Enabling Mass Personalized Travel
By Sarah Marion & Chris Arsenault
Recently, we at Inovia Capital have been fascinated by the emergence of messaging and conversational UI. Since announcing our first investment in the space last summer, we’ve kept learning from operators in the community and have solidified our investment thesis. Consistent with our broader philosophy, we’re backing exceptional founders who are tackling valuable problems across a multitude of opportunities within the messaging and UI category — messaging infrastructure, enterprise knowledge management, conversational marketing, and consumer plays, to name a few. The ultimate guiding principle connecting these companies are founders who are driving a paradigm shift from mobile-first to messaging-first, ushering in a new wave of personalization at scale. Building on top of messaging platforms enables companies to mine conversation history for personalized data and context. This enables a transition from reactive “one size fits all” responses to predictive personalized suggestions over chat.
We’ve seen a broad consensus across the industry that messaging platforms are a logical extension of customer support. The pain of existing support channels is relatively high as most companies still rely on phone support (which is inconvenient and demands your full attention) or email (which is asynchronous and drags out the interaction). An emerging use case is conversational marketing, where messaging platforms can serve as a home for marketing campaigns, creating opportunities for deeper engagement. We’re excited about this category (and have made an investment in the space), as marketers begin to recognize the value of ongoing campaigns and communication via messaging platforms. The fundamentally new approach to social networks and messaging platforms requires substantial guidance. Yet intertwined with both customer support and marketing lies the actual act of purchase itself. Capturing consumers’ time is valuable, but only if that attention translates into purchase. We believe that a confluence of factors have primed consumers for conversational commerce — using messaging interfaces to transact with businesses. What makes the timing right?
- Facebook, Kik and recently Apple have all opened their messaging platforms, exposing an audience of over a billion people to a world where your conversations with businesses live in the same app as conversations with your best friends;
- Messaging platforms have unveiled mobile payment mechanisms, both reducing the need for external integrations to allow businesses to monetize conversations and increasing consumer comfort with payment transfers via chat;
- Individual platforms establish a persistent identity with meaningful data insights that can drive deep personalization; and
- Perhaps most importantly, consumer comfort in engaging with brands over messaging platforms has grown as support and marketing use cases have normalized that behaviour.
Chat does have some limitations over traditional app or web-based experiences, namely a smaller footprint to display options. With that in mind, the best companies aren’t simply copying those experiences to a new UX, they’re leveraging messaging as a distribution mechanism. Transacting over a messaging platform also enables companies to both retarget an existing user base, and target “lookalikes” against the existing user base. Facebook continues to connect News Feed ads with Messenger sessions, and we expect to see further support for viral sharing and improved discovery from messaging platforms. This extends some of the network effects that are supporting social networks to conversational commerce companies — in an environment with limited real estate, messaging platforms will suggest fewer options and the out-performers will rise to the top, capture more users, and leverage that heightened transaction frequency to continue to improve.
Travel booking is a logical “killer use case” for conversational commerce, as it ties these distribution mechanisms with offline experiences. WeChat is highly demonstrative of the opportunities in online-offline integration that have not yet been unlocked in North America. Attracting online users to purchase offline services, coupled with leveraging data points that are unique to mobile — GPS location, sensors, voice, camera and bluetooth — can unlock additional value for consumers. Although travel booking isn’t the most frequent use case (and thus not the most habit building), it engenders a strong emotional connection, facilitating high levels of trust which we believe is key for conversational commerce. It’s also a massive market, with hotel booking alone accounting for $550B in yearly spend. The sheer size of the market creates opportunities for multiple billion dollar companies, including new ones emerging as leaders in new channels.
Given our excitement around conversational UI and travel booking as a winning use case, it’s no surprise that we’re announcing that we are leading an $8M Series A financing in SnapTravel, a chat-first, hotel booking company that enables users to book hotel rooms over Facebook Messenger and SMS. They caught our attention when they launched last summer, and kept it when David Marcus (Head of Messenger) highlighted SnapTravel not once, but four times at this year’s F8. SnapTravel is currently the top grossing bot on Facebook, and uses hybrid AI-human labour to help travellers find and book discounted hotel rooms. The company also reaches out to the hotel on your behalf to negotiate upgrades and no special requests are falling through the cracks. While users initially arrive because of the simple entry through a conversation UI, and stay for the heightened support experience, SnapTravel’s ultimate goal is to simplify the booking process and curate a small group of recommendations based on users’ personal preferences.
SnapTravel is betting that the convenience and advantages of selling via messaging platforms, recent improvements to machine learning and natural language processing, and the company’s relentless focus on customer experience will propel them into a worthy opponent against the North American travel duopoly, Expedia and Priceline. We’re no stranger to the travel industry — we’ve previously written about our experience backing Luxury Retreats (acquired by Airbnb earlier this year) and Routehappy, and also count BusBud and MileWise (acquired by Yahoo! in 2013) as members of our portfolio. We were awed by the product and growth that SnapTravel has created in under a year, and booking our hotel rooms through SnapTravel quickly spread from a diligence test to our go-to travel habit.
Above all, we were highly impressed by the co-founders’ commitment to building a company that prioritizes customer experience and creates real value for users. Messaging is a noisy space — the founders that prioritize consistently exceptional experiences over buggy exchanges in the name of NLP purity will be the ones who build consumer trust. We fundamentally believe that vertical-specific first-movers are well-positioned to monopolize their relationships with users. Although switching costs seem low, first-movers develop earlier relationships with users. These early touchpoints critically establish trust and affinity between consumer and company, which enables extreme personalization.
Prior to co-founding SnapTravel,
co-founded AdParlor, which he bootstrapped to $100M+ in revenue and more than 100 employees across 8 countries. When he sold to AdKnowledge in 2011, AdParlor was the #1 Facebook advertising company and managed $7–10M/month in ad spend. Facebook’s strategic emphasis on driving adoption of Messenger as a B2C communication platform is a meaningful tailwind, and has unparalleled expertise in optimizing Facebook ad spend. He’s joined by Henry Shi, who honed his technical skills at Google, LendUp and Bloomberg, and co-founded uMentioned.We’re excited to support these founders as they grow a team of equally skilled operators and solidify their reputation as the default conversational travel booking company for consumers. We also encourage everyone to consider SnapTravel for their future hotel bookings — we’ve tried a lot of booking apps at Inovia but keep going back to SnapTravel!
