Japan Travel

* * * * * * * * TERRIE’S (TOURISM) TAKE – BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.

Tourism Sector Edition Sunday, Feb 19, 2019, Issue No. 980

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+++ The Full-stack Travel Company

Over the last 3 years I have spoken with many potential investors
about what Japan Travel (www.japantravel.com) is and why they might
want to invest. All the books, such as Venture Capital for Dummies –
my favorite in that particular genre – say that to be attractive to
Venture Capital firms (VCs) and other professional investors, you need
have a single compelling focus and be solving a problem in a large
market, that you are well placed to fix. You need to be ready to bet
the farm (actually, usually someone else’s farm) on your project, you
should be willing to fail big in the process, you must have a global
story, you should have a management team in their 30’s with a lot of
insider knowledge, and either a couple of PhDs or a couple of previous
tech company wins under your collective belts.

So does that describe anyone in a start-up business that you know of?
Certainly it doesn’t for me – well, not in Japan anyway.

Rather, most of my business start-up friends prefer to start out small
and learn the ropes first. Then they develop multiple sources of
revenue which allow them to build reliable prototypes to help mine
that proverbial pot of gold in their business sector, all while making
enough to pay the bills with. Once they have developed something and
tested it to a good response in the market, they might go out and
start talking to potential investors. Usually they will start with
friends and family, perhaps some larger companies in the sector, and
if they’ve taken more than a year to start up, then probably they will
also be talking to the Japan Finance Corporation (JFC). If you have
never heard of the JFC you should check them out. They help start-ups
when no one else will. They have a massive JPY24.65trn in assets
invested (latest data is 2014) and I’ve sent more than one penniless
start-up founder to go see them.

http://bit.ly/2GPjMLJ [Japan Finance Corporation website]

With such a scrappy, pragmatic start, I’ve found that most people
likely to invest in a company like our’s are not VCs obsessed with
billion dollar valuations, but rather, other business people who have
been around the track a couple of times and who recognize a good idea
and competent execution when they see it. As such, the pragmatic
start-up, and certainly my own business, are a kind of “anti-VC”
start-up – meaning we have been battle-tested and molded by real
market experiences prior to raising capital. In other words, we’re a
bit slower to get to first base.

[Continued below…]

—— Inbound Travel Business Matching – Last Call ——-

In 2018, 31 million visitors came to Japan, over 3,000 international
conferences were held here, and the Rugby World Cup and the Olympic
and Paralympic Games are just around the corner.

Holding an event in Japan is not difficult any more, as many new
meeting facilities and hotels open one after the other. Working with
the right partners is now the key to success in organizing a MICE in
Japan. IME 2019 will be held on Thursday Feb 28 at Tokyo Int’l Forum
and will help you find your right partner.

Come and join as a buyer at IME 2019. (http://bit.ly/2GOewrQ)

[…Article continues]

In fact, truth be told I have not done so well with VCs in developing
Japan Travel at all. Instead, I have probably made all the fundraising
mistakes that an entrepreneur could possibly make!

For example, my first significant mistake was naming a travel business
as Japan Tourist. I thought it was (and still is) a great name – very
to the point on what we wanted to do – which was to revitalize Japan
inbound travel, starting with foreigners. Instead, I was told that I
needed to have a shorter, punchier name, perhaps with *.ly or a sly
misspelling somewhere in the title. I did seriously think about
registering “Wasabi Travel” after the owners of Japantourist.com
wanted the cost of a small house for that name. But somehow,
“Wasabily” didn’t really sound right! Then, as often happens in
business, Lady Luck (aka Dumb Luck) suddenly appeared in the form of a
community member who knew the owner of Japan Travel and who wanted to
sell the domain.

My second significant mistake was not seeing myself as a Unicorn – you
know, one of those mythical companies with a market capitalization of
US$1bn or more. Instead, as I visited VCs I made a pitch that said we
would go public in Japan or regionally and that our target was a
listing that would value the company at US$100m – a big enough number
that I thought was respectable. But perhaps because of the corrupting
influence of Mr. Son and his US$100bn Vision Fund, it turns out that
these days if you’re not a unicorn you’re a pig.

My third and biggest mistake was sharing with VCs that I planned to
make something that I would refer to as, “A systems integration
company for travel.” By this I meant multiple sources of
tech-leveraged business revenue that might offer us some safety from
predatory competitors with much bigger pockets. That idea went over
really badly. As one VC guy told me, “If you’re spending all your time
creating separate revenue flows, you won’t have enough time to spend
on the main business that will make all the money.”

Furthermore, the systems integration label sounded too complicated, so
I shortened it to a “full-stack travel business” instead. This means I
opted for a survival configuration with revenue being earned from
three very specific layers.
* Layer One: our media and advertising/marketing business.
* Layer Two: our full-service travel agency which allows us to produce
our own tours.
* Layer Three: Our systems development business that connects to many
sources of travel-related data in Japan.

What does Full Stack” mean? Well it refers to a new generation of
software developers who not only handle databases and servers, but
also systems engineering and client-facing interfaces (UX). In travel,
I intend the term to mean pretty much the same thing: strong back-end
processes and connectivity and easy-to-use front-end applications and
customer service. The only real difference between the two is that I
now also throw in a healthy amount of humans instead of trying to do
everything by software alone. As Expedia and other high-tech start-ups
of 10 years ago have started to realize, AI bots are interesting, but
for now they are not yet up to the task.

I believe that full-stack, diversified travel companies will prevail
over single-focus ones, if for no other reason than because supplying
services across the entire travel spectrum de-risks the business, as
well as spreading out income sources so as to flatten traditionally
peaky revenue flows that normally occur in spring and fall. This seems
to be the same reason that Expedia and other travel sites are starting
to build out more and more lines to sell visitors. It’s not just about
hotels or activities any more.

As an example of the need for de-risking, I think that after the Tokyo
Olympics the travel sector media business will probably take a hit as
the national and local governments ease up on their sports diplomacy
investments. On the other hand, we are expecting the Rugby World Cup
and the Olympics to awaken massive subsequent interest (in 2021) by
well-heeled western tourists. As a result of that conviction, we are
gearing up investment into the French, British, and German markets.

…The information janitors/

——— Japan Travel Corporate Travel Services ———-

Japan Travel’s Type-2 licensed travel agency business is one Japan’s
few independent foreign-owned inbound DMCs. One of our specialties is
looking after corporate groups of 10-300 people. To date we have
assisted in the successful holding of training events, incentive
travel, conferences, off-sites, and team bonding programs. We have
looked after the full gamut of services, such as: international air
travel, hotels, local travel, event logistics and venues,
entertainment, micro-management of dietary needs, and special needs

We are highly motivated and are happy to work in a variety of roles
tailored to suit your needs: as a full-fledged corporate travel agency
partner, as a logistics partner for a particular issue, or as a source
of innovative experiences and venues. Looking after hard-to-please
high-tech groups is our specialty!

For corporate travel assistance, contact us at: tours@japantravel.com.
Or visit our pages at:


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Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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