The entrepreneurial sweet spot – how to build a B2B startup in the travel industry

By on December 20, 2017 | Spotlight

Simon Akeroyd, VP, Corporate Strategy & Business Development, Amadeus Asia Pacific has penned this piece for aspiring travel startup entrepreneurs.

There’s no doubting that the world of business is changing. The traditional model of large international corporates functioning in a singular, closed-door fashion is fast disappearing, with companies now open to collaboration or outsourcing. While previously big corporates, protected by expensive barriers of entry, were responsible for all “business problems” in-house, technology has now made it possible for many of these issues to be outsourced.

And here lies the opportunity for the B2B entrepreneur. The last few years have seen an unprecedented rise in the number of startups globally, not least Asia where there are over 47,000 startup companies listed on angel.co. Often seen as polar opposites with differing goals and priorities, many large corporates and disruptive startups are now finding they can benefit one another. Startups are capitalising on the fact that big businesses need them, they are working to tackle business problems outside the larger company’s domain, with the outside chance of finding themselves targets for acquisition by the very companies they are trouble shooting for.

In fact, even if a trade exit doesn’t materialise, there are still plenty of compelling reasons for startups to partner with corporates. For one, working alongside a trusted corporation provides startups with credibility in an often-crowded marketplace. With an established corporation as a partner or key customer, the startup is well-placed to be taken seriously by their peers. Secondly, by working alongside larger, more established companies, startups can piggyback off robust marketing and PR strategies that may save them from falling foul of any crises that can often plague new companies. Finally, the scale of a large organisation provides a startup with strong distribution channels, significantly improving the situation of the startup, whilst also reducing the overall risk.

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Simon in a tuk tuk in Sri Lanka Image Credits: Amadeus Blog

So how should you go about founding a successful startup?

Three steps to startup success:

  1. Identify the problem you want to solve.

For large travel companies (including Amadeus), there’s always a long list of problems or challenges, of varying levels of priorities, which we’d love to focus on. However, more often than not, there isn’t the time or the resources to look at them all. Most companies have limited capacity to implement every change and advancement that they want to; there are always projects that get pushed down the to-do list. It’s those non-urgent tasks that could be the real sweet spot for a startup, a great advantage for the budding entrepreneur. Rather than the stress of worrying about sales figures (which should generally be consistent), or spending time marketing to attract new customers, the startup can instead focus on serving that one customer with that one product.

  1. Do your research.

Familiarize yourself with the industry, assess the work of competitors and keep an eye on what technologies and innovations are coming next. Take a hotel, for example. Maybe they want to cut their laundry bill or determine how rooms can be cleaned in a more efficient way to offer early check-ins, accommodate late check-outs, offer an amazing guest experience and drive loyalty. It could even be how to improve internal efficiencies or manage their supply chain better. If a startup can offer a solution to these types of problems, they become a valuable match for any corporation and far more likely to succeed.

  1. Choose the right support.

With the number of accelerator programmes multiplying throughout the region, it can be difficult to determine which is the best fit for you and your partner. It is vital that you find the right experts to partner with in order to have the best chance of success. Not an accelerator or an incubator, Amadeus Next is a community, nimble and flexible, just like a startup itself, which leverages the technology and expertise of our experts to provide support to travel technology startups. We currently partner with more than 30 startups, and surprisingly over 70% of these companies have some form of B2B (business-to-business) component, with almost 55% being purely B2B.

Why B2B?

Founding a B2C startup is undoubtedly an attractive idea. Many entrepreneurs dream of creating a company with mass appeal. The next Airbnb, Line or Grab perhaps. However, these ‘unicorn’ triumphs are rare (hence the name), and in my opinion, entrepreneurs would be wise to consider an alternative route on their quest for startup success. While it is true that some B2C startups bring great ideas, technology, and solutions to the travel industry, for many it can be very difficult to get off the ground, particularly for first-time entrepreneurs. From the get-go, B2C startups must be alert to many things, including having a strong marketing strategy in place that stands up against the big names already dominating the B2C travel industry. You have to compete for a potential travellers’ attention against the massive marketing budgets, years of brand exposure and known services of the likes of TripAdvisor, MakeMyTrip, Expedia or Ctrip, amongst others. Most well established travel brands have a solid funnel of customers and it’s hard to take those customers (and their loyalty) away.

The reality is that many B2C startups we see aren’t favourable to investors, many of whom prefer to fund B2B businesses in a bid to establish more stable earnings. It may sound glamorous to launch a B2C startup, but according to CB insights, in 2016 there were only 25 unicorn “births” globally, 68% less than in 2015[1].

So the next time I see an exciting Asian startup trying to make it in travel, this would be my advice; don’t get fixated on becoming an industry disruptor in the consumer sphere, instead explore how your technology can help solve an important issue in a B2B company. While it may not be their current priority, or one which their R&D team is focusing on, by helping to solve that problem, you could make a huge difference to a company’s business, and hopefully the chance of success for your startup.

[1] https://techcrunch.com/2017/01/31/cb-insights-3358-tech-exits-in-2016-unicorn-births-down-68/

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