Bangalore Startups’ AMA with Varun Khona, Co-founder & CEO of Headout
Varun is co-founder and CEO of Headout — a mobile marketplace for travelers to book last minute experiences. The app is live in New York & Las Vegas. They started out as a 500 Startups incubated company and recently they raised their seed round led by Version One Ventures, Nexus Venture Partners, 500 Startups, Funders Club, Fabrice Grinda, Paige Craig, Maiden Lane Ventures, Ludlow Ventures, Snapdeal founders, Vishal Gondal and others. The AMA can be focussed on building a consumer brand globally, starting up in US, fundraising, accelerators and mobile marketplaces. He doesn’t think too much of any generic advice and outrages against any outrage.
Q: When so many investors are investing at seed round, is it just the money? if not what kind of strategic help do these guys bring on board by? — Nagesh Bansal
Each investor *has* to bring something to the table, especially at the seed stage. We need expertise in building marketplaces, mobile products, city specific networks for our launch and hiring related inputs. We ended up having the round oversubscribed so had the good fortune to cherry pick.
Q: Varun tell us your story about how it all started? — Mithun Muddan
It’s the good old tale of solving a personal problem. I travel a lot and one of our trips to visit Suren (who is now my cofounder) in Paris led to Headout.
Q: What makes you believe this already crowded space of travel startups is good place for disruption? — Saurabh Minni
Travel being crowded is just factually incorrect. There are myriad verticals and markets and the fact that space has seen multiple multi-billion outcomes across the globe is a testament to the industry. There were close to a billion people who traveled across international borders just last year.
Q: Firstly Congrats on raising a debt of over half a mil! What’s the model? Is it to primarily fill empty spots on a tour or empty seats for a Broadway show? Or is there more to it? — Sharad Madiman
We have actually raised $1.8M on convertible notes. Haven’t announced yet. We are starting with filling empty seats and getting efficiency in the industry. A by product of solving discovery and ease of transactions is an opportunity to get more people to indulge in experiences that we believe form the core behind why people should travel.
Q: Have you or your co-founders lived in the US for a long time before you decided to start head out? Why US was the first choice makes terrific sense but how did you go about aggregating data? Was it all done online or you guys had to spend months on time living in there, to go talk to people (tour guides for instance) in New York and Vegas to curate the data gathered? — Karthik Nagarajan
None of us have any background in the US. It is perhaps the single biggest foolish bet I have taken in my life. We put in our life savings and got a one way flight ticket to figure it all out.
Q: What is the repeat business you see (in terms of percentage of total users) from a single user on an average? — Harsha MV
Average of 2 reservations within 48 hours in NYC. 40% of LV users are folks that have already used Headout in NY the same week. Our repeats are within a short period on the same trip. The metric we look at is TTV (trip time value).
Q: How was the experience with 500? Do their partners mostly invest personally in the follow through rounds? — Kartik Mandaville
500 is what you make of it. They follow on rather selectively.
Q :Where do you see a lot interest coming from? Business travellers who have a couple of hours to kill in the airport or Backpackers who kind of know what they want to do but not exactly where? —Karthik Nagarajan
Business traveller is a great segment for us. The largest however is young couples/families.
Q: Gives us some inside notes on your plan to scale and how you went about creating initial buzz around your product — Vijayaparashar
We have a city rollout model that is the central piece of scaling up. We haven’t figured it all out for sure. Buzz is simply building a great product and then hustling to find some initial scapegoats. We are primarily still focussed on the former.
Q: How do you get the data? Is it manually curated? How do you plan to scale in the future? — Kartik Mandaville
Data collection is automated and curation is manual for now. We have individual commercial relationship with vendors to enable transactions.
Q: Which city is next after NYC & LV? Also, Any plans for India ? — Pravin
SF and Vegas. We are not looking at India for the next 12 months.
Q: What is the entry barrier for this kind of business? Someone with enough money and legs can come in and steal your customers right from your app? Do you have an exclusive deal with the Hosts? — Harsha MV
The only barrier for a marketplace is network effect and trust; with sellers and buyers. Same holds true for us.
Q: How do you target the young couples? What’s been working? facebook? — Kartik Mandaville
Mostly word of mouth, App Store discovery and referral credits.
Q: Was there a question of are you guys the right bunch to pull this off from investors since none of you had lived there and you had decided to start with US first? — Karthik Nagarajan
Absolutely. We simply pointed at data for the traction we had in 6 months on both sides of the marketplace. That shut them up. In hindsight I can say with a lot of confidence that our lack of local knowledge didn’t matter all that much. We live in the age of internet and the valley is an extremely friendly, easy place to figure out.
Q: On model — do you take a cut from the cost of the experience booking from the vendor? — Kartik Mandaville
Yes, we take a % on every transaction from the vendor. No charge to the user.
Q: How many people did you hire to build content and supplier contracts? — Vijayaparashar
We have a team of 5 including 3 founders.
Q: Can you gimme a rough idea of your numbers when you applied to 500 startups and YC? — Karthik Nagarajan
We were at at $400K run rate.
Q: How was the sign up process for vendors? I’m assuming it would have taken a lot of hard core yelp style selling to them — Kartik Mandaville
We hacked that. We didn’t sign up vendors initially. We simply started selling for them and went back with actual sales data to ask for partnership. Seen 100% conversion with that approach.
Q: Did the vendors honor those sales?how’s the integration with vendors? Do they get like a webhook on every booking? I’m assuming lot of vendors are offline or have low tech or have outsourced tech so how do you deal with that — Kartik Mandaville
Yes. They have an Uber driver style app to accept reservations.
Q: So the user cannot pick the vendor? — Kartik Mandaville
No we take care of the vendor curation and choice conundrum. You don’t need to worry as all of them are vetted/rated.
Q: How was your experience to get on TV “The PITCH” — what effect did it have on your company and personal branding? (assuming it was like Indian Shark Tank) — Harsha MV
The TV show was fun but no real help. Vishal Gondal did invest in us though so it wasn’t that bad ;)
Q. What was the thought process behind raising almost 2mil in a convertible note? You didn’t want to part away too much equity to start with? Or do you really have the Revenue projections to match it up? — Sharad Madiman
Note is easier, faster and cheaper. We set out to raise $1.2M for 12 months but extended to accommodate some strategic investors. We are a US entity and raised all our money there.
Q: How do you take care of the inventory since vendors must be getting bookings from multiple platforms? Do they actually update? — Ish
Yes, they do. In the tours vertical, there aren’t that many platforms vendors work with to be fair. We have made it ridiculously easy with the app though so that helps. Takes 60 seconds for an update.
Q: Whats the hardest part to do a new City Roll Out? How much time n effort you need to get another city on board? — Harsha MV
Two weeks, $50–75K. Hardest task is user acquisition and recommendation algorithm customisation for the launch.
Q. What happen to Trippy? Did you have an exit? — Sharad Madiman
I did sell it but didn’t make much money per se. It ended up becoming a lifestyle business.
Q: How did you guys work out visa issues? — Karthik Nagarajan
Expensive lawyers ☺
Q: Will you expand to more cities or give other offerings to users in existing cities — package deals etc? — Harsha MV
Expanding to 12 cities by the year end. Yes. Bundling is in the works.
Q: What kinda exit did you have with Trippy? Same founders started HeadOut? — Harsha MV
No, Trippy was only me. One of the many reasons why it didn’t work out.
Q: How many vendors do you have onboard? — Kartik Luke Singh
Close to 500.
Q: Give a shoutout if you guys are hiring! — Harsha MV
FYI, now that we have some money to breathe comes to the quintessential hiring plug. Got a swanky office in Koramangla and a promise of one amazing topsy turvy ride. For more — https://www.headout.com/careers
That brought our AMA with Varun to a close!
Lots of people had requested we get this one up on a Medium post because they couldn’t be on Slack to attend live. We want to thank Varun for taking the time to chat with us.
We’ve set up a Twitter handle — @blr_startups. We’ll start tweeting updates and such out there in the future.
If you are interested in the startup ecosystem and would like to network with fellow tech founders join the Slack group if you haven’t already! Just fill out this form. If you have already filled the form, you would have received an invite. Contact @kar2905 or @harshamv if you have any issues. This AMA was summarized by @kartikluke and @karthik2502.
You can suggest other people for AMAs at the Slack group or you could reach out on Twitter.
