In the interview, we discuss what he did before NileGuide and how the company got started. Towards the end of the interview he gives advice to aspiring entrepreneurs interested in the travel space.
If you have any additional questions for Josh or feedback on the interview, I’d love to hear it. Please leave a comment below.
Jason: Let’s start off with a general background question; tell me about yourself leading up to NileGuide.
Josh Steinitz: Sure, let’s see. I started my career in the management/consulting world which gave me the basic business tool kit so to speak. Had a mini-MBA there and had a chance to be exposed to large companies, medium sized companies, smaller departments within large to medium size companies etc. So I got the basic took kit but two things kept this from being my career.
Number one it was not connected to my personal passion in any way shape or form in that I did not feel a lot of fulfillment by helping these companies be ever larger. And it also just kind of made me feel disconnected from being able to move the needle in a material way. Both of those things were important to me when I thought about what I wanted to do next.
I actually left management and consulting and joined a small startup called Green Travel which was focused on eco and adventure travel space; which is an area close to my heart; and sounds like yours as well. I was a jack of all trades and this was in 1999. We did all kinds of fun little guerilla market campaigns. We sponsored a team in an eco-challenge and we said for every person you get sign up for an email and to follow you, we will give you a buck until you sign up 10,000 people and we built up our email list. A bunch of things like that.
We had a searchable database of adventure trips where we were passing leads on to tour operators, but it really turned out that folks were out there leading the rafting trips down the Grand Canyon or Biking through Tuscany and they were not tracking leads through the online inventory system. It was really hard to kind of connect the dots between a lead and a transaction and get paid for it. The good news is that the types of people who take those trips are really attracted to advertisers and so at the time without really knowing what I was doing I started selling sponsorships and advertising and doing deals with the corporate sponsors who essentially wanted to reach our audience who were looking at these trips and reading that content.
And so ultimately i kind of succeeded in the new space that we kind of attacked which was the media world. We became the largest online travel publisher. We bought the domain Away.com and we launched away.com. We bought Outside Magazine’s web access essentially and ran Outside Online, we bought another site called gorp (great outdoor recreation pages). At the time we were larger than Lonely Planet and Frommers and all those guys.
We eventually sold the business to Orbitz in late ’04 to beginning of ’05, right around the same time that Orbitz was being bought by an even larger conglomerate called Cendant that does not exist any longer. It was kind of a mis-mash of a bunch of different brands and assets.
I stuck around there for about a year and a half and it kind of became clear to me once again that I was not a big company kind of guy and as much as I enjoyed running a small team there but I did not feel that I was as closely connected to being able to make things happen because of the politics involved.
I left Orbitz and started NileGuide in ‘06. Raised some friends-and-family money and spun-off an alpha demo product. Used that raise a small venture round and spun-up a broader beta product. From that, we started our first real-sized venture round and then have been investing in building the product and scaling out our content and getting the right team members on board; then really starting to grow the business ever since.
Jason: Let me go back to green travel, how did you find that opportunity, and how many people were there when you joined?
Josh: I found that opportunity strangely through a college email discussion list. Just like a kind of Princeton Alumni network list; a guy who had been a McKenzie consultant put out a posting asking some unrelated questions about, I can’t remember, I think it was how to structure stock option compensation for employees for a start-up or something, and I just saw his post and we started a dialogue and company’s based in D.C., and I had just moved out to San Francisco. The timing wasn’t great, even though I’m from Maryland area originally. But we basically struck up a relationship, and he hired me. I was, I guess probably the third business employee.
I had joined the same week as the CFO, and there was maybe one or two developers there, but I was basically one of the first employees.
Jason: That’s a very cool story of getting into such a great and successful start-up, you know, just kind of off the bat, that’s really cool.
Josh: Well, you know we went through our challenges to. I mean, I was into that space because, you know, I’d actually written my Thesis on Eco-Tourism.
I’d been a passionate adventure traveler and, traveled all over the globe, and so I knew I had been interested in the space. But we also made our share of mistakes. We bought, a bookstore, and eventually a place called Adventurer’s Traveler.com in Vermont, and we bought a site that had a call-center in Portland, Maine for booking adventure trips that we ultimately had to disband. And we did some other things, and you know, we probably grew from 3 to 120 employees, and then back down to 40 or 50, but ultimately we, we survived the kind of dot com 1.0 bust and built a, you know,a it’s not a You Tube, or a Groupon, but it was successful enough to find a good home and be part of something larger.
Jason: What did you study in school?
Josh: My degree is from the Woodrow Wilson school of public and international affairs at Princeton so, kind of public policy and international relations and I had a focus on environmental studies.
Jason: OK. Great. It’s always interesting to see if you have a computer science background or something different.
Josh: No, you know that definitely would have made things easier if I had, and I’d highly recommend it for anyone who’s ultimately considering a career in entrepreneurship, you know feeds that fire within the belly to at least have that tool kit, I certainly didn’t and you know it just means you’re one step further away from being able to kind of kick off controlling your own destiny.
Jason: Yep, yeah. That makes sense, you got to still find that developer to help you out. So let me move to, NileGuide then, so what was the first inspiration for the idea?
Interviewee: Yeah, you know, one of the things that everyone hears or says when they hear that you’re starting or planning to enter a space like travel that’s so massive, I mean it’s a $200 billion online market, it’s so competitive, that their first reaction is like wow, there’s so much competition how can you be different?
And for me, you know there in lay the opportunity, which is, the problem in travel and on-line content information, is not that there’s a dearth of it, in fact there’s an overwhelming amount of it, so what I saw was the challenge of helping people cut through that clutter, to find what’s relevant and interesting to them versus creating yet another layer of clutter. And in particular, that opportunity was converging on several trends I saw.
One was the kind of new pools of interactivity the web was starting to make available. You know, Kayak had just come online, and you saw all kinds of fancy, you know, Ajax, you know started filtering and sorting, you know, kind of the old days of just static html pages were, were going away.
I saw that, this kind of, as I said before, this massive amount of content, which was a huge opportunity to leverage content, and process content that was already out there without re-creating another wheel, and starting another TripAdvisor, or another Lonely Planet or another Yelp. But then, adding a layer of relevancy again, with this technology and with humans to make great recommendations, and make those recommendations a critical part of the trip planning experience rather than trip planning just being about, you know, tools, adding things to your basket, much more about the content.
That was kind of a convergence of, archival content that had been created over the last ten years, the new technology that had become available, and then this opportunity to take the best of those two trends and use it as a sort of delivery mechanism to make great recommendations.
Jason: Yeah. Were you there at the beginning? Was this your idea? How did that process work? And then also my next question is going to be on the bringing on first developer and getting that first beta product out that you mentioned, as well.
Josh Steinitz: Yeah. I mean, I started the companies but there was different ways I could have gone about it. I took a look at purchasing another company and kind of using an existing product and platform and repurposing that and growing that into something ultimately I wanted. But in the end, that turned out to just be a leap too far and I just decided to just build it myself.
So I basically kind of vetted choices with whom I could start off my development project. I kind of looked at a distributed Razorfish type of model where you kind of contract for some development. I looked at one or two folks locally. And then I ultimately settled on a team of offshore developers managed with an intermediary in Seattle to be able to provide product management in terms of requirements and specifications from their experience alongside kind of business requirements and ultimately, you know, product vision that I was having.
So that’s how we kicked it off. I was in parallel raising money and I was spending it as fast as I was raising it and sometimes spending it faster than I raised it. So, you know, it was coming in one door and going out the other.
Jason: Yeah. That’s pretty incredible. So you basically started on your own and found this person in Seattle, your intermediary, and with him you kind of worked out the product vision. And then he had developers in India working on it. Did I explain that correctly?
Josh: Well, a few clarifications. One is I had a couple other guys I was working with to start. Not initially. I was doing this with them. I fact, I was doing this with a friend of mine early, early, like while there was just a couple PowerPoints and an idea. He ended up moving overseas and then I was working on it solo for a little while. Ended up linking up with a couple other guys. One of whom ultimately became my business partner. The other one also helped contribute to getting the thing off the ground. Although, he didn’t stick around for very long and didn’t participate in fundraising or product launch or things like that.
My other cofounder did stick around for, you know three years and so he and I worked, you know, closely together for quite a long time.
But in terms of the developers, they were actually in the Ukraine
Jason: And was your, the cofounder that worked with you for three years, business or technical?
Jason: So the other two people that you mentioned, were either of them technical?
Josh: Not really. The two other guys, at various points, came on board for short periods at the early days. One early days and one kind of shortly after the early days for kind of short periods of time and, ultimately, I think we and they, we’re hoping that they would fill that technical role, that technical product role.
But ultimately it had been so long since they had done any coding or they were just at a state in their career that that didn’t make sense to let them. Ultimately, you know, we needed some different expertise there.
Jason: I am interested again in the early stages of NileGuide. So you were working with your developers offshore. You’re raising money. Can you tell me a little bit more about the early days and kind of getting ramped up to maybe the first or second round of venture capital? How did the process work? How did the company grow? Any pivots? Things like that.
Josh: Yeah, I mean, there’s no rule book or roadmap for this stuff. So, a lot of it is just learning by doing. And you know, you make mistakes and the important thing is not to make the same mistake twice.
There are certain basic truisms. The offshore development can be cost effective. But it can also mean that you are less agile because you have to over specify things and there’s a time lag. And then it might be clunky code. You might have to fix later.
But looking backwards, those are all things that you can say, ‘I wish I had done that differently.’ But at the time, you know, you work with the resources. It’s all about timing and circumstance, right.
You start off with $5 million. And the question is, what’s the best way to spend this $5 million to build this product. What you’re going to do is very different than if you have $250,000. And the explicit, entire goal of that $250,000 is building an alpha demo product that you can use to raise more meaningful capital.
That was the goal. Our goal is not to build the ultimate be all, end all product with $250,000. It was to build something that could showcase the concept and the vision that we were going after. And that’s what we did. It was just for San Francisco. It was a clunky, crappy UI built by Ukrainians.
But it showcased the potential of being able to filter and sort to get and potentially dynamically receive recommendations. And even to create your own custom downloadable guide to take with you, which is this custom PDF that we enabled you to download to your phones. At the time we didn’t have the iPhone app but we had that functionality.
So it was working on a reasonably discrete amount of content which limited the complexity of the system. But, and it didn’t look pretty, but at least it showcased how compelling that could be. And that was the goal of that first friends and family round.
And then at the same time, the goal of the first venture round was to build up a small team to show that we could have an impressive executive team as well as a few folks who could actually get shit done and weren’t just overhead. Although, everyone’s getting stuff done when you’re at a startup, no matter what your title.
And we didn’t want to be reliant entirely on offshore development. Because that’s just not long term, very defensible, and is not a great place to be.
So we hired some people. And we built up enough of a team locally with the goal of ultimately replacing the offshore team. Although that took another year or two to finally wean ourselves off. And we raised a larger round. And we had a number of term sheets. And we had to negotiate. But we ultimately found a couple of strong investors.
Jason: How big is the company now? How many employees? I don’t know what you feel comfortable sharing or what you don’t.
Josh: NileGuide, we have about 20 employees today. Although our footprint is considerably larger because we’re 100 local experts around the world writing. And we have a community of 100,000 locals. Localyte is a company that we bought in the spring.
So, we have a considerable footprint or opportunity to create content and explicitly for travelers by locals. What’s really special and unique about NileGuide’s ability to deliver recommendations, is that it’s really based on local expertise. Great recommendations for travel based on real local expertise. That’s something that you’ll never find on a traditional travel guide site. Nor will you find it on a traditional UGC, user review site.
We’ve got the boots on the ground. And we’ve got the Yahoo! Answers for travel. And we’ve got the About.com for travel. And we’ve got the software that processes and semantically editorializes all partner content that we have access to.
So, we’re trying to be as objective as possible and saying, ‘Hey, we’ve got all three rights as a content tool. We’ve got great content from filmers, from Trip Advisor and Open Table and all of those folks. We’ve got our own network of local editors. And then we’ve got a community of content creators. So, it’s like, pick your poison.
So, that’s where we are from a team perspective. We’ve got about a million visitors a month. And our goal is to continue to grow that, as well as of course, revenue over the course of next year.
Jason: Very cool. I do want to be respectful of your time. So, just a couple of quick wrap-up questions. What advice would you give a new entrepreneur interested in the travel space?
Josh: Hmm. Good question. I guess a couple points I’d throw out.
I definitely don’t subscribe to the “if you build it they will come” mentality. You know tools don’t create customers in and of themselves. And if you don’t really think about customer acquisition and how users will find your site naturally, or how via social media or via natural search, or word of mouth, you know, that’s tough. The web’s a crowded place, right? So just think about how customers…how your product will have customer acquisition baked into the product itself. I think that’s really critical. I don’t see enough of that. I see people kind of thinking, well, hey, I’d use this, hence this will become widely accepted and popular.
I definitely don’t fall into the, kind of, you know, navel-gazing. And it’s easy to do because you’re working hard on it, and your friends and family say it’s great and really cool. But there’s a million and one travel sites out there, and there’s only a few places where people are actually, you know – and when we’re talking people, I’m talking millions and millions of people – are actually looking for travel. And that’s, you know, Google. And to some lesser extent, Facebook. And then, a few large brands that have carved out enough of a customer base to generate direct, repeat traffic. And that’s because they’re doing TV ad campaigns and all kinds of other things.
So, yes travel’s big, which is great. But it’s also really important to find your product and then how to use it. The other alternative, of course, is that you could build a product that monetizes so well from Day One that you can literally afford to buy all the traffic you’ll ever need. I’ve only seen a few sites that do that. Usually they do it the other way around. But it’s certainly possible to build just a truly awesome mousetrap, and you have the scale to make it work right away, then, you know, you essentially create your own scale. So that’s another option, but it’s hard to do that.
The last is just, you know, don’t wait – I mean you see this a lot, but – don’t wait for the perfect product. Get something out there, and then iterate and test rigorously fast all the time. And don’t let perfect be the enemy of good. It’s never going to be perfect. But it’s also important to actually get something out there and just be super analytical about how you decide what to do next. Does ABC to CBA, you know…just keep cranking on those cycles until you make it better and better and better.
Jason: Great. Last question, what’s coming next for NileGuide?
Josh: Well, NileGuide has kind of just gone through a evolution away from explicitly being about trip-planning, precisely because of some of the challenges I mentioned to you earlier, where tools don’t create customers in and of themselves. You know, trip-planning sounds great, but five percent of the people want to plan trips; ninety-five percent of the people want to just find stuff and search for stuff. And I see lots and lots of trip builder, trip itinerary start-ups coming out, again, and they’ll fall into that same trap where it’s just a complicated tool that no matter how cool it is, not enough people will ever use it.
So we are in the process of moving away from explicitly focusing on trip planning, and again really focusing on the content, back to that value proposition I mentioned to you, which is, you know, great travel recommendations based on local expertise. And that means we’re explicitly focusing building on up our Q&A capacity with our global community. It means were explicitly focusing on ramping our original content from our local editors. And it means that we’re starting to really think about how that content gets delivered in a user interface that engages users so they don’t bounce, and spend a lot of time on our site. And that enables them to do things that actually support a business. Like, look at ads, and check rates for hotels, and things like that. Because, ultimately, once you get to a certain size and stage in travel, you have to start proving that last element which is critical to any business, which is, you know, support a big revenue base.
But it’s kind of an order of operations right? I mean you’ve got to, if everyone believes that travel is a highly monetizable state, so you’ve got to, kind of, build an audience. Because, no one wants to have the world’s most profitable, three customer company. Unless those customers are like, Google, Facebook and IBM, or something.
So, we had to start first with building an audience, but now that we’ve got some critical mass it’s time to start flipping the switch, and having driving revenue capture a greater and greater share of our energy.
Jason: This stat you threw out at the end, of five percent of people want to plan trips, ninety-five percent just want to find stuff. That’s an interesting thought. I’d never heard that before.
Josh: Yeah, I mean, you know, it’s funny. Planning trips means different things to different people. I mean, people spend a lot of time online, researching and planning right?
But, I guess, what I’m thinking about is actually organizing. That’s a power user thing. That’s like people who actually want to drag and drop days on the calendar, you know, share and collaborate it, and what they’re going to do on their itinerary, and all that stuff.
That vast majority of time and activity, and what particularly supports the business model, is looking for content. Whether you’re just looking for inspiration, or looking, actually doing research. There are some companies that have tried to turn some trip planning into more of a lead-gen model like Tripology. But, you know, they’ve had kind of mixed results with that.