I stood in the middle of the street at the top of the hill, taking giant, euphoric gulps of air. I grinned with delight as I watched the moon shining through the scattered clouds and onto the rippling surface of the ocean. All I could hear was the wind in the trees and the waves gently lapping on the beach. With May ushering in a winter chill that normally lasts till about October, the seaside town of Lorne, packed with tourists during the summer months, had returned to its permanent population of less than a thousand. But with the locals all tucked up in bed, I had the town to myself. I gleefully trotted and skipped down the steep hill to the bottom, turned around, then sprinted back to the top.
Suddenly, the world seemed full of promise and hope. The problems were still on my mind: the panicking investors, the aggrieved former team members, the outstanding bills. But they weren’t tormenting me now. They were just steps that needed to be taken, ordinary business issues that could be worked through calmly and methodically.
“This,” I thought triumphantly, “is what it means to be full of life!” It was a state I’d been desperately trying to achieve for years. Somehow, my iron-pumping, triathlon-training self of years earlier had become so lethargic that just getting out of bed was a huge effort. I’d tried so many things to get my energy back: every diet, supplement, detox procedure and mind-hack I could find. But whatever improvements there’d been, they weren’t enough.
Yet here I was, after just a week of solitude in a friend’s beach house, running and skipping and shadow-boxing like a lunatic, exploding with vitality like never before. And it wasn’t as if I had to drag myself off the couch and out into the chilly, windy night to sprint up steep hills. I wanted to do it. I needed to do it. I just couldn’t sit still. And doing it felt amazing. Exhilarating and euphoric and calm and peaceful all at once.
The plan for Lorne had been to adopt a lifestyle of perfect health: strict diet, nutritional supplements, daily meditation, sauna sessions, and long walks on the beach, filling my lungs with fresh seaside air. Was that all I’d needed to cure five years of fatigue? It seemed improbable; I’d been doing most of those things for more than a year. Apart from the solitude and the seaside location, there was really only one other thing that had changed: the overwhelming sense of dread I’d felt for the past few months had been replaced by relief. Could that have been it? Was relief the magic ingredient?
Of all the emotions running through my mind that week in early May 2011 when I arrived in Lorne – the week Adioso’s funds finally ran out – relief was the dominant one. Relief that the many months I’d spent worrying about running out of money were finally over. Relief at the thought that things probably couldn’t sink any lower. Relief that now that failure had unequivocally arrived, I could stop fearing it and start focusing on positive steps to get back on track.
It helped that we’d found a way to keep ourselves fed. Having created a popular open-source library used by Twitter developers, Fenn had picked up some remote contracting work for a well-funded US startup. He thought he could do a couple of solid days a week contracting to bring in enough to cover our basic expenses, while still allowing time to work on Adioso. I wouldn’t have minded if all he did for Adioso was keep the servers running. I was worried about his own stress and fatigue, and felt guilty about having him toil to pay both our living expenses. It wouldn’t be for long, I told myself. I was going to figure out how to get us some real money.
Aside from recovering some health and emotional balance, what I most hoped for in Lorne was some clear time to think everything through. Was I still up to the job of being a founder of this company? What about Fenn? Was he up to it? Did he still want to do it? Did he even know? Could we function as a team? What about Adioso? Was it worth persisting with it? Did we even want to be in the travel industry? Over the weeks I spent living in Lorne, I rolled all of these questions around in my head, often during long walks along the beach, or sitting on the verandah watching the kangaroos graze on the grass in front of the house.
Though that surge of energy after the first week was cause for optimism, I couldn’t get ahead of myself. So many times before, some perceived breakthrough had led me to euphorically proclaim that from that moment forward, everything would be different, only for the lethargy to return within days. Even if this really was the beginning of a sustained improvement, I still had major doubts about my capabilities. What was it, I’d increasingly been wondering, that I was actually good at?
Fenn’s talents were clear. He was a brilliant programmer; probably one of the best in Australia. He was also unusually socially competent for a programmer. He enjoyed the company of others; people liked being around him, and other great hackers loved working with him.
In 2003, Fenn had asked me to start a company with him because we seemed to look at the world in much the same way; I could program well enough to help him build things, and I also had a degree in business and experience in sales and marketing. He’d thought I’d be able to do all the messy business stuff to turn his talents into commercial success. As we progressed, I’d worked as a programmer on some major projects, at times excelling enough for Fenn to comment that I was closer than anyone else he’d met to being as capable a programmer as himself.
But that was years ago. As we went through Y Combinator in early 2009, my energy levels collapsed, my programming output ground to a halt, and my contribution as the business guy wasn’t nearly enough to compensate. As the months passed after YC, and we started to comprehend the magnitude of the technical and commercial challenges Adioso faced, I found myself feeling as though any contribution I could offer was like pissing on a bushfire.
Was I incompetent, and out of my depth? Was it a mistake that we’d been backed by such eminent investors like Y Combinator, Paul Buchheit and the Reddit founders? That wouldn’t be particularly remarkable; even for the very best investors, most of the startups they backed turned out to be mediocre or outright failures. But we weren’t meant to be one of them. PG seemed to have had particular belief in us, telling us before demo day he thought we could one day be IPO material, and strongly recommending us to VCs and angel investor friends. It was shameful to consider what they’d think if they knew how little I was getting done. Or how long it took me to get out of bed every day. This wasn’t how I was brought up. What would my parents think, or my late grandfather?
It had been comforting to think that my problems were the result of some curable – or at least definable – physiological condition. I’d spend endless hours consulting Dr. Google, scouring mainstream medical journals and wacko alt-med discussion boards and everything in between. ADHD, Asperger’s syndrome, depression, anxiety, chronic fatigue, bipolar, metal toxicity, poor liver & kidney function, adrenal fatigue, low thyroid function, digestive disorder, mitochondrial dysfunction, glutathione deficiency and more; I’d pore over whatever I could find, trying to find common threads and pointers to the next plausible-sounding treatment option. “You’re fine, it’s all in your mind,” well-meaning friends would scoff. I’d heard the same from doctors, back when I used to think they might be able to help. Even if it was all in my mind, I’d reasoned, it still meant there was something wrong with my mind.
But while the health fixation was a distraction, it didn’t stop Adioso from being on my mind at every moment. I seemed to be constantly turning over our conundrum in my head: we needed funding; to get funding we’d need a growing audience and revenue; to get a growing audience and revenue we’d need inventory and technology; and to get that we’d need funding. I’d endlessly be trying to work out what I could or should do, and willing myself to do it. And while I waited for an answer, I’d be reading anything that seemed to offer a glimmer of insight: the history of the travel industry, economics, consumer psychology, user-interface design. I was able to tell myself I was learning a lot, but tangible output was sparse. Was I simply a downright lazy person? The accusation had been levelled at me plenty of times in my life. It just didn’t make sense. I was trying so hard! How can someone so lazy be so stressed and exhausted?
Still, I didn’t accept that my flaws alone were holding us back. I’d always been driven by determination, passion, and camaraderie. Even at my lowest points, I’d always loved discussing big ideas, and imagining ways that Fenn and I could both become better, stronger, more capable people. In the good old days, we could keep each other going like that for hours. But these days, Fenn just didn’t have much spark. It seemed he was only interested in problems he could code his way around; beyond that, he just didn’t seem to care very much. I didn’t even really know what he was spending his time doing anymore. He always seemed to be busy doing something, but I couldn’t see how it was moving the company forward, and I doubted he could either.
Somehow, we’d gotten out of sync. The very fact that I was in Lorne by myself seemed to symbolise the distance that had formed. I’d hoped that Fenn would join me for at least a few days so we could spend some time to bond and refocus. But he’d just wanted to stay put in Melbourne, where he could at least look forward to spending his evenings with his girlfriend, Hannah.
I wondered if it was the travel industry’s fault that we were burned out and drifting apart. The travel thing had been Fenn’s idea; I’d been lukewarm on it initially. My reaction when Fenn first suggested it was, “Why would we want to build a travel search website? They all suck.” It wasn’t as silly as it sounded. Even as a layman I could sense that it was an industry controlled by monolithic old companies that would make it tough for new entrants. But I thought it would make for a good trial run at building our first consumer web product, so I was willing to go along with it. Fenn would soon realise it was a futile pursuit and we could move onto one of my better ideas.
But before we knew it we had users loving our product more than anything we’d done before, and Y Combinator was inviting us for an interview, and we had to get serious about travel after all. It was OK with me; I could see how travel would be a pretty exciting world, especially if YC could make it easier for us to gain traction. Though I’d not travelled extensively, I’d loved all the travel I’d done, and wanted to do more of it. It was during my first trip to Thailand a few years earlier, then a trip around Europe the following year, when I’d started to feel more alive and free than I’d ever felt before. The idea of living a life of abundant travel, and extending that opportunity to others, was giving me the sense of purpose I needed.
The problem, we’d discovered, was that this kind of passion alone didn’t get you funded. The travel startups that did get any funding all seemed to be founded by sports-jacketed, middle-aged MBAs from other big travel companies. There didn’t seem to be any successful travel startups founded by nerdy outsiders. Fenn and I were just a couple of scruffy geeks from Australia. We’d tried to recruit some travel veterans as investors and advisors, but it always seemed we were talking a different language. Though everyone was polite and supportive, you just got the feeling that we just seemed too crazy or feeble for anyone to believe we could succeed. Now we were learning that many prominent investors refused to invest in travel startups at all. It was easy to see why; usually the founders just wind up broke and burned out. In our present state, we epitomised the very reason why smart investors steered clear.
But for me, now, the thought of just walking away and letting the establishment win was too infuriating for me to countenance. It wasn’t so much the prospect of our own failure that was upsetting. It was more that what we were trying to build would not be built by anyone, and that the kind of product and company we’d envisioned would never actually exist. At least if there was another company trying to build something similar, we could just go and work for them. At the very least we could use their product. But nothing on the landscape had any appeal. When we entered YC back in early 2009, it had seemed we were the only startup trying to do anything ambitious in travel. Since then there’d been an avalanche of travel startups getting solid coverage and funding. By now enough time had passed to see if any of them were going to pull off anything like what we had in mind. No one had come close.
Why was it, I wondered, that there wasn’t a company that had huge appeal for the talented people who wanted to build brilliant travel products? So many of the most talented engineers and designers are crazy about travel. Why wasn’t there a travel company as attractive as Google and Facebook? In this era when company culture is considered so crucial to success, could there be a better platform on which to build an amazing culture than travel?
Reflecting on the minimal impact there’d been from other travel startups, it didn’t seem we were quite such miserable failures. Sure, our internal and personal issues had hampered our progress. But we’d still achieved a huge amount for a small team. And we knew people really wanted our product. In Australia, where we had near-complete airline coverage, people still loved what we’d built, even if they thought we weren’t improving fast enough. And we’d frequently get enquiries from people all over the world, asking when we’d extend coverage to their location or desired destinations. What we’d failed to do was to figure out how to scale out and cover the rest of the world – but the barriers in the travel industry made it impossible for anyone to do that.
We’d now spent the past three years of our lives trying to build a product that gave a good answer to the question, “Where can I go to a tropical beach for about two weeks in late October for under $1000?” It had taken us till now to understand that there was 50 years of travel industry infrastructure standing in the way, and it certainly wasn’t going to move for us, or anyone, really.
Yet, just as I was wishing we could turn back the clock three years and do something more sensible, signs of hope were appearing on the horizon. Two ambitious startups in Europe were starting to offer new kinds of flight data services, which may have been just what we needed. Google had acquired the leading flight data company ITA Software. One could only speculate about what they’d do in travel, but who knew, maybe that would help us somehow. At the very least, maybe it would motivate the established flight distribution companies to get more serious about innovation.
Maybe we’d just been too early. It was said that being too early was one of the most common causes of startup failure. I could understand why that would be true for VC-backed startups with millions in funding and a mandate to move fast. But we’d only taken a couple of hundred thousand dollars from angel investors. We didn’t need to hurry. If we’d been too early, that was OK, we could just wait.
But should we? Would it really be a good idea to persist when we were both so exhausted? Well, I could think of one reason why: when I did a stocktake of what I had to lose, there wasn’t much there. My finances, my health, my social life; they’d all taken a battering. I didn’t feel like I had to worry about losing much more, yet I could still see a pretty huge upside if I could make the right moves. And as if like magic, since I’d arrived in Lorne, new ideas seemed to be coming at me from all directions. It seemed that only now that we were out of money and my back was to the wall, my creative inspiration was flowing more richly than ever before. Maybe Adioso was the kind of company you can only build when you have nothing to lose. If it was, we’d only just arrived at the starting line.
It was one thing for me to think like that. But what about Fenn – back at his desk in Melbourne, clocking up the hours to pay not just for his own rent and groceries, but for mine too, while I pranced around on the beach, basking in my latest epiphany? Could I get him believing that our miserable predicament is in fact a giant opportunity? Or more importantly, should I?
Fenn had seemed pretty disengaged and miserable for a while. Always the kind to suffer in silence, I was worried that it was all getting too much for him. He and Hannah hadn’t been able to take a holiday for a couple of years. In a few months, Hannah would be travelling to the USA to attend Burning Man for the first time. Without some kind of windfall in the next couple of months, Fenn wouldn’t be able to go with her. It was weighing heavily on me. Perhaps it was time to stop holding Fenn hostage to my delusions, and let him go and do something less stressful, and more lucrative.
But what if there really was a way through this? What if we were actually quite close to pulling it all together? Would it be the right thing to do, to let Fenn just walk away from the best opportunity he’d ever have to build a world-changing product and truly great company? And would Fenn really find a better career somewhere else, with someone else?
Maybe, maybe not, but I was pretty confident about this: I’d yet to meet anyone as determined as I was to build a better life. That was all I really cared about. Adioso had just become the medium, the motivator, and the benchmark. I wasn’t attached to Adioso as an end in itself, I was attached to Adioso as a conduit to the most enjoyable and fulfilling life I could create, for myself, and for anyone else who cared to join me in that quest.
Adioso was the natural progression of a journey that had started six years earlier, when we’d read How to Start a Startup, then The Game, then later The Four Hour Work Week and The Dip. Each of those texts had awakened something in us, triggering intense discussions and excited proclamations about what our futures may offer, which were all underpinned by one fundamental realisation: that you had choices about what kind of life you could live, and even what kind of person you could be.
Among the most profoundly moving experiences I’d had during the Adioso journey were the approaches we’d had from a couple of friends in our social circle in Melbourne. They’d come to us quite independently and unbeknownst to each other, asking if they could invest. Neither of them were particularly close personal friends, they weren’t wealthy, they had no experience investing in early stage companies, and they weren’t even expecting big returns. They’d just witnessed the journey that Fenn and I had been on, they could see the determination that drove us and the potential for Adioso to become something wonderful, and they were willing to contribute substantial portions of their modest savings to be a part of it.
In my darker moments, it was the faith that those people had shown in us that gave me the resolve to carry on. I couldn’t bring myself to let them down. But for the most part my thinking wasn’t so grim. It wasn’t so much that I couldn’t let them down; I just knew we didn’t need to. There was going to be a way we could get this company back on track. I didn’t know exactly what it was going to be, but it was going to start with recapturing our motivation for starting Adioso in the first place: to build a life for ourselves that involved a lot of travel and a lot of fun.
So I’d convinced myself. But could I convince Fenn?
I’d realised that at the very least, what I had to do to make things better for Fenn was to give him options. In our present state, he was trapped. Sticking with the company was no fun, but walking away and letting it collapse would have involved plenty of hassle and misery too. Maybe he would be better off going and doing other things, with other people. I’d be disappointed if he did, but I couldn’t claim to want the best for him while standing in his way. So at least I could try to get the company into a state where it could survive whether Fenn wanted to be a part of it or not.
Of course, he’d only want to stay if I could make it fun for him again, if I could give him support, and if I could become the co-founder he’d wanted in the first place; someone who saved him from having to worry about annoying business bullshit and gave him the freedom to write brilliant code and build amazing products.
Could I do it? I wasn’t sure what it would take. But for the first time in months, I had optimism. Just a few days by the beach was all it took to overcome years of lethargy to be leaping off the couch and sprinting up steep hills at midnight. Who knew what else could be within reach?
Without that surge of vitality, I wouldn’t have been nearly as positive. But the way forward was becoming clearer. Despite everything that had happened, Adioso was still the only thing I really wanted to do. Maybe it could again become what Fenn most wanted to do. Or maybe it couldn’t.
Either way, there was only one way to give us both what we needed. We needed to start building a new team. Now that our funds were at zero, it was time to start hiring.
I didn’t really go for the marketing-speak, but I knew what she meant.
It was late April in 2011, and Jenni and I were sitting near the fireplace at the Great Britain Hotel, the delightfully offbeat pub in the inner Melbourne neighbourhood of Richmond, that had been my sanctuary and playground during my chaotic period of a few years earlier. Jenni, one of the people I’d come to rely on to tell me what I needed to hear, was home from London for a brief visit over Easter.
She was talking about the How Much Do You Heart Me? microsite we’d launched a couple of months earlier for Valentine’s Day. Until that moment, not a single person had straight-out told me they thought it was a bad idea. But Jenni was telling me something I’d known deep down all along.
The journey to How Much Do You Heart Me? had started back in November 2010, about three months after the launch of our new website version and our Techcrunch & Lifehacker coverage. The message we’d taken away from the feedback after that launch was that our flight search product was amazing, and that all we needed to do was add more airlines and destinations so it would be useful for everyone.
The version we’d launched carried just 13 low-cost airlines. It enabled good functionality in Australia & Southeast Asia, and moderate functionality in Western Europe and the US. But the confinement to low-cost airlines meant there was barely any inter-continental coverage. We were positioning Adioso as a flight search tool for adventurous travellers, but you couldn’t get from the US to Asia, or from anywhere to Latin America or Africa, and it was completely unusable to Canadians.
The problem was, the search engine we’d spent the previous eight months building could only handle low-cost airline flights as individual one-way segments. To offer more comprehensive coverage, we needed to add full-service airlines. These airlines structure their fares in a completely different way. So it wasn’t a mere case of continuing to develop the engine we’d already built. We had to start building a new platform again.
As we set about the task, we were all confidence; we’d have the new engine built within a month or two, and as soon as it was done we’d be able to offer comprehensive global coverage, and even start making revenue out of all the transactions we’d refer for full-service airline flights.
But by late November, almost three months later, we seemed barely closer to the finish line. Some of our core technology assumptions were turning out to be flawed and the task was becoming increasingly complex. Estimates of “four more weeks” were floated, but there was no real way of knowing with any kind of certainty.
To complicate things, our burn-rate had us looking at only about another five months before we’d need to have another funding round closed. If we could announce the launch of the new engine in a month, and if that would start growing the traffic, we’d be in good shape, though the timing would be tight. But if it took two, three or even six more months, which for all I knew was just as likely, we’d be screwed.
During a company hacking retreat in New Zealand, a team member suggested a different approach. We’d take a break from building the new flight search engine, and try a new project that would be much more achievable and fun. A simple microsite that matched flights with hotels to create packages for spontaneous romantic weekend getaways was proposed; it seemed to have merit. It was much more of a known undertaking than the new flight search engine. We’d need to build a hotel search component, but we’d been planning to do that anyway; everyone knows the only way to make money out of flight search is to add hotel search. This would give us the incentive to get a minimal implementation done quickly.
A Christmas theme made sense; it was a pretty tight deadline, but we wanted to make the timeline short to keep it lean. It would be social and sharable, it would hook into Twitter and Facebook, and it would totally go viral, especially if we offered a $1000 travel prize to whoever came up with the coolest tweet about it.
Something else about it appealed. We needed to have something exciting to show our existing investors. We’d been getting concerned questions about our traffic and our development progress. And some were wanting us to hurry up and start generating revenue. One investor seemed to reply to each of our slavishly prepared update emails with the same question: “Do you have a business model yet?”.
The microsite idea would put all those problems to bed. It’d be wildly popular, make us some money, generate lots of hype and drive loads of traffic back to Adioso, giving us the momentum we’d need to raise our next funding round. Fenn briefly put forward a dissenting view, but he was outvoted. The getaway package microsite was going to be our salvation. So we got to it.
It was all mostly working with about nine days to spare before Christmas. All we were waiting on was the accommodation distributor. There’d been a delay. We’d needed their Europe-based engineering team to do some customisations, but with some of the team unable to get into the office due to the record-breaking snowstorms, they were even more under-resourced than usual.
Christmas came and went. No accommodation. No microsite launch.
No matter, we thought. It was always going to be cutting it fine. We could just come up with a new theme and try again in a few weeks.
Valentine’s Day seemed like the perfect theme for a site to let couples find romantic getaways. A sexy 50s-esque flight attendant would ask you to choose a budget, representing how much you loved your lover, and you’d then be shown a series of weekend getaway options. With howmuchdoyouloveme.com already registered, it became howmuchdoyouheartme.com.
With the help of our designer and two front-end developers, we had it ready for launch on the Monday a week before Valentine’s Day. By then the project had taken far more time and money than we’d initially envisaged, and with the end of our runway in sight, we needed this to be a success. But everyone who’d worked on it or previewed it was convinced it was a winner.
We published the blog post announcing the launch at about midday. We tweeted it and Facebook-posted it, then sat back and waited for the hockey-stick graph to take shape. People who knew us responded with exactly what we wanted to hear. The Melbourne Twittersphere was abuzz. People with personal connections to Adioso and the others involved with the project were euphoric.
Within about 30 minutes, the traffic and social media buzz flattened off. It wasn’t spreading much beyond our own networks. I waited for a few more minutes to see if it picked up, but it remained flat. A wave of dread swept over me. I went out for a walk, alone. I thought back over the two and a half months since we’d made the decision to take this direction, calculated that we’d bet 75% of what had remained of our runway to get here, only to find that it had moved us no closer to funding. For the first time since our last fundraising a year earlier, I was starting to panic.
Over the next couple of days, the campaign scored some media hits, with coverage in Lifehacker Australia, Tnooz, and Notcot, and we heard the campaign had been on everyone’s lips at a Melbourne advertising industry networking event. People were talking about how beautiful the design was, how fun the concept was, and how cool the use of HTML5 was. In total it generated just over 10,000 visits – about 5 days’ regular Adioso traffic. And not a single revenue-generating transaction.
I knew it wasn’t an outright failure. I knew the people who loved it had good reason to love it, and everyone who’d worked on it had done a wonderful job. But it was just like any new startup idea. To become truly successful, it would have to go through months of testing and improvement. There was no time or money left for that.
Six weeks later, as we were returning to Melbourne from our bubble-bursting trip to the Bay Area, Fred Wilson caused a stir in the startup world with the publication of a post lamenting the fact that he’d passed on an early-stage investment in Airbnb. In the post, he recounted the legendary tale of Airbnb funding themselves through a cash drought by selling novelty Obama-themed breakfast cereal during the 2008 election campaign. He explained that in retrospect, Airbnb’s ability to survive a crisis in this way was the most powerful indicator that they’d turn out to be a good investment.
Over the following weeks, as our cash situation became increasingly desperate, I became fixated on the idea that this kind of campaign could work for us. I scoured Alibaba for ideas for Adioso-themed travel accessories, like neck-pillows and eye-masks. Fenn suggested a one-off comedy event as part of the upcoming Melbourne International Comedy Festival, where comedians would tell travel stories. Ned had been toying with the idea of importing fixed-gear bicycles from China, and thought perhaps we could get them painted in Adioso orange and promote them to the unconventional traveller.
I started thinking t-shirts would be the way to go. Yeah, t-shirts! But it wouldn’t just be a plain ordinary t-shirt sale. We’d make it a Kickstarter-like affair, tied in with the new features we were proposing to build on the site. People would pledge their support for a particular feature, and fund development of it by buying a limited-edition t-shirt. We’d rinse and repeat as we worked through more and more awesome features, funding ourselves all the way to greatness with t-shirt sales.
I bounced the idea off my housemate Cris, then to Fenn in a late night call. They both responded with something like “er, yeah, I guess that might work”. It was good enough for me. The next day I put it to Ned in a walk’n’talk around the park near our office. I hadn’t slept much the night before, and was in a pretty overhyped state as I explained it to him. He contemplated what I’d said for a few moments, then stopped, turned to me and said “Fuck dude. Do you really think you can get through this?”
The question had been nagging at me. Because there was one major flaw in all these ideas that revolved around selling products to our community: we didn’t really have a community anymore. We used to. Not a huge one, but the community we’d had was devoted and passionate. They’d email us, and excitedly tell us how refreshingly simple and delightful the site was. They’d tell us about the trips they’d been able to take only because the site existed. They’d suggest features, and respond with excitement when we quickly implemented them. They’d ask if we had t-shirts they could wear, or if they could just send us a donation out of gratitude for all the time and money we’d saved them.
To these people, Adioso had represented what travel search should always have been; a way for people who wanted to travel as often as possible to learn about where they could go, and find the best flights as quickly and easily. They’d seen Adioso as their saviour from the exasperation they’d felt towards the antiquated travel search sites they’d always been forced to use.
Somehow, over the eight months since we’d launched our new version, we’d stopped hearing from them. I couldn’t really pinpoint when it had happened; you don’t really notice these things at the time. Well, not if you’re not paying attention – which I guess is why it had happened.
As I thought things through I realised we’d been paying attention to the wrong people all along. It had started when we’d taken the message from the Techcrunch/Lifehacker/Hackernews crowd that the most important thing we had to do was enable global airline coverage. Not that we shouldn’t have been thinking about that; our community had been asking for months for us to improve our international coverage and to include full-service airlines.
But that was only one of several things they’d been asking for. Being so fixated with the huge task of enabling complete global coverage in one big hit, we’d been ignoring lots of other, far more achievable things, that would at least have shown our users and investors that we were making progress. But when things started going wrong, rather than calmly reassessing the situation and correcting back onto a more sensible path, we panicked and made a huge bet on something completely new and untested.
I realised it had been out of fear of letting down investors that we’d chosen to pursue the microsite idea, only to end up letting them down anyway. And I realised that in seeking the plaudits of the social media crowd, we’d made it impossible for the people who’d loved us and supported us from the early days to know what we stood for, or where we were going.
That night, an old friend was having his 30th birthday party. I had some Airbnb guests coming to stay in my bedroom, so before going to the party, I went home to make up the room and pack up my things. I’d be spending the next few nights in a single bed in my old bedroom at my parents’ place. As I filled the back of my car with what seemed like all my worldly possessions, I thought “I guess this is what it means to live out of your car.”
I went back to do a final tidy-up and check for any important items or valuables. I noticed my passport on the bookshelf, thought perhaps it was safer to have it with me rather than leave it with strangers, so I picked it up and tossed it into my laptop bag before heading off to the party.
The party was fun and I was in good spirits, given how uncertain our business situation seemed to be. My friends were always interested in how things were progressing with Adioso, and I was frank about our troubles whilst still maintaining an upbeat stoicism. “We’ll get through it” I assured them, and myself. “We always have before”.
As the night drew to a close, I offered my friend Keir a lift home. We said our goodbyes to the others, and walked up the street to the car. As Keir walked around to the passenger side of the car, he stopped abruptly, pointed at the rear window and said “did you know about this?”.
As I walked around to inspect, my heart sank as I predicted what I was about to find. Sure enough, the window was smashed, with broken glass covering the back seat. Only one thing had been taken: my laptop bag, containing my 12-month-old Macbook Pro and my passport.
As we drove back to Richmond, the late-night chill of the descending winter billowing through hole that was once my rear window, I dwelt on the perversity of it all. Normally I’d never leave my computer in the car unattended. It was only there because I was staying at my parents’ place. And I was only staying at my parents’ place because I was broke. Too broke to have any ability to buy a new computer.
Rather than going straight to my parents’ place, I decided I needed to head back to my home to think things through. When I got there I was relieved to find Cris still up. “You wouldn’t believe what happened”, I said. “My computer was just stolen out of my car.”
“Oh dude.” He jumped up and gave me a long, consoling hug. Then he turned around and pointed at the old black plastic Macbook that he’d been using as his music machine. “This” he said. “I don’t need it, it’s all yours, give me half an hour to move stuff off it and you can have it.”
I went into the living room and collapsed on the couch, staring at the ceiling for a few minutes. It was almost 16 months since I’d last had a sip of alcohol, and only a couple of weeks less than that since I’d last craved one. But right now, the temptation to pour myself a Scotch was becoming pretty powerful. I opted instead to hunt through my media server for something to take my mind off things. “Curb Your Enthusiasm” seemed to fit the bill.
Without being much of a superstitious guy, it was hard to escape the feeling that the universe was trying to send me a message. I’d spent the past six months trying to bluff my way to the appearance of business success, but I’d been found out. Until I’d learned my lesson, I couldn’t travel overseas, and I couldn’t have nice new things. And the tool I’d have to use to try and work my way back was a 32-bit plastic Macbook made in 2006.
And so, three days after the theft of my Macbook and my passport, as Jenni summed up the past eight months of my life in one swift blow with the marketing jargon-term “off-brand”, I felt I finally had to acknowledge where we’d gone wrong. We’d stopped paying attention to the people who mattered most, and as a result we’d nearly sunk the company. The only way back was to stop pulling stupid stunts and to start listening.
“You took some funding, and you didn’t make it to the next milestone. That’s what failed startups look like”.
It was late on a gloomy Saturday afternoon in Mountain View, and we were doing a walk’n’talk ‘office hours’ session with Paul Graham) - "PG” - on the street outside the Y Combinator office.
“What do you have to show for the funding you’ve taken so far?”
I tried to explain. “We felt we needed to build our own technology platform for flight search, because nothing already existed to support the product we were trying to build. So, basically we spent it on back-end engineering.”
“Well that sure was a mistake,” he huffed.
“How do you know your product is something people want?” The pg-bot had engaged.
It was hard to explain.
It was the way people’s eyes lit up as they exclaimed, “That’s exactly what I’ve been wanting for years!” when we talked about Adioso.
It was the emails people used to send us, thanking us for building it, and calling it “amazing”.
It was Melina Chan, a Melbourne expat who’d moved to Battambang, Cambodia to found a non-profit initiative. The first time I met her, she expressed with visible emotion, just how much easier we’d made her life, and how much more trustworthy Adioso was compared with all the other travel search sites.
More recently, it was the number of people, many of whom seemed seriously talented, who’d responded to our recent job listings, telling us how much our concept excited them.
“Surely that’ll impress investors,” I’d thought. “Everyone keeps talking about how hard it is to find good people. That’s the easiest part for us.”
“You need to have a number going up, or some deep insight you’ve discovered,” said PG. “Anything. Do you have any number at all that’s increasing?”
Sigh. This was a sore point for me. In the 18 months after our Y Combinator stint in Feb 2009, our traffic had been increasing steadily. In September 2010, when after an eight-month build we activated our new version, then launched with coverage on TechCrunch and LifeHacker, our monthly traffic doubled. It had stayed eerily flat at that level for the six months since.
“Our email list is growing at 10 percent a day,” I replied.
“10 percent a day? That’s huge!” It was the first time he’d sounded optimistic.
“Yeah. Well, 10-a-day, but it’s about a hundred total,” I replied.
“A constant 10-a-day? That’s terrible! It’s a declining growth rate!”
It was the middle weekend of our 12-day trip to the Bay Area. Before the trip, we had about two to three months’ cash left in the bank. After the cost of the trip, it probably wasn’t much more than one.
We’d already tapped the Melbourne angel-investor community to try and pull together enough to get us through another couple of months or at least give us time to work on a proper Silicon Valley raise. The response was, “Not at $5M valuation, that’s crazy Silicon Valley talk.”
We thought we could justify it. A year earlier we’d raised $270K at a $3M valuation. Not a big raise, but right for us, we felt. Particularly given how easily it came to us. We assumed we’d be able to get more whenever we needed it.
12 months on, $5M seemed like a reasonable step up. We’d written so much code and learned so much important stuff since then! “If you think you can get that valuation in Silicon Valley,” one politely-interested prospective investor had said, “Then you should just head over to Silicon Valley.” It was partly in defiance and partly out of a desperate need for the kind of guidance or inspiration you can only really get from the Y Combinator world that we did.
“OK…” PG sighed, in that way that’s so familiar to any founder of a struggling YC-backed company. “You’re just gonna have to go away and figure out a way to get a number going up. Fast. Do it from here, or go back to Australia then come back when you’re ready. But until you’ve got a major discovery to show, or some serious growth, I can’t recommend you to investors”.
The three of us piled back into the hire car. My co-founder Fenn in the passenger seat; Ned - a friend from Melbourne who’d been helping us out with marketing and was in town en route to SXSW - in the back. We were all pretty silent as we drove off. Silent, apart from Fenn intermittently gasping, “Stop sign!” It was my first day driving on US roads. And it was fully dark by now. Staying on the right side of the road was enough of an effort. Particularly now.
Fenn tried to lighten things up. “Who cares if PG says we can’t raise. It’s just one opinion. Those VCs we met with last week seemed pretty interested.”
“They’re always nice to you” I replied, impatiently. These days I didn’t have the fiery temper I used to have, but I still needed to vent a little. I wasn’t angry. I couldn’t be angry at Fenn. No one ever can ever be angry at Fenn. And Ned was mostly an innocent bystander. It wasn’t his fault. It wasn’t anyone’s fault. Well, perhaps mine. Fault? Responsibility? Due to my deficiencies? It was certainly the burden I carried.
We headed for University Ave, Palo Alto. It’s considered by many as the main street of Silicon Valley. It’s home to the Apple Store that was Steve Jobs’ local. It’s where Google and Facebook both had their first proper offices, and where it’s common to spot Valley celebrities just out for a coffee or a frozen yogurt.
If there was ever a time when I’d felt worthy of being on this street, now was not it.
We found a just-affordable-enough-looking Thai restaurant. Ned took care of ordering. I stared at the table, turning everything over in my head. After a couple of minutes I gave a big sigh that turned into a laugh as I said, “OK, now what the fuck do we do?”
I don’t remember much more from that dinner. It was 14 months ago, pretty much to the day. What I remember is that by the time we finished dinner and got back in the car for the drive back to San Francisco, I was spent. I didn’t want to do any more thinking. I just needed to listen to some happy, familiar tunes to remind me of happier times and familiar places. Ned popped into the Apple Store to grab a car radio adaptor.
Before seeing PG, the belief was that somehow we’d figure out how we could paint a good enough picture to get investors interested, raise a round at terms we were happy with, and get back on with the job of building the company as we’d been doing before. It’d be a close call, and it’d be painful and probably undignified, but somehow we’d make it happen, like we always had in the past.
PG had opened the floodgates on the dissonant reality that nothing we’d done to grow our traffic in the past six months had made a jot of difference, and, until we had some fireworks to point at, no investor was going to touch us. I’d been working hard to resist it for a while, but there was now no avoiding the fact that all my expectations and plans for the next few months - possibly longer - now had to be rewritten.
This is what PG is for. He’s the little boy in that story The Emperor’s New Clothes. He says those things that no one else is game to tell you, but that you so desperately need to hear. This is what we’d missed out on by living back in Melbourne rather than here in Silicon Valley for the past two years.
Sunday was another cold and rainy March day in San Francisco. We were meeting with the founders of a major travel website in Europe. They just happened to be in town at the same time as us. It was their first visit to Silicon Valley. We met them at the Hi Dive Bar on the pier where Bryant St meets the Embarcadero. It was a humble venue, but they were humble, friendly guys. We all got along really well.
Despite their 10-year history, VC-backing and huge success in Europe, they seemed somewhat wide-eyed and innocent about the ways of the Valley. Maybe it was just that they weren’t as downtrodden and wrung out as ourselves and many of the founders we knew.
Any gathering of travel-tech company founders quickly develops the atmosphere of a self-help meeting. “A trillion datapoints,” said the engineer of the pair. “That’s what you need to cache if you’re going to index every flight combination in the world.” It was a big number, but not hugely surprising to us. We’d built a platform that could handle about 1% of the world’s flights - just the easy, low-cost airlines - as individual one-way segments, but attempts to scale it beyond that had so far fallen short.
As we’d suspected, the catchup wasn’t merely social. They had big ambitions to expand globally. They were impressed with what we’d achieved with so little. We’d been able to do things they’d long wished they could do. And they knew very well, just how hard it is for a small travel startup to survive on its own. They’d already acquired a few startups.
They shrewdly dropped all the tyre-kicking questions about how much we’d raised, how much we’d given away, how things were progressing with our next raising. They asked us if we’d be open to an acquisition offer. We agreed to think it over and try to catch up again later in the week.
We hadn’t started Adioso with a view to taking a quick exit. It wasn’t something we’d thought we’d seriously consider, even under the circumstances. But it sure was nice to feel wanted.
Fenn and I headed for an Indian restaurant in Nob Hill. We chatted quietly, reflecting on the last couple of days, and tossing around the options. Maybe being acquired by a big, safe, successful company, one that shared our values and gave us the backing to do what we’d aspired to do, was the best option for us. Maybe it just wasn’t possible for us to make it alone.
On the downside, it meant becoming employees, for at least a couple of years. And maybe moving to Europe for a while. And we weren’t in a position of strength. We couldn’t command a high price. Maybe not even enough to cover all the savings we’d put in, and the personal loans, and the maxed-out credit cards. But maybe that’d be OK if we could just pay back our investors and get a nice salary.
There was another factor that was starting to dominate my thinking. I’d been feeling pretty rundown and exhausted that day. Actually I’d been battling the feeling of being rundown and exhausted to some degree for at least the past 6 years. But on this day, I was succumbing to the feeling that I just wasn’t winning the battle, and perhaps I really wasn’t going to be able to win as long as I was still trying to run a startup.
Maybe what I really needed to do was just take an exit that allowed me to escape to a tropical beach or health retreat for 6-12 months, or however long it would take to be properly healthy again, then start afresh doing something new.
But would this exit allow me to do that? Not likely.
On Monday, Ned joined us in our room at the Broadway Manor Inn on Van Ness Avenue. He was taking charge. We were going to do whatever we could to get numbers going up. Fast. The way to do it was with deals.
Everyone was talking about it. Groupon. Living Social. That’s what the world wanted. Maybe it’s what our users wanted; plenty of people had asked us if they could sign up to receive alerts when flight prices dropped. It was something our platform could do - in a way that others couldn’t - but it just seemed tacky. Sure, we wanted to be able to do some kind of outbound notifications, but something a bit nicer than boring old email. But suddenly email was back, and now it was our big hope.
That evening, Fenn and I were walking to meet Ned and some friends for a drink. We chatted about the day’s progress and the bigger questions about what we should do. Fenn had done a lot of thinking. His feeling was that an acquisition could be the best option. And he was becoming quite resolute, even stubborn about it. That was always a bad sign.
All the things we were trying to do to get numbers going up, he thought, have already been done by the incumbents. And besides, he didn’t start this company to wind up building a fucking daily deals site.
The previous week, we’d met with a VC who was in a position to know as much about flight search as anyone. Flight search was a terrible business, he told us. It soaks up extraordinary engineering talent and resources, you still end up with shitty products, and it doesn’t make any money. Why, Fenn thought, would we persist, when the people who know more about it than anyone else are telling us not to bother?
To Fenn, an acquisition now had plenty of appeal. We could wipe away our debts, make our investors whole, relax for a few years in the cosy employ of another company, then go off and do something else. Also, having a successful exit on your CV would put you on better footing to raise funding for our next thing. “Like Dennis Crowley selling Dodgeball to Google,” he said. No, I thought, we are not Dodgeball, our suitor is not Google, and neither of us is Dennis Crowley.
To me it seemed like a mirage. Going to join a company would not be relaxing. The whole reason I started my own company was because I couldn’t stand working for or with other people, apart from the ones I chose myself. There was a lot that sucked about startup life, but it was never as bad as employee life.
Also, spend three years working for someone else, then start something new? In the three years since we’d first launched Adioso, I’d learned more about myself and the world than the rest of my adult life put together. If I kept up that rate of learning for the next three years, anything was possible. To spend that time working for some other company would be like being cryogenically frozen. And besides, in Melbourne’s timezone it was now my 34th birthday. I was already on the old side for a startup founder. Wait till 37 or 38 then start something new? That was no age to be starting again. Again.
There was something else eating away at me. This would probably be little more than a talent acquisition. And I wasn’t even sure what talent I had that anyone would want to acquire.
After the first drinks catchup, we headed with Ned to Zeitgeist to join another Melbourne friend, Ross. Ross is normally someone I particularly enjoy hanging out with. But right now I was impatient to get back to talking things through with Fenn. As soon as Ross left, I wasted no time.
“What’s with the change of heart, Fenn? The other day you were the one saying everything would be fine.”
“C’mon, let’s settle down,” said Ned.
I was mostly settled. I knew the most important thing to do was to stay calm. But Fenn was always the one to keep his head, and it was worrying to see him starting to lose it.
I didn’t want to rule out an acquisition; if we got a good offer and the opportunity to build what we’d envisaged with better backing by people who were really on our wavelength, it might be tempting. But we could only get a good offer if we were in a position of strength ourselves, and to do that, we had to have numbers going up, just the same as if we were going to raise funding. And if we could raise funding, there’d be no need to sell anyway.
The thing was, our situation wasn’t all that dire. Sure, funds were low, and there was no immediate answer to how we’d find more. But, we were a very lean company. All we needed was $1000/month to cover our hosting bills, and basic living expenses. Fenn and I were well accustomed to living a frugal existence, and we could be even more frugal if we had to.
Far from being a crisis, I thought, this is our biggest opportunity. It’s in times of extreme adversity that you learn the lessons and make the changes that come to define the company. Every big and successful company has a story of struggle and at least one, if not several, near-death experiences. Well before applying to Y Combinator, one of the PG essays that had inspired me the most was “How not to die”. All startups need to do to become successful, he implored his proteges to realise, is avoid death for long enough to figure out the formula to succeed.
It seemed so simple. Sure, we’d been going a while; four years since Fenn wrote the first code, three years since we released the first experimental public version, and two years since Y Combinator. But that’s forgivable; everyone knows what we’re trying to build is really hard. Every other company that’s tried to build disruptive travel technology has taken at least this long. There was only one other company in our YC batch that was building comparably ambitious technology to us, and they hadn’t released anything at all yet.
“How about this?” Ned was trying to be helpful. “I can tip in a bit of cash to keep you going for now, and then you guys can just do some web development work to pay the bills.”
“No,” Fenn and I said almost in unison. We were not going to be doing web development contracting to pay the bills.
“OK,” Ned went on. “We’ll just do a sprint to get everything in place to get the numbers going up, and you’ll be fine.” Ned was a few years younger than us, and had a lot more energy.
Fenn went to the bathroom.
“This is the problem,” I tried to explain to Ned. “Fenn’s burning out. And I’ve been trying to overcome burnout for years.” Even if a sprint would get us anywhere, which it probably wouldn’t, we just didn’t have the energy to do it.
I started to think Fenn was tricking himself into viewing the acquisition as a successful outcome, when really he was just looking for an escape from what was becoming an increasingly miserable existence. If we were going to get through this, we were going to have to find a way to ease Fenn’s pain.
Tuesday was my birthday by the San Francisco clock. It was more a day for rumination than celebration. I thought a lot about the differences between what Fenn wanted and what I wanted. Fenn was never in this business for wealth and fame. Indeed the prospect of that was somewhat of a turnoff; it might be quite inconvenient. He wanted to work with people as talented as he was, and who were a lot of fun to be around. He wanted to work on hard problems and write brilliant code. He wanted to make things that could solve important real-world problems for many people. And somehow he’d convinced himself that selling what we’d already built and seeing it put into production by a much larger company would satisfy that. He had loads of interests and ideas, and he didn’t want to be stuck in the travel industry for another 5-10 years. In fact the prospect of that seemed awful.
I wasn’t in this for wealth or fame either, anymore. I mean, some money would be nice. I’d grown up in a modestly well-off family, but for most of my adult life, even when I’d been in full-time employment, I’d been on a knife-edge financially. It’d be nice to live without that hassle and fear for a while. Fame was something I’d fantasized about as a weird high-school kid who struggled with comical desperation for acceptance and approval, and to some degree that need for validation had stayed with me well into adult life. But over the past couple of years, as I’d come to understand the world and my place in it, that didn’t matter to me anymore. People who live in constant pursuit of external validation, I’d realised, are people who never achieve it. I’d figured that out the hard way.
For me, Adioso had become the driving force in my own life journey. Four years earlier, as I turned 30, I was at the lowest point in my life. In the couple of years prior I’d been suffering increasingly severe anxiety and panic attacks, but it lately it had been descending into deep depression. A sequence of disasters in our first business, along with tumultuous events in my personal life had me feeling deeply angry at the world and at most of the people I knew. I felt I couldn’t trust anyone, including, or especially, Fenn. And my mind was so frazzled it was becoming hard to function. To pay the bills I was having to apply for software development contracting jobs. In the my first interview, I was so foggy and crippled by nerves I couldn’t even complete a very straightforward coding test, and walked out in shame.
Two weeks after my 30th, my grandfather passed away, age 95. He had been loved and revered by the whole family, and widely respected for his intellect, his accomplishments in business and sport, and for his decency, dignity and determination, right through to the end of his life. It was only in the couple of years before his death that I’d started to truly appreciate him. And as I sat with him in his final days, I was ashamed at just how low my life had sunk. I resolved to become the kind of person that was worthy to have had such a man as a grandfather. 20 months later, Fenn and I were flying to San Francisco to for an interview with Y Combinator. It was an inheritance cheque from my grandfather’s estate, which arrived the week before we received the YC interview invite, that covered the cost of the trip.
Though we managed to get into Y Combinator, and raise a small amount of funding after that, my physical and mental health was still pretty fragile. I knew that if we were going to make Adioso work, I’d have to devote myself 100% to getting healthy and becoming mentally strong. Y Combinator gave me the strength and the safety net to do it. No matter what happened from here, no one could take away from us the fact that we’d been funded by YC. It might mean being misunderstood for a while, but I was already pretty used to that. I was willing to spend as long as it was going to take.
Adioso had given the motivation to get my life together, and the opportunity to get into YC. It was what had given me the willpower to quit booze, eat healthy, and keep away from the people who’d been bad influences. It had meant giving up most of the indulgences and social outlets that I’d always relied on to make life enjoyable. It had been a pretty bleak couple of years. I needed there to be a happy ending, both to my own journey, and to the journey Fenn and I had shared for so long. A talent-acquisition and a return to full-time work was not going to do.
On the Tuesday night we went along to the Socialcam launch party. The venue was both fabulously extravagant and delightfully nerdy. It was held in The Exploratorium, an interactive science & arts museum located at The Palace of Fine Arts. Though I’d never seen it in real life, The Palace of Fine Arts had quite some significance for me, as it features heavily in the hilariously shambolic movie The Room, by Tommy Wiseau.
I’d first seen The Room about a year earlier. It had been the most entertaining, joyous couple of hours I’d had in years, but there was more in it for me than just that. After the hysteria of the initial viewing subsided, I started to find myself strangely moved by it. There are so many formidable barriers to getting a feature film to market, I’d reflected, that it should have been impossible to complete the production of such an abomination of a film, let alone get it into cinemas. That Tommy Wiseau was able to clear those barriers could be seen as a freak accident of cinematic history. Or, it could be seen as an example of what’s possible when a person is both unshakably determined, and tragically delusional.
Since seeing the film, I’d read and thought a lot about Tommy Wiseau. I was inspired by his determination. And I was intrigued at how someone so delusional could function in the world at all, let alone create something of such cultural significance. How, I’d wondered, can one know whether their determination is leading them down a path of rationality or delusion?
For admission into the Socialcam party, you had to have their new app already installed. Fenn and I obligingly presented our iPhones to the door staff. Ned had proudly quit his iPhone. He held out his $20 Nokia - his “burner”, he called it - and shrugged “I would if I could”. The door-girl smiled and rolled her eyes, as she gestured us all in.
We wandered into the party and scanned the crowd. We spotted a few YC alums we knew - mainly from our batch, the class of Winter ‘09. As we’d been back in Australia for most of the time since then, we didn’t know a whole lot of people from the other batches. I didn’t know how many of the crowd were YC alums but it was fair to assume a good portion were.
The room was full of energy and optimism. The whole Valley had a whole lot more energy and optimism now than it did back when we did YC. At that time, being the lowest point of the GFC, there was such pessimism around fundraising that Y Combinator picked a smaller-than-usual batch, biased their selections towards the teams that seemed particularly tough and resilient, and dubbed us “The Cockroaches”.
Now, it couldn’t have been more different. It had just been announced that every participant in the current and future Y Combinator cycles would be offered a no-questions-asked $150K investment from celebrity investors Ron Conway & Yuri Millner. The standout companies were quickly raising angel rounds at pre-money valuations of $10M or more. The middling ones were at $5M. Just two years earlier, we were deeply grateful for our $1M valuation.
Adding a little sting to it was the fact that recent Y Combinator applicants had been reading my post about our YC interview for pre-interview comfort and guidance, some of them contacting me for one-on-one advice. Before going on to leave us in their dust. I didn’t like to feel resentful. I wasn’t really, I understood how it all worked. I just wanted to be able to be as confident and optimistic as they all seemed to be.
We went up for a chat with Joe from Airbnb. They were far-and-away the rockstar startup out of our batch, and now they were rivalling Dropbox as the rockstar startup for all of YC. We high-fived and bro-hugged the way you do with Joe, and I said something congratulatory about just how much they were killing it. “How you guys doin?” he asked. “Oh man… y’know.” Yeah, he knew. “We went through some pretty low times man. You’ll get there.”
As we went for the bar, we ran into Jude Gomilla from Heyzap. He was always full of enthusiasm. “Guys! I saw that Valentine’s Day promotion you did.” Heh, that. The How Much Do You Heart Me? campaign. The best and worst thing we’d ever done. “So cool, love the concept.” Yeah, everyone loved it. Not one person bought anything from it. “You should do more stuff like that, there’s gotta be something in that that can work really well for you.” I appreciated his optimism. I really did.
Daniel Gross, a recent, celebrated up-and-comer with his Sequoia-funded Cue, was similarly excited about our campaign. It was great to get the affirmation from such talented people. But perhaps also crushing to realise we’d misdirected the effort toward something so tangential to the right direction for the company.
We spotted Dave Rusenko of Weebly. A few months earlier, he’d been reminded about our site, had gone to check our progress, and had got in contact with some suggestions. As we hadn’t met in person for two years, I had to re-introduce myself, but he was totally up for a chat. “You guys should totally be able to raise funding for what you’re doing,” he insisted. “I need your product, I want it to work so badly.” Steve from Hipmunk was also with us. Despite the festive occasion, the self-help-group atmosphere briefly descended as Steve, Fenn and I talked about the cost and pain around getting access to flight inventory, and how hard it particularly was to get data to support a product like ours.
Dave remained optimistic and supportive. “Just build something that makes it easy for people to find their paradise. That’s what I care about. Some place I can get to that’s cheap, and that’s paradise. Build something that just looks amazing, then get in front of investors, you can totally do this.”
“Paradise…” I pondered. I turned to Ned. “Did you get that?” He was already typing “paradise” into his burner.
Next we spotted Robby Walker, also now of Greplin, and an Adioso investor - indeed the lead investor in our first angel round out of YC. We chatted at length, explaining the ups and downs and the troubles we faced. He was unsurprised at the challenges, impressed that we’d persisted this long, and confident that we’d find our way back onto the right track.
We went away from that party more content and upbeat than we’d been at any time on the trip. Ned and Fenn decided to pop into Safeway for some beers to take back to the motel. They were ready to unwind. So maybe PG wasn’t willing to put us in front of investors just yet. But, some of the most successful people in YC believed in us. As long as we had that kind of support behind us, we’d be able to find a way to make this work.
The following day, I only remember doing two things. I went to Amazon and ordered a copy of “Web Design for Developers”. And I went to Airbnb and listed my own bedroom.
Being located 17 hours ahead of Silicon Valley often has you lagging behind on the big news. On waking this morning at home in Melbourne, the inbox and Twitters were abuzz. Google had launched a flight search product.
As the “other” YC-funded travel search startup, people just wanted to be sure we’d heard the news. Most were just interested in our thoughts. At least one feared for our future.
Over at HackerNews, once you waded past the protracted debate over Google’s evilness, several commenters asserted with certainty that this would spell death for travel startups like Hipmunk. The news had one anonymous travel startup founder throwing himself out the proverbial window.
When Google first announced its intention to acquire ITA Software in July 2010, we at Adioso thought it was a huge deal that would materially influence our prospects. But today, on the day that Google has finally launched its flight search product to the world, we couldn’t be less fazed by it, and we think every other travel search startup should feel the same way.
Let’s try and cut through the hyperbole. What is Google Flight Search? It’s just a flight search tool, that is integrated the Google search engine. Nothing more, nothing less. It has some cool features, and no doubt it will have many more cool features in the future, some which may be truly disruptive to the travel industry.
But as a startup, to believe Google Flight Search destroys your own prospects is to believe that being Google is all it takes to own 100% of the travel search market. It is also to believe that once Google has taken ownership of the market, it will be the unassailable leader for any type of travel search, effectively for all of eternity.
I doubt those beliefs are correct.
One of the Y Combinator mantras is “Startups don’t get killed by competitors, they commit suicide”. In YC folklore, the only company ever to have been killed by a competitor was Kiko, a calendar app, that died shortly after Google Calendar launched[1].
You can see how that would would have happened. A calendar app is a relatively generic product, and being good enough and tightly integrated with Gmail might have been sufficient to effectively kill the rest of the market. For Kiko to have innovated enough to overcome Google’s natural advantage would probably have meant becoming something quite different from a simple calendar app. They could have done that, but they decided to do Justin.tv instead.
You don’t get anything much less generic than travel search. Well before the internet, there were endless different ways in which people planned and booked travel. And whilst the internet has spawned a handful of dominant players like Expedia, Priceline, Orbitz and Kayak, there are thousands of other online travel search and booking tools, many with very large, happy audiences.
The travel industry is one of the biggest of all the world’s industries. It’s hard to imagine an industry with a consumer-base as vast and diverse. Yet tastes and preferences in travel search tools aren’t just diverse accross geographic and demographic segments, but even within quite narrow ones.
As Y Combinator-backed travel search companies, Adioso and Hipmunk have a significant intersect between our initial target demographics: YC founders and fanboys if none else. Yet even among people in this rather homogeneous segment, you’ll get wildly differing views on which company has a better travel search product.
Some adore Hipmunk, some hate it. Some are excited by Adioso - its potential or its reality - and some don’t understand why anyone would ever want it. Some think we both suck and just carry on using Kayak. And some love each one at different times, depending on the type of travel and the certainty of their plans. So, even within the one brain, there’s often great diversity in tastes and requirements in travel search products, depending on the context.
It was discovering this that made me realise we didn’t need to worry too much about competition. Adioso was never a search tool to win largely-satisfied customers away from other established players. It was a product we built for ourselves, which then found an audience of people who agreed with our ideas on the way travel search should work. Similarly, Hipmunk is a search tool for people who agree with Adam and Steve about they way travel search should work. Some of those people will be the same, and some won’t. For both of us, our success relies on finding enough people who share our views. The beautiful thing about travel is that each of these niches can still be vast and lucrative.
When we heard about Hipmunk, we naively worried they’d copy our ideas and use our secrets to beat us in the race to win over the market for, well, I guess any new travel search product [2]. Of course as soon as we saw their product we realised it was nothing like ours and was built to serve very different needs.
Now, if I ever worry that Hipmunk might move into our product space, I just remind myself that they’re far too busy just being Hipmunk to think about being Adioso. For every feature of ours they’d add, they’d become less of what they set out to be themselves.
And now I think the same about Google. Google is building the sort of travel search product that Google would build, and it will be liked by the sorts of people who will agree with Google on the way travel search should work. They’ll probably add features conceived by Adioso, Hipmunk and any number of other travel search companies.
But they can’t do everything. They can’t please all of the people all of the time. More so than in just about any other industry, they can’t do it in travel search.
I’m not underestimating how significant and disruptive this will be for the industry. And I’m not oblivious to the implications for those who depend on Google paid or organic search for traffic, or on ITA for airline data.
But in the scheme of things, these issues matter little for startups. Building a great travel search company is really hard, not because of anything that Google does, but because building a great company is really hard.
At Adioso, we’re just getting on with building a great company.
In November 2008, Fenn and I had one of the more momentous experiences of our lives. After six years working together on various startup ideas from in our home town of Melbourne, Australia, we were selected for an interview with Y Combinator in Mountain View, California. Here’s how we got through it.
The Preparation
After allowing ourselves a couple of days to come to terms with the surprise of our interview invitation, we set about preparing. As we already had a working product, we didn’t need to spend much time on our demo. From YC’s interview preparation guide, the most important points seemed to be that we should have a good idea of how we’d make money, and find someone to help us practice our interview skills.
As complete outsiders to Y Combinator and Silicon Valley, practicing with YC alumni or experienced operators in the Valley didn’t seem to be an option. We didn’t even really have any friends or associates we felt would be capable of asking the right questions in the right way. But we did know of a prominent Melbourne-based web startup founder and blogger called Steve Sammartino. We’d never met Steve, but he seemed like the sort of guy who’d be willing to help, so I dropped him an email and he was good enough to reply quickly and make himself available to help us out at only a few days’ notice.
In the days leading up to our meeting, we thought and talked through our product, market, and business model enough to be confident in our ideas, but the task of being able to convey it convincingly to potential investors still lay before us. Steve turned out to be the perfect person to help. Being more of a business guy than a hacker, and being oblivious to Y Combinator and Paul Graham’s essays, it took a thorough explanation of our business approach and concept for him to be convinced, particularly with respect to our revenue model. But after a three-hour discussion that started as simulated interview/interrogation and ended in relaxed camaraderie, he commented that he was particularly impressed with our passion and determination. The comment I most remember from Steve that evening was “You guys sound great when you’re not trying to pitch”. This gave us a huge confidence boost.
Three days later, Fenn and I set off on our 18-hour journey to California feeling as though we were as well prepared as we could be. We arrived in San Francisco about 48 hours before the interview, and spent most of the remaining time trying to rest and relax, with a few sessions grilling each other with whatever questions we could imagine might be asked.
The Interview
We’d chosen a late-afternooon interview slot, selected to allow ample time to get there and minimal time sweating over the outcome. Arriving at the YC office over two hours before our appointed time, we were greeted by Loopt-founder Sam Altman and directed to the big orange room where we joined several other nervous aspirants. We chatted a little with candidates and alumni, then Fenn and I took a wander around the surrounding streets to give each other a few more final practice questions before returning to the office to await our appointment. I was nervous as hell but I knew we’d done all we could to prepare.
Jessica emerged to welcome us with her effervescent charm, expressing amazement that we’d flown half way around the world for a 10-minute interview and promising to try to give us an extra couple of minutes for our trouble, before introducing us to the rest of the crew: Paul, Trevor and Robert.
Paul opened proceedings and cut to the chase: our market is already very crowded, although most of the players suck; how are we different from the many established competitors? Suddenly, finally, our show was on the road. This was a pleasing, if slightly unexpected opening; we didn’t even need to explain what we were doing or why, just how we’re better than the incumbents. I opened up with a response and was going quite well until things hit a snag. Mid-explanation, Paul pulled me up with his first challenge, saying “surely your competitors can do that”. I replied that they couldn’t but he refused to believe it, and with Robert now furiously typing away at his laptop to check out my story, my confidence started to waver; I was convinced of our superiority over our competitors on several fronts, but I hadn’t checked them all for this specific feature. Just as I started to panic, Fenn came to the rescue, pointing out that although it may seem as though our competitors have this functionality, for some crucial technical and implementation reasons where our product excels, the others are all abysmally deficient. Our story checked out, and the panel was satisfied.
As we proceeded to explain how our site worked, we suggested turning to the demo and the YC team agreed. So far I’d thought I was the nervous one of the two of us, but as Fenn drove the demo I could see he was shaking enough to make it a little hard to control the mouse. But he kept it together and got through the demo in style. The team seemed satisfied.
To be honest I can’t recall many details of what happened next. What I do remember is that it never felt like the intense grilling I’d been expecting from reading other founders’ stories. That’s not to say it was ever cordial or casual, but I never felt like we were under a blowtorch. The question of how we’d make money was never explicitly asked, but discussions inevitably led to our ideas of the business model. I’d barely begun to exalt my grandiose plans when Trevor said “OK so you’d be building a more efficient market for flights”. Um, yeah, that’s it. They got it. From that moment I relaxed and was able to enjoy the remaining few minutes chatting about everything from our insights into the industry to the immigration minefield that lay ahead should we be successful.
After what seemed like about 3 minutes, Jessica announced we’d been going for 17, so the interview was wrapped up and we made our exit.
The Aftermath
We walked back towards downtown Mountain View, talking a little but mainly just thinking to ourselves, trying to make sense of the whole experience. As my composure returned, I stopped, looked at Fenn and said “You know what? I think we went really well”. He replied “I think we did too” and we gave each other a brief manly hug. We weren’t confident of getting funded; we’ve learned from many setbacks never to be overconfident. But I felt as though we’d done everything in our power, and that if we were unsuccessful, it wouldn’t have been because we were badly prepared or because we’d sucked in the interview. Whatever happened, we could feel proud of how far we’d come and be optimistic for the future.
We headed for St Stephen’s Green Irish Pub in Castro Street, and ordered what has become our requisite opening combo for momentous occasions: a single-malt Scotch, neat, and a pint of beer. We’d barely got through the Scotch when Fenn’s phone rang. Thanks to shoddily implemented international roaming, Paul Graham’s call from the YC office less than 2 miles away was being routed to Australia and back, so the words “We’d like to fund you” were difficult to decipher, but audible nonetheless.
Another manly hug and a few drinks later, we were back on the Caltrain to San Francisco for a quiet dinner and our most relaxing night’s sleep in a couple of weeks.
The Lesson
Given this experience, I’d advise candidates that more than anything else, you must (a) intimately know your market and competitors and (b) convey your determination.
I went into the interview confident I knew exactly how and why we could beat our competitors, but in the heat of the moment I wasn’t able to articulate it convincingly. Given my time over, that’s the main thing I’d work on.
As for determination, that’s harder. On this point Fenn and I possibly had a natural advantage. Our long-time friendship and persistence in business, along with the effort and expense of travelling across the Pacific Ocean for a 10-minute hearing probably gave us a head start. I’d think hard about how dedicated you are to your business and how you’re going to make that evident to your interviewers.
Make sure you think and talk about your idea so much that you understand it so intimately and can visualise it so vividly that you get really excited at the thought of it succeeding. Talk to as many people as you can, and learn what you have to say and how you have to say it to get people excited at the thought of how much better the world will be once your product exists.
Once you’re in that zone, it won’t matter whether YC funds you, you’ll set about working on your startup anyway, and with enough determination and persistence, you’ll be sure to build a great company.
