Jerome Touze Wayn Interview

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David: [00:00:00]  Hello everyone, welcome to another episode of How I Got Here. Mozio and PhocusWire’s podcast about the innovators in travel and transportation. Today we’re joined by Jerome Touze, one of the founders of WAYN which stands for Where Are You Now and was a travel social network that’s sold to Lastminute.com in 2016 after a 16-year journey. WAYN raised a total of $11 million and at one point had over 15 million users. Welcome Jerome.

Jerome: [00:00:27]  Welcome and thanks for having me.

David: [00:00:30]  Of course. So, we like to ask the same question at the beginning of every podcast which is bluntly how did you get here?

Jerome: [00:00:36]  Well, so my journey with WAYN started very early, you know, it was in 2000 I finished university in U.K and I don’t really come from an entrepreneurial family you know, I always had this aspiration to be my own man and I finished a degree in business at the University of Westminster in London and I had this job waiting for me at a very large consultancy for Accenture I’m sure you heard of them and just before I joined the firm it was just actually before 9/11 and when the terrorist attacks unfolded and I got this letter from Accenture essentially saying to me that my job was going to be potentially not going to be essentially on it and so I was a bit nervous about that and they sent me two solutions. One was to essentially shake hands and I was free to join the competition or I could wait for a year and go traveling and it would pay half of my salary. So I was like, well, I’m definitely taking that option and so I went traveling around the world and I went to work for a few months in Haiti where a big part of my family still live. They have a very large bakery business there. So,  I went to learn how to make bread for about 4-5 months and during that time I also went traveling to the U.S and joined a friend in San Francisco and it was at that time that I came up with an idea and this idea was you know, how cool is it to travel around the world and you get to meet so many people and I felt of course, very fortunate to be in a position to travel that much and I thought how cool would it be if you could essentially inform your friends of your whereabouts and meet like-minded people about your next intended destination. And so, my idea was essentially well mapped where one would essentially plug the coordinates the way you would go next and then the network would be notified, you know, so Kevin or David are going to be in San Francisco and do you want to meet, you know, person X,Y and Z? And so that was pretty much it and then on the returns of my travel I essentially shared that idea with friends and family which were very quick to rubbish it and say, “no, just stick to your job with Accenture.” So they were very quick to sort of discourage on that front and I was like, “yeah, maybe you’ve got a point. Maybe it’s never going to fly.” And I was kind of at the end of the journey at that point and I met at an Accenture social gathering, I met my ex-business partner, Peter Ward, and he’s the one actually that really pushed me to do something with this idea. He was like, “no, I think you’re really on to something” and he himself came back from a round the world trip and I think accumulated something like £45,000 of debt and I was like, well, do I really want to partner with you mate? And then, it was really actually inspirational and it’s because of him that I actually persevered to do something about it and before you know it him and I were business partners and we were like, “come on, let’s do it.” So he tried to encourage me to leave Accenture, he’s like “let’s do it now.” I said, “look, you’ve got quite a lot debt to clear so maybe we should work on it in our spare time.” And that’s what we did for 2 or 3 years so between 2001 to 2003, 2004, we were literally gathering at the end of the day at London Business School, working on this idea. And I don’t know if you remember, there was one big star in the internet days in the U.K at that point in time called Friends Reunited. They were the darling of the internet. They were the first one that really came up with this idea of class reunion, you know, someone going back to a website and finding that friend you went to school with and it was huge. I mean, Kevin you probably remember that and even before I went to the U.K myself and they were in the press literally all the time, sometimes for the wrong reasons but they had accumulated like 11 million members and they were very profitable, cash-generative, I think they were charging £5 a month for subscription, purely for the benefit of reuniting with their friends so this is really way before the Facebook days and so, Peter, my co-founding founder in crime introduced me to a friend of his saying, “look, you and I haven’t got a clue when it comes to technology. We really need to find someone that knows how to code, someone that can come up with a website and make these things happen.” And this is where the third partner in crime came about, Mike Lines and he was a genius in his own way and he was a really a class of everyone when it comes to understanding tech and he also happened to be a developer at Friends Reunited and because of him, he managed to introduce us to the founder of Friends Reunited, a gentleman called Steven Pankhurst and we managed to get a meeting with him in a pub as you do and before you know it we had an invitation to get in to invest into the business and he actually thought the idea was quite interesting and he was like, “how much do you guys need?” and I think we should’ve done our homework at that time was like £10,000 I think and in hindsight I should’ve said £100,000 and then he sort of nodded you know, almost like it was a bit of a stretch and it was like, “okay. How much are you going to give me for this inequity?” and again, we should’ve done our homework on that one and I came up with my first answer of 3% and I don’t know why, Peter said, no, 0.5%, for what I care? And so, here we go, first found and raised £10,000 and we essentially spend that money on our first IBM surfer and a bit of graphic design to get this web going and Mike was working with it on his spare time. We still have a full-time job at that point. But of course, now we have this beautiful website that we’re madly in love with, nothing else is better than it. But we have no member, so we have to try to get people to join and I think after the course of a year or two we managed to you know, get maybe 2,000 members and the site was not going anywhere so it was pretty much close to, we actually call it quits and stick to our jobs at Accenture and this thing called Google Ads came about, you may have heard of them and we thought the concept, interesting, oh wow! You can actually spend money and you can get people to come to your website, so you know, this is really the web 1.0 days and it feels a bit old talking about these generation and so, we decided to put £500 on our credit card and to see whether we could get you know, some users acquisition at that time, our technology was actually based on SMS messaging so we would be able to send a message from the website to any mobile around the world and you know, instead of sending a normal mail you would be able to send someone an SMS and that was in the days of the jamsters generation and that was quite a novelty at that time. So our campaigns on Google where you join WAYN and get 5 free SMS for free and the cost of a click at that time was ridiculously low. I think it was like  .01 or .11 One p per click. So there wasn’t really tall competition, so the word “free” and the word “SMS” you know, managed to get us a lot of registrations and so, we went back to Steven Pankhurst, again, in a pub a round a pit of beer and we said, “look, we think we found a way to grow.” And we showed him an Excel document you know, if you invest £500 you get X and he was like, “wow!” you know, this is really going guys and how much do you need? So lesson number 2, do your homework again. I don’t know why, £10,000 and okay, how much are you going to give me for this? Well, 3% so, before you know it we’ve done £20,000 of seed money investment for 6% equity and this money, the second round, the £10,000 was pretty much spent on Google Ads and we managed to get something like 20,000 or 30,000 users so that was our first sort of level of critical mass, not really critical mass compared to 12 million users at Friends Reunited and the problem with that approach of course is mostly users would come to the website to get their free SMS and they would never return. So we had a very high churn and we ended up with user base of really 500 if that. So, Steven thanked us to being obviously very clever and decided not to meet for another pint and there was not going to be another £10,000 and there was not going to be another 3% and so, it was pretty much look, this is do or die and maybe we should call it quits and we had our big moment of breakthrough and that was in 2005 and this is what really what made WAYN in the early days. We were very frustrated and almost jealous and very immature at the same time you know, when looking at the growth of all of these guys like Myspace and then if you remember Friendster and there was Hi5 you know, they were the first generation on social network, all inspired on this concept of the six degree separation and these guys had accumulated millions of users and they were also raising $10 million, $20 million sometimes $50 million. I think Usecorp were about to acquire Myspace and here we were with our website with 30,000 users of which 500 were active and £20,000 investment, and we said, “wow! What is it that they did differently? How did they managed to grow?” and everything was based on viral marketing and they managed to find a way to get inside the address book. You know, if you remember Hotmail was a big thing at that time, so AIM or AOL and Hotmail and Yahoo, of course were the three major address books and there was no such things as API. And so, we managed to find a guy in a nice secure chatroom, a developer from Poland, a guy named Piotr, and he was actually a fantastic developer and he ended up working for us for many years and we paid him out of our cash from our salaries, a fee or a few hundred euros to try to find a way to get inside those address books and it took him about 3 months and one day we got a call from him and said, “guys, I think I cracked it.” and I said, “what do you mean?” and he said, “it’s working. I managed to get inside the address book.” So we roll out this technology and all it did really was a big page with a username and a password field and right in the middle of the page, a very ugly button called “continue” and right at the bottom of that page you know, perhaps too low a font Times New Roman font you know, by clicking on continue you hereby give us the consent to invite your friends and we thought, “that’s exactly what the guys in the U.S were doing we should just remake that and see what happens and I’ll remember that day for the rest of my life, you know, I was in Bratislava in March 2005 and it was a Sunday and we had this admin.wayn.net sort of background where you could essentially check the data and the stats on who had joined. We were literally averaging registrations of about 5 to 10 users a day, literally, 5 to 10 registrations a day and that day Mike and I were on the phone and he said, “you’re not going to believe this.” And I said, “what?”, “We have about 2000, 3000 members. I can’t remember.” And I was like, “Yeah, right, very funny.” I said, “I’m telling you. We’ve got 3000 members.” It was like 9:00 in the morning, how could it be? So my level of anxiety to essentially go and check the website you know, using dial up modem in Bratislava that took me about an hour just to get in and then I could finally see the numbers for my own eyes and I said, “Mike, there’s got to be a bug. It can’t be true.” and it was obviously true because it was the typical exponential model, you know, 3 people inviting 9 inviting 81 and before you know it you’ve got a viral marketing model that worked really well and in a space of a couple of weeks we already had accumulated a hundred thousand users and a month or 2 months later we were close to our first million and it was just insane to think that this particular model which quite frankly was a short-term game, long-term pain approach because little did we know that of course, the laws in the U.K were a little bit different than in the U.S at that time and we kind of thought that it was okay to just replicate what other guys were doing until we got a letter from the lawyers of Microsoft and I pretty much, you know, thought I was going to go to jail. I was 23, 24 at that time and I thought that our days were numbered and I was literally freaking out and we had this great lawyer from Australia that was actually saying you know, these guys don’t stand a leg to stand, they’re just trying to flex their muscles ‘cause of course LinkedIn was doing it now, Facebook was starting to really come strong in the U.S and they had exactly the same technology and it’s the point where the lacks of Gmail and Hotmail and all of these guys realized that they had to really open this up apart from one company clearly hasn’t done it yet is Facebook and they essentially opened their address books for API and so they essentially managed that we could carry on and yeah, so this is how we got to the days of success, the days of hyper growth. We got to a maximum of 25 million users I think until the end of our journey and the years of 2005 and 2007 just before the financial crisis 2008 were remarkable because we had you know,

David: [00:13:43]  Jerome, can I quickly interrupt. I’d love to hear a little more just like what the product was at this point.

Jerome: [00:13:51]  Yeah.

David: [00:13:51]  I think like there’s a lot around travel social networks and you know, I recognize that a lot of this was actually before Facebook and I think that’s a key insight here is that there was a huge influx of travel inspiration and travel social networks about 7 or 8 years ago and a lot of them failed and I think they failed because basically your whole network was on Facebook and you might as well post, “I’m going to Italy, where should I go?” to Facebook and it seemed like that didn’t really exist. Is that correct?

Jerome: [00:14:21]  Yeah, exactly. To be honest, the concept of WAYN and I think there was another one called Dopplr, you know, they were trying to emulate from the same concept. I think that the prime sort of service functionalities that we had at that time was around messaging, so, and it was, the key difference, differentiation on WAYN apart from any other network is the fact that most of the interaction actually happen outside of your social graph, so, you would essentially interact with people that you do not know, whereas on Facebook of course, they are people from your first degree or second degree of separation. So, the whole idea of WAYN was you know, you’re going to Brazil or you’re going to Bangkok or you’re going to South Africa, find out who from a similar age or similar interest you know, would be at the same place, same time and you know, we were actually known for some time for you know, dare I say a quasi dating site and I think that is actually the truth because—

David: [00:15:15] [] Quasi dating, I thought you guys actually had a domain called “WAYN dating” didn’t you?

Jerome: [00:15:19]  We did. Absolutely, we ended up realizing that maybe down the line we should make a distinction between what’s a pure travel social network and what is a pure dating play, but you know, I can come into that story but again in the 2005 and 2007 days it was purely WAYN.com travel social network, high growth, people would join, they would tell us, you know, we had this map that you could color code, places you’ve been, places where you are now and places where you want to go. So we were collecting a huge amount of data points which was another thing that was quite not all about what we were doing but we were not very good at the monetization. In fact, we were still trying to figure that out and we actually emulated the same business model of what Friends Reunited had back in the day which was a subscription business. The ability of getting in touch with someone and if you want to know who is going to be in Cape Town at the same time as you and you find that they are 5 you know, 5 ladies or 5 guys or whoever and you want to get in touch with them, you’ve got to pay. And we got a fairly decent amount of conversion because of the sheer volume of traffic we had. So only of 2% converted when you have a flow of traffic coming from the top of the funnel. You know, we were generating actually quite a bit of cash and at that point, you know, there was only 3 of us but you know, the business was only doing £1 million of revenue and so, we generally thought that this was a great model, there was a cash flow, positive business, very profitable but it was not really scalable and another point—

Kevin: [00:16:54] [] Jerome, Jerome, it’s Kev here. Hello! Just an interesting point, you know, I think it’s worth kind of getting a sense of this at this point in the conversation, anything, I think we could sit here and listen to Jerome because the backstory is terrific. But, how did you think about you know, travel is, unless you are backpacking, travel is a very infrequent thing that you do. So did you have in your mind that you are going to target people that were backpacking who were constantly...

Jerome: [00:17:25]  No,

Kevin: [00:17:26]  off road. What did you think, okay, how are we going to make sure that we keep front of mind for people that are perhaps only going once a year?

Jerome: [00:17:35] [] You know, the beauty about the model is you’re right about the frequency of travel but why only are you focusing on those that are going to be traveling? Imagine someone living in London or living in Paris and they’re only traveling once a year but they could also be a host, they could also meet those that are traveling. So it works both ways. So you could literally be in Paris and you’ve never been outside of Paris your entire life, yet there are people coming to Paris all the time. So, it works both ways. The person sitting home could say "who is coming to town this weekend, I want to meet people. So, that was a"—

David: [00:18:10] [] It’s like the original couch surfing or something

Jerome: [00:18:12]  Yeah, but you know, obviously we were not providing a facility that would essentially say you know, you can crash at someone’s place. If these things happen, it would happen almost naturally by the conduit of further interactions, but that was the beauty of the model is that it was open you know, for those that traveled and those who didn’t and meet the locals and we were doing I think at some point about a million, maybe 1.5 million messages that were being sent on the platform on a daily basis. So it was very popular at that point.

Kevin: [00:18:45] [] It’s interesting. I mean, given that rapid jump up in numbers and you said your Bratislava moment as we’ve now heard and you said there was just the three of you, it’s you, Mike and Pete at that point right?

Jerome: [00:18:58]  Yup.

Kevin: [00:18:58] [] How did you, I guess this is a tech question because this is something that startups who you know, tuning in today often have to grapple with these are sudden you know, hockey stick as they call it, a massive upward growth, how did you cope with that technically? Did you somehow had to buy loads of server boxes, I mean, how did you do that?

Jerome: [00:19:20] [] So, I’m going to simplify the answer and if my client listens to the story himself he’s like, “well, what do you know about this you’re not a techy.” But I do remember that server in Mike’s bedroom and funny enough, you know, there was no such thing as again as Cloud computing then and we didn’t even have enough money to afford mirror computing. So really, we were hoping that everything that Mike had done from an infrastructure and code writing was done with usage of scale and to be fair to him it was but it just so happened that that particular machine wasn’t enough and this machine pretty much started to steam, physically steam out and then the machine died and it just so happened that when the machine died, a week before, I had given a call to my parents to finally tell them I’m taking the jump, it’s like “what do you mean?” it’s like, “I’m leaving Accenture, I’m going full time on this thing.” And they were like, “no, I think you’re making a mistake.” It’s like, “you could be a partner at Accenture” it’s like “yeah, very exciting but that’s not what I want to do.” And I saw, took the leap of faith and literally 5 or 7 days later the machine that was sitting in Mike’s bedroom pretty much died and I remember being close to tears, it’s like I can’t believe this is happening, like we have 1 million users. We’ve got this super, hyper growth. We’re getting like up to 10,000 registrations a day and now the machine dies you know, so we look like complete fools because we didn’t have any back up and anything else like that. I mean, we had obviously a tape you know, sitting somewhere I think in Mike’s roof and we managed to get the IBM engineers to come back and after 5 days and revive the machine, and then of course at that point you know, we thought it was about time to take things seriously and we invested in a lot more web servers and this is at that time where even you know, we couldn’t really afford to have a machine sitting in someone’s bedroom. So, we had to go to a proper you know, server center, it was in London and we had our first set of cabinet. We have a couple of servers in there and yeah, so things were starting to actually take shape.

David: [00:21:17] [] Very cool. I, one thing that stood out to me is that because you guys are a little before Facebook I feel like people’s ways of interacting online were a little different. I remember like you know, Live Journal and Friendster and these things like back in the day and then it’s just kind of before you know, I was fully conscious in the internet world but people were spilling their guts online and in a way that I feel like right now on Facebook there’s an online protocol, what you do and what you don’t do and I think to some extent, meeting new people via social network is a little bit frowned upon and that seems like that was actually the core and the crux of what you guys did. So I’m curious, kind of two part question is like do you think the culture changed over time and how did the Facebook’s arrival on the scene affect you guys?

Jerome: [00:22:03]  Yeah, so I think the first part of the question is that you’re right you know? Before Facebook, the only real sites where one interacted and even before the Myspace and the Friendster and the Hi5 you know, was essentially dating sites and it was a huge taboo around interacting with someone that you don’t know and pretty much flirting online which let’s be frank about it, WAYN had a huge part to play in that field because many of the interactions centered around the excuse of knowing that someone was going to be in the same town as you and perhaps originated with some tips around the location but very quickly diverted around you know, perhaps the social meet up or more and really, it’s the Friendster and the Hi5 of this world that were the first one to introduce you know, the pure set of social interaction with your friends. On WAYN really the key features were you had a profile, you had your picture, you could load a couple of pics from your travels and everything was centered around locations and we came up with this search filter and that was really the core of the website and then we allowed people to search based on who is going to be there at a particular point in time and this is also why it never took off for years because we didn’t have enough users, you know, the odds of you finding someone in London base on a particular set of dates would be very, very small and as we started to grow and get you know, millions of users and all of a sudden you could have 5, up to 10 pages worth of pictures and of people that would be return and this is where it started to snowball effect and as to the second part of your question, how did the rise of Facebook essentially affected us as well, it affected us in a very big way because as our model was very centered around charging a fee to interact with a user and it was proven pretty very quickly by Facebook you know, with much superior tech and simpler concept and also centered around people that you knew, now the trust factor was very important and they were doing all of these for free and it just so happened at that point that we were looking at all of the fundraising happening in the U.S and Facebook were raising, and I can’t remember, maybe 30, 50 million series A then subsequently series B and you know, here we were still with our £20,000 of seed money and this is at that point that we thought the risk gain would be a smart thing. Now we thought, you know what? We don’t know what the future holds, we’ve got a website which is generating less than a million pound of revenues but you know, when you only have 3 or 4 working on it, it’s not too bad. It was very profitable but it was a risk and we thought perhaps we’re missing a trick, maybe we could actually do a series A which would contain a degree of cashing out because we didn’t really need the money. We were actually one of the very rare startups in the U.K that had generated a huge amount of growth on a zero acquisition cost. I mean, that was the key thing that was super attractive about WAYN. We were generating up to 20,000 registrations in any single day on a pure 0 cost. I mean, of course it was a cost enough for the serving and hosting and us in terms of costing us, people cost. But you know, it’s not that we were spending on Google anymore to acquire users which and like many other sites like dating sites which I keep referring to, they can have an acquisition cost of up to $20 or $30 per user. In our case, it was zero. So we became a very attractive asset to the investment community and venture capitalist and this is at that point in 2006 that we met a venture capitalist, Draper Spirit and I met him over a dinner and they loved the fact that we had a very high growth and very profitable business and this is at that point that we sold a minority stake of the company for $11 million which was $40 million  evaluation, you know, that really thinking about it you know, a company which was generating less than a million pounds of revenue, I mean, it was crazy! The evaluation was sky high and they went up predicated on fundamental economics. They were purely predicated on users. I even remember one day receiving an email from a broker saying, “hey, how many users do you guys have?” whatever it was maybe 15 million at that time, your evaluation has just increased to 150 million, it’s like, “well, how?” it was based on value per user and these were the days we lived in and high insights, and high insights are wonderful thing perhaps we should have cashed up completely at that point but you don’t think like that. I was 25, 26 at that time and even exiting for you know, $11 million for a minority stake. It was remarkable back in the—

Kevin: [00:26:46]  Sorry Jerome, just on that, I mean, there was—dare I’d say and they would probably be thrilled at that title, there was some pretty high level luminaries you involved in that round.

Jerome: [00:26:56]  Yes.

Kevin: [00:26:56] [] And David Soskin of Cheap Flights, there was Brent Hoberman of Lastminute.com, there was Adrian Kirschner and Andy Philips, and you know, you were dealing with some serious folks there,

Jerome: [00:27:11]  Absolutely

Kevin: [00:27:11]  And I think the sense that we’ve gotten the story so far is that you know, maybe I’m interpreting this in the wrong way. Sometimes you’re kind of flying by the seat of your pants to use a phrase, all of a sudden you’re faced with some people that have been there and done that in almost every kind of way. Now, how did you kind of approach that as s entrepreneurs being faced with these kind of people that you know, are willing to give you their money whether that’s as individuals or as institutional investors, I mean, how did you go about the mindset of having to deal with very serious people all the time?

Jerome: [00:27:42] [] No, I mean, look, I think that was perhaps we were immature in some ways and of course in experience you know, it’s like what do we know? We just generated this company at the back of an idea and things took off very rapidly, but the vision and the passion we had about WAYN becoming the travel and lifestyle platform never changed because we genuinely sat on a very valuable data set and we thought that you know, exiting and we're risking is one thing but if we could surround ourselves by some very experienced travel, seasoned professionals that have been a doormat in the travel context to take this business really outside of the realms of a subscription business and to become perhaps more of a pure sort of travel focused platform would be smart and the person we had in mind at that point was Brent Hoberman because I actually remember reading about the stories of him and Martha Lane-Fox when they obviously listed Lastminute.com. I remember still being in my university days and thinking, “wow! How amazing would it be to be like him or to do something like he has done.”

Kevin: [00:28:53]  They really were the poster children of the .com era here in the U.K at that time.

Jerome: [00:28:59]  No, absolutely.

Kevin: [00:28:59]  It’s true.

Jerome: [00:28:59]  They were huge and you know, if someone told me at that time that a couple of years later he would become one of your investors and chairman of WAYN, I would’ve never believed it one second and how ironic that 16 years later we would actualy sale to Lastminute.com. Again, you know, it’s just sort of a funny ending. So Brent Hoberman became our chairman and invested into the company and as you widely pointed out we also had the privilege of working very closely with Hugo Burge and David Soskin from cheapflights.co.uk. So, we had a dream team and we also had Constant Tedder from Jagex so we really had a great advisory board and investors that were really keen obviously in the investment and believe just like we did in the vision which obviously meant that very quickly after doing this transaction, the business model changed because we realized that for us to really become this travel play, we had to become a lot more open. We could not have this stifling of the interaction by charging a subscription which you know, by the virtue of doing that also had a connotation of quasi-dating as what I’ve mentioned earlier on. So, we wanted to remove that and this is also why in the end we decided to make a play with you know what? We’re going to have WAYNdating which will be completely, you know, focused on dating and then we’re going to have WAYN which will be the main travel social network play. Again, you know, high insights perhaps we should not have done that and it was a way of still conserving some of those profits coming through the subscription business and allowing us to focus on the growth of the travel play. So that’s how things panned out in 2007 we dismantled the subscription business.

Kevin: [00:30:44] [] Yeah, I just want to go back a little bit, back to this you know, the dating thing kind of hanging over it and you referenced a little while ago about you know, how it was a way for people to hook up and did you at that time or once you got your investors, did you ever feel that the business that you had some kind of degree of duty of care about the connections that you were making or some responsibility? I mean, can you talk us through the kind of conversations you were having because essentially if you were connecting people and there was no you know, there was no vetting for people and that kind of thing. How did you go about that as a strategy and what you needed to do like I said as duty of care perspective?

Jerome: [00:31:31]  You mean vis a vis of the members in terms of safety? Is that what you’re touching based on now?

Kevin: [00:31:37]  Yeah.

Jerome: [00:31:37]  Well, look obviously it’s very, very difficult to secure you know, 1.5 million messages are being sent on a daily basis but of course we had you know, our own policies and safety checks in place. You know, we vetted actually, we were the first network, we’re the very few networks that were vetting every single picture that would be put on to the website. We actually had a team of customer support agents in Thailand that would essentially preauthorize the picture before they get uploaded which is very hard to do when you have 50,000 pictures uploaded on a daily basis, granted it was not the millions that Facebook were dealing with but you know, we could deal with about 50,000 a day. You know, we would also have our own technology to essentially block any messages that would be of an abusive nature. We also had forums or chatrooms that were very popular at that time and again, there was you know, community moderation and this is I think the beauty of scale is that you can tell it on its head and let the community acting as the policing agent on your behalf. They’re the ones that will report anything that happens of an abusive nature you know, luckily you know, in 16 years of doing this business, we’ve never had one incident and I really mean like not one major incident. I mean of course, there were the occasional bullying online that would happen and we would treat them very seriously but it never went beyond that.

SNIPPET 1: Monetizing the “exploration” phase in travel.

33:04-40:32

David: [00:33:04] [] Very cool, so you alluded to a change in business model and I wanted to kind of delve with a little bit deeper into that. I heard that you guys used to work with tourists offices, these kind of you would visit Mexico guides with big booths at the ITV fairs and I always wonder what exactly they do and I recognize you guys existed at an interesting stage that is often hard to monetize which is kind of the exploration stage and I think there’s been many startups that have you know, died who have tried to do stuff here because purchased a lot later. So I’m curious if you could talk a little bit more about how you transitioned from subscription and what the end business model was.

Jerome: [00:33:42] Yeah, exactly and you lightly mentioned around the stage of the funnel you know, we had a business which was very lower funnels so you come and you join and the interaction will lead to your wall and you have to pay and we realized by changing the model that we were sitting on a goldmine of data which was essentially where people have been in the past and where they would like to in the future which was more the aspirational stage and we knew that people would come to WAYN with a different mindset. We’re not in the mindset of transacting although we made some test with Booking.com in fact, a couple of years ago to prove that we could actually generate income on pure hotel bookings and purely using their brand, powered by Booking.com, but it just wasn’t going to scale. So we thought, well, maybe the data that we have is so powerful that we have a great media advertising model that play and what a better way to sell this information to the tourism board for them to have a voice within the community because one of the great thing about tourist boards is they all share the same strategic, you know, goals. They’re all about promoting the destinations in one way or another. And so, going to a tourist board and saying, “if I told you that we have 100,000 users from France and we have 1.2 million from the U.S” and whatever the examples were that are in the process or interested in visiting South Africa would they be interested to you? Well, you bet that South Africa tourism is going to be interested in that because it’s very relevant and now they have an audience which is essentially speaking their language. They’re all about thinking of going to South Africa but they haven’t made that final decision, the transactional stage and this is where the art of funnel really works, the aspirational stage is to provide a conduit or a reason from which to interact and we started to essentially talk to South Africa tourism and I mentioned South Africa tourism because they were actually the first client that we ever signed and that was in 2008, it was at a conference  in Joberg and I was fortunate enough to meet the makers at that conference and they really waned to experience social media because that’s what everyone was talking about but no one really knew how to so we quickly developed a solution that was geared for tourist boards so it would have a profile just like you would have your profile on Facebook or on WAYN or on LinkedIn, they would also have a profile on WAYN and then we would offer them some tools that will allow them to spread the key value proposition than messaging. So, through video, through you know, notification, through newsletter placements and these would essentially be sold in packages, you know, whether it’s a 3-months advertising, a 6-months advertising or 12-months advertising and we realized that actually, it was very easy to sell those packages but it was equally time consuming and very labor intensive.

David: [00:36:40]  Can I ask a quick follow up there? It’s funny because like how do you measure ROI and I’ve heard that because it’s so hard to measure and hand way this part of the industry is particularly tough to close deals and I remember I’m from California and I remember, you know, 8 years ago there was Arnold Schwarzenegger and you know, had visit California ads and I thought they were ironic that I was seeing them in California but besides, they like, I was thinking like okay, well, 10 years later like you know, like maybe I will visit California but it’s really hard to know that advertisement actually paid off and—

Jerome: [00:37:14] Converted

David: [00:37:15]  Yeah, I’ve heard because of that basically, it’s like who gets drunk with who at many of these conferences like even more so than the normal you know, big deals are.

Jerome: [00:37:24] [] So you know, you’ve hit the nail on the head, so the last part of your point which is quite funny and you know, who gets drunk at what conference. Of course, you know, any of those deals you know get down on relationships and so, a huge amount of travels go around those conferences whether you go to ITB, whether you go to Phocuswright or all of these big events where you’re going to meet some of the decision makers and it’s really like anything in business, you know, you try to engage and do business with the people you like and of course, the value proposition on what we’re selling needs to equally be appreciated and people need to be receptive. But we did indeed have this challenge of proof of conversion because we were not an online travel agent. We didn’t have a conversion model but what we had was still very valuable to them which was engagement and again, things have changed a lot in the last 10 years. So, we’ve just actually opened a media branch here at Travel Start and I came to talk about it a little bit more and Lastminute but the way, also does that a lot with tourist boards and airlines and other companies but the model has changed and to what used to be perhaps more around brand awareness and how we would measure that where we had market research and because of the scale of engagement that we had with millions of messages you know, the throughput of those type of research was actually statistically significant. So you could say, “hey, before we engage we have the tourism board of South Africa.” We had a per section of X and post-campaign we had a perception of Y so being able to essentially show a shift of positive sentiment purely by educating and providing the messaging of differentiation of what South Africa is—

David: [00:39:05] [] So that shift of positive sentiment on...

Jerome: [00:39:08] [] Well, purely by, we had our own market research tools and we didn’t even outsource this. So we actually became quite clued up internally on some of the tools that would allow us to measure those things and we would have literally a platform within WAYN that would allow us to gauge the appetite of users to travel to their destination on a scale of say 0 to 10 and is it precise to your point? You know, you wanted to visit California or not, how do you know whether you really have the—and the truth of the matter is we didn’t. You know, we could not essentially say whether for sure people had arrived at the destination, however, what we did have that many of the networks didn’t have is that when you join the network, not only do we ask you where you would like to go but we also ask you where you’ve been so we could essentially utilize that data to find out what point of that time they saw the advertisement and when they said they’d been to a destination to make some degree of correlation you know, between the advertising campaign and how many of those have now said that they’ve been to the destination since they saw the advertising campaign. Was it perfect? Of course not. And that it was some form of correlation that we could use and actually most of the clients that we had were very happy with that level of methodology, at least for back in the day it was actually quite sophisticated for its days.

Kevin: [00:40:32]  Jerome, tell us, at what point you know, at first I’m thinking it was probably the latter part of that decade,

Jerome: [00:40:40]  Yup.

Kevin: [00:40:40] [] Did you start thinking we need to either rethink what we’re doing just because of what was going on at Facebook and things like that, just explain to us how the discussions took place internally and with the investors and with Brent as the chairman about how you were going to counter if you were going to counter what was happening on Facebook.

Jerome: [00:41:08]  Yeah, so for us it clearly was a differentiation play. We would never compare ourselves with Facebook because you know, it was a lost battle from day 1 you know, and we were really differentiating on the fact that we were sitting outside of the social graph as I mentioned earlier on and on the fact that we sat on this data which could be so valuable for advertisers, not just tourist boards by the way, but also travel companies, airlines, cruise liners, OTAs, because now they could essentially utilize this data and monetize it on the basis of knowing that those users had expressed a strong interest in visiting destination X, Y or Z. And so, really, that was the focus. In addition, we were still sitting on this technology that allowed us to tap into the address book of the users and because we were one of the first companies to do this in Europe, we had first move of advantage. We had IP addresses that were trained for years that allowed us to be essentially be in the inbox. We had a very high deliverability rate in the inbox. So, you know, the fact that we had this platform that could generate up to 20,000 registrations on a daily basis. That alone was extremely attractive or at least so we thought at that time.

Kevin: [00:42:26] [] It was around that time that also TripAdvisor was starting to think about the same thing. It first iteration of its kind of social network when it did TripAdvisor connect?

Jerome: [00:42:39]  Correct.

Kevin: [00:42:40]  Which was aligning itself with Facebook and kind of trying to do the same thing.

Jerome: [00:42:45] [] Yeah, absolutely. But then again we never saw TripAdvisor as a social network and they’re not. You know, yes they have a community of active travelers very active and in fact, in the generation of reviews. But you don’t got to TripAdvisor to hangout. You don’t go to TripAdvisor to meet people and to genuinely send messages to one another. I mean, it’s not the place for that and even if there was a play that they could essentially compete on  on that level too. We never thought that that was actually their business model. And so, we never really saw that as a threat in any way. For us it was much more around you know, placing WAYN as a niche player but niche which is not too niche which has enough scalability to essentially appeal, to either a media company or an online travel agent where the two set of categories that we thought would be sort of the ideals sort of exit you know, in the horeizon.

Kevin: [00:43:40] [] Tell me Jerome, how did the relationship with you and Pete kind of evolve over time? Now you said, he was the one who came back from traveling with quite a lot of debt was your word and you know, you were the one who was going to work at Accenture and who had done the business, you have been to business school

Jerome: [00:44:00]  He actually, by the way also worked with Accenture, that’s how we met.

Kevin: [00:44:03] [] Right. Of course, but and you know, did you have different types of personalities? You know, he was the one who was willing to go off and travel and rack up loads of debt. How did it manifest itself in the way the company was run?

Jerome: [00:44:14]  I use that story a lot more because I think in a tongue in cheek manner but you know, he was definitely the more risk-taker. Pete was, for him, you know, he didn’t care because he knew he was going to pay that off and he knew he was going to make another way which is something I’ve always admired about him and you know, if it wasn’t for him as I said, maybe I would have actually stuck at Accenture. So you know, we definitely had a very opposite personality which was actually great for the business to have differences, skill set and personalities and Mike as well. So we really balanced each other out very well, I was perhaps the more pragmatic one and Mike was maybe in the middle and Pete has more the Peter pan you know, everyone calls him like that because he had a great vision, you know, he was a visionary and perhaps less operational but none the less a great driver with you know, fantastic leadership skills for our time. So, but you know, how the relationship panned out over the years you know, I think we kind of also quite comfortably that there’s been a lot of sweat and tears and blood, you know, through our years at WAYN and we argued a lot and particularly me as a French and Mediterranean, I’m quite dramatic in my own ways and him being the British candidate at first play, you know, we had very different ways of dealing with things but you know, we remain very close friends even if the geographic locations being me in South Africa and him being in the U.K means that we don’t see each other as much these days but yeah, we could not be more different.

SNIPPET 2: Jerome & Pete become mini “celebrities”

45:56 - 49:37

Kevin: [00:45:56] [] It was interesting. I mean, I remember having I don’t know if it was both of you or whether it was Peter actually, forgive me, I have one of the very, very early travel agent summits so this would’ve been 2006 through 2007, really early days for me writing about the industry and it was just this time when the pair of you, and I say this very loosely, we’re almost kind of the second generation of posterchild for them to you know, web 2.0 and you know, you were very popular in kind of almost almost celebrities. I use the phrase very lightly, I mean, how did you personally kind of wrapped your head around that? I mean, you were still in your 20s. I mean,

Jerome: [00:46:42]  We were very young.

Kevin: [00:46:43]  It must be an interesting thing if you’re not naturally suited to that, maybe you are, but if you’re not, how do you kind of deal with that level of kind of focus as entrepreneurs?

Jerome: [00:46:55] [] I think we’re both very extroverted in our own ways and very comfortable with you know, dealing with the public and perhaps I was a bit more shy at that time than he was. You know, Pete was definitely a level up you know, when it came to public interaction. Now what really made us and I remember is it was the story in metro when we were going through this you know, remarkable hockey stick curve, the growth from you know, a few thousand users to you know, a million in a short amount of time and we had this story on Metro, I remember it was “How two British backpackers came up with an idea over a pint of beer and became multimillionaires.” Which obviously wasn’t true, a very much exaggerated from a rugs to riches angle. But the moment we got that story on Metro everything then cascaded up. We went to ITV News Lunchtime, we had meetings with you know, some of the big PR companies and actually I remember it was classic, it was a company that came to see us and they came up with this great idea saying, you know, we think we can make another story which is going to make it in the paper and we were like, okay, what’s that? and saying, “well, given your presence in the U.K” ‘cause we were huge in the U.K at that time, we’re going to do a story and we’re going to ask all of your users out of all the places they travel to, what is the most boring and unwelcoming nation they’ve ever been to in the world. And you bet your gold that France obviously won the medal and being obviously a Frenchman myself, you know, the story came out the next day and I think the big header was in the Guardian or I think it was The Guardian and why we’re not alone in hating the French and so, I had literally no idea that the story was going to make it and I even forgot about it and I got a call from my dad that day, I was moving flat from Kilburn to Willesden Green at that time in London and I got a call from my dad saying, “what have you done?” and I said, “what are you talking about?” he was like, “your name is all over the press and they talk about you on the radio, a Frenchman that says this country is absolutely rubbish” I’ve never said that! And so, if you ran to the news agent and literally pick up the newspaper, it literally was on every single print. And that took us viral and yeah, we had a huge amount of coverage in the press at that time and you know, whether we said [unintelligible] now perhaps not use that word, but we had a degree of visibility and the level of exposure in the press luckily in a good way but we also had a lot of negativity and a lot of backlash from perhaps not the press but more the online covers because of those aggressive tactics of growth and this is why I talk at the beginning of the short-term gain and the long-term pain. Now this thing caught up with us.

Kevin: [00:49:37] [] Yeah, and I think there was some degree of skepticism in the industry really you know, certainly the traditional past of the U.K end of the travel industry which is they hadn’t had that massive up from Brent they hadn’t had an influx of kind of young, up star entrepreneurs and I think we’re quite keen to kind of take the story on now and how did things start to pan out? Was there slow of growth? Just talk us through how it all kind of ended or you know, you’re no longer with the company so there is a kind of a final chapter to it, if you can—

Jerome: [00:50:13]  Yeah of course.

Kevin: [00:50:14]  talk us through that and then we’ll jump in with more questions I’m sure.

SNIPPET 3: Selling WAYN

50:17-55:59

Jerome: [00:50:17]  Yeah, absolutely. So, actually, 2008 was a key turning point, financial crisis to name a few and you know, we, out of the series A that you rightly pointed out, you know, we sold a big portion for 11 million and most of the cash went out and again, you know, hindsight’s a wonderful thing. How do we know and we would’ve raised more money and we would have invested more into the company? You know, I wish I could turn the clock back and do things differently to some degree, not that I would because the experience we have is something that I wouldn’t change for the world. But we made a lot of bad business decisions and I think that luckily at that time we had access to a facility from Draper Spirit which was a bridge loan and that facility was a million pound, I think it was 10% coupon interest and repayable over 2 years and it was a blessing in disguise that we had access to such facility because you know, trying to find financing you know, at that point, you know, through the bank, good luck. 2008, you know, forget it. So, the fact that we had access to this instrument, we obviously took it right away knowing full well that repaying this facility in 2 years time was going to be very challenging. And of course, you know, venture capitalists, they’re not in the business of lending money, we all know that and it was more the, of course, the leverage for a conversion at a lower evaluation and quite frankly, I can’t blame the investors for that. You know, I would do the exact same thing but doing so would’ve mean you know, relinquishing the vast majority of our equity and we found ourselves in the position where you know, the motivation was completely low. I guess the excitement to pursue the dream, you know, changed very quickly specifically if we were going to work for you know, for a much much lower stake in the company. So we really thought hard about this and to cut a long story short, we managed to actually get to an agreement of renegotiation with my investors on the basis of reaching a certain KPIs. And so, we worked very, very hard with the team to come up with further mechanic loops would allow us to essentially generate a lot more growth very rapidly. And this is where you know, we were looking at, I don’t know if you remember, there was a site called “Badoo” as in B-A-D-O-O and they were also a dating site but they came up with you know, a model which was very simply which allowed you to create a viral model on the click of a button, “Do you want to meet this person? Yes or No.” And if you click on “yes” it generates an email then the person would receive an email that will be rather intriguing, “someone wants to meet you.” But if you want to find out you have to click and come back to the site. So, doing that was a huge change model for us because we managed to reactivate a lot of users and we managed to hit our targets and we managed to then be in a position where repaying that loan was no longer required and we managed to remain on top you know, in terms of the equity ownership and not relinquishing you know, the vast majority of our hoardings and for us that was again one of those decisive moment of you know, that you’d give up or that you’d persevere. We were very, very close to giving up at that point because we thought we were never going to reach the metrics and luckily you know, we managed to do that in 6 months time but we knew deep down at that point that you know, we were facing an uphill battle you know, we had a model which was you know, growing. We had growth, you know, we were still growing 5, 6, 7000 users a day but the business was really living you know, hands to mouth and we had to go on the road to sell to tourist boards and this advertising model was killing us. You know, we had to essentially travel all over the globe and convince tourism boards X, Y, Z to come to the party and to invest and to sell advertising packages. That’s what we were doing and it’s very, very tough because on the cash percent point we were really struggling. We never ran out of money, but we knew that you know, if we were to have one or two months of that performance, that’s how close to the line we were. We would potentially fold all, I mean, we were never going to fold because there was too much at stake for the investors but that would’ve been the signal for them to come to the party with potentially more investment at terms that would be very punitive. So, you know, someone breathing down our neck you know, all the time and for 2 or 3 years it [] hardest time of my life you know, from a business standpoint you know, we were again very close to giving up, is it really worth it? What were doing this for and what’s the earning side and finally, in 2016 we had a breakthrough and we you know, sometimes it’s all about timing. You know, the strategic alignment with you know, Lastminute.com was great. They were looking for a media asset with content generation and fast growth and particularly in markets they were interested in and merging markets I think was some degree attractive to them amongst other things. We also had a team in Thailand, very talented developers and that was also very strategically interesting for them and very luckily at that time the stars finally aligned and we managed to do a deal that would allow us to you know, obviously get some value out of the deal from a cash standpoint. We didn’t want to walk away with nothing after all of these years and it’s not nothing ‘cause we had our first sale in 2006 but you know, another 10 years had passed from that point and we thought that you know, those 10 years should be worth something and we also wanted to return some of the liquidity to our investors as much as we could ‘cause again, we had a duty of care to our investors that had been so supportive to us over the years and we managed to do that in yeah, 2016.

Kevin: [00:55:59]  So, one last one from me really. I mean, I’m curious Jerome and there’s been lots of twists and turns and certainly that latter you know, 5 or 6 years as you say was a really tough time in particular over these 2 years and then obviously, thank you for talking us through the last and I think there was a fair amount of people were quite reasonably unsure how it did all kind panned out, could you just tell us over the history of WAYN and I think it’s worth referencing now that you now that got a very good job at Travelstart in South Africa. What would you say is your own kind of biggest regret about the WAYN story, whether it’s a wrong decision or just something. What would you say just quickly as your own biggest regret?

Jerome: [00:56:50]  I don’t really look at it that way Kevin, ‘cause I would genuinely don’t have any regret in a sense that I look back now, you know, in 2016 when the deal happened with Lastminute and obviously I was very relieved that we could have you know, a very gracious with getting out of the business, you know, in a way which was you know, satisfactory to the founders. And maybe I was a little bit more bitter at that point but you know, when you look back, now I look at the last 2 years and I’m thinking, would I really have changed something? No, because this experience that we’ve had is so unique. There are so many startups even today that try that don’t even pass the first two years. I can also say with confidence that there’s a lot of startups that fallout purely within the founders. It’s such a classic scenario where I see people falling out, you know, they lose interest and they even risk friendship out of it. That is the one thing that really managed to keep us afloat, you know, for so many years and there’s unique bond that we had, Mike, Pete and I and respect for one another, that’s really meant that we could keep going for so long. Now again, hindsight’s a wonderful thing. I think that what we really had and we should have perhaps persevered with our subscription and stick to our gun and perhaps instead of trying to prove a our media value or media play with the travel social network that so many were trying to do and quite frankly, many fail in doing that, we also had a very successful subscription business that were generating you know, quite a lot of cash at some point and very profitably and maybe we should’ve just you know, persevered in that vain and maybe the valuation would’ve been different. Maybe we would not have you know, exited in the way we did but again, it’s completely irrelevant because you know, it’s the past now. But I look really with no regret and actually I look at what we did with a huge amount of pride and I know that Pete and Mike would say the same thing because it has been very tough but it also made us who we are today and I think you know, I look back at this whole experience with a huge amount of humility because I have made a lot of mistakes but again, these mistakes are required and you know, it’s again, a very thin line between success and failure and I look at what we’ve done with you know, the conclusion. It was a great success. It doesn’t mean that we had sold you know, yes you know, we didn’t sell it for $100 million or what not, but I don’t define success by the value of the exit. I define success by the experiences that we’ve had and how we’ve managed to not let go and to really persevere all the way through ‘cause it would have been so easy to just give up and trust me, I came to that point so many times and we could’ve literally lose the business at least 4 or 5 times, it’s actually quite short of a miracle that we didn’t.

David: [00:59:43]  Very cool. We got to wrap things up here but I want to end with one, maybe more whimsical question. I want to kind of know how WAYN dating worked out and I think most people who travel had a hostel romance so, in the hot seat, are you married and if so did you find your wife through WAYN dating?

Jerome: [01:00:00] [] You know, it’s interesting. I actually met my wife through online dating and I didn’t meet her on WAYN dating, I know WAYN dating had been closed by that point so, you know, I’ll keep that one short ‘cause WAYN dating didn’t do very well to be honest. It was more of a distraction more than anything else and that was actually a mistake. We should’ve really again, focused on one thing. Perhaps this is you know, the thing that we realized you know, we try to be a bit of everything, a Jack of all traits, masters of none and really focusing on one core aspect of your business is something that really should prevail and remain true today to any business. You know, I am married, yes and we have two wonderful children and I did meet my wife in the U.K through I think it was Match.com at that time or Meetic I think part of Match.com and we met online and again, you know, it’s funny how the industry has evolved in what used to be a very taboo thing to talk about and now is becoming such a common phrase.

Kevin: [01:00:57] [] There wasn’t a temptation to call any of your children Wayn was there?

Jerome: [01:01:04]  No, thanks God we didn’t go down that path.

Kevin: [01:01:07]  Thank you. David

David: [01:01:08]  cool. Well, thanks a lot for the time today Jerome. I think this has been fascinating and it’s the whole insight into part of the industry that I don’t think many people especially tuning in these days would know about. So, thanks again, this has been How I Got Here, Mozio and PhocusWire’s weekly podcast and thanks Jerome.

Jerome: [01:01:30]  Thank you so much guys for having me. It’s a real honor.

 

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