Jul 13th, 2011 |
Every biz dev advice column, book, speaker or video you come across can probably be summarized by what Hipmunk CEO Adam Goldstein recently said:
“Lose your sense of shame.”
And while he was specifically referring to how often to ping a contact (it’s more frequent than you may think), the larger lesson learned is how tenacity can affect your startup’s business success.
Adam will share a number of other lessons, tips and tricks for improving your startup’s business development this October during his session at Web 2.0 Expo New York. (Use code BLG20 to save 20% on registration.) He took the time last week to talk to us about what relatively young travel search site Hipmunk has learned about startup business development since it launched.
Getting to “Yes”
At the start, Hipmunk’s primary business problem was simply getting a foot in the door of the heavily competitive travel industry, already dominated by large corporations hostile to new entrants. “In travel, the companies tend to be really conservative… they don’t believe in innovation as a core value,” he said. Adam said the veteran companies believe changing course and experimenting with new services (such as Hipmunk) is what the OTHER guy does. To them, “you never want to be the first one to try it out.”
This is a familiar story for most startups: How do you find that first company who agrees to test your product? And how do you find the person who will say “yes” to a partnership?
“We want and almost need to get partnerships with all of the major airlines,” he said. “For the first six months it was difficult to get meetings.”
After a few unsuccessful tries, Adam finally found what worked: playing off the psychology of those conservative veteran companies and using some creative tactics. Instead of trying more calls or emails, Adam tried a different approach with a potential partner. “I sent out an email to them and told them I’d be in their city on a particular day and at a particular time,” he said, although he had made no such plans. The gamble paid off, and Adam had a meeting.
“Once we show people Hipmunk, than it became pretty easy,” he said.
Another important (though not new) tactic used was convincing partners that their competition was already interested in Hipmunk. The thought of losing out on a good deal to a competitor is enough for many to at least meet in person.
But back to how often to ping your contacts: Adam believes most people are too timid about reaching out to contacts. “They just assume the other person will just get a hold of them when there’s news… People consistently misestimate… They assume that people will get annoyed if they bug them once every two weeks. Most people won’t get annoyed if you bug them every two days.”
After chasing down contacts and months of back-and-forth, Hipmunk has an impressive partnership list. “At this point today, more than half of the domestic itineraries [on Hipmunk] have the option to book directly to that airline… We’re working to get that to 100 percent.”
Who’s Your Biz Dev Lead?
Adam and co-founder Steve Huffman, who previously founded Reddit, decided early on that such constant upkeep and other tasks required for business development shouldn’t be split between them: Adam took over business development responsibilities full time while Steve stuck to technical development. “Trying to split that role between two people when you’re just starting up is difficult,” he said.
Despite the heavy load of work for business development, Adam said he doesn’t recommend early stage startups hire a person specifically for the job. Startups can have many varied demands, requiring multiple roles per team member. “It’s always better to get someone who can do more than one thing,” Adam said. However, he did say if given the chance, it would have helped Hipmunk to have a seasoned professional from the travel industry on their team early on.
Hipmunk’s Competitive and Extremely Adorable Edge
At Web 2.0 Expo San Francisco 2011, Adam argued that good user experience and thinking like the customer has resulted in Hipmunk’s already impressive growth (100s of thousands of uniques a month) and a solid Series A round this past February of $4.2 million.
This approach has lead to Hipmunk having a loyal and happy user base (one that occasionally sends in fan art of the Hipmunk). Passionate evangelists of a travel site is an abnormality, Adam said. “No one really loves to use Expedia. It’s the service that has their password stored.”
With Google’s recent purchase of ITA, Hipmunk may have another possible competitor in the near future, although Adam says their target audiences will likely differ: Google may go after the same audience as Expedia (average price-sensitive customer), whereas Hipmunk targets those who will pay more to avoid the agony of changing planes or off-hours.
Hipmunk is not only leveraging its fan base, it’s now testing out paid marketing campaigns including physical ads. “We’re basically just running a bunch of experiments,” Adam said. (Alexis Ohanian, another Reddit cofounder, now runs marketing for Hipmunk.)
To learn more about Hipmunk’s successful biz dev and marketing ideas (and how you can adopt their best practices), come see Adam speak at Web 2.0 Expo New York this fall.
