Right after Berlin-based travel activities booking platform GetYourGuide announced its $50 million Series C, one of Europe's biggest tourist draws, the city of Paris, was rocked by a series of terrorist attacks.
The awful events in Paris were clearly not good news for a tourism-dependent business.
"We closed the round on the eve of the Paris attacks... which kind of grounded the business for almost two months," GetYourGuide co-founder and CEO Johannes Reck tells TechCrunch. "In Europe literally no one went on sightseeing tours.
"It's been quite a turbulent journey since the last fund raise."
Yet today, two years on, GetYourGuide is announcing a $75M Series D, bringing on board new lead investor Battery Ventures, with all its existing investors also participating in the round (including KKR, Spark Capital, Highland Europe, Sunstone Capital and Nokia Growth Partners). The round brings its total raised to ~$170M.
Sad to say, terrorism hasn't gone away. Anything but. Since the Paris attacks of November 2015 there have been a number of other attacks carried out by individuals or small terror cells in many locations across Europe -- including Nice, Berlin, London, Manchester and Barcelona to name a few. Many of these cities are also popular tourist destinations.
But despite violent attacks on high profile tourist locations being an all-too-common news story -- in Barcelona this August terrorists targeted the tourist-packed street of Las Ramblas, and had also been planning to bomb another guidebook staple: Gaudí's Sagrada Familia -- GetYourGuide says its business has not suffered any more major freezes like the one that occurred after Paris.
On the contrary, it's been able to show late stage investors the kind of robust growth metrics that get VCs proffering term sheets.
"Throughout 2016 and particular in 2017 the momentum just came back at such an extraordinary pace," says Reck. "And this year we've been growing faster in absolute numbers of course but also in relative metrics than in all of the previous years. So we've really accelerated."
This summer the 2009 founded startup passed a cumulative 10 million tickets booked milestone, with nearly half of those booked in 2017 alone.
"We've seen a tremendous impact from the Paris attacks but then, after that, no further attack has had any real impact that you could measure. It's almost like travelers now are kinda of used to this," he suggests. "They don't see it as a massive threat anymore. Which I honestly also think is the right way to look at it.
"I mean the people who were hurt the most after the Paris attacks were the local Paris suppliers. Many of which went bankrupt or had to lay off staff. So I'm grateful to travelers that they don't punish the local suppliers. They got punished twice -- they got the Paris attack and then they didn't get revenue. It was really bad."
And the apparent resilience of tourists to terror tactics hints at the underlying growth story in the travel market in recent years that's also enabled GetYourGuide to keep scaling its business.
Its key markets are "all the European markets"; both from a source customer and travel destination point of view -- and "definitely" Germany and the UK on the source front. But Reck also says the US is its fastest growing source market now, and "soon the number one source market globally".
"We've made significant inroads," he says of the US market, adding this is "something that two years ago I frankly would have never believed we would have been able to pull off".
He puts US traction down to GetYourGuide's "relative strength in Europe" (vs competitors), and to Europe itself being a massive travel activities market -- worth $150BN annually -- which he says has also meant it has always made sense for GetYourGuide to stay headquartered in Europe. Even though it had to go outside the region to seek and secure this late stage funding.
The Europeans could not stand the pace, and typically didn’t also have the appetite for risk that such a venture at this scale requires.
"Unfortunately I have to say, as an entrepreneur in the European ecosystem, we just don't have the density of growth funds in Europe that we need," says Reck. "In this round we closed the round from start to finish in eight weeks. So it was a very, very fast process. And trust me it was basically just US investors being involved in this. The Europeans could not stand the pace, and typically didn't also have the appetite for risk that such a venture at this scale requires."
"This was the first time we were really at a scale and profile where everyone wanted to invest," he continues. "Every investor that we've met had a very keen intent to become a part of it, just because it's a very exciting market at a very exciting juncture in time."
"Travel activities is a huge growth market," he adds. "More and more people want to do activities -- if you look at millennials, I think seven or eight out of ten would rather book an experience than buy a physical item. And overall mobile usage at destinations is still skyrocketing -- with lower roaming costs and better wi-fi. So we're on a huge growth trajectory. Less than one per cent of the global travel activities segment is being booked online yet with an intermediary like GetYourGuide. And there's just so much reason for doing that -- we're growing very fast."
Another on the up travel trend he flags is food, noting that 16 per cent of leisure travel spending goes on restaurants or food related experiences. "There's a wealth of really creative food experiences now popping up in many cities," he notes. "Which is also something that we're hosting on the platform."
Growth in the travel activities online booking market generally is being driven by more tourist attractions opening up to online bookings via third party platforms -- including offering incentives for travelers to book their tickets ahead of time, such as skip the line or VIP entry, reckons Reck.
He says momentum is also being driven by the general digital feedback loop of Internet research combined with online reviews helping to weed out bad quality and raise standards among tour suppliers -- and thus also grow demand for activities and day trips as more consumers share their (positive) experiences.
"The major trend here is that it's not the same tourists than the tourists that you had 10 to 20 years ago. [Then] there were these old school tour operators. Really bad reputation. They would all show you the most touristy parts of town... Now because we have so much content around the activity and customer reviews etc it's becoming much harder for the tour operators to do a bad job... So essentially we're in a new age of tour supplier, all of which have really tremendous customer satisfaction."
"In these past two years while we've more than quadrupled our total transaction volumes we've also increased customer satisfaction by more than 50 per cent," he adds. "Which is really due to the improved offerings. There are many completely new companies that never existed before that have now been created to serve customers in a much more authentic and better way. So no more tourist shops and stops in places where you'd never want to go."
GetYourGuide is "very close to profitability", according to Reck, with some 15 million unique monthly active users at this stage.
The Series D funding round does not yet an EU unicorn make, though he says valuation was not "the key driver" for the round. Rather the priority was to bring on "a really good investor that understands the space", and to get terms that allow it to remain "a founder driven company".
Battery Ventures general partner Itzik Parnafes is joining GetYourGuide's board, bringing decades of experience advising tech-focused businesses across a range of industries -- but with a particular focus on marketplaces and tourism.
“The company has already made significant progress in carving out a large and high-profile niche in the European travel market. I’m looking forward to working closely with the Board to support its efforts to capitalize on what I think is a very exciting segment of global tourism," said Parnafes in a statement on the GetYourGuide funding.
"This raise gives us a lot of flexibility," adds Reck, saying that it will provide "many years" of runway. "We didn't just want to raise the capital to burn it in the next two years -- at this point, because the company is so sizable, it was also to have significant funds on the balance sheet so that we can pursue strategic opportunities and just take a longer term view than we could before."
An IPO is also not yet on the horizon -- though going public is "definitely under consideration". But Reck says the plan is to go public "ultimately", using what he dubs "the luxury of being private" to continue to invest in the tech and pursue "longer term opportunities".
The Series D funding is going firstly towards international expansion, with a big push planned for the US market and also into Asia (Reck describes this bit as the "boring execution game that we just need to be really good at").
Investment will also go on product dev, with the team already working on ways to try to enhance personalization of the product and generate effective recommendations for extra activities for travelers to book. The end game is to have GetYourGuide be more like a travel companion or assistant -- i.e. rather than a platform used once or twice, ahead of time, to book the odd flagship tourist experience.
Nudging users to transact with GetYourGuide multiple times per tourist destination is their revenue-amplifying goal.
"We're trying to hone our recommendation algorithms -- and we're actually working quite a lot on machine learning and AI right now in order to really understand what customers want, to understand customer intent," he says. "Before they book, when they book, after they've booked -- and then really have tailored recommendation. So that we can become a much more integral part of their trip."
"A couple of years down the line, with what we're building, with a smartphone you'll have a companion in your pocket that you can take out at any point in time and will recommend you the best things for you to do for your trip at this very point in time," he adds.
"We'll be able to direct you there, the ticketing will be totally integrated with the local provider, the check-in experience will be really seamless. So I think that's where we're really moving with the company -- and with the travel activities industry overall is to be the content, really the exciting part of the trip. And constantly inspiring the traveler to do more and to do more exciting things at their destination."
Reck puts a 12 to 24 month timeframe on GetYourGuide being able to have automatic recommendations up and running for users based on their geolocation and "profile", though he says it is already taking the "first steps" to tailor recommendations -- by, for example, analyzing what people were searching for in Google when they landed on its platform.
"It's something I'm super excited about because it will make travel overall so much better," he adds. "So far no company really, in travel, has managed to do personalization really well."
The travel companion vision does raise the question of where GetYourGuide will get the necessary personal data to profile its users and power relevant enough recommendations for extra stuff for them to do on each trip.
Reck says it's already started building out partnerships to help profile customers for travel activity suggestion purposes. "One thing we've done recently is we're now the exclusive partner of Easyjet, of KLM, and a host of other airlines where we have very tightly integrated partnerships where we can leverage each others' data essentially to understand the customer profile. And we continue to pursue that," he notes.
So when an EU airline asks you to specify if your trip is for business or pleasure as you're purchasing your flights, it might also be sharing that intel with GetYourGuide (and vice versa).
Reck characterizes this as a win-win all round: For travelers, because they get more relevant recommendations; and for destinations because "it will help to spread the traveler away from just the main tourist zone where everyone is at right now, into a much more diversified portfolio of locations and also of activities".
However profiling customers does imply a loss of privacy. And with incoming changes to EU privacy law -- under the GDPR which will be in force from next May -- all companies doing business in the region and gathering EU citizens' personal data at scale are likely to need to be rather more explicit in informing their customers about what personal data they are gathering and for what specific purposes, as well as enabling people to ask to have their data deleted on request.
So while consumers might be okay with travel companies profiling them if it means that they end up having better holidays, all companies involved in this data-sharing chain are going to need to get good at explaining which bits of personal data they are gathering and why.
On the competition front, Reck says GetYourGuide is not concerned about Airbnb's moves into offering travel experiences via its platform -- arguing that the vacation accommodation platform's focus is currently too narrow to be a threat to its more mainstream tourist market positioning.
Rather he's more concerned about Chinese rivals, and mentions that as one of the reasons why GetYourGuide intends to hold off on IPOing in the short term ("not having to really optimize the profits on a quarterly basis" is, he argues, "particularly" important if you play against "such long term players as the Chinese").
"Airbnb has a very unique set of products that I would consider to be more PR products than real products. It's relevant for a very small sub-segment of, I would say, very artsy types of customer that look for very, very curated and unique experiences in a city," he argues. "Those products have not been demonstrated to be successful in the main market yet. And I don't see that happening moving forward unless Airbnb really dramatically changes their strategy which I think would be detrimental to their brand -- which is all about uniqueness. I think they won't be a real competitor. But we'll see."
"The most interesting competitors to me are all out of China," he adds, name-checking Hong Kong-based, Sequoia-backed Klook as one -- a 2014-founded company which last month raised a $60M Series C and added Goldman Sachs to its investor roster.
"The Chinese are really innovating super fast," he says. "China outbound is just a massively growing market. It's something that we'll also make sure to tap into. But what we see now -- the key competitive landscape, it's not even GetYourGuide vs Airbnb, Booking.com or Expedia. All these companies, all the large corporates are very focused on their money makers, which is accommodation, but the more interesting competition that is going on -- that will be going on over the next five to ten years will be the one between GetYourGuide from the Western hemisphere and all the Chinese companies that are coming up."
Moving faster is something Reck says, with hindsight, he wishes the business had been able to do. But then GetYourGuide grew out of a student project and the young, first-time founders were effectively learning on the job -- with running a startup doubling as their defacto MBA.
"If anything, I would do a lot of things faster," he says when asked what he would change if he could. "We took a very long time in the beginning. We could have literally skipped like three years or so at the beginning by having a clearer strategy and raising more funds earlier.
"We kind of dabbled along with a lot of different business models, building a lot -- on content and SEO and partnerships that were kind of semi-fruitful. In the beginning having a lot of inexperienced junior people, and frankly being inexperienced junior founders. On the positive side, that was like our entrepreneurship MBA if you want. So we had the luxury to, under the radar, mature as entrepreneurs before really going into the limelight and raising a lot of funding.
"What I see as more problematic with some of the founders today is that the ecosystem is a lot more mature so you get seed funding very quickly, you have a lot more instructions from experienced people which is all great. It also puts the founders under pressure to really mature at a very, very fast pace -- and I'm not quite sure whether I myself would have made that, to be honest. So for us I think it was good the way how it ended up being."
What's his biggest challenge now? Recruiting, says Reck without hesitating. "Hiring really good people and experienced people."
He says the current team is comprised of around 15 per cent German speaking staff and 85 per cent who had been brought in from elsewhere -- mostly from the Europe Union and some from even further afield.
"We need to constantly relocate people into Berlin or Zurich which is the engineering office... We constantly have to find talent abroad, need to assess it and need to relocate them."
But that's a necessary price for GetYourGuide remaining located at the heart of its market, says Reck. "It would have been a completely bad decision to relocate the company to the US for many reasons... One thing I've learnt it's not because the talent is worse here it's really just the lack of experience -- so we have a lot of really high calibre talent, we have great universities... we have many, many very high powered universities with very bright minds and well educated people coming out of. What you really need to infuse the companies with is experience. And that's what we've tried by always bringing on a mix of Silicon Valley talent... alongside a lot of really good local talent."
"And the good thing about being a big fish in a smaller pond is that you stand out so much more -- so we can really hire and recruit the best people across all of Europe," he adds.
- This article originally appeared on TechCrunch.