he liked the attention and care he could give people. But he is also a man of flesh and blood.

One of his customers was going on a trip and Thorbjörns vacation was coming up so he suggested he would accompany the … GIRL. He didn’t expect her to say yes, but she did. So off they went for a two week trip to the States. Talk about personal assistance!
After he came home we were all dying to hear what had happened between them. But I think he rather wanted to forget it.

Nowadays we handle close to 3000 people a day and we don’t do customer service at this depth but Thorbjörns spirit of customer service lives very much with us still.

Thorbjörn went back to politics and now service the whole Swedish community with his personal service and wits. He´s a great influence in the society and he makes local politics more human and fun.

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Thursday September 17 2009

A bug’s life. Travelstart stories 16/30. 10 years of relentless innovation

I happen to believe that the world is a much better place with online travel players such as Travelstart around. There are purists who believes the opposite, that we are just parasites. I agree to a certain degree but even a bug fulfils a higher purpose in nature. So lets look at a bug’s life.

First of all the online travel companies’ drives innovation. And to prove this case we should go back some + ten years to show. In the US before there was PC travel, 1travel, Travelocity and a whole bunch of others that I forgot the name of, there was nothing. In Scandinavia before there was Easy T, Mrjet,  Travelstart, there was … nothing. The airlines did nothing. The old school agencies did nothing (they still don’t). The online travel agencies invented what to sell, how to present it and how to market it (even though the latter came years later).  In many parts of the world the airlines still doesn’t do anything online and they are run by some gents sitting at country clubs sipping rum and coke while the customers are paying too much.

I also happen to believe that hundreds of global online travel CEO´s + teams outsmart a handful of airline directors who mostly deal with politics (except the occasional Ryan Air gladiators, of this world).

Most products that we come up with are soon copied by the airlines. In our markets Travelstart have always led the way when it comes to innovation. I have lots of examples how our company have innovated; we were the first to realize and use the power and future opportunity in meta search, the first to invest in social networks, the absolute first to offer ancillary products to name a few. Here’s an example of one of the least digital products that we came up with; in 2005 we launched a very simple product called “service pack”. We knew that most online customers just wanted a simple ticket but realized that some wanted some type of service. We came up with an add on product called “service pack” for those who wanted best of both worlds, high tech and high touch. This way we kept the low low fares for those that wanted just the ticket and gave an option to those who wanted a bit more. Brilliant I must say. It became an immediate big seller, and it grows every month as people realise the true value when paying a tiny 15€ to get access to all the customer service you would in the old world, with the online convenience. Our local competitors were quick to follow suite. The airlines still haven’t copied and probably still don’t get it.

Secondly the OTA´s are consumer champions. You might not think that it’s such a big deal. But airlines go bankrupt far, far more often than agencies. When airlines have problems, be it delays or cancelled flights or when they practice unfair marketing pricing it is always the agencies that cleans up the mess. Airlines are generally great for the top tier of their customer base, the gold, diamond, platinum, and plutonium cardholders. Generally they want the agencies to take care of the rest of the s&%t, which is 90 of the cabin.  You and me. Don’t get any ideas, you are a liability to the airline and they really don’t want to deal with you when you are a bargain hunter. There are airlines with different attitudes; the Southwest’s of this world and they are doing extremely well.


Agencies answers mails, phones, chats, issues tickets, fixes airline errors, schedule changes etc etc etc. And what we charge for this is next to nothing. Most of us make money selling ancillary services that you are free to choose.

Thirdly online travel agencies drive sales through innovation in distribution.

You will find online travel companies just about anywhere. Travelstart and other OTA´s championed advertising via Google, affiliate sales, search engine optimization, newsletter clubs, comparison-shopping and what have you. Still to this day airlines are battling with how to reach new customers.

Fourth Online travel companies drives transparency. It is fair to say that without us there would be very little competition and the world of aviation would fall to a Biff Tannen state of corruption and under the table deals to keep high fares up and competition to an absolute minimum.

OTA´s have championed all-inclusive fares and some airlines still do all they can to hide fees and taxes.

So to conclude this evenings post about Travelstart stories I am happy to conclude that we, and competitors, have made this world a better place, in the words of Michael Jackson. We have made more choices available to more people with better distribution, transparency with distinct customer advocacy. And considering that the aviation industry is an economic driver and one of the largest industries in the world, it’s not really such a bad thing.

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Thursday September 17 2009

Cash dry. A Travelstart story on survival. 15/30

When your cash flow dries up you have a problem.

The fall of 2001 was desperate times in the travel industry. In the aftermath of the dot COM crash we had lots of debts to pay off and we were doing the best we could. But clearing a debt of more than a million euro on a cash flow of less than 100.000€ a week is not easy, considering that you have to pay salaries, rents, marketing etc. After September 11 it became even harder. For a couple of weeks we had negative cash flow. Coming out of that shock things were starting to look a bit better. Then a SAS plane crashed at Linate in Milan. And for a while Swedes stopped to travel. It was the definitive blow to many travel companies in Sweden. We battled to survive, but had no intention to give up.

When you run an IATA accredited agency, like Travelstart, you are allowed to collect money on behalf of the airlines. You either pay the airlines cash once or twice a month or you pass on the customers’ credit card and collect your own fees separately. If you are a new agency or an agency with low liquidity you have to come up with some sort of collateral, typically a bank guarantee. Unless you are sleeping with the bank manager you have to back up the guarantee with some cash. I only sleep with my wife so we had to give cash as collateral. We had a couple of hundred thousand locked in doing no good to anyone. If we could free that cash I figured it would take us to Christmas. The only issue was that without the cash as collateral we could no longer issue tickets. Catch 22.

I negotiated with a consolidator to issue tickets on our behalf and give us a line of credit. It was a clear win win deal. I would get my money from the bank; he would issue my tickets and make money. We would survive. IATA agreed on keeping our licence dormant for a period of six months. The consolidator, the Swedish Travel Group and their founder Dan Ströborg and I went years back. In 1989 when I ran a large consolidator firm I helped him with a line of credit to get going and to expand. Now it was his turn to help me. But Dan is much a better businessman than I ever was. He wanted handsome payment and shares in the company to help me. I had just bought my shares back and it broke my heart to have to give them up again. We agreed on 5% for a credit line of 200.000€.

We were in business again and the customers didn’t knew the difference. But it would take me quite some time to get the ship in proper shape and I had the 6 months extended from IATA to one year.

For several months a Swedish Travel Group henchman would call me every Friday at 4 to cancel our credit arrangements. But it always ended the same way, we got more credits. At the peak of our intensive collaboration we owed the company up to 600.000 €.  The 5% was suddenly 10% and the fees for issuing tickets got exorbitant.

But God favours the brave and we grew. Late 2002 we paid off our last debts to them and got our IATA license reinstated. That was a happy day. It took me another year to come up with the money for my shares that now was worth quite a bit.

But all in all it was a great little collaboration. We saved the company. My suppliers made tons of money on tickets and selling back shares. This journey taught us many valuable lessons.

Today Travelstart has an AAA rating, which is the highest form of credit rating. It’s in fact better than 95% of the banks in Scandinavia.

Yeah these are stories that you normally don’t read in press releases.

 

Have a great evening.

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Tuesday September 15 2009

Whats in a name. 10 years of remarkable stories of Travelstart 14/30

Choosing a name for our business was tricky and it has almost taken us 10 years to get it right.

I was never good with names, not to remember them, not to come up with them. I had just come out of another start up called Mrjet.com. There we created this fictional character that we borrowed inspiration from 60´s hit series “Mr Jetson.”

Stephan Ekbergh 

I wanted something exact opposite to the fictional character. I wanted something human. Our first static webpage was called ekbergh.com, which was the only human thing I could come up with really fast. My rationale was. Ok so this is Internet I will put my own butt on the line to make this work, just like people did in the old days. And so it was for a couple of months but I never liked it. I was so busy with everything and never thought about the name until I started to do investor presentations.

I sat at the house of one of the wealthiest people in Sweden doing my power point thing. He said, “Interesting, so, what’s the name?” I stuttered “er… eh … Ekbergh for travellers… but, but we are changing that…” He politely threw me out.

Flygabilligr 

Back in the office I needed to come up with something real quick and browsed through our domain names. We decided to go for Flygabilligt.se, in English flycheap. This worked better. But the Swedish word made me sick I needed an English name.

The hosting company for our webPages and domains went bankrupt at the same time so the website was shut down. We couldn’t transfer the domains because there was no one to release them. I had to hunt down the lawyer handling the estate. And this was in the days when practically no one knew what a domain was. It took a couple of week to sort it out and it was nerve-racking.

One day a young student,  Alex Molvin, from Stockholm School of economics joined us. And it changed everything in the company. He could see where we needed help and his marketing and conceptualization skills was just amazing. The first thing he looked at was our name. After that he came up with a shortlist of 20 names all in five-letter one syllable type. We couldn’t decide on any until he found out that we had Travelstart registered. He thougt we should go for that. And we decided to do so until we came up with something better.

Travelstart-old 

On Sept 10 1999 a new website was launched Travelstart.net. We were finally on to something after a somewhat foggy start. The chequered logo was inspired by REM latest album Up! Terrible.

REM

Because we never owned the .com domain we were forced to start market our name with each countries own top domains, .SE, .NO, .CO.ZA etc. And in some countries this is better than using the .com domain.

We knew we needed the .com domain but it took us 9 years of negotiations. From 2010 all country specific domains will point to the .com domain and after 10 years we finally have a common structure on our domains and a great domain to build one of the top brands in the world of travel.


PS

The faces we have on our pages today is a reflection of the old idea that we still want to communicate something human and personal.

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Tuesday September 15 2009

Investing in technology. More indiscreet stuff from the story vault of Travelstart 13/30

Our company started out with a static html homepage that displayed great flight offers. We had no money and definitely no knowledge to build anything. There were no solutions on the market to license so my strategy was simple; just go for it and hope and pray that in time we could find a solution. This is exactly what happened. A small Stockholm based firm called Easy T emerged with a client served based solution that was hooked up with Amadeus XML API. I met their founder Michael De Jong a couple of times and came to an agreement where we could license the technology and pay off the once off fees, around 25.000€ over a period of time.

The day our first online booking came in I remember Lars shouting out in the office; “Who is working with THE booking?”. We were suddenly an online agent.

A couple of years later it was time to upgrade our technology. I met with some ex colleagues from Mrjet.com, a company I was the cofounder of. They were tired of being in a large corporate setting after the Ebookers acquisition. I encouraged them to start their own company. We would be their first customers if they somehow could bring the source code.

With my commitment as their first client they negotiated the source code as part of the divorce settlement and so started MrOrange, the most successful online travel booking company in Scandinavia. How they managed to bring the code is still a mystery.

To pay for the technology we needed cash, which we managed to get one of our suppliers to come up with. I supervised the whole deal from a pool at the Canary Islands over phone and SMS. It might sound exotic but truth was that we stayed at this shitty four star VING hotel. We had just had our third baby and my wife had a Spanish tummy bug that kept her down for four days. So I juggled three small kids a sick wife and a deal over a cellphone. But it worked out fine. But we promised ourselves NEVER to travel charter again.

Working with MrOrange is everything a successful collaboration is supposed to be. We helped them get off the ground, they made us successful. We got them more clients and they used our success to get others started. Suddenly I realized that we created our own enemies. It made me sick. I hated to see our ideas end up on as a add on modules on competitors websites so I decided that one day we needed to invest in our own technology.

In early 2001 I had come in contact with a young talented man; Erik Bosrup who pioneered the Meta comparison business in the world with Luftgrop.com. He ran the site as a hobby project in the evenings as he went to school. We outsourced some projects to him and it was all good. I approached him about taking a job with us but was told I had to wait a couple of years until he had finished school. So we waited until 2004 when he graduated. To get him onboard we had to acquire his evening project and it cost us a fortune at the time.  But it has proven to be great little investment.

We agreed on hiring five developers and the timeframe for launch was about six months. By the time we were supposed to launch the whole project had swollen to now encompass a whole suite of products. Website plus front and mid office all kinds of tools, bells and whistles. It was an amazing project, to look at but the guys refused to put it live. Launch was of course delayed and delayed and delayed. Finally our MD said enough lets launch.

Mid 2005 we launched and expected bookings to explode. The exact opposite happened. The whole website was new and no consideration was taken for Googe indexing so we completely disappeared from the Internet. Lights out! Old customers didn’t recognize the website and left it. Searches timed out. People got no results and hundreds and hundreds of other things happened and many more that I was probably never told of. From the day we launched our team went from being a development team to a full time bug fixing team with the occasional new features that we tried to slot in between bug fixes. It was a real nerd project.

It was impossible to access the website from outside Sweden. And here I was sitting in South Africa waiting to make a big splash with huge offices and staff. I wanted to take drugs. On a trip I remember sitting at Schiphol airport wanting to access our website but it was impossible. When I contacted our dev team I got the usual, it’s-working-fine-from here-must-be-something-with-Internet-at-airport bullshit. Of course I had no problem accessing all other websites of this world. It took us 1,5 year to get back to the same volumes as we had before launch.  I figured it cost me 1,5 million usd in bottom-line profit plus development costs to have our own technology. That’s a large shunk of money for a company that’s just come out of poverty a couple of years earlier.

We have had this solution now for a couple of years and it has been nerve wrecking from day one. It has also been by far the most expansive and flamboyant projects I have ever been involved with. But compare to what I have seen in collapsed e commerce companies we got away fairly easy.

Choosing to build instead of license is a matter of strategy or personality. We made the choice primarily because we wanted independence.  Now we have to invest more money to rebuild, or refactor as they call it, the system from ground up because in some parts of the world it is almost still impossible to access the system. But I don’t regret anything and the boys did a good job.

PS

So what happened with Easy T? Well it’s a bit of a sad story.  Michael De Jong had prior to Easy T worked with the vultures at Stockholm based investment firm Traction. Tractions business model was and probably still is to buy undervalued companies with weak teams and outmanoeuvre people and sell at a higher price. Michael used his ex employer for  “funding”.  Easy T never got any money from Traction, but they helped him to raise a couple of hundred thousand €. Traction kept the majority. Easy T was THE online travel business in Scandinavia for a while until MrOrange came on board. But by that time Michael was outmanoeuvred. He never got any money from his shares. And as far as I know the company has shrunk to oblivion. The url was taken over by Seat24.

I have sympathy with Michael because without his support our company might never have got off the ground.

Posted by Edith at 03.29PM to Lesevorschläge | Permalink | Comments (0) | TrackBack (0)



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Tuesday September 15 2009

Deciding to relocate to South Africa. Travelstart 10 years of (in)famous stories 12/30

A start up company is like an extension of the founders DNA in dreams, aspirations, actions, the good sides and the dark sides. In Sweden a company receives a registration number that has the same format as a persons personal id DDMMYY-1234. The company is in fact from its inception a type of person. The parents are the founders. The company will go through life like any person, infancy, childhood, adolescence and so on. Or it can die due to lack of love, care and nourishment, i.e. cash.

The traits of the founders will become evident in the company. If founders are only interested in money, that will become apparent very soon. If they are sloppy, that will show. If they are insecure you will have an organisation that tip toes around the managers who likes to keep things in the dark. In other words it will all come out. So working on you is as important as working with the company.

Our baby is a curious little one, and she’s not afraid to take risks. I like to gamble in business. I never cared much about short term but I’m curious for the long term. That’s why there’s been a lot up and down these last ten years. Some years we have zero growth and the next year we have two consecutive years of close to 100% growth. Actually we are in such a  low phase now. Some would call it consolidation. I call it fixing the shit. Perhaps not a ideal company to invest your money in if you want to play it safe.

2003 and 2004 I was curious as ever but discontent with the status quo or something like that. Something was pushing me. We decided to go for a 10-day family holiday to South Africa. I knew South Africa well from before. I was the first in Scandinavia organising trips to South Africa already back in 1989. A not so popular venture, back in the embargo days, amongst the press, who decided to hate my guts. During an Indaba conference in Durban in 1990 a man came and told me I was on the ANC black list. To this day I still have no idea what he was talking about. Nowadays ANC has no problem in using me as an example of foreign companies who successfully invests in South Africa. And I don’t have a problem with them using me. A happy couple.

I don’t think our plane had more than hit the tarmac in Johannesburg before my wife started to talk about the possibility to move to South Africa. I had no idea what this would mean to the company. The family would do well, I didn’t doubt that. But I was unsure about how this would affect the company.

Two days later I started to SMS my right hand man, Sören, in Sweden what he thought about me relocating and starting up in ZA. He told me to do my homework. I was always a bit lazy, so I did a couple of phone calls. I called the manager for Worldspan in ZA. One day he was out playing golf, the next day he left after lunch. On the third day he was playing golf again. It took me a week to get hold of him.  And when asking about the business opportunities in South Africa his reaction was “the market is saturated and consolidated. Done and dusted. There’s not more to be done.” I made some calls to Lastminute.com and Travel.com.au who were also doing business in ZA. They were both managed by large local industry players who didn’t seem to have their heads in the game. I remember thinking; this will be like stealing candy from a kid.

I was sms´ing my so-called industry research to Sören and to my board. The board said that as long as we could find someone to run the Scandinavian business it would be ok.

I was ecstatic about the opportunities to launch in ZA and about finally emigrating from Sweden to this utopian beauty spot.

By the time it was time to go back we had all mentally moved. I spent the next nine months preparing the family and company for the move. I went back a couple of times to start our legal entity, hire offices and do the necessary homework for the launch. The board and me took all necessary precautions for the move.

The most important thing was to find a new CEO to take over after me. We met with three possible candidates and decided to go with one of them. He came on board on June 1St and was laid off six weeks later. My right hand man decided reluctantly to take the job. I should have listened better.

On December 1st of 2004 we landed and it didn’t take me more than a month to realize that our South African Launch would be endlessly postponed. It took me another couple of months to realize that my Scandinavia business was seriously jeopardized. As great as we were as a team the same was also true on how bad we were when we changed the management structure. The whole synergy disappeared and later we parted ways. I still regret this.

We paid a high price in relocating to South Africa and we are still paying for that decision in form of lost market shares, lost edge in innovation and lost profits and a high staff turn over in Scandinavia.

Our local success in South Africa has to a certain extent made up for the lost business and profits in Scandinavia. I am still betting long term that the relocation will have an overall greater effect for the company than if we would have stayed as a local player in the Scandinavian market. Luckily I only pay for my own errors, some you pay in cash and some in lost relationships.

When people ask me if I can recommend doing a move like this I would normally say no.

A start up needs attention like a baby needs breast feeding, change of diapers as well as love and intimacy. My baby wasn’t ready for this and we are still trying to fix her. But it’s bloody hard to change what has once been broken. But there’s nothing better than challenges, it keeps us young and vital.

Posted by Edith at 03.28PM to Lesevorschläge | Permalink | Comments (0) | TrackBack (0)



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