Being an entrepreneur is certainly not for the lazy or faint-hearted and there are things you should know before making the leap, writes Pamela Whitby

The environment right now for starting up an online travel business couldn’t be better. The technology infrastructure is there and industry expertise exists in a way that it just didn’t ten to 15 years ago.

Yet, in the highly competitive business of online travel, there are still far more failures than success stories. Some might argue that this is because the travel industry has its own peculiar challenges, but it may be, as Room77 Founder Drew Patterson puts it, that they are “just shitty ideas”.

In the coming weeks we’ll be running a series of stories and interviews about various aspects of starting up, and staying started, in various parts of the world. In the meantime, for those who think you have a good idea, are serious about success and in it for the long haul, here are few things you could be thinking about.

1.  Your value proposition

If you can’t tell the story of exactly what value you are going to create in well under three minutes, you’ll struggle to sell the idea to anybody! Don Birch, a travel industry veteran and founder of Travel Innovation Partners looks at two or three new start-ups a month and time and time again finds that founders struggle to define a clear value proposition in less than three minutes.

Because people love to travel, it is something that inspires passion – and, it would appear, business ideas. But just because you’ve come across a problem on a trip, doesn't mean you’ve got a business, says Patterson. Those who think they can solve a travel problem need to think very carefully about whether the value they are creating and their target audience really stacks up!

2.  B2B or B2C?

While everybody wants to be the next Airbnb or Uber, it's worth noting that the B2C landscape is littered with failures; only a tiny percentage of players actually succeed.

Like many others, Birch believes that the real opportunities lie in solving the plumbing. Patterson, for example, points to the need to facilitate a true digital experience for the hotel guest in the way the airlines have done. Plumbing may sound more boring than facilitating the next awe-inspired trip, but for a fragmented industry to move to the next level it’s infinitely more investable than yet another trip planning tool.  

Having said that, it does depend on the market and in Asia, the B2C market still represents significant opportunities (watch out for an exclusive interview with Yogendra Vasupal, the founder of the fast-growing Indian vacation rentals firm Stayzilla next week).

“We haven’t even scratched the proverbial tip of the giant ‘stay’ market in India,” he says.

We haven’t even scratched the proverbial tip of the giant ‘stay’ market in India

Yogendra Vasupal, Founder, Stayzilla

3.  Patents: if it’s a good idea somebody will steal it

For Heddi Cundle, the founder of the online travel gift card myTab, the first thing you need to do if you have an idea you believe strongly in is to “respect it by filing a patent”. You should also consider putting it onto Google Drive stamped with the date of when you came up with the idea.

Bear in mind, however, that patents can take time; myTab which launched in 2011 still has a patent pending. However, to cement the point, in the past year Cundle has come across infringements more than once and by Fortune 500 companies.

For US-based start ups it’s also important to create a Delaware C-Corp because most angel investors venture capitalfirms will tend to choose the C-Corporation as the type of legal entity for their investments over an LLC (limited liability company) or S-Corp.

4.  The founding team

There are typically three stages in building a start up. Getting it to work (technical), getting out and selling the value proposition (marketing) and thirdly running and keeping the business going (fund-raising). For this reason, Birch never looks at start-ups with just one founder. “They just don’t have the bandwidth to do what needs to be done,” he says, adding that three to four founder companies have a much greater chance of survival. Worryingly though, Birch finds that often founder teams are weak across several dimensions. 

Finding the right people is something that Max Kraynov, chief executive of Russian metasearch engine, Aviasales, has certainly experienced. “It might be easy to find ‘Sir, yes sir’ kind of people but it’s much harder to find those with their own decently compatible picture of the world,” he says. “What you are really looking for is people willing to build a trench and not dig their own hole.”

What you are really looking for is people willing to build a trench and not dig their own hole.

Max Kraynov, CEO, Aviasales

Cundle, who happens to be a sole founder, says it’s important to hire people who are as passionate about the product or service as you are. Somewhat reluctantly, she also has to admit that having a male co-founder gives you a much greater chance of raising money in what is a very male-dominated travel industry - more on the gender issue and why there are so few women in travel later this month.

5.  Technology and marketing

For an online travel company, first and foremost you have to have good tech but great marketing is as important. Many firms seem to get stuck on trying to get the technology perfect but that just isn’t going to happen the first time round. Instead it’s important to launch a minimum viable product and then iterate based on feedback from customers. This so-called ‘lean’ approach is something that all start-ups have to do.

“It’s the only way it can be,” stresses Cundle.

Going back to founding teams, very often they are technically oriented, but don’t understand what it takes to take something to market. Yet the marketing piece - understanding what value you have created and for whom - is essential. Part of this is about gut feel, but there are also various marketing techniques to help. A big issue is that start-ups very regularly underfund marketing.

“Many simple don’t understand how much they have to spend to acquire B2C customers, create value and monetise the process,” says Birch.

6.  Funding: this is no time to be precious

The stages of funding go something like friends, fools and family, angel or venture capital and finally Series A and so on.

Cundle, who has bootstrapped with some private seed funding, has not found the perfect investment fit yet. Her focus has been to keep the business going, but she says nobody should be precious about investment. Birch agrees: “Quite often the founders are just not audacious enough at the right moment.”

Many don’t seem to understand that if you are onto something you need to create momentum and in order to create momentum you need to get enough money together to do that

Don Birch, Founder, Travel Innovation Partners

In other words they don’t want to part with their share in the business. “What many don’t seem to understand that if you are onto something you need to create momentum and in order to create momentum you need to get enough money together to do that,” he says.

On that note, here is a lesson from Kraynov: “ We’ve been profitable from day one and we should've got the growth investment one year earlier. That would have allowed us to speed up even further.”

7.  Work ethic: do you have the stamina?  

When it comes to starting any new business, there is no getting away from the fact that it’s going to be a long hard slog. We’re talking 18 hours a day, seven days a week for two years, probably longer. At the beginning, says Cundle, you should expect to have so much work “that you can’t breathe”. And if you think it gets easier after launch, think again.

For that reason, it’s important to ensure you have some downtime – like playing a team sport.

Although there can be no better time to launch a start up Cundle argues that one of the biggest challenges is a lack of commitment and dedication, fuelled by a media-driven obsession to become an entrepreneur.

But she is in it for the long haul: “There is no end in sight for me”. 

Do you think the start up community lacks dedication? Have you started up and have an experience to share? Tell us more in the comments box or join us at the Start Up Village (March 23-24) in San Francisco to learn more