What's Next for Luxury Travel?

The luxury travel segment has always been about high-touch service and premium experiences. In a rapidly changing post-pandemic world where AI turns the service model upside down, over-the-top experiences collide with sustainability concerns, and a renewed appreciation for authentic engagement fosters an even more fragmented landscape of travel providers, what does that mean for the luxury market?

In this episode, guests, Stuart Greif, Chief Innovation and Strategy Officer at Forbes Travel Guide, and Jim Bendt, owner of Pique Travel, a luxury travel agency in Minnesota, join the pod to share their unique perspective on the future of luxury travel.

It’s a segment of the market that is challenging its own traditional ideas, welcoming new and different types of travelers and experiences, and diving into new technology with both feet.

• What exactly is “luxury travel”, anyway?
• The intersection of high touch and high tech
• What does the “Connected Trip” mean in a new AI-driven world
• Can luxury travel be sustainable?
• Who is the luxury traveler? It might not be who you think

Follows:

Gilad Berenstein - host

Cara Whitehill - host

Stuart Greif - guest

Jim Bendt - guest

Go Deeper:

Trend Report: What We Learned at Virtuoso Travel Week 2023 Virtuoso

Can Luxury Travel Be Sustainable? Sustainable Travel International

Gen Zs don’t have a lot of money, but they’re traveling anyway CNBC

8 things to know about the future of luxury travel The Points Guy

Future of luxury travel: The latest trends shaping the luxury travel industry Deloitte

Transcript

[00:00:00] Well, hello, and thank you for joining us on the Travel Tech Insider. I am Cara Whitehill. And I'm Gilad  Berenstein, and we're thrilled to have you with us for what I'm sure is going to be an insightful and thought provoking conversation, exploring questions on why there is so much great travel tech startups and so few venture rounds.

But before we jump in, Cara, what's new with you?

 I am knee deep in planning my travel schedule for the fourth quarter with all the various conferences going on. So, um, doing all my business travel planning. Looking forward to seeing you there at some of these, I think. You

know, the, uh, the end of the year is a busy investing time.

So trying to look through lots of deal flow coming through. And of course, trying to do all the analysis, not just on the viability of the businesses, but also on their viability and be able to raise follow up rounds as they need to raise the next round from larger investors and potentially people outside the core element of travel tech [00:01:00] investing.

Um, so thinking a lot about these kinds of things

right now. Yeah, you know, it's, it's interesting. The travel industry tends to get the side eye from a lot of VCs, despite spawning two of the most disruptive startups in the past decade, right? Uber and Airbnb. Um, I know you see this a lot. I see it a lot. Um, in our capacity is angel investors and VCs.

But, you know, a lot of VCs will argue that travel is just too complicated. Um, too much legacy infrastructure and tangled commercial models, but then they go and they plunk a lot of money down into like healthcare startups, right? That are even more complicated. Um, or they'll say the TAM is too small for travel, despite travel representing one of the top categories for household discretionary spend.

Transcribed Um, I know you've heard this one a lot, too, where they'll say, isn't Google already doing that? And then they'll turn around and fund another enterprise collaboration tool or an ad tech platform that Google already does. Right? So what is it about travel that makes it so tough for startups to get VC funding?

Are there alternatives [00:02:00] to VC worth exploring? Should we be looking for ways to reposition travel startups to make them more enticing for VC investment? Um, this is a topic I know you and I both have wanted to dig into for quite some time and get some candid perspectives on.

Absolutely. I'm thrilled that we have the perfect guest to join us today to discuss this topic.

Chris is a partner at Thayer Ventures and one of the most respected investors in our industry. He has spent his entire career and professional life in and around startups and high growth businesses in travel, hospitality, and technology. Having founded seven companies during his 37 year career, he came from a family of hospitality pros with.

Businesses spanning food service, gaming, retail, aviation, as well as resorts in Hawaii. And it actually seems like Chris's dad and my father or grandfather in law may have actually known each other back in the day. So lots of interesting things to talk about

here. Yes, absolutely. So with that, let's get started.

So Chris, thank you for joining us. It's really wonderful to have you. And to start, please tell us just a tiny bit about your [00:03:00] background and tell us a little bit about what areas you're excited about investing in right now.

Sure.

Happy to. And thanks for having me, guys. This is, uh, this is exciting. Um, so look, I, I grew up in the business.

As you mentioned, my dad was a hotel developer in the state of Hawaii and was a, you know, innovative entrepreneur himself. He built some of the sort of legendary destination resort hotels on the island, the High Regency Waikiki, High Regency Maui, the Westin on Kauai and other sort of crazy big box resorts.

So, So I grew up around wet concrete and the comp, you know, the complications of running a travel business. And I started in the family business after graduating from Cornell. And after a few years ended up starting companies of my own. So I've been on the. The path of entrepreneurship, meaning that I've actually never been employable my entire career and have to figure it out every step of the way, which is the life of an entrepreneur, right?

Absolutely. [00:04:00] And, and built companies always in and around travel and technology and hospitality, as you mentioned. And about 14 years ago, um, after running a few venture backed businesses, myself sort of had this insight that, you know, this very complicated and interesting injury, uh, industry that you guys described well, I think in the, in the beginning of this, of this discussion, you know, one of the largest industries on the planet earth growing faster than global GDP expected to for some time to come historically resistant to the adoption of technology, you know, all of this.

But relatively overlooked by, um, institutional investors. And I, I felt that there was a real opportunity to build an investment platform focused on the category. We saw a lot of things coming, um, and had a lot of expectations about change and disruption in this industry. And I think we've been right. I mean, things have accelerated certainly over the last five to six years.

Uh, and so [00:05:00] no, we're now investing out of our fourth fund. We have a bunch of strategics. Strategic investors in our funds. Um, we tend to be very, very active with our portfolio companies, helping them navigate this industry. So it's been, it's been a passion project of mine and, um, uh, and certainly interesting every step of the way.

And frankly, the, the things that have been interesting to invest in have changed over time, right? There was. Several, you know, I would say four or five years ago, the big themes were all alternative lodging, right? And this was, this was an area that was very interesting for us. And we were early investors in, in Sonder and, and we're investors in BookingPal and other players in the landscape.

I think that category is still very interesting, but some of the ideas being built there are very capital intensive and this is just not a time. For capital intensive startups, frankly, this is a very difficult time for [00:06:00] those types of businesses, frankly, and it's, it has everything to do with follow on investing in the scarcity of growth capital in companies that's, you know, require so much money, but there's a lot going on right now, I think in the top of the travel funnel there, you know, back then when we were very pro.

Alternative lodging. We were also very negative B2C investing. And I, I used to say that we would do no consumer investing. And a lot of that had to do with just sort of the, you know, the dominance of the big players at the top of the travel funnel, right? You had Expedia and booking and, and Airbnb and, and the suppliers themselves spending tens of billions of dollars on search terms.

To acquire travelers. And we just saw no opportunity for, um, consumer startups, frankly, to reach that critical escape velocity where they could continue to raise money and get to cashflow positive. So we, we shied away from it. We've, we believe that that's changed [00:07:00] in the last several years. And there's some really interesting things happening the way, you know, millennials and Gen Zers engage with travel is totally different.

Um, many of them are not using OTAs. Many of them are not using search to do their planning and discovery, and then ultimately making their booking decisions. And so things are being shaken up. Um, and we're seeing some new emerging models there, which is very exciting because frankly, that's where I think some giant outcomes can occur.

Your

thesis. It sounds like it's evolved over the years. And, you know, you're finding your way into, um, you know, some of these newer kind of demographically oriented platforms, if you will, but, um, do you tend to focus on particular stages of companies or, you know, you mentioned short term. Um, rentals and, and kind of hospitality oriented things.

And then you talked about, I mean, I know you from my experience at Traxo, and that was more of a data play and data companies were kind of a big thing for a bit. But do [00:08:00] you find that you're sort of honing in on different theses from fund to fund, or do you kind of have a macro level approach to, you know, generally these are the types of companies that we focus on, you know, regardless of fund.

That's a, that's a really good question. I mean, we. You know, as a, as an institutional investment platform, we do sort of have a stated perspective on stage. We invest in series A and series B companies. Typically, we avoid seed stage and precede investments. Um, very specifically, but we will participate sometimes in later stage opportunities where we think we can bring value.

So I think our, our perspective on stage has remained fairly stable. Our perspective on, um, On on roadmap and the particular flavor of investment we're looking for is very much changing and it's changing constantly. I always like to say that the biggest category of focus for us is opportunistic, [00:09:00] right?

The things that we learn from entrepreneurs, if you're close, if you, you know, if you're as an investor, you're sitting back and thinking that you can plan out the entire landscape for innovation and startups and then only invest based on your fundamental thesis, you're going to miss a lot of good stuff.

Because the reality is, you know, I learned from the entrepreneurs when they pitch me concepts, right? I learned things about markets, things about pain points in, in value chains or supply chains themselves. And, and, you know, you have to be open minded and opportunistic. There's also, and, and, you know, Gilad, you made a very good point in the beginning.

There is this fundamental issue of what's happening in the capital markets, right? When you're living in a world where all of a sudden money has gotten very expensive and it used to be free. That has fundamentally changed what it means to get follow on and growth financing. And so if we're blindly still investing in companies, you know, based on the notion that, Oh, no problem.

They'll raise a big series B or a series C. [00:10:00] That's easy. Was it, you know, that's, those are dead ends. Good companies can die because they run out of money. You know, this, this just in all companies die because they run out of money. That's the only thing that universally kills them all. So we have to be thinking, you know, what's happening in capital markets and adjust our investment style accordingly.

Yeah. Can you talk a little bit about your, your LPs? Because I think it's, it's interesting being a very kind of. Um, industry focused specific fund versus other VCs that are much more generalist in nature. Um, how do your LPs think about their participation with you and do they kind of follow a particular profile, if you will?

Yeah. I mean, that's super important. You know, we have in our fund, we have the, some of the world's largest hotel companies, right? Marriott is an investor in the fund, Hilton Hyatt hotels, host hotels and resorts and others. And you know, it sort of is a cut both ways relationship. You know, for them, they see us as a partner [00:11:00] out on the edge.

You know, we're, we're that tsunami buoy out there in the digital world, um, giving them first signs on threats and opportunities as it were mostly threats. Um, and, uh, um, and that's useful. So we spend time bringing information to them about what we're seeing and where we think things are going. We likewise, though, then get a deeper look and understanding of their strategy.

What are the things they're looking for? What do they care about? You know, how do they think about innovation? And that informs the way we ultimately invest. Most importantly, though, we then are able to open those doors for the companies we invest in. I mean, that's the whole, the whole fundamental thesis for me is can we add what we call alpha, right?

Can we add alpha to our investments? By the relationships we have in the industry. And so by having those types of deep inside relationships, when we invest in companies. You know, we can bring that to the table. And [00:12:00] ultimately that helps all of our LPs by increasing the performance of the fund overall.

So this, so the strategic LPs are important for us. And I'll, I'll say also, you know, as, as a entrepreneur myself, right. When I came to this, what everybody refers to as the dark side, right. I had a real fundamental, um. Commitment to wanting to have a, a value add story that was real. Like a lot of venture investors say, Oh, we're value added investors.

And at the end of the day, when you say, well, how do you add value? They say, well, We're pretty smart. We show up at the board meetings. We pick apart your balance sheet. And if you need to recruit a CTO, we know some good recruiters. It's like great, right? But the reality is good companies, they want help in business development, sales and strategy.

They want doors open so that they can test their products and have a shot on goal. Right. And so for me, that's been a super rewarding part of what we [00:13:00] do is, you know, I can help provide those shots on goal. Now, sometimes they work out great. And everybody wins. Sometimes they don't. And that's the game of entrepreneurship.

But I think Providing that opportunity is really critical to the, to the process.

Yeah. I'm so glad that you said that because that is definitely one of my favorite parts as well, you know, after the investments actually been made, getting to really engage with the entrepreneurs is as at least for me, part of the fun.

So a few months ago, I wrote a short post that. Was one of the inspirations for today's conversation, where I basically asked, you know, why are there so many great travel tech startups and so few venture rounds for those startups. And the common theory in the venture world is of course, a majority of these companies are not visiable.

And usually we hear about TAM and market size being one of the issues, or we hear about entrenched commercial models and large global players. What's your take on why there's so many great startups in relatively few rounds?

I think that it's all of that. Um, it's also that venture [00:14:00] capitalists are inherently lazy and they stick to what they know and there's a lot of old patterns.

And I mean, you see that not only in the dearth of rounds and travel, but you see it in the lack of diversity in the entrepreneurs they back, right? I mean, it, it's sort of sad, but it's true. It's a, it's a, it's a bit of a lazy industry. Travel is also enormously complex, right? The, you know, the ecosystem.

For the hospitality sector is complicated, right? With owners and brands and franchisees and OTAs. And a lot of people can't get their hands around that. They can't really get, get their minds around that. I will say though, and we've done a lot of work looking at this, the, the number of entrants that are starting to make travel investments, big funds that have now decided that this is an area of interest and thrust has increased dramatically over the last.

Six or seven years. I mean, when we started in 2010, we were by ourselves. There was very few others that [00:15:00] were, that were playing. There are now more and which is great for us because we're a small fund model. We co invest all the time. So all of the other venture firms that are active in this, in the category now, I consider partners, not competitors. 

And that’s great because the more liquidity I think that we drive into this particular, you know, industrial sector, the better for the whole pace of innovation and, you know, ideation and the birth of new ideas. I mean, you've got to have a whole, you know, financial value chain that pulls entrepreneurs all the way through. You need the mid market private equity shops.

You need, you know, you need the growth financing. You need the series A and the seed to make it all work. And I really do feel like we're there now. So it's healthier than it's ever been. It's just that now money is very expensive where it was free a year and a half ago. And that has more of an effect on startups than

anything else.

And, and that's an interesting point because I, I [00:16:00] think. I would almost argue that when you talk to these, um, these other VCs that are investing in what we look at as travel companies, I don't think they look at them as travel companies. They look at them as, it's a marketplace. It's a, you know, a consumer app in retail or something.

And, you know, I have conversations with, with different investors and they're kind of just, they're, they're describing their, their profile as we do marketplaces or we do, um, retail or, or whatever it happens to be. And so they, they're looking at it. From that perspective, as opposed to it being a travel company.

Um, which I find kind of interesting because then when you say, well, you know, that's travel and they're sort of like, Oh, well, yeah, you're right. But you know, it's a marketplace and that's in our thesis,

right? I think that the you know, the sort of dirty little secret there is that everybody needs to remember that venture capitalists depend on Financial LPs, right?

I mean, we're money. Right, right, right. And what I have seen over the years [00:17:00] is when you say travel tech to a giant institutional fund that's putting money to work with managers. They say Nietzsche. They say not interested too narrow Nietzsche. So all of these other funds have been trained to say vertical sass.

Yeah, marketplace, right? And so they may have a, they may have a real thesis about our industry and like what's happening there because there is a lot of interesting stuff, but they're, they're stuck in their mantra. Because they, and look, I have faced it myself. I mean, there's a reason that a lot of our LPs are, are strategic is because it's been really hard to convince the traditional financial players to be LPs of scale in our fund because they think it's an itchy.

And does that give you a bit of a, um, I would almost call it a superpower in a way, because I would think what you described a moment ago almost felt more like what corporate venture does, where they're in it for. The returns are nice, obviously, but they're also in it for a strategic return. [00:18:00] Right? And so if I'm a Marriott or a Hyatt or a Hilton and I'm looking at partnering with Thayer, I'm looking, my hunch is that they're looking at you because you can bring them really interesting, innovative ideas that help them achieve whatever particular issue they have in their business model that they're trying to solve that they perhaps can't solve efficiently on their own.

Right? And so The returns, while nice, if they get a 50x return, is, would you say that's not necessarily the primary objective for those strategic LPs? Yeah. Interesting.

Spot on. That's spot on. I mean, they, they, you know, you, you don't see companies like Marriott and Hilton making in fund commitments to venture capital as a part of their treasury strategy, right?

It's just not that they're, you know, they're only doing it because of the information.

Interesting. And how do you connect that to kind of traditional corporate ventures? You know, we know JetBlue, of course, has made. a real commitment to being active as a venture [00:19:00] investor. And then it seemed like many of the other companies, you know, kind of flirt with it for a while, then pull back.

Who have you seen do it well? And do you think any, any insights on how we can do it even

better? It is so hard, right? I mean, there's the biggest challenge with CVC is that you never know if they're going to be there for a follow on because the CFO can change the rules and the CFO is running a giant company.

So they don't really care that they're changing the rules. And so it was a good entrepreneur is going to be very nervous about taking a big slug of CVC if they think that there is a chance at that. Investor won't show up at the subsequent, you know, subsequent financings. I think that's a big challenge.

Also, a lot of entrepreneurs are nervous about having a major industrial player directly on their cap table because they think it could hurt their. to sell to competitors or ultimately to exit, um, which I think is right. So, you know, CBC is [00:20:00] tricky, but there's so many benefits that potentially come from it, right?

Where these are organizations are now opened up. And you would think if you got an investment from a corporate venture. Practice that all of a sudden you'd have great access to that company. Turns out that that's not always true, but, um, so it's super, super hard to do it right and to do it well. And you have to tip your hat to the JetBlue Ventures team because they have stayed steady and in the game right through the, the.

The, you know, the pandemic when airlines went to zero overnight, you know, if there was ever a moment where you would have thought they could have easily jettison that practice, dumped all their investments and walked away, it would have been at that moment. And they didn't, they stayed in the game. So super impressive.

And I think Amadeus does a nice job. I think they have a real, um, platform that was, you know, built by, by Catherine grass, it was one of our, uh, venture partners and she did a, you know, and, [00:21:00] and Susanna Chu, who now runs it, they've done a nice job. They've been consistent. They're making investments. You know, I don't see a lot of other players in travel.

Um, I know there are some emerging, uh, CVC funds, but they're super strategic focus. Like in the airline category, they're, they're only investing in, you know, things that are very specific, like alternative fuels or, you know, electric aviation. They're not really broadly looking at travel where. That is something that was inspiring and impressive with JetBlue is that they've looked more broadly.

Yeah, absolutely. So yeah, CBC is a funny game. It's an interesting

one. One of the other challenges I was going to bring up too is I remember back at uTrip, we had Expedia as a client, not even as an investor. And we had other prospective clients who would come to us and say, We want a clause in our contract that if you ever get acquired by one of the OTAs, our contract is null and void.

So there's also this extra fear that you were kind of alluding to on the prospect side, in addition to the investor side with corporate

investors. [00:22:00] Yeah. And I mean, that has a huge impact on your exit. If the buyer, when they're going through your data room says, wait a minute, half of your revenue might go away.

And then they force you to have to go to all those people and say, Yes.

Yeah, I was, I was going to comment on Amadeus Ventures and I think they've done a really good job, um, holistically and providing a lot of resource and support for their portfolio companies as well. And, and even kind of beyond their portfolio companies, they do a lot of work and a lot of thought leadership and things that I know a lot of.

Um, startup founders really appreciate the effort they put into it. And so that's something that I think Thayer is, is uniquely to the point about your superpower, I think you're uniquely positioned because you have those relationships with your strategic LPs, but you also have your, um, kind of your bench and your team of folks within the Thayer.

that have a lot of expertise. Can you talk a little bit about how you, how you think about that in terms of alpha and the resources that you can bring to your startup [00:23:00] founders?

Yeah. I mean, the, we have been crystal clear with our LPs from the beginning that we are a commercial animal, that we are super clear that we are going to invest in companies that have great promise to drive returns because I remember early days, one of our strategic LPs.

Hey, if you make an investment in a company we don't like, can we have a carve out so that we don't participate in that? And I said, no, absolutely no. And I said, by the way, you should dust off your, your, your copy of Sun Tzu. And remember, you know, keep your friends close, keep your enemies closer. Don't you want to be on the cap table of something that threatens you?

I mean, you don't want to stick your head in the sand. And anyway, they, they ultimately agreed. So I think that that, that total independence and commercial approach keeps us very, um, you know, sort of very clean entrepreneurs know exactly what we're doing and why we're doing it. And we're very clear about it.

So, um, I [00:24:00] think that helps if that answers your question. And, you know, I think that one of the things that also has been super important to me over the years has been, you know, the sort of spirit of this consortium, not just the specifics of it. So I have very good relationships with many companies that aren't LPs in our fund.

And I bring them information and tell them what we're seeing and share and invite them to participate in stuff that we're doing. And they likewise trust that I'm not going to bring them really bad ideas. You know, if I see a company that I think can do good work for them, I'd like to make that connection.

And I think that that's been proven over time. So, you know, there are that, that it's a really important piece because not all of our companies just, you know, want to work with hosts. Marriott, Hyatt, Hilton, you know, some of them could be looking to work with other, you know, companies across the space. So that's been important.

How often do you [00:25:00] see, um, You know that you're focused on series A and series B. How often do you see deal flow come your way from, you know, the precede and seed companies and how do you think about them when you see these startups that don't maybe they're too early for your approach, but how do you focus on keeping them warm or keeping an eye on which ones you think might have promise and what do you tell those startup founders or how do you, how do you direct them to Stay on your radar and kind of build the company to a place where you would take a look at them So

that's a really good question 70 to probably 75 percent of all of the deals I see are too early Maybe that's actually not even accurate.

Maybe it's 80 85 percent, right? So so it's tricky because on the one hand I know that you know Time is their worst enemy in many ways, so that I got to make sure they know very quickly that that I'm not going to be a source for cash right now, [00:26:00] um, and so that they should go feel free to move on if they if they want to, because their their journey is, is urgent.

And and some of them too, I'll see. And, you know, they'll, they'll be too early, but they'll also be utterly uninteresting. And I won't necessarily want to. You know, sort of say, Hey, I'm really interested in tracking your progress because that wouldn't be honest. Right? Yeah. Um, so it's, but it's, but I've also seen some of the most incredible pivots between, you know, early seed, late seeds, seed and series a, so if it's a great entrepreneur, you kind of want to just stay around the hoop to see what they make work.

Even if you know what they're working on initially is probably going to happen. You know, have to be changed. Um, so, you know, want to keep them around the hoop. So a lot of times it's just keeping track of people's progress. I, I always tell when I talk to young entrepreneurs about building slide decks and whatnot, I give them.

You know, the coaching of all the typical stuff, [00:27:00] market product, unit economics, all that stuff. But I always say that they should have a slide in their deck about progress because every entrepreneur makes progress. I don't care if it's, you are just thinking of an idea now, every month, every week, you're doing something.

You're having a phone call, you're investigating this or that, and progress is material. And it's also important because it shows that you have the ability to move the ball down the field as an entrepreneur. But the most important part of it is if you have a slide that references progress, you can then say to the investor that you're talking to, who may be rejecting you for any reason, maybe that you're too early or whatever.

Do you mind if I keep you updated on my progress? Right. And the reality is that every investor in the world is going to say yes. No one would ever take a meeting and say, no, I don't want you to update me on your progress. So then, you know, you can collect all these email addresses of people who have agreed to be [00:28:00] updated and send out a newsletter once every 90 days with your progress.

And so that's, I find that useful when I get Notes from people that, you know, here's what's going on with my business. And then when they're finally ready for a series day or they're, or I see that they're growing into that skin, then we can re engage and go a little bit deeper. But it's, it's overwhelming how much, how many entrepreneurs are out there.

So it's, I don't really have a, a direct practice for how to keep them warm. I kind of, it's on them to do it. You need an

AI bot, Chris.

Just what I need. Yeah. No, one of the things I love about what you said is I often tell founders if they're early enough in their process, that my advice is to do the six months, three months and zero months.

meeting where I say, go meet with the VC six months before you're going to ask them for a check and tell them what it is you're going to be working on, what it is you're going to be trying to prove or learn over the six months. And then I tell them, do a short phone call or an email in the middle and say, I've worked on all these things and I've learned a few of these things.

And you come back to them when you actually need the money. And you could say, [00:29:00] look at all this stuff I've accomplished since we first met, plus a few extra things I wasn't even expecting to accomplish. And then you build so much rapport with the investor that I find that it's a really nice way to build that relationship.

So I kind of love what you said there. One more question on this topic is, you know, there's lots of these, lots of startups that we see that are have really great promising businesses, but are probably not, you know, visible as we keep saying, what advice do you give these founders or what advice should these founders think about if they're, if they're learning that the VC market is not excited about their business, but they want to continue to build that

company.

Uh, well, I mean, the first thing is that just because a venture capital firm or institutional investor is not interested in investing your business doesn't mean that it's a bad business. I mean, that has actually nothing to do with it. It's a very, this is a very specific asset class. It has extremely high demands.

For, you know, capital expansion, there are [00:30:00] many, many, many other sources of capital to finance a business. Many businesses are just simply bootstrapped and have never even required. Uh, financing. I know people who have grown lifestyle businesses who have gone on to make actual fortunes, right? I mean, real fortunes this and, you know, without having to raise venture money.

So it's the first thing is, you know, I find a lot of young entrepreneurs think that. Venture capital is just some sort of a structural part of, of building a business of being an entrepreneur. And so the first thing I do is try to dispel that myth so that they realize it's not true. Um, and then figure out all the other possible ways forward.

I mean, I built the seven companies that I've built across my career. Only two of them were venture backed, you know, others were just bootstrapped or. Scrappy. They were fun. You know, some of them work. Some of them didn't. And you know, it's fun. So I think that's, that's important. And it, [00:31:00] it's a, it's a huge waste of time to be chasing venture for capital if that's not a fit for your business.

So maybe that's one of the things that entrepreneurs need to do is understand what does it mean to be a fit for that category? And if it, how do I know and pull the plug and work on, you know, I often like to

ask first time entrepreneurs, when they ask me that question is, what do you want for this business?

And I find that surprisingly often they haven't been asked that question. And I was like, if the only thing you want is to build this into the next Expedia, then sure you need to get some venture money. But there are so many other amazing business models and outcomes that can happen without it. So anyways, I love what you said there.

Yeah. And I think too, there's been a lot of, um, a lot of founders that don't know what venture really is about. They don't understand the math and they don't understand that really it comes down to what return profile that LPs are expecting from the checks they write to the venture capital firms, right?

So once you sit down and walk them through that, then, then it's like, look, this is a [00:32:00] treadmill you're about to get on that's on, you know, slope 11, and it's going, you know, eight miles an hour, and you're going to be on this for 10 years, right? So you have to be in really good shape before you even step foot on that treadmill.

And you need to understand what the expectations are because you, once you're on it, you can't. You can't get off of it. Right. And I think we can do collectively a little bit better job educating founders in these early stage companies, like what venture is, and then what some of the alternatives are. And I think, you know, some of the things that we're finding, you know, in my angel investing work, and I know Gilad's done a fair amount of this too, but, um, you know, there are a lot of angel investors in, in travel, but they're kind of hard to find.

And so finding a way to kind of programize some of these alternative. Fundraising mechanisms, um, in a way, kind of how VC has become, but finding ways to kind of make that easier and more approachable for these founders and, um, you know, giving them more access to these alternatives, I think, could, could help kind of, um, smooth things out a bit, make life easier for, for you.

So you're not [00:33:00] getting, you know, pitches that really aren't a fit for you. It frees up your time to focus on the ones that are better fits and where you can be more of an asset to your, your, uh, portfolio. And then, um, right size or align the resources more appropriately for, for everybody involved. But interesting problem.

Totally agree. Good. Um, so switching gears, you have a, um, a close relationship with Cornell. Obviously you're an alum. Um, talk about how that program has worked between the university and Because that's an interesting profile, I think, for how to connect the dots between what the market's looking for, what some of the academic institutions and the students in those institutions are seeing, um, what the investment community sees and connecting all those dots together.

Um, tell, I'll talk a little bit more about that. Yeah.

I mean, there's, there's no formal relationship between Cornell and Thayer Ventures per se. It's really all just me personally. Um, [00:34:00] And, you know, the, first of all, I just, I love teaching and, you know, I'm sure you guys have the same experience, right. Being around, you know, young people that are innovating and hungry and excited and leaning in.

I mean, if I can give back and be a part of that, it's super exciting and I love that. Uh, it just so happens that, you know. Cornell, Cornell's network in hospitality specifically, but even in travel more broadly is, is just incredible, right? It's been, it's been an enormous part of my process of networking, you know, the CEOs and, and senior executives at so many of the world's hospitality companies and travel companies are Cornell alumni.

And so I've been able to, you know, I've grown up with a lot of those, uh, executives. And, and so that networking has been just, again, plays well into. My practice of understanding the business and where it's going by spending time with those people, but also then having doors that could be opened and, um, helping out our [00:35:00] entrepreneurs.

But other than that, there's no real formal connection. We, you know, we've, we've explored ways that we could do things. Like, and I, I invite the Cornell team to come down to our annual meeting and a bunch of students, we bring them down and give them exposure. Um, but beyond that, there's, there's nothing really formal.

Got it.

Got it. It seems like there's some opportunity to. Align With some of these, um, you know, Cornell being a hospitality program, but also, you know, other engineering schools, for example, with you look at things like, um, the autonomous cars, right? And, um, you know, AI. And what's fascinating to me is every example that you hear when people first start talking about AI is trip planning, right?

And, you know, we can use these AI tools to plan better trips and whatnot. And so it's funny to me that there's so many travel applications, travel and transportation applications for a lot of this advanced And it makes me wonder, are there opportunities to do more collaboration between, um, the investing community and some of these [00:36:00] academic institutions and, and the startup ecosystem and, and, and tie these things together and, and share knowledge in a different way?

You know,

and there have, there have been in many, or there are many firms that sort of have relationships with, you know, sort of the intellectual property. Property commercialization practices of big universities. I mean, it's been common in, in healthcare and other, you know, um, practices I, at least for us in travel, it's, I haven't seen anything that's been sort of incubated and invented at the university level that's then become a really big deal in travel is I guess it's because more of the things.

that we invest in are, are sort of deeply operational if they're B2B. So they're built by people who have been in the industry for a long time and really understand the pieces. Um, and if they're consumer side, I mean that again is just sort of more of a new practice area for us given the change in the dynamics.

[00:37:00] I'm just not seeing great inventions happening at the university level. Maybe that's also because I'm focusing on series a series B and I'm certainly not going to find a company doing 5 million. And there are a lot of dorm room in travel, but it's a, you know, I don't know. I, you, I'm sure you're seeing it because you're as angel investors, you're probably spending a little more time with the hospitality schools.

There are definitely business plans coming out of there. I judged the, you know, business plan competition at Cornell every year. And that's a lot of fun. But none of that is remotely investable

for me. Yeah, there's interesting things percolating for sure. Yeah, it's like interesting,

you know, with the Pillsbury Institute at Cornell, where, you know, I recently joined their advisory board and they're trying to find that middle ground of taking those case study competitions that are often more like an academic exercise and they are really like an entrepreneurial endeavor, but trying to give them the legs to do that.

And at least in the early stage, that's something I've tried to do is to get connected with them to find [00:38:00] some. Like you said, founders who might not be ready today, but you want to stay close to those founders because you know they're gonna do something great when the time

arises. Yeah, well, good. I mean, and that's I I'm glad that there are people like you guys because you're doing that work.

And then ultimately, the little green shoots the little green trees. And, uh, and then I'm there, right? But it's hopefully building companies is, you know, as you guys know, Building companies is hard. Entrepreneurship is really hard. It is characterized more by failure than success. And it takes time. It takes at bats.

Um, so, you know, a lot of, I, I, sometimes I think about that when I'm talking to these young university students and, you know, I'm thinking, look, you're about to graduate from a great school. Maybe you should go out and build your skills for four to six years before putting it all on, you know, 24 block [00:39:00] and going for it.

I mean. Because that you spend you could spend four or five years trying to get something off the ground. And that's a big hole in your resume when you're in your early 20s.

Totally. So before we wrap up, um, tell us a little bit. You touched on it earlier, but if you have, you know, two or three Okay. Areas that you're most excited about and it doesn't necessarily have to be that you're excited about for writing checks, but you're excited to watch some of the earlier stage companies come up so that you can keep an eye on.

Are there particular, um, functional areas or technologies that you're, you're particularly keen

on? Well, I mean, we just made an investment in a company called Sephora, which is a, it's a consumer platform for Gen Z and millennials lodging, um, curated. Really interesting, uh, loyalty twist. We're in it with Sequoia Capital and D5 Partners.

I'm super excited about that business, [00:40:00] but it also sort of plays into this work we've been doing around the way travel is being merchandised and sold. Um, and how that's changing. So we've been doing a lot of work looking at the, you know, sort of social and influencer space still early. I haven't seen anything that really shows the promise of being a big play there, but the number of people that are playing in the influencer category and want to sell travel to the people, they influence pretty.

Extraordinary when you really look at it. And by the way, we all think of, you know, Kim Kardashian is an influencer and sure, maybe she is, but there's tens of millions of people who have 5, 000 followers to Tinder, right? Who are, who have some influence and actually are trying to figure out how to, how to monetize that.

So I, I just think that generally the way travel is being, um, merchandise marketed and sold. Is shifting. And that's really interesting. So I like to sort of be around the hoop of [00:41:00] all of those components. I still think that we are, you know, mid game in the flipping of the proverbial hospitality technology stack iceberg.

Um, Muse, in my view, is the clear knockout home run winner in the category. But it's not just their platform, but the influence their platforms having more broadly on the hospitality stack, even at the enterprise level. Is really interesting. And as hoteliers are truly thinking about themselves as the center of the traveler's travel experience, as opposed to just a place where you rent a pillow.

Um, that's opening up a bunch of really interesting opportunities. And, you know, vertical software, you know, personalization, applications of AI, you know, stitching together tours and activities and, and things that happen that, um, in country. So I'm, I'm still, you know, keenly aware of, of the opportunities that are emerging there.

And, you know, we've invested in Canary, which is turning out to be also a [00:42:00] big hit and they've really rethought many elements of the, of the hospitality tech stack. So that's super intriguing, exciting for me. Um, and, you know, look, we've had, we've had this sort of. Long view on, uh, on sustainability that we're, we haven't seen anything yet because look, again, we are a commercial animal, we are looking for commercial outcomes, but the fundamental thesis is that sustainability is.

Becoming such a critical mandate for many companies in travel for a variety of reasons, their consumers are beginning to actually pay for it. Their employees are demanding some attention to the matter, right? Their institutional investors are, are measuring how they're. Behaving. And, you know, uh, in the end of the day in travel, corporations that put a lot of travelers in beds are asking questions about sustainable practices.

So there seems to be a lot of [00:43:00] energy behind instituting practices. But all of those practices have to be measured and analyzed and expressed. So in our view, there's sort of an emerging world of these green business models, whether software or services or marketplaces or platforms. kind of gonna be needed in order to fill that, that problem or, or, you know, serve that need of expressing, um, you know, one's results to all these constituencies.

So we're, we're looking around in that area and I think that we're going to see some. Cool software companies coming up. Yeah, so that's that's another area that's keeping us busy But there's a lot going on and then like I said huge bucket or opportunistic.

Yeah, absolutely I mean, I love there's so many areas to be excited about and you know What you said about influencers is something I totally agree with and there's actually a great Um, case study that was published by the Harvard Business Review, the basically showed that influencers with under 10, 000 followers [00:44:00] typically drive more commercial activities per follower than the influencers like Kim Kardashian with hundreds of millions.

And the best example, I'm a new, I'm a new dad is mommy bloggers and daddy bloggers, where some of these people might only have a couple thousand followers, but their followers buy every single thing. that that mommy blogger says that you need for your baby. Um, so that's an area I'm really excited about as well.

Um, and you know, I called it in my annual, in my annual kind of write up, uh, monetization through travel, which is exactly what you're talking about. All these other brands, whether it's influencers or we saw Chase, and I mean, there's so many examples of these. Um, that are trying to monetize their audience through travel.

And it's always good when you give a talk to see it again in the world. So right after I got home from Vegas, um, one of my favorite local chefs, who's a Japanese chef, literally opened a tour company, leading you on foodie tours to Japan, trying to monetize his audience through travel. Yeah, and we could spend hours riffing on this.

But before we let you go, we do have a lightning round [00:45:00] of a few really quick questions. We're gonna limit you to 30 seconds per answer. And Kira's gonna kick us off,

right? Um, so if you weren't in VC, what would you be doing professionally? Teaching? Ah, interesting. What

would you be teaching? I'd be a professor, either a professor of entrepreneurship, Or some sort of an abstract view on, on

risk.

Okay. I thought you were going to say interpretive dance, but that's okay.

I'll buy it. Next week I've got a call with a guy leading travel for TikTok, and they're obviously trying to make some headway in our industry and monetize their audience through travel. So when it comes to TikTok, are you a buyer, a seller, or a holder?

Holder. Not sure what's going to happen there from the regulatory perspective.

Yeah. Me too. Me too. I'm excited to learn more. Yes.

Very much so. So, uh, last question. What famous person alive or dead would you most want to be stuck in an [00:46:00] airport with on a six hour weather delay?

Oh my God. That's a tough one.

Um, you know,

Thomas Jefferson would be one hell of an interesting conversation, but it would be probably hard to pin him down because he'd be freaking out that we're in an airport. Probably. Probably. But fascinating, uh, fascinating character and, and career. So I think that's the first one that pops to mind, interestingly enough.

I always

say Larry David, but only if you wanted to be with me. Because if you didn't want to be with me, that sounds like six hours from hell. Right, exactly. Well, thank you.

Sure, guys. It was

a pleasure. Yeah. It's been wonderful having you with us and, you know, we're excited to see you around at all the events coming up this fall and next year.

And thank you for everything you do for our industry.

My pleasure.[00:47:00]

So, Gila, that was really fascinating to hear from Chris. What was one of the main things you took away from What he

shared. Well, it's hard to choose one because there's so many incredible things that he touched on. But I loved what he said that the single most important aspect for a startup's ability to raise the next round is actually the capital market and growth capital availability almost more than any individual thing that that startup could be doing themselves.

And obviously right now we all know that later stage capital has become harder and capital at every stage has become more expensive. So I thought that was a really important point that's probably not made often enough. What about you?

Yeah, there is. There's a lot. And it was interesting because I've, I've known Chris for about a decade now, I guess, and I've been familiar with there for a while.

And it's interesting to me that they've been really successful as a focused fund and narrowly focused on travel and hospitality tech when so many other funds tend to go more [00:48:00] diverse. Um, they've really cracked the code, I think, on this notion of both, he talks about being opportunistic, right? So not being so wedded to a thesis, you have sort of your guardrails.

industry sector that you're, you're concentrated on, but also being opportunistic within that and, and following the trends and following the movement from, you know, short term rentals and that earlier era of what they were looking at. And then it was, you know, there's data platforms, there was some corporate travel stuff that they did for a while.

And now they're looking more in consumer where they never looked before. And so I think that. combination of being opportunistic, but also having having that expertise in that network that really drives the alpha that they can deliver for their LPs, many of whom are strategic, which I thought was interesting to to weigh in on that.

And I think the second thing that will be helpful in the conversations I'm having with startup founders in my network is really VC firm and think about the LPs that participate to the extent [00:49:00] they can, you know, that's not always public information, but really understanding from the VCs who are their LPs, what are they they looking for?

Because in the case of fair, having their strategics involved is really, really powerful for the portfolio companies that come into the Fair Network. And that can be such an incredible value add for those founders. So really making sure that you're aligned with the vc, but also the broader mission that they're serving for the, the LPs that invest in them, I think is a, a good point for founders to keep in in mind.

Yeah, absolutely. And I love that you pointed out the, I think he said, thinking about consumer anew or something like that, which made me really excited because of course, my first startups were all started as direct to consumer businesses and ultimately found success as b2b businesses. But one of the reasons they pivoted was the difficulty of raising capital as a b2c company.

And I think there's so many opportunities. So I was really excited to hear someone like Chris say that they're kind of looking with new eyes. And at the end of the At the end of our conversation, he shared their investment in [00:50:00] Safara, which is one of these new agency models that I'm taking a look at. I'm kind of interested in seeing where these come, where these guys land.

So that was a really exciting thing that he said on my end.

It's great stuff. Well, I enjoyed it as always. Thanks for your time. And thanks to Chris for his time. And we'll do it again

soon. Yeah, absolutely. We'll see you all again.