Silicon Valley does not have a monopoly on innovation. Great entrepreneurs are everywhere, and we have seen a strong software ecosystem emerging from Australia and New Zealand.
We recently profiled Rod
Drury’s Xero journey building a global
platform out of New Zealand. Meanwhile, another TCV company, SiteMinder, just reached an important
milestone of AU$100 million ARR.
SiteMinder has methodically built a global SaaS leader in hospitality out of Sydney, Australia. Coupled with its impressive revenue milestone, SiteMinder has 35,000 hotel customers in 160 countries and is reshaping the hotel distribution value chain and online travel, itself.
TCV’s Dave Yuan caught up with founder Mike Ford to reflect on his journey.
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Dave: Congratulations, Mike! Hard to
believe you’ve grown SiteMinder to AU$100 million ARR. That’s an incredible
milestone and a great foundation for things to come, but let’s start from the
beginning. Tell us about yourself and how you got here.
Mike: I always had an interest in
technology and commerce, having majored in both. This led me to consulting,
where I worked on large business intelligence projects for the likes of
SABMiller, AngloGold Ashanti, and Chase Bank, bridging technology teams with executive
management and getting a good grounding in both disciplines. Being passionate
about travel, I embarked on a year-long backpacking adventure in 2000 before I
arrived in Australia and took on a three-month contract with a health
technology startup to fund further travel. In 2006, I founded SiteMinder, and I
am still in Sydney 18 years on, so, clearly, my adventures didn’t work out as
expected!
Dave: Tell us about the SiteMinder
creation story. What was the original insight? When did you know you had an
idea good enough to quit your day job?
Mike: I didn’t quit outright and that was
key. I consulted for my then-employer, two days a week, in order to fund the
early months.
There
were two major influences that led me to take the leap.
The
first was the health tech startup I was working at. They were digitising
paper-based claims sent from hospitals to medical funds for reimbursement, as
paper-based claiming involved a long payment and reimbursement cycle. For
hospitals, the digitisation of claims meant instant delivery, faster
reimbursement, and a clear digital trail. At the core of the engine was a
switch that converted data from different hospital systems into formats
digestible by different medical fund systems.
The
second influence was an investment I’d made in an accommodation business.
Through that, I learned how hotel and other accommodation sales were rapidly
moving away from traditional channels, such as wholesalers and brick-and-mortar
travel agents, to online booking sites as travellers were increasingly turning
to the internet to make their reservations. The shift in consumer behaviour
drove a proliferation of last-minute booking sites in Australia at the time,
such as Wotif.com and lastminute.com.au, which promised huge discounts if you
booked close to the date of your stay. The issue for hoteliers was there was no
means of centrally managing all of those websites and keeping their room rates
and availability continuously up to date on each. So, they often chose to list
on only one or two sites and miss out on others because they couldn’t manage
them at scale.
I
quickly realised that if I could connect hotel systems with different online
channels, as I did in the medical funds world, I could synchronise hotel room
rates and availability in real time. For hoteliers, the value proposition was
they could get more rooms onto more booking sites to grow their reach online.
At the same time, they could reduce overbookings and the operational overhead
of manually inputting reservations. That value proposition helped us get a
strong foothold quickly in the market.
Dave: What was it like to start a
company out of Sydney?
Mike: We were actually very fortunate to
be in Sydney. As with banking and payments technologies, Australia was far
ahead in terms of technological innovation in online travel. Where other
markets weren’t yet embracing dynamic room rates and availability, there were
many booking sites in Australia available for hotels to list on. The multitude
of sites, combined with the sheer number of hotels out there, especially
independent hotels, meant that conditions were ideal for our entry into the
market.
Funding
was a big challenge as the technology venture market was very underdeveloped
relative to what it is today. The government in Australia also had a myopic attitude
to how important tech and STEM jobs were to the future of the economy, so tech
startups got very little support in terms of R&D benefits, and sadly that hasn’t
changed. In spite of these challenges, more than 80% of our revenue now comes
from overseas markets. We are a truly global business that has kept its roots
deeply in the city of Sydney where it all started.
Dave: You’ve scaled past AU$100
million ARR. Was it all smooth sailing from there, or were there big doubts and
moments of near death?
Mike: In the early days, moments of doubts
may have been around survival. Later, they were more focused on growth or new
market entry, but they’ve never quite ceased, and I suspect it’s no different
for any founder.
If
ever there was a near-death experience, it would’ve been pre-angel investment,
when I was funding the business and paying my co-founder out of my own savings.
On top of that, we learned a competitor was launching a month before us, and
they had AU$100 million in funds and an existing product. We had AU$180,000 and
a beta release. It was nearly a no-go decision, but I’m pretty stubborn and so we
took them on, and they soon went bankrupt.
Dave: What were the big decisions
along the way?
Mike: Very important decisions included:
- Who we were going to take money from and bring on to our board of directors. We turned down early interest from numerous VCs purely on the first meeting dynamic.
- Whether we were going to go global or dominate locally, and what the timing would be.
- What not to chase. There are so many opportunities, and you can lose focus quickly unless you’re very clear about what you are and are willing to let go of opportunities that may seem attractive but don’t provide long-term benefits.
Additionally,
the most crucial decisions involve the people you choose for the journey and
the timing of bringing on key talent. The outlook of a founding CEO, certainly
in the formative years, can differ substantially from those of a professional
CEO. As a founding CEO, you have grown the team and the business from nothing.
You have loyal, committed, and talented individuals who have helped you get the
business to a particular stage so the company culture is more familial. Yet,
through high growth, it’s hard to stay on top of skills and challenges across
the business, and you may find yourself in a situation where you either don’t
recognise that such deficiencies exist, or you don’t take appropriate measures
quickly enough to address them. Over time, you get better at identifying the
skills you need for the future, ahead of the curve.
Dave: How has SiteMinder succeeded in
a field that has gotten so much competitive attention?
Mike: I think the definition of success is
different for everyone. There are many travel tech companies that I would consider
successful, even if they may not all have the size and growth trajectory of
SiteMinder.
It
sounds cliché, but it comes down to the deliberate process of ensuring many
ingredients come together in the right way, at the right time, and in the right
sequence. We’ve had a focused and smart go-to-market strategy, plus we over-indexed
on personalised support for our customers and doubled down on localising our
products and service for many different countries. We’ve invested in strong
operational centres around the globe to provide true round-the-clock sales and
customer service, and we’ve hired smart people. I could go on, but at our core
we are product-driven and customer-obsessed. That permeates our culture and is
key. Even if your product is average, you can have early success if your sales
and marketing are great. In the long run, you can only continue your success if
your product is truly market leading.
Dave: As you look forward, what are
the big opportunities for hoteliers? How might this translate into benefits for
the consumer and traveller?
Mike: Many hoteliers are still stuck in their traditional ways and aren’t open to the possibilities that technology can offer in making a world of difference. This does vary between hotel segments such as independent versus chain, full service versus limited service, regional versus city, and even by country. The vast majority of hoteliers still struggle to navigate the changing online landscape and are overwhelmed by the extent of the choice out there.
It’s
for this reason that we’ve created an ecosystem, not just of our own
technology, but of all other technology players that can help hoteliers
navigate the online world in search of guests. If hoteliers can connect with customers
at every touchpoint throughout their buying journey, they can ultimately create
greater guest experiences long before those guests set foot in their lobby and
long thereafter.
Dave: If SiteMinder fulfills its
mission, what role can it play in the changing online travel ecosystem?
Mike: SiteMinder currently connects to
700+ partners within the travel ecosystem, so hoteliers can hook everything
they need into their property management system and harness the power of
integration, openness, and choice. Essentially, our platform is the most
comprehensive and effective way for hoteliers to bring guests to their hotels,
without having to think about or manage technology. It gives them more time to
spend on the guest experience, which is the part they really enjoy.
If
hoteliers can choose any best-of-breed solution to optimise their opportunities
in acquiring guests in an increasingly online-driven world, we’re doing our
job.
We
also play a big role in the value chain in online accommodation, specifically
the supply equation, by connecting hotel room rates and availability in real time
to points-of-sale such as booking sites. We enable those booking sites to gain
traction in core markets, where they otherwise can’t access a supply of rooms
to sell.
There
have been middlemen aggregators in the past that have rolled up supply for
booking sites yet we connect the room supply directly to booking sites or room
demand sources, so there is no ticket clipping and dilution of margin between
the supplier (the hotel) and the seller (the booking site). In doing so, we
have streamlined the supply chain for hotel rooms, rates, and content.
Dave: SiteMinder’s opportunity is
also unique as a SaaS company. Vertical SaaS is seeing a renaissance with SaaS
companies taking on platform and network characteristics, meaning “SaaS as a Platform”. What does SiteMinder look like as a SaaS business model
over time?
Mike: We started out with a distribution
platform for hotels. Over time, we recognised the importance of the direct
sales channel and expanded our platform to integrate a hotel’s own website, so
they could manage both their indirect and direct sales channels.
Over
the years we’ve designed our platform to be more proactive and have powered it
with business intelligence that steers our customers and makes them aware of
opportunities to improve their hotel business. For example, our platform makes
hoteliers aware of changes in market conditions or demand, so they can maximise
their guest acquisition capabilities in a rapidly evolving online landscape.
The
next evolution is really exciting. We recognise that there are many great
applications and tools out there for hoteliers, and they can all improve a
hotel’s guest acquisition strategy. These may be upselling tools, airport
transfer services or activity bookings, revenue management systems or anything
in between. We know that one company will never build the best of all these
things. Our brand essence has always been one of openness, so we’ve developed a
way to seamlessly link a hotel’s property management system to all the
different applications. In doing this, our customers will be able to use all
the best-of-breed applications available out there in combination with our own
platform. If we are successful in this endeavour, we will have the most open
and connected platform the hotel industry has seen, with the greatest number of
hotel participants (we already have 35,000 today).
Dave: Outside of SiteMinder, what in
online travel gets you excited?
Mike: One important shift is the rise of
tours and activities moving increasingly to online with dynamic inventory and
pricing. Driving this is people’s desire to seek experiences, not just flights
and accommodation. We’re seeing increasing demand among consumers to package
their accommodation, services and ancillaries, so they can get the best
experience out of their accommodation and the local destination.
Somewhat
tangential is the rise of personalisation. For a more personalised experience,
including destination advice, many travellers still use a brick-and-mortar
travel agent to plan their trip. That said, we’re also seeing the growing
dominance of online booking sites. Alone, neither of these options is ideal for
at least one segment of the leisure travel market, so I think we will
increasingly see hybrids where booking sites get better at offering deeper,
more human advice and personalised service. This may even include speaking to a
local human expert when booking online. We are already starting to see signs of
that happening now.
There
are also relatively new entrants like Google making a wave in the space with
disruptive models that are attractive to hoteliers. I think the race is on for
OTAs to create a seamless end-to-end experience for the consumer, including
research and advice, flights, hotels, car hire, transfers, in-destination
activities and experiences, restaurants and everything in between.
Dave: Thanks so much, Mike, and
congratulations again! AU$100 million ARR is an amazing milestone that only a few
reach. Savour it!
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The statements, views, and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This interview is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified, if any, are not necessarily representative of all TCV investments and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies. For additional important disclaimers, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at
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