Over the past four years I’ve seen a lot of sharing economy travel start ups fail. Actually I’ve seen plenty of more seasoned companies fail in this space too. Though if you never really got off the ground, 5 or 10 or even 15 years in, I think you might still be called a start up.
I get a lot of folks reaching out to me to talk through their new business idea. When new entrepreneurs are doing research on competitors and the business landscape, they often come across ShareTraveler.I guess I’m something of a market expert in this niche of the peer to peer travel business. I’m always happy to chat about these creative new ideas. And of course I want them all to succeed
Drew Myers, from Horizon (the hospitality exchange app), brought my attention to this article about the new age of marketing. It got me thinking more about all these conversations I have with entrepreneurs.
Start up founders are all super enthusiastic about how their company is going to be the next big thing (as they should be). I always ask how they are different from the previous start ups in the same space, especially the ones that have failed over the past few years. Those who have done their homework are familiar with these failures. That’s encouraging. But too often people don’t have a good answer.
How will your new [home exchange, ridesharing, crowdsourced delivery, peer-to-peer tour] business acquire users while so many before you failed? I think that’s the question everyone needs to answer before putting too much time, money and energy into starting a new sharing economy business.
I’m lousy at SEO and social media. But I’m also pretty confident that if your answer to this question is that you’re good at social media, that’s not enough. In some of these arenas you’re competing against businesses with lots of money to spend acquiring customers. But in others you’re actually looking at a landscape of all failures (ridesharing in the United States is a good example of this). This doesn’t mean a new business can’t come in and blow away the competition. Just that I don’t think it’ll happen with a strong social media strategy alone.
The one example that’s totally surprised me in the past few years is Roadie. Roadie is a social shipping company in the U.S. that has grown dramatically in their short life. In an arena where no one had really succeeded before, they’ve built a remarkable user base. In part I think this is due to their strategy of targeting business partners (from the Waffle House to commercial airlines). But even aside from business partners, Roadie’s user acquisition approach is working. One thing I do know: they had a lot of funding, $25 million in the first two years. They spent that money wisely. But I’m confident Roadie wouldn’t be where they are today without all that money.
Another example that was less surprising was the success of LoveHomeSwap, a home exchange network. They came into the business by acquiring another home exchange network. With money they started with a user base. And they spent a LOT of money on marketing. Any Google search would turn LoveHomeSwap up at the top of the list for several years. With some deceptive marketing LHS managed to convince prospective members that they were one of the largest home exchange networks. It turned out this wasn’t true. But it persuaded a lot of people, myself included, to join.
What does that mean for all the entrepreneurs with great ideas for sharing economy businesses, but no money? Well lots of successful companies start with no money. The trick is figuring out how to get the funds you need to build a critical mass user base. In the peer-to-peer travel space this isn’t cheap.
Indeed, a topic not enough founders think deeply about. Without a unique go to market / distribution strategy/advantage…. well, don’t start the company until you figure that out. Unless you are okay losing a lot of your own money/time.
BTW, it’s Meyers with two E’s 🙂