Hipmunk Closes Hyper-Competitive Angel Round, Sans The Usual Suspects
techcrunch.com
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YC alums in a position to invest can interact with the founders for months in very social and relaxed settings as peers. That's orders of magnitude more data than what you get in normal angel investing.
"income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year"
And it is not like you have to submit to an audit to the company before sending them a check -- all you have to do is sign something that says you are accredited. That way you will have a harder time suing the company claiming you were mis-led or whatever.
I'm assuming the same for Kevin Rose who's a pretty active angel.
Likely the sums invested are fairly small as well.
The Foursquare guys took $4M home out of a current funding round
http://www.theequitykicker.com/2010/07/15/foursquare-founder...
That would be interesting given that Sequoia is an investor in Kayak as well.
So it would be the same basic idea. Sequoia sees that there's a lot of money to be made by investing in good startups early, but also sees that there are people who are better than them at doing so, since their expertise is traditional VC rounds. So they give YC money to invest in super-early-stage startups, and YC and Sequoia share the returns.
There's no reason they couldn't do the same thing for someone who's interesting in angel investing but doesn't have the money or doesn't want to risk his own money.
From there he can invest whatever he wants -- $1k, $10k, $100k, etc. -- assuming the entrepreneurs agree.
Interestingly, it seems like they went with a lot of investors with experience as a founder.
Not for long!
any thoughts? covered this elsewhere? --link?
Has a ton of revenue already, Doesn't really need more capital - Steve has enough from the Reddit sale.
Enough said.
what revenue? where are the customers? how much are they paying to acquire them? how much affiliate revenue do they actually receive per transaction? how do they retain customers? how are they planning to overcome the non-existent barriers to entry in that space?
scorpion032's comment: "Steve has enough from the Reddit sale." is dead on. think about it.. these guys could self-fund the project without breaking a sweat and yet they still sold 20 point equity stake. why? --diversifying risk or pr, really.
either steve realizes hipmunk's a longshot and isn't quite sure that he and his co-founder's street cred will actually play out in terms of long-term customer acquisitions and retention so he's cashing out now while the handful of early adopters (their "e-following") will still look like an aggressive growth curve), or he's trying to get some free press. basically.
edit: i say "longshot" in the sense that i feel it's unlikely that their competitors will do nothing to adapt to any serious hipmunk rise... so unless their competitors are clueless-- which i doubt they are-- and unless they develop some sort of non-replicable competitive advantage-- which i dont see happening-- i think they'll have a hell of a time gaining any ground.
Good luck - this is a tough space, but hopefully you can succeed!
If even one of the Big 3 rolls this out, Hipmunk will be challenged to pull traffic... because their improved UI will be where the existing travel visitors are searching already.
I'm still a fan of Adioso.com's UI (another YC alum), and the TripAdvisor/Bing/Kayak experiences, from memory, are fairly subtle with their advertising.
Clean? Maybe? Shiny? I don't know but every time I've shown the site to any of my friends or coworkers they remark that it's pretty.
Hipmunk vs Kayak or bing is the difference between a cheap casio watch and a nice, heavy, automatic winding watch with a pretty window on the back of the dial. They both tell the time, they both sit on your wrist, but the latter just...feels nicer.
Hipmunk is very v1, but nonetheless you can tell how much thought has gone into the presentation of flight data. The agony sort, for example, is so blindingly obvious once you see it in practice, but no one bothered to give it any thought until now.
Simplicity is actually really hard. They got it to work.
Don't get me wrong, I'm rooting for hipmunk. I would love to see them succeed. But they need more than shiny.
I'm not just talking about the interface, I'm talking about the experience overall.
http://blog.danilocampos.com/wp-content/uploads/2010/10/Hipm...
Here's Travelocity, for example.
Bing's flight search isn't bad, in that it's minimalist, but they're not doing anything terribly exciting beyond the Farecast action they acquired.
TripAdvisor can die in a fire. I'm never, ever using any of their products again, thanks to the constant (user-hostile!) "book a flight to this place right now damn you!" pop-ups they used to do on the browser and, worse, on the iPhone. They would try to get me to book a flight to a place where I already was, searching for things to do or places to stay.
It's just asinine, jackass behavior and representative of everything that's wrong with online travel sites.
The actual flight product itself at TripAdvisor isn't too bad (apart from auto-selecting Orbitz as an alternative search so they can do some flag-planting). It's the main site that does all the pop-unders and in-line pop-ups. Try going direct to flights - http://www.tripadvisor.com/Flights
Companies can monetize at the expense of goodwill all they want. It doesn't impress anyone but their accountants and investors.
Meanwhile, users grow resentful. Companies with a user product should value the user first and configure their business accordingly — it's just the only viable long term play.
If you do crappy things to the user for short term cash, that becomes your long term play because you become dependent on the money. And in the long term, you lose to the guy who doesn't treat users like crap.
Edit: >All sites start out idealistic, and then start making compromises in order to survive.
And if Zappos had taken this advice and compromised by screwing their customers for cash, would they have sold for a billion dollars?
I mean, a billion dollars, all for not being a dick to users or cutting corners at their expense. Thats the value of ideals you won't compromise.
Have you built a product like these and dealt with these tensions? It's a really hard problem to balance for 99% of companies. Because a few get away with it doesn't mean it's right for everyone else (or that those that get away with it are intrinsically better).
You lose your argument when you resort to ad hominem stuff like "highway robbers". Working on a large consumer internet site is full of necessary compromises.
It's not that the large travel companies don't know they're user hostile, they're just trying to squeeze every last dime from the consumer they can.
we have zero metrics on Hipmunk other than a warm-fuzzy feeling that it's "nice".
until there is some kind of study or publicising of figures proving that Hipmunks approach sells more airline tickets than the big players' noisy "hard sell / up sell" approach, patting Hipmunk on the back at this point is just conjecture.
the cynic in me says that it's relatively easy to boil a concept down to a graceful, user-friendly experience like this. it's an MVP-style 10-week challenge. the difficult part is extracting the maximum revenue from every customer in order to turn the MVP into a viable business, or a public company a la Expedia. that's the 10-year challenge. somewhere along the way, thousands of choices will have to be made as to where the slider should fall between these two product strategies - "User-focused" or "Revenue-focused".
my guess is that as Hipmunk matures, there will be no escaping pushing that lever towards the latter.