“It's not who you know, it's who knows you.” – Alex Simon
Alex Simon is the co-founder and CEO of Elude, which is focused on helping people find and book incredible travel experiences. It's the only place where you can simply input your max budget, your local airport, and how many days you'd like to be gone to find incredible destinations around the world that fit those parameters. So you can ask the question, where can I go next week for a thousand dollars?
This episode is a fascinating, deep dive into the world of travel, from the unique barriers to building an airline and hotel booking business—which include a surprising amount of regulation—to an overview of the major players in the travel space and a look at what it's like to build a cutting edge company in a very old industry.
In our conversation, we go deep on why travel is considered a startup graveyard and how Elude overcame all of those obstacles to build a big and completely new company in the industry. We cover how they brought deep experience building Google Search to build their own unique search experience for travel. We talk through all of the regulations in the travel industry, why they exist, and how they impact travel companies. We discuss why Elude wanted to become a merchant of record, owning the customer and transaction from end to end, rather than follow the typical playbook of simply building a search UI and then using affiliate links to airline and hotel websites. Finally, we discuss all of the lessons that Alex and his team have learned building Elude over the last few years, and reaching more than 500,000 searches to date.
This episode is our definitive guide to building a startup in the travel industry. In it we cover:
- 00:00:00 – Introduction
- 00:02:24 – The path from investment banking to entrepreneurship
- 00:05:35 – The Elude customer journey, from app download to travel time
- 00:14:11 – Building a travel search engine from the ground up
- 00:19:34 – Why the travel industry is a startup graveyard
- 00:25:32 – How travel regulations make it difficult to build and scale a business in the industry
- 00:32:42 – Why becoming a merchant of record was crucial to Elude’s success
- 00:35:21 – Building a brand with the help of Apple advisors
- 00:44:09 – The difficulties and rewards of entrepreneurship
- 00:49:55 – It’s not who you know; it’s who knows you
The Big Takeaway
The travel industry has long been considered a startup graveyard. Building and scaling a travel business is difficult and costly in part because of how heavily regulated the industry has always been. Most travel booking platforms are data aggregators that simply forward customers to airline and hotel websites for a small commission without owning or managing the actual booking. Elude has taken the longer and harder route of becoming a merchant of record, which means they own the transaction from end-to-end. This gives them a real moat and real customer relationships so they can become a dominant brand over time.
- Regulations Favor Incumbents: The travel industry is heavily regulated, for very good reason—for example, known terrorists are restricted from traveling by the U.S. government. But regulation can be both helpful and unhelpful. In this episode, Alex talks about how Elude had to raise at least $200,000 to put into a checking account just to meet minimum balance sheet requirements to become a registered travel agent. Regulations like these inhibit disruption and make it harder for new companies to enter the market.
- Own the Customer Journey: The travel industry is largely broken up into two distinct types of players: aggregators and merchants of record. Aggregators don't own the transaction or customer journey; they simply display results and pass users off to airline or hotel websites to complete the purchase. Merchants of record are the exact opposite. They own the transaction from end-to-end, including things like customer support. This makes their job much harder, but it allows them to build real customer relationships and become a trusted brand over time.
- Brands Are About Trust: So much of creating a great brand is about building trust with customers, which isn’t easy to do. It requires ruthlessly focusing on the customer journey and delivering a great experience in every interaction. For Elude, building trust has meant focusing deeply on the design of their app from day one to ensure it provides an incredible customer experience. If Elude does that job well, over time, they'll build trust and slowly build a powerful brand in the travel space.
We covered a lot of ground in this interview. Here are links to the stories, articles, and ideas discussed:
- Connect with Alex Simon: Twitter | LinkedIn | Elude
- Morgan Stanley | Global Leader in Financial Services
- Deutsch Bank | German Multinational Investment Bank
- KAYAK | Search Flights, Hotels & Rental Cars
- Sabre | An innovative technology company
- Amadeus | The leading travel technology company
- The Travel Corporation | Private Hotel Group & Travel Company
- Priceline.com | The Best Deals on Hotels, Flights and Rental Cars
- Expedia Travel |Vacation Homes, Hotels, Car Rentals, Flights & More
- Ctrip | Chinese Multinational Online Travel Company
- Global distribution system | Wikipedia
- ARC | Airlines Reporting Corporation
- IATA | International Air Transport Association
- Orbitz | Hotel Deals, Flights, Cheap Vacations and Rental Cars
- Skyscanner Travel | Compare Cheap Flights, Airline Tickets, Hotels & Car Rental
- Distribution with Offers & Orders (New Distribution Capability) | IATA
- Duffel | The best API to sell flights online
- Tim Kobe | LinkedIn
- Delian Asparouhov of Varda Space Industries on Problem Solving with Space Manufacturing | Outlier Academy Podcast
5 Ways to Dive Deeper
Want to dive deeper? Here the best content we've curated on this subject:
- Life is Short, Travel Now: This TED talk by Jared Kamrowski provides practical travel tips and encourages us to travel more. (10 Min)
- Dollar Scholar Asks: Can Travel Booking Sites Like Expedia Actually Save Me Money? – This summary of online travel agencies work underscores why becoming a merchant of record was so important for Elude. (7 Min)
- Tim Kobe, CEO of Eight Inc. and designer of the original Apple Store, opens up about his approach to design and the importance of brand experience: Learn about the design philosophy of Tim Kobe, one of Elude’s top design advisors. (7 Min)
- How airline distribution works: Watch this quick guide on how GDS (global distribution systems) function. (7 Min)
- COVID-19 Travel Recommendations by Destination: Before deciding on a destination, check out the CDC’s recommendations based on current local COVID case numbers. (5 Min)
Daniel Scrivner (00:05):
Hello, and welcome to another episode of our Founder Spotlight Series, where we dig into the ideas, frameworks, and strategies of the world's best entrepreneurs. I'm Daniel Scrivner. And on the show today, I'm joined by Alex Simon, who is the co-founder and CEO of Elude, which is focused on helping people find and book, incredible travel experiences. It's the only place where you can simply input your max budget, your local airport, and how many days you'd like to be gone to find incredible destinations around the world that fit those parameters. So you can ask the question where can I go next week for a thousand dollars? This episode is a fascinating, deep dive into the world of travel. From the unique barriers to building an airline and hotel booking business, which include a surprising amount of regulation to an overview of the major players in the travel space and a look at what it's like to build a cutting edge company in a very old industry.
Daniel Scrivner (00:56):
In our conversation, we go deep on why travel is considered a startup graveyard and how Elude overcame all of those obstacles to build a big and completely new company in the space. How they brought deep experience building Google search to build their own unique search experience for travel. We talked through all of the regulation in the travel space, why they exist and how they impact companies in the space. We discussed why Elude wanted to become a merchant of record owning the customer and transaction from end to end, rather than follow the typical playbook of simply building a search UI and then linking literally most times with affiliate links to airline and hotel websites.
Daniel Scrivner (01:35):
And we discuss all of the lessons that Alex and his team have learned building Elude over the last few years in reaching more than 500,000 searches to date. This is an incredible interview and a fascinating look at what it takes to build a travel startup within a highly competitive and regulated space. I learned a ton and I know you will too. You can find our episode guide and the full text transcript for this episode at outlieracademy.com/106. And you can learn more about Elude at elude.co or by downloading the Elude app from the app store. With that here's my conversation with Elude's co-founder and CEO, Alex Simon,
Daniel Scrivner (02:16):
Alex, welcome to outlier academy. I am so excited to have you on to talk about Elude. So thank you so much for the time.
Alex Simon (02:21):
Yeah. Thank you for having me. I'm excited to jump in.
Daniel Scrivner (02:24):
So I am thrilled to have you on, because what you're building is very different from the industry that you're in and I'll try to quickly describe what it is. You know, Elude is an app that anyone can download where they can input their max budget and basically the airport that they want to leave from and just generally how long they want to be gone. And in return, they get a bunch of destinations and destinations, including a lot of things. I'm sure that they wouldn't find if they went through the traditional experience, which is really trying to think of where you want to go of the places that you know about and then kind of working back. And so I love it because it's this really wonderful inversion of how most people think about travel. Can you start by talking a little about the origin story of Elude and how you landed on that particular approach?
Alex Simon (03:08):
So my background before starting allude was over in investment banking. So I was over actually on Wall Street for about five or six years bouncing between Morgan Stanley and Deutsche bank. And I would kind of call myself just like a traditional worker in any case. Like I enjoyed my corporate world, but anytime that I had a off or a three day weekend or an upcoming holiday, I would always be looking for ways to get outside of New York. And so it didn't matter to me the destination. It really didn't even kind of amount to me of like where I could afford to get to. It was just more so about seeing different cultures, seeing different places and basically getting out. And so in the very early stages of Elude, what we basically did between myself and my co-founder was we said, look, we don't care the destination that we're going to. It didn't matter if it was Paris, London, Rome, we just wanted to go and explore.
Alex Simon (04:00):
And so I would say like, thinking about destinations more from the budget point of view, rather than how a lot of people tend to think about travel, which is just destinations by themselves. And so in the very early stages, when we were building out the proof of concept or if you will kind of like the MVP of Elude, we really kind of thought about it and said, how would we as travelers, like to look at destinations if we were to just put in our budget. Let's say we have a thousand dollars and next weekend, wow. Okay. Now seeing destinations that we couldn't afford or didn't even think that we could afford and have this kind of discovery angle to new destinations. And that's exactly what you were getting at in terms of the origin story for us.
Daniel Scrivner (04:43):
Yeah. So it's fascinating. So it's basically a kind of obsession with just exposing people to new destinations. It almost sounds like at its core.
Alex Simon (04:50):
Yeah. There's kind of two angles. First is the actual time itself. So if you think about it. If you were to try to back yourself into flight plus hotel for a handful of cities, you're talking about hours upon hours to try to find out exactly where you could afford to get to. Again, like just Paris, for example, you can go down a rabbit hole of like spending hours, literally finding flights and hotels to kind of match that budget. Whereas not only is it the time component, but it's more so the discovery. So instead of just, let's say finding the next trip to Miami that you've been to or San Francisco where you've been to 15-20 times, find different destinations that are completely out of the traditional scope and go to those locations instead.
Daniel Scrivner (05:35):
Yeah. That's so cool. At the start of this episode, I tried to explain at a high level what you're building, which is essentially a search oriented experience for finding incredible destinations. Can you just from the perspective of a customer, kind of walk through what it's like to do the search, book your travel, and I think what's interesting and we'll get into this a little bit later in the episode, but one of the things that I think is fascinating about Elude is you guys own the entire experience. So it's not just the searching experience, it's all the way through the trip itself. So just walk us through that kind of customer experience, customer journey.
Alex Simon (06:08):
Yeah. And I'll probably talk about this throughout the podcast as well, but there's kind of three main areas that we like to focus on when it comes to the experience for the traveler. The first is our onboarding, which I'll go a little bit more into the details. The second, which is the actual search and then the third which is the actual booking. So let's start off with more or less, just the onboarding. We ask anywhere between 10 to 15 questions to better know the user about how they like to travel. So these questions, they're all over the place. It's like, do you like wifi? Do you like beaches? What kind of foods do you like? And basically what we start to do with that information is we start to curate the actual city destinations that we start to showcase to the user.
Alex Simon (06:49):
So my best example here is if you hate long flights and you hate beaches, showcasing Thailand is not going to be really relevant to you.
Daniel Scrivner (06:57):
Alex Simon (06:58):
And so exactly and so we really want to kind of create that curated experience, especially because everybody travels for completely different reasons. One person goes for a bachelor party, the other person's just trying to get a weekend away from the kids, those type of situations. Then we've kind of dealt with the middle, which is the main search for us. And I'll just kind of walk you through from a user standpoint, what actually happens. So you touched on this earlier with the first kind of overview of Elude, but basically somebody comes on, they tell us how much money they're willing to spend. So their max budget and then the local airport that they're flying out of is autopopulated to your local airport. So in my particular case, LAX, and then you select the dates that you're able to start to travel. So let's say it's next weekend or a few months from now.
Alex Simon (07:46):
Once the user actually selects search, what ends up happening is we actually piece together the flight plus the hotel for largely, almost like 15 to 20 plus different destinations. And the user actually sees those destinations and are able to jump in kind of in quick views, both on the flight, as well as the hotel. So everything is customizable, but we actually hand select and hand curate both the flights and the hotels per destination. So let's say for example, that thousand dollars in next weekend, you say London, Rome, and let's say Tokyo, the user is able to actually go directly into each one of these destinations and kind of hand select or change if they want to.
Alex Simon (08:27):
So for instance, if somebody needs to leave at 7:00 PM or 7:00 AM, it gives a lot of flexibility and you're not kind of beholden to the actual search that we put together for you. And then we kind of get to the last piece, which is really where I'd say everything comes together kind of really nicely. So I hate to compare ourselves to the other travel sites. But if you think about like a KAYAK, for example, they're very much focused on just getting somebody to search and then the second that they're about to book, they actually get pushed off to a third party to transact. We never wanted that feeling to happen. And I'm sure you've dealt with this as well, but when you're, let's say about to purchase a flight and you click book now, it kind of pushes you someplace else. And then it's like $300 more in the matter of a second.
Alex Simon (09:12):
And as a user you're kind of sitting there like what the heck just happened. And so in our particular case, we actually own the transaction and own the booking. So what you see in the search is actually what you're going to be getting directly in the booking itself. And we ticket you as well as kind of handle all of the reservation systems, both on the front end and on the back end. So again, we can talk through a lot of like the regulatory hurdles that we had to get through in order to get there, but by and large we're everything from the search to the actual booking.
Daniel Scrivner (09:42):
Yeah. It's fascinating. I'm going to try to recap that just to make sure I've got it right. And then you can maybe push back on that. So it sounds like, I guess maybe to state it search is itself. If you were to just do search without any preferences up front is almost too wide open. And so first you're asking people kind of general high level questions that help you narrow down the list of search results. Then when someone searches, it sounds like you're doing this principle and design called progressive disclosure, which basically, it just means don't overwhelm people with every detail at once. So it sounds like after the search, then they can go in, the search is pretty tight, but they can then adjust small little details of that and then they never leave the site. They never leave Elude or they never leave the app, I guess, in this case.
Daniel Scrivner (10:22):
And so they book and then they're going back to the app, I'm guessing when the trip happens. Can you maybe just walk us through, you talked about booking, what does it then look like, let's say my trip's a month ahead of time, what does it look like as I start to then get ready to go on my trip?
Alex Simon (10:37):
Great question. So we're a little bit different than a traditional travel agent or travel service right now, which basically as soon as you get your, it's called in the travel world P and R code, which is like that, six digit code, like XW45J whatever, something like that you check into the airline or hotel. We don't just provide that, we actually are able to kind of be along the journey with you. So we send across handful of emails prior to your departure time, a little bit more of like the details of what you should be checking out kind of prior to your trip, whether that's boots on the ground activities or experiences, things like that. We haven't really dabbled yet into actually being able to purchase experiences, but we do want to be kind of a trusted source directly to our customer base, as well as our community around top destinations to check out and things to do in those set locations. So we are kind of like handholding the user along their process, but you're hitting exactly on that. It's a little bit unique and kind of different than the traditional travel search.
Daniel Scrivner (11:36):
Yeah and you have this wonderful little kind of design detail in the app where you actually get, what is it like stamps or stickers for the destination that you went and it's almost like a little passport within Elude.
Alex Simon (11:46):
Yeah. So we basically came up with this fun kind of quirky gamification, so to speak where it allows users to come back, both for discounts as well as rewards. So for instance, I'll give you one, if you book like a middle seat in the airline, you get like a middle seat survivor passport stamp. And in that case it encourages you to come back, but also it's, 10 to 15% off of your next trip as well. And really just encourages this gamified way of looking at travel differently. And if you think about it, most airlines and hotels, they don't have great reward systems. And in our particular case, we are trying to be kind of that newer age, getting people excited again to travel.
Daniel Scrivner (12:26):
Yeah. Well, they don't have rewards, but I think another thing too, is they, so much of my experience with traveling is I just have so many memories. And so there's this aspect of travel where you want to go back and relive and kind of remember these past trips you've been on. And so it sounds like a wonderful way to do that. And I love that label middle seat survival because or survivor because that's definitely what it feels like most of the time when you actually get to your destination.
Alex Simon (12:50):
And one thing just to note on that as well. I think a lot of people, specifically our customers and travelers and community, there's this unsaid thing when it comes to loyalty and many people don't have loyalty to an airline, to a place that they book or even hotels. They're looking for kind of the best bang for their buck. And I think in our particular case, maximizing somebody's budget and really kind of showcasing and displaying city options based off of that really encourages people to think about travel in a bit of a different way. And to your point, kind of gamifies the system.
Daniel Scrivner (13:25):
Yeah. Well, and I know what I love about that is they can build loyalty and trust in Elude, but they can still go to different destinations and different hotels. And so it's almost, it sounds very similar to like the Airbnb model for accommodation. You're trying to own that space for all of travel generally.
Alex Simon (13:41):
Spot on. And I think the best way that I could relate that for us is that we want to own kind of the spontaneous travel lane. Most of the time when people are booking or searching trips, they either know where they're going specifically or they need to kind of plan around different dates and different destinations whereas for us, we want you to come in and really discover where you could afford to get to first and have that like general awareness of like, what's out there. What can my dollar basically get me in the travel market?
Daniel Scrivner (14:11):
One of the core foundational aspects of what you're building is search and one of your co-founders luckily worked on the product team on Google search. And I want to just dive into that aspect for a minute because, searches, I think everyone knows what search is and it's wonderful because obviously as someone who's using search, it feels incredibly simple. You're just giving a couple of answers and you're getting all these results back, but what's happening behind the scenes is often really, really, really complex, especially in your case where you've got, you are trying to match times and against hotels and flights and different options and different times. Talk a little bit about what's searching for travel unlocks in the sense of what you're doing at Elude and how hard it was to build this kind of search centric, destination focused experience from the ground up.
Alex Simon (14:58):
So great question. And I think Ivan, our CTO could handle this a lot more kind of eloquently, but I'll give it my best. So your spot on what we're doing actually from a search capability is very unique and kind of completely different than almost everything out there on the market. When you're talking about buying a, like let's say a specific flight or specific hotel to a specific destination, it's very easy to tap into data sources like they're called GDSs, global distribution systems, which basically house the flight and the hotel data. But when you basically create this open ended search, there is a lot of complexity that comes into this and what we're actually doing with the questionnaires and layering in kind of a different set of machine learning, so to speak or just like a little different set of questionnaire, it actually kind of creates a complete different complexity to what the user actually delivers in terms of the results. Now, what I think and what I think we've done really well is creating this in a very efficient way and design focused to be able to package this up beautifully.
Alex Simon (16:02):
So what we're talking about is right now, when let's say somebody does this, open-ended search flying from LA for a week long trip. I mean, we're talking about hundreds of thousands of different hotel and flight data pieces together in addition to thousands of destinations in and of itself, to be able to offer that to the user, what we're doing is we're actually layering in a handful of assumptions basically to create the best kind of package for the user. So I'll just kind of run through a few of these assumptions. One is we don't showcase anything, three stars or below in terms of hotels. We never want our users to feel like they're in a hostel and most of the times our users are the younger demographic that are looking to get away for a long weekend or an upcoming holiday.
Alex Simon (16:48):
The second is we optimize based off of flight. And so what does that mean? We're not going to put, just because it's "cheap", we're not going to be putting you to something that has two or three or five layovers like most of the other travel sites. And then the third is actually maximizing based off of destination. So we've curated a list of around 150 to 200 destinations, both domestically and international that fit our Elude criteria, which again, if some users were kind of checking out the early adoption of our beta, you would see like, Arkansas are places that maybe are not necessarily as sexy, but we've actually hand curated now a city list where every single time somebody goes into the Elude app, they're actually dealt with kind of this aha moment of seeing destinations that are quite unique and a little bit more bespoke to what we want to offer, but that comes at a cost.
Alex Simon (17:43):
In our particular case, it's taken a while for us to really develop the algorithm both on the back end. And then most importantly, and I say like, my CTO's going to joke around, but he's going to say 90% of the work is done on backend, but I would actually argue from an end consumer, 90% of the work actually comes from the front end, in order from the design point of view of like, can this beautifully be put in front of a user and have them make a decision based off of what you're showcasing? And if the answer is, yes, we're doing a really good job.
Daniel Scrivner (18:12):
Yeah, yeah, no, you did a great job of outlining that. And I feel like that back end versus front end. It really is one of those, one of the my favorite concepts in businesses idea that you have to own a super position. I think that's a great example where you can't just be good at front end and terrible at back end. If you displayed data beautifully and had terrible results, no one would want to use it. And so it's this thing where you really have to master two very different, very difficult things. One is dealing with all that informational complexity that you talked about, which is sounds just staggering. And then the second is once you've wrangled that into some sort of neat and tidier smaller list, then you still have to display it in a way that it's easy to scan. It's not overwhelming. It's easy to understand and you've done a great job at doing that. And that's one of the reasons I love what you've built and just how different the model is.
Alex Simon (18:59):
Appreciate it. And I will say, I mean, for every other founder or entrepreneur out there too, like it is an iterative process. We're constantly changing this. We're learning as we're growing. And I think like, my point being of like showcasing destinations at first, that weren't necessarily as sexy. These are things that like from a user standpoint, they're the ones who are telling us saying, hold on, this is great app, but why are you showcasing me destinations that are a little bit outside of kind of my realm of what I would want to go to. And those are great kind of feedback loops to be able to, for us to kind of curate and create a little bit more of a better unique experience.
Daniel Scrivner (19:34):
Totally. Yeah. And I think with the way I would maybe describe that is like, when you have a problem space, that's as big as the problem space that you guys are tackling, that is literally the only way to do it. You have to just, it's like one step and you're constantly orienting and trying to figure out what to do next. And yeah, it's a very iterative way of building. I want to talk about, you hinted at this earlier, I want to talk a little bit about regulation, but before we do that, I want to talk about just the travel space because something you and I talked about when we were preparing for this episode is that generally the travel industry is a start of graveyard. It's this place that a lot of founders, very optimistic, very passionate founders go to build and eventually just aren't able to overcome all of the hurdles that it requires to build something in the space. Talk a little bit about why that is and why so many companies have failed, because I think it's particularly interesting.
Alex Simon (20:24):
Yeah. I think I'll start off by actually first mentioning a lot of startups, specifically focus on destinations first and kind of back there or way back to a kind of a glorified view of like very high level discovery. And so what you'll find is a lot of travel startups, want to create package trips for, let's say, Paris or London, and they want to scale that a little bit, unique and kind of create experiences based off of that, what we found is the further you get away from the destination, the easier it is to actually build and scale a notable business in the travel space. And so for us specifically, we're focused only on the discovery. Yes, eventually and as we continue to scale, like the booking becomes a clear indicator of like, what's working well, but searches and getting people excited about kind of this discovery tool is where we want it to live.
Alex Simon (21:18):
And then the second I'd say, and I can get a little bit more into the specifics of it, but when you're talking about travel brands, I mean, you're talking, these companies are literally spending hundreds of millions of dollars per year, just on marketing, let alone their customer service, let alone, kind of the way that they've scaled, there's only a handful of them and so what you find in the travel space is that once you start doing something a bit unique and a bit different, it kind of gets the ears perked up for a lot of these other larger players to say, hold on, well, what are you doing either? They're going to come out and kind of acquire you or kind of find ways to partner and kind of scale your business with them. Because at the end of the day, we're all kind of using.
Alex Simon (22:00):
And I say, we're all. But, as a travel brand, we're all kind of using very similar data. The flight and the hotel are basically commoditized at this particular point. It's just a way to be able to present it in a more unique and kind of beautiful way, which is what I was describing beforehand. And I think the last piece is more on the funds. I think a lot of travel startups have a unique value proposition which is always great. But when you start to actually dabble into purchasing, the data itself, it becomes very cost heavy. And again, for a lot of travel startups, they can't stomach a 10, 15, 20 in some cases, $200,000, bill to just get access to that data. And so they end up kind of creating like a smaller bespoke solution that doesn't necessarily scale quite well.
Daniel Scrivner (22:51):
Sure. So it sounds like almost in that last example you gave, it can be so cost prohibitive that companies never even get a functioning product that they can actually then scale and it's not sticky enough. And yeah, I mean, that's a really interesting point is, for any startup to scale, you first need to succeed at a small enough size to then be able to grow that. And yet, to your point, if you can't overcome some of those hurdles, you never get that initial stickiness.
Alex Simon (23:16):
That's exactly, that's exactly it.
Daniel Scrivner (23:16):
Yeah. One of the aspects of the high failure rate as well too, is just, and you talked about it that there are very few large players and I was surprised to learn some of these names. I haven't done a lot of research into the travel space, but you, when we were talking before you talked about companies like Sabre, Amadeus, Travelport, talk about some of these behemoths and what they do and kind of the position that they occupy in the industry.
Alex Simon (23:41):
So let me actually kind of segregate this a little bit, just so that for all of the listeners, it's a little bit easier to understand. So there's basically three main travel suppliers when we're talking about the data itself for flight and hotel, that's Sabre, Amadeus, Travelport, which is what you mentioned. Then the other three actually are the three behemoths that most people are aware of that own most of the travel brands that we're comfortable with, number one is Priceline. Number two is Expedia. And then the third is Ctrip, which is basically the Asian or Chinese version of those two companies. And I'd say all, if not, most of the travel brands that we feel comfortable, kind of booking on right now are owned by those three Priceline, Expedia and Ctrip. When we're talking about the data of actually getting flight and hotel with brands, this is where the Sabre, Amadeus, and Travel Corp come into play.
Alex Simon (24:38):
And so each one of them is a bit unique, but they're in essence, they're called the GDSs, the global distribution systems. And that's really what the foundation of travel brands are baked into and kind of created off of and when you're going on to let's say Expedia price, basically any travel brand right now that you go on is run off of those GDS services. And the unfortunate truth is that these brands haven't changed or kind of iterated their product in over 20 years and so for a travel startup like us, right, which is a few years old, we have to kind of comply with a lot of the rules and regulations that they go through, both from a customer standpoint, as well as just being able to search data. And so again, I can give a lot of cool and kind of funny stories of us kind of trying to enter into this space and being dealt with a little bit more pushback than what we would have liked.
Daniel Scrivner (25:32):
Yeah. I would love to talk about that actually, because I know one stat that you shared with me is that it took you guys, I think, eight or 10 months to be able to do your first API integration. And, you were talking about, you just shared some of the, and obviously some of this is when you have travel, there's national security concerns and so then you get into some interesting regulation that I think as consumers you're maybe lightly aware of, but you clearly don't have kind of purview into. Talk a little bit about some of those stories and just, how long it took you to be able to get up and running with some basic integrations.
Alex Simon (26:06):
Yeah. So each one of those integrations, so right now Elude is actually integrated with all three Travelport, Ahmadiyya and Sabre and each one of them on average took around eight to 10 months by themselves. And the issue actually becomes not because of the tech integration, but actually more of the rules and regulations from a business that you need to go through in order to be able to actually sell travel. So you, Elude to it, but for instance, like the no fly list, not many people are fully aware of this, but there's a lot of integrations when you're selling flights specifically that you need to be held responsible so that you're not selling it to someone that clearly shouldn't be flying. And so there's something called the ARC which is Airline Reporting Corporation and this is basically, if you think about it, like the IRS of travel, it's basically what they are.
Alex Simon (26:56):
They act as this kind of middleman from a federal level to understand who's actually purchasing both flight information. And then they started to dabble a little bit into hotels and a little bit more into kind of like the experiences, but realistically, most of the regulation comes with flying and the flight regulatory. And then the second piece is something called IATA and it's basically like, it's the travel agent. I would call it like the travel agent commodity, where in order to be able to purchase and sell flights and hotels, you need to be regulated by the IATA board and again, a lot of individuals or a lot of companies don't make it past those first few steps because there's a lot of financial requirements that you need to hit. So, like for instance, to go a little bit more into the specifics, it's like, they look for anywhere between a couple hundred thousand to a few million dollars in your bank account or bonds basically to be able to issue you your number.
Alex Simon (27:58):
This is not something where you can just go on and just apply and next thing you know, you're a travel agent. Like there's a lot of kind of hoops that you need to run through in order to be able to really establish yourself as a business entity in the travel space. Now, mind you, I'll give you the complete caveat, which is where I think a lot of the other early stage travel startups tend to be, you're able to become kind of an affiliate where you're selling sky scanner or orbits or price lines, data through your website or something along those lines. The good news is that those are lower barriers to enter, and you don't need to have a lot of rules and restrictions to kind of get into that space.
Alex Simon (28:36):
But the con is that you really, you can't build and scale a business that way, because the margins are very, like, when I say low, like almost insignificant, you can do it more for just like being able to help, users, but not necessarily build and scale a business. So again, happy to unpack a lot of that. I know that's a lot of data and information.
Daniel Scrivner (28:55):
No, no, no. It's, I mean, it's just fascinating and I love the acronyms and things like airline reporting corporation sounds like some dystopian, kind of company you would hear about in a book, same thing with just Travel Corp or Saber Amadeus. I think Sabre was actually the company in the office, which is kind of funny that ends up acquiring them. I want to hear, you alluded to it, this story of what it was like when you entered the space and some of the pushback you got as a startup. Talk a little bit about that, especially from your perspective.
Alex Simon (29:24):
So a first few conversations that we had with these GDSs. They basically came to us and said, yeah, what you're about to enter into doesn't exist you can't search open-endedly like this. And what's funny. And it kind of gives me goosebumps saying this now is, that's the exact reason why we wanted to create what we were creating was because everything was completely not showing us the way that we wanted it to be kind of, the results weren't showing up this way. And so those early pushback actually gave us a little bit more motivation and I think now looking back, like that was kind of the grit for us to say, well, yeah, exactly, you guys don't offer this, but we, and when I say we, I give a lot of credit to my CTO and our full dev team, but we wanted to create kind of this algorithm that took most of this information and repurposed it in a way where we can deliver it back to the user in a simple and kind of sleek format, which is, what the Elude experiences right now.
Alex Simon (30:24):
But those first few, moments of kind of entering into the space and getting that pushback was definitely a motivation for us, I think.
Daniel Scrivner (30:33):
Yeah. I mean, it's hilarious because obviously as a startup, I think one to be successful, you need to do something that's markedly different strategically than what other people are doing. And so it's like, that's the very nature of why you got into the industry was to do it. It's also funny because I'm guessing this is probably what it's like. I've had a few other founders on the show that have had to integrate with legacy systems, especially in banking and, just hats off to developers and CTOs that have to work with those, because that is an extremely painful trying exercise as well, too. To try to deal with outdated technology, using your new technology stack and try to make it all work and hold it together.
Alex Simon (31:11):
And I will give the GDSs and some other businesses, some credit they are going in more, there's something called an NDC, which is basically their new way of doing travel bookings, which is a little bit more automated and allows businesses to kind of tap into data a little bit more easily. So it doesn't take eight to 10 months. You're talking lead time, like three to four months in some cases. There's a company called Duffle out of Europe, which is doing this incredibly well from a flight aggregator point of view. But I think to your point, like a lot of these legacy models don't change and if they do start to change, it's very minimal, but it still requires a lot of upfront work for the consumer and in our case, kind of the travel business to make our way and connect to them.
Daniel Scrivner (31:55):
Yeah. I had a founder on recently who described it as like, the technology is very similar to Rome where there's a mix of very old and very new, and it seems like that's probably a good description of how it feels at Elude. Yeah, one of the things I want to talk about, you touched on it a few minutes ago was, when you think about other competitors in the space, you mentioned sky scanner, you mentioned KAYAK, it is fascinating to me, I guess, I didn't really understand that they really just search UIs that then pop you out using basically an affiliate link, so to make a parallel, it's almost like people are familiar with Amazon affiliate links. You're on a site, someone's blog, you click on the name of a book. It pops you out to Amazon. That's effectively exactly what sky scanner and KAYAK are doing. And in your case, you're actually, what's called a merchant of record.
Daniel Scrivner (32:42):
I want to talk for a second just because I think it's interesting, why was it so important to you to become a merchant of record? And what is that unlock in terms of the experience you can provide customers that's just very different?
Alex Simon (32:53):
Yeah. I absolutely love that question because this was something that in the early days of Elude, this was the main reason why we wanted to start Elude was to become the merchant of record and at the time we didn't even really know what that meant, but I think what we started to realize, especially as we built out the system was that we never wanted a user to feel like we were, changing the price on them last minute, which almost every one of these travel sites, you kind of like have to question, where are these arbitrary prices coming from? Why is it changing from $412 to $600 in a matter of a second? And so we have been dealt that situation as a consumer years and years ago when we were booking travel for ourself. And what we said to ourselves in the early days was, we want the customer to experience, to feel like what we showcase from point A is what you're going to get at point B or at the booking cycle.
Alex Simon (33:47):
And so basically what that merchant of record allows us to do is A just not only sell travel, which is what I was getting at, which is like the ARC IATA kind of credentials, but allows us to take payment from the user and basically own the transaction. And so there is some downfall to being the merchant of record. You're talking like customer support and assisting with any type of ancillary documents or anything that happens basically post booking, but outside of like the pre and post booking assistance, the merchant of record really gives us full functionality of being kind of where somebody comes to book their trip and again, it's different than like a KAYAK or a sky scanner that just pushes you someplace else in hopes of you transacting. And so we're able to kind of really own the customer and really like learn more about them, which is a big reason why we created the onboarding experience and over time, hopefully learning more about each one of our unique customers.
Daniel Scrivner (34:45):
Yeah, no, totally. And I can see why that's so important because it seems like for you guys, clearly the play is you want to be the one that has a direct relationship with a customer, which means you need to build trust. To build trust, you need to be the merchant of record. You can't be doing things like popping people out and giving them a poor experience or unable to help them after a purchase. I want to kind of switch tax and talk about that for a second, because there's two things I think that are interesting one, for anyone that's listening, if you haven't yet go to elude.co or go to the app store and download the Elude app and you'll find that it's just really beautifully designed. And obviously part of that I imagine is strategic because of big parts about building trust.
Daniel Scrivner (35:21):
I think design and trust are kind of interlinked, but another piece is just this idea that you want to build a brand. And so I want to talk for a second about how did you come up with the name Elude and then kind of walk us through how you guys prioritize design from day one and what that looks like in terms of investment in work that you guys had to put in that?
Alex Simon (35:43):
I'll start with the Elude question and then I'll jump into the design. So Elude actually started between myself and Frankie, who is my co-founder. We basically came to the table and we were trying to come up with a handful of different ideas in terms of names and phrases that made sense. And ironically, I was still working in my corporate world and kind of looking in like different dictionaries and kind of seeing what best words kind of resonated with us. And I actually came across Elude, spelled differently, A-L-L-U-D-E clicked into it. And the definition didn't really spark anything for me and then I looked down below and it said, otherwise known as or look into Elude, E-L-U-D-E. And I clicked into it and the first description of it was to evade and escape.
Alex Simon (36:30):
And I was like, this is exactly what we're trying to sell. We want you to Elude your lifestyle. We want you to go someplace else and do something. And then I think over time, what we realized is that, yes, the word Elude sometimes has kind of like this negative connotation to it when it comes to like, again, getting away and doing something different. But I think it actually is the embodiment of what we're finding our users want to do. They're in their nine to five or they're in their kind of work schedule and they know the times that they have off, they want to Elude their current state and kind of go someplace else. And we've started to find that the word Elude or like the verb Elude actually allows people to think about travel as kind of this escape, which a lot of us do in general.
Alex Simon (37:13):
And then I'll kind of touch on the design aspect that you had mentioned. I think from the early stages of when we were creating our web beta to even now with our launched app store and things like that, what we wanted was simplicity. I think a lot of the times our travel brands tend to overcomplicate, like, again, if you go on to Expedia, you have all these popup blocks or like price line. It's just, it's ridiculous it almost feels like you don't want to be there doing this. It's like, you want something that gets you. That's a little bit simple but if you have a question, you can go and talk to somebody like we wanted to create that feeling with the app. One other thing that, and I can go a little bit more into the details on advisors as a whole, but in the early days when we were creating and really creating the foundations behind Elude, both design backend, front end, basically every angle of the business, we started to actually go out to advisors that knew their space very well.
Alex Simon (38:12):
And so I'll give one example. One of our advisors is Tim Kobe, who is one of who is Steve Jobs' right hand man as they were basically creating the Apple store. And he's noted as the main designer behind the Apple store and again, just from reference, like that's kind of what we wanted to showcase in the app is we wanted somebody to feel like, whoa, okay, they actually took their time and they're deliberate about the colors about, the different details around the app, the icons, those small things that really matter, even down to the photos. Now, mind you, I was getting at this before, but we have a curated list of around 150 to 200 cities. I mean, we source every single one of those photos just to make certain that in the app, it's not, we're not going to just show a generic general, like, Brooklyn or New York kind of photo. We wanted to-
Daniel Scrivner (39:01):
Alex Simon (39:02):
Pixelated, exactly. And so like those minor details is the exact reason why people trust a brand or they don't. If we don't have any photos for any locations for a travel brand, that's unacceptable, you're not going to get any bookings basically. Like you're not going to get people to say, oh wow, I'm going to go to Nashville, they want to see some photos, they want to see the hotel. Those type of situations is exactly kind of what we were going after in the early days of building the foundations for the design. And so my point just being about Tim Kobe is we've actually asked industry leaders that have helped kind of the foundations of other businesses give their insight and really kind of have hour long conversations in those early days to figure out what colors we should use, what fonts we should be portraying, those type of things that feel a little bit more inviting.
Daniel Scrivner (39:51):
Yeah. It's fascinating and I mean, I love the depth with which you talked about that because it is and as someone who spent a lot of my career in that design role, obviously it's music, to my ears, but it also seems particularly important in travel and in just because I think so much of brand and design is around tapping into an emotion and clearly with travel that is it at the end of the day, you are really selling this excitement, this sense of where I can go and what I can do and so it makes a ton of sense. I want to ask one other question, which is, one of the things that's interesting to me is to go back to the parallel of like, if, if I'm doing KAYAK clearly for most people, they're thinking of what destinations do I know of, what destinations could I get to, but what destinations do I know of? And then they're working back into, how would I do that?
Daniel Scrivner (40:41):
With your model I love, and again, it goes back to what I tried to share at the beginning, it's really inverting it and saying, almost saying, what are your constraints? And then let's help you figure out the coolest place, the most amazing place that you can go to. And as I thought about like what an experience that would create, I imagine a lot of people are very surprised once they get to the destinations that like, oh wow, look at all these places, I didn't even, wouldn't have thought about it. I wouldn't think this was possible. Talk about that aha moment. And if you have any stories or any examples of places, people go to through Elude that they don't normally go, I think it would be really interesting to hear that.
Alex Simon (41:17):
So I absolutely love any aha moment when it comes to people within the app. And I actually personally like, I like having people download it in front of me and kind of do a quick search and see these different places because most of the times it's, oh my God, I had no idea I can get to Germany and let's say, Croatia for the same price and what personally a good story I think was one of our early users actually was trying to book a honeymoon for him and his wife and they basically were coming up with a whole bunch of domestic locations that they were trying to find. And I said, look, check out our app, like tell us, how much you're looking to kind of spend and you'd be surprised. What's interesting is that the first destination that showed up was Paris.
Alex Simon (42:05):
And he was like, I didn't even think that this was something that I could afford and of course it's like one of the most romantic cities, like, yes, we're going to book, we're going to go through it and book this. And it's those type of experiences that I think like, unless again, you have the hours upon hours to kind of back your way into the flight in a hotel, like you're not going to do that search. And I think like maybe if you and I were to have a conversation, we would come up with maybe five, maybe 10, max 15 or 20 cities that like, we're both fairly comfortable of going, but there are hundreds of cities out there and I think people don't recognize really the breadth of where you could actually afford to get to. It might not be, let's say Rome, it might be Pisa.
Alex Simon (42:48):
For example, these are great analogies or great situations or like, Lisbon instead of Barcelona, but it's still Europe. And like, those are places that people don't necessarily know to actually search right off the bat. But when presented it kind of allows them to say, whoa, okay. I, I'm actually going to do this exactly what if I did go there? And so it's really unique, but I think that kind of like wonder and that kind of like experience of that aha moment is exactly what the Elude app is there for.
Daniel Scrivner (43:18):
Yeah. It's so cool because I love, you know, I think such a cool part for me about talking with founders like yourself, looking at and really thinking and diving into new business models is thinking about the second and third order effects. And obviously what's amazing here is like, I want a world where people travel more internationally, where they're exposed to different cultures. This is a great way of doing that because I don't have to know about it, have read an article somewhere and gotten interested in a city. I could just go to Elude and be able to type in some of my constraints and find out that actually, wow, I can go and visit this place, which is really cool. I want to wrap up with just a couple of, kind of questions about what the experience has been like for you building Elude and one of the questions I always like to ask is, you've been at this now for multiple years. When you think back over the last couple of years, what are some of the hardest moments?
Daniel Scrivner (44:09):
And I imagine probably a lot of them are in those early days, eight to 10 months you were working on one of those first integrations, what are some of the hardest moments and what did you learn? What did you take away from some of those experiences?
Alex Simon (44:21):
Yeah, so I think as a fellow founder to everybody, like I feel like there's incredibly high highs and incredibly low lows. That's just like the nature of the world of entrepreneurship. And I think specifically in the travel space during COVID is a great like prime example, like almost every travel brand closed down. And in our particular case, like luckily we were able to fundraise right beforehand and kind of like have the runway to be able to iterate and kind of create the next version of Elude and launch it in a time that made the most sense, which I think even now with COVID allows us a lot more opportunity, given people are itching to get out and do something. But I think what I've learned most throughout those highs and lows is that you have to come back to your passion.
Alex Simon (45:04):
And so, I left corporate world to go and experience kind of this like, edge case of like, hey, can I make this business work? And I think like going down to travel really is my DNA. That is what kind of runs me. I love going to different destinations and exploring different places. And I want to provide that for other people and having that at its core, there's going to be the incredible highs of the fundraising or landing a great advisor, getting bookings and things like that and there's going to be incredibly low lows of like, not being able to integrate with a partner for eight or 10 months or having rules and restrictions kind of be at the forefront of what you're dealing with or hires going bad or things like that. But at the end of the day, I like to say I get to do what I love to do every single day. And it's ironic because I never found myself being a entrepreneur.
Alex Simon (45:58):
I always say, I stumbled into entrepreneurship because it was like a passion of mine to create something from nothing but specifically in the travel space it's like, that's where I live, that's where I know my co-founder lives as well. It's like, this is what we want to be able to present to the world. And it's a really fun experience being able to do that.
Daniel Scrivner (46:20):
Yeah. In many ways I think stumbling into, it's probably the best way to go about it because, there was one founder that I had on [inaudible 00:46:27] Varda so he is a founder at a company that's basically working on some of the first factories that are in outer space and he was an investor before that and he had had an unsuccessful venture before, but he kind of described it as basically, his decision to found Varda was finding something he was so excited about that he was willing to put the gun in his mouth and pull the trigger because he's like, that's basically at the end of it, what it is. It's incredibly, incredibly difficult what you're going to go and do. On the flip side of that coin, talk about some of the rewarding moments and what that gives you, what you remind yourself in some of those highs.
Alex Simon (47:02):
Yeah. So, I mean, in our particular case, like getting great PR is always a great aspect to the business. And like, for instance, more recently we were on Fox business and then a few months later or a few months earlier we were on the New York Times and those type of moments are definitely an outer body experience for me as the founder, because what we're talking about is actually more now the movement and the community behind Elude rather than the foundations of the elements behind the tech or the front end or those type of things. And so it actually is a really great rewarding experience for me, knowing that we're building something for a much larger audience than let's say myself or my co-founders or our team, like people are actually searching. People are actually going through the motions and booking their trips. And that's a really rewarding experience.
Alex Simon (47:51):
The other thing too, is I will say again, I kind of go back on what I was describing about the advisors, having incredible advisors behind us and around the table for big decisions on a monthly and bimonthly basis. Like that's really incredibly rewarding as a founder because this is my first venture. This is my first time dabbling into creating a startup and I haven't done it before. And so hearing directly from individuals that have scaled businesses at like, not like at a, 50 to a hundred million, we're talking like hundred million to billions of dollar businesses, like having their insights and just like their advice as to how we can start kind of positioning our brand better. That's always rewarding and encouraging to just know that we're not yet there and that we're still building and kind of, again, motivating us to doing something bit grander.
Daniel Scrivner (48:44):
Yeah, I mean, I love that you talked about that because I feel like advisors in general are kind of polarizing, some people are a massive fan of having advisors, others aren't, but you know my take is, it's just all about the people you find, people are people, some people are great, some people aren't, but I love that you talked about that because yeah, I think, clearly you're learning so much and I've always thought, it feels like, yes, you're here to build a business, but you're also here to just level up and continue to get better. And so you need to be learning from the best at every single stage.
Alex Simon (49:12):
So one other just call out too, that I wanted to bring up specifically on the advisor piece actually is we have one of our investors and advisors, was the former co-founder of Priceline and then also one of the co-founders and CTO of sky scanner and I bring that up because again, industry knowledge is not like I did not come from the travel space, I came from investment banking. I kind of came in with this first principal's approach and having leaders that could help introduce us to individuals that would streamline our process literally made or broke our business. I mean, like, one introduction would have taken years in some cases to build that up and so having those industry experts around the table has been incredibly valuable for us.
Daniel Scrivner (49:55):
Yeah, no, totally. Last question, what and this is just, I'm just going to ask it super wide open for other founders listening, what generalizable advice would you have? So clearly there's kind of specific advice around building Elude, you've talked a little bit about just always going back to your passion, especially when you're in one of those low moments, what else maybe would you share with someone listening who's building their own business that might be helpful to them?
Alex Simon (50:22):
Yeah, so I love this advice. I don't know who gave this to me, but I absolutely love it. It is so we're taught growing up. That it's all who you know and I think as founders we're generally, we take that saying pretty deliberate, like, right, like it's, you have to know the right people and you have to be connected to the right people. But I always say it's a big, literally complete opposite. And we need to rewire ourselves to think differently and that it's not who you know, it's who knows you. And the reason that, that's so important and the difference there and the nuance is that I can go knock on a hundred doors, but unless those hundred people know who I am, they're probably not going to open them for me. And as a founder, this becomes even more incredibly valuable as you go out for fundraising and bringing out the right hires and again, like building your business.
Alex Simon (51:15):
And it really becomes incredibly valuable to know those right people, but also have those open lines of communication. And so, kind of building out your network early on is never a bad idea. What I would also say too and again, as a fellow founder who has left the corporate world started, if somebody is in the corporate world trying to kind of dabble into building a business, start small, it doesn't need to be, going in from, literally giving your notice to like starting your business the next day, like start doing side projects, start understanding the market, start understanding those customers early. It could be the first five customers. It doesn't need to be the first 5,000. Start small and start to kind of realize that what you do in those early stages are actually going to start to dictate a lot of what you start building for in the future. So I know for me, that's been incredibly valuable, but it's always like a fun journey.
Daniel Scrivner (52:09):
I love that little turn of phrase. I'm probably going to steal that or use that it's about who knows you, because I think, to your point as well too, I think it speaks to the fact that yeah, there's who you know, which is obviously great, but I think just being known as someone who's very high caliber, who's trustworthy, who's worthy of respect, who's done interesting things is really important and it does open a lot of doors. And the thing that I found over time is that actually counts for more because at the end of the day, I think a lot of it is earnestness and it's people's ability to trust you and it's their ability to see your passion and that is something that takes a very long time to build and so, yeah.
Alex Simon (52:45):
Yeah. I love that and definitely please use it.
Daniel Scrivner (52:51):
For anyone listening and watching, you can learn more about Elude by visiting elude.co. You can also go to the app store and download the Elude app as we talked about, it's beautifully designed and it's a really amazing experience. And you can also follow Alex at al_elude on Twitter. Thank you so much for joining me, Alex. This has been so much fun. I really appreciate it.
Alex Simon (53:14):
Thank you so much.
Daniel Scrivner (53:14):
Thank you so much for listening to this episode. We hope you enjoyed it. You can find our episode guide and the full text transcript of this conversation at outlieracademy.com/106. At outlieracademy.com you can find all of our other founder interviews, profiling, incredible companies like Eight Sleep, Common Stock, Varda space industry, Superhuman, Prema Kitchen and 1-800-GOT-JUNK among many, many others. In each episode, I sit down with the founder to deconstruct the ideas, frameworks, and strategies they use to build these incredible companies. You can also find the video version of all of our interviews on YouTube at youtube.com/outlieracademy. On our channel you'll find all of our full length interviews as well as our favorite short clips from every episode, including this one. So make sure to subscribe, to get notified whenever we share new videos. And if you haven't already follow us at Outlier Academy on Twitter and LinkedIn, so you never miss a new episode. Thank you so much for listening. We'll see you right here next week on Outlier Academy.
On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.
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