Reflecting on the past, would you have ever thought the travel industry would get in such trouble after coronavirus? Of course no, surprise is a part of life and business. So, it’s high time to recover after the crisis, overcome fears or trepidation, and restart tourism. If you’re running a travel startup, don’t devalue your efforts, as now you have a great chance to rethink your business strategy and stay one jump ahead of competitors.
Toristy is a SaaS for tour and activity operators aimed at selling their services in destination. It resells 1000s of services and partners with Google, HotelBeds, Bókun, PrioHub, WeChat. Keep reading an interview with Steve Jackson - a founder and strategic lead of Toristy - to know how to challenge your inner fears and defeat them.
Steve, how did you come up with a decision to start Toristy - the in destination reselling company? Did your previous experience in the analytics industry motivate this idea?
It all started in a bar in Helsinki around 2011 on a Friday night with fishing (as I'm a keen amateur angler). I was with a few entrepreneurial types and we were wondering if a fishing application could be built that would tell you the best places to go fishing. This evolved over a few years into, could we do a marketplace for fishing captains?
Finally, it evolved further into "could we help small businesses by building marketplaces utilising our digital marketing and analytics skills?" So for sur1e, the previous experience I have in digital/analytics did have a massive part to play. That's when we actually went about testing the concept more thoroughly so that in 2018 we had started what became Toristy.
Our mission now is to make tour and activity operators in the experiences sector of travel famous. We do this by selling operator services on the websites of domestic travel networks such as ferries, trains, airlines, hotels (concierges) and local media or marketplaces, helping operators build a local sales network and simultaneously providing new revenue streams for all concerned.
Let's get back to the times when you’ve just entered the market. How have you built a community around your company, and what was the business model for attracting audience and partners?
We started by doing research and development into what our primary target market was. We want to help small businesses, but they require the end users of our platform who would be the consumers on an enterprise website.
Our community building efforts have to date been to connect with influencers in the industry and do active research with them. We also actively join existing communities on LinkedIn and Facebook that naturally offer great feedback to ideas.
Then we have had some success with PR visibility both locally in Finland and internationally with Phocuswire (a travel business publication) in their start up scene.
The business model is primarily that we get paid when we sell one of our suppliers services and our technology platform is designed to help us do that. That means that there is no up front payment needed by anyone which means no-one has anything to lose by working with us. This has proven quite attractive with 1000s of services onboarded that we can sell.
Now we're planning the next phases where we will reach out enterprises in order to sell supplier products on their websites because when we make the sales for a supplier we get paid as does the enterprise.
Who are your biggest competitors and how do you differentiate yourself from them? What channels do you prefer to promote your product?
I think of the competition in broad terms. Enterprises could do what we do themselves. Then we have the OTAs like Klook or GetYourGuide or Tripadvisor. Then big travel agencies and destination marketing organisations (govt) and finally other reservation systems. So basically we're up against some of the biggest companies on the planet and governments. You could consider it daunting, but all our competitors focus on different aspects of travel services. For instance reservation tools which serve suppliers focus on getting new suppliers. We are set up to distribute supplier services so we're different. OTAs do the marketing for suppliers but because they need to drive traffic their commission can be 30%. We distribute for 15% and plan to share that revenue with enterprises that already have the traffic. Enterprises could do what we do, but we're talking about 10 years of IP development, significant (6-7 figures) investment in technology. They could partner with us and send us invoices every month for their share of the commission.
We're different because we have a different approach to solving the problem the small companies in travel have which is being found. We're letting the enterprises that can afford to do the SEM/SEO and traffic driving solve their problem and in turn provide new revenues to the enterprise. We promote our product on Search engines, to supplier networks we have joined (like Touriosity and Tourpreneur) and we promote our supplier services to travellers on Facebook and instagram.
In social media, you often comment on Covid-19 pandemic and its influence on the travel industry. According to your blog, there could be no worse time for launching a travel startup. So how do you pivot your efforts during these turbulent times and how does your strategy change to adjust to the situation?
The pivot was to focus more on building up our supply situation rather than selling. So areas where the pandemic is receding like Asia is where we're building our supply network. We took advantage of the fact that other companies laid off excellent staff (we employed one person from TripAdvisor for instance) and we doubled down on product development. We also focused on getting our own house in order on digital delivery meaning that our whole process is becoming more automated by using tools like Hubspot.
So the strategy was simply to re-prioritise to do what we could do rather than go out and pitch pilots to enterprise customers which is what we can start to do now.
How will the world and tourism industry, in particular, be different after Covid-19 pandemic?
It will be different until a vaccine is found and distributed at least. Travel bubbles will appear across countries that allow citizens to travel unhindered like for instance in Finland (my part of the world) we can already freely travel to Estonia but not Sweden yet as they haven't got the pandemic under control there. I am seeing conversations about safety being a massive priority (supplying facemasks and cleanliness being a focus).
I think it'll also mean a lot of businesses will be gone by the end of the pandemic. Companies that can't survive without consumers will either hibernate and plan for when it ends or close altogether. So this is going to have a 3-5 year impact even after the pandemic is over. Some countries that have poor leadership like the USA will take longer than others to recover.
If you could give a word of advice to yourself before setting up Toristy, what would you say?
I'd say, Never stop finding sources of funding but don't waste your time trying to get VC funding for your MVP. Look at government grants, business loans and angels for early funding to build the product. Goto the VCs when you've got a proven MVP and a business model in place. If someone had told me that I wouldn't have wasted my time being rejected by about 20 VC companies in Finland. Another thing I'd say is look for niche funds (VC funds) when you do go looking as they will not need your business model explaining. I now treat VCs and funds very differently from what I did a year ago. Getting funding is an art in itself.
How do you see the company changing in two years, and how do you see yourself creating that change?
We hope to be partnered with a number of enterprises, earning revenues for ourselves and our clients and scaling up to a series A round in 2022.
Depending on the success of the pilots and partnerships we could get to profitability by the end of 2021. Series A funding will lead to faster growth and business development in key markets. This is a little slower than we wished but the SWOT analysis we did, whilst listing environmental factors as a threat didn't have a pandemic threat of potentially 2 quarters of sales being lost. Now that we're coming through that with the contingencies in place we expect the business to be slower overall.
That said we're still optimistic. Personally I am working on many aspects of the business to make this happen. My first priority is creating enough cash flow via funding rounds until we get enough of our own revenue to support ourselves.
What do most people starting companies not understand that you wish they did?
The first thing is you need a product that people want. The second thing is you need a good set of people to make it happen. The third thing to understand is nothing good ever comes easy. If either the first or the second thing isn't there you will fail. If you don't have the stomach to go the long haul on the 3rd thing you will fail. It's that simple.
All entrepreneurs have an idea and most of the ideas that become companies are great ideas.
Most failures I see or hear about aren't because of the idea but because the entrepreneur didn't have the right focus themselves or the people to make it happen. Your team need to be able to come together to consistently make good things happen. As an entrepreneur you need to understand your people (not your technology) are the important cogs you need to run the machine. You can solve difficult problems with good people, but you can't fix difficult people. That's why every hire and every team member is a risk that as an entrepreneur you need to measure. Build a working team all working from the same playbook, with the same goals, drill the ideas so they stick, so that no matter how diverse and different your folks are, the machine doesn't break down.
How are you going to grow your platform technologically? Are you planning on developing a mobile application to put your product to the customer’s hands?
We will grow the platform to develop in support of operator needs, enterprise requirements and business viability. We have developed the product to be API first technology that works on any platform. Mobile applications may be needed in the future for certain brands we work with but not particularly for Toristy. Toristy will not be a consumer app like Airbnb for instance. But it may be working in a mobile application for a transport company (touch screen app), or be part of google maps on a mobile, or be embedded into an app that works on hotel screens in the guest rooms or concierge areas. Our tech is designed to make our operators famous, but not us as a company.
How far are you willing to go to see your idea become a success?
I'm happy to spend my time into retirement on this idea if I see traction in the pilots and the partnerships, and can convince the required investors to join us and continue enjoying myself as much as I do now. The pandemic we're going through today hasn't dampened my enthusiasm for building the business, rather the contrary, it's increased it. So if coming out of the other side of this pandemic is a signal of how far I'm willing to go, that's just a stepping stone of a challenge as far as I am concerned. Nothing ever comes easy as I said earlier. There is a long way to go.Opinion shapers