The hot professor: Top EU business lecturer from Cork aims for tech start-up success
Published 17/01/2016 | 02:30
There were early signs of the path that the career of Corkman Joe Haslam - a serial entrepreneur and lecturer in business at Madrid's IE Business School, the top ranked business university in Europe - might take.
As a pupil at St Munchin's' boarding school in Limerick, he got into trouble for starting a sideline in fast-food deliveries, taking taxis to buy burgers and chips and bring them back to the school for his classmates.
It's a wonder he didn't start one of the current food delivery apps like Deliveroo or Just-eat rather than the last-minute-hotel booking app, Hot Hotels, of which he's a founder. Though he is an adviser to HeyPlease, a phone app founded in Madrid for ordering, paying and availing of offers in bars and restaurants.
Teaching is in his genes as well. His parents were both lecturers at UCC (his father also worked at various levels in Cork and Limerick County Councils before becoming Limerick County Manager), and one of his two sisters lectures at New York's NYU.
His own education in accounting, finance and IT systems afforded him an early career that took him to London and the US to work in consulting, before returning here to co-found a web procurement business, Marrakech, with five colleagues in 1999.
They raised $75m from backers, including UK private equity giant Doughty Hanson, employed 250 people at one stage and had Tesco as the biggest of its large corporate and government agency customers.
But when it sold to AMT Sybex in 2006, the fact that their stakes had been diluted meant they didn't each bank the big payout that they might have hoped for.
To a certain extent they missed their chance to float the company on the stock market in the aftermath of the Dotcom crash of 2000 and 2001, the 43 year-old former inter-county hurler says.
"It was a choice between us taking late money, which keeps the business going, but dilutes your stake - known as 'cramdown' - and aiming to go public, or you don't raise money and keep your stakes, but try to build the business to the point of a sale, but it can be a very long, hard road. We took the former route and as a result we didn't really make any money."
He's more confident about the prospects for fast-growing Hot Hotels, he tells me from his office at home in Madrid, where he and his two young daughters, 6-year-old Claudia, and 8-year-old Julia occasionally spend a few minutes of an evening watching bookings from the app come in from around the world, affording them an early behind-the-scenes insight into the workings of an app-based business.
He and co-founder, Wicklow man Conor O'Connor, currently have hotels in 332 cities in 55 countries signed up to their app, which they established in 2012.
O'Connor is something of a veteran of hotel booking businesses, having previously sold a web-focused one to a Norwegian media, advertising and online marketplace group, Schibsted.
"I met Conor through being a member of the Spanish-Irish business network. Ideally, you never want to go into business with someone who's doing so for the first time, and we both had that in our favour. He knew about being scrappy, basically how we could spend as little as possible on everything, and about the importance of working with the right people.
"Denis Brosnan, the founder of the Kerry Group, famously said every business needs three key people: the face of the business, a numbers guy and a son of a bitch. The latter is the guy who stubbornly won't give up but will stick at a task.
"They won't settle for failure or second best and aren't afraid to go against the status quo. They're unhappy about the current way of doing something and want to change it.
"They'll fight over every last inch and won't give up. They're contrarian, with a kind of fire inside them.
"That's one of the two things about business that can't be taught. The operations processes and things like marketing, however, can.
With Hot Hotels, Conor is our one. I'm the face of the business and we have a colleague, Ade, who is an IE MBA graduate who looks after our numbers and operations."
With seed funding of €1.8m under their belt, they're currently talking to US investors to raise more millions in series A money and have recently relocated the business to Boston, where a cluster of travel tech firms including Tripadvisor, Kayak and Zipcar, has built up.
They've also been accepted into TechStars USA, arguably one of the world's top start-up accelerator programmes (it's often compared with another called Y Combinator), and to which less than 1pc of entrants get accepted.
While travel-related mobile apps may appear to be a crowded market - well-known ones include Expedia, Skyscanner, Booking.com, and HotelTonight - it's one that is rapidly growing.
For hotel bookings alone, this year it will have doubled in value to €4.9bn since 2014. Haslam and O'Connor are eyeing the success of Dublin-based Mobile Travel Technologies, which was bought last year by UK firm Travelport for €55m, and involved a performance-related share deal for 28 MTT executives worth €14.4m.
Being the only Spanish TechStars entrant will help to open doors, but they need further recognition and the backing of an investor - more for the validation than the money - to take the business to the next level, he says. "Although we don't need it for working capital, we're competing to hire the best people in Boston. They want to know we have the validation of one of the big venture capital (VC) investors in travel tech. If we could, we wouldn't take any money. What the VCs are looking for is not just sales and customers, profit margin and burn rate and the growth potential of the business. They look more closely at specific metrics like how many bookings your system can take without crashing."
What gives Hot Hotels an edge over others is its use of artificial intelligence (AI) through a software tool called an API that shares data with, and reacts accordingly to, other software.
As well as enabling their own app to give users the best "price-optimised" deal on a room, it's unique because it also does this for a number of rival apps, effectively taking a small bite of their lunch for each booking they take.
"Both the hotel and the user want a good deal. We're doing what Paddy Power can for the odds for betting on a horse. To do that, they analyse information about a horse, the weather on race day, the jockey, the going on the course, and that changes during the lead-up to the race. Similarly, we're using information about the weather, events on in a particular city at the time, the time of year and anything about a person's booking history. We'll know you paid a certain price for a hotel room at a certain time in the past, and any other related information.
"Behind the scenes, our software is interrogating 10,000 - or at times it could be 100,000 other pieces of software on that many computer servers - and that all usually happens in milliseconds. If for any reason it takes more than three seconds, you've lost that customer. And it's all thanks to the power of your smartphone."
Don't the firm's bigger rivals do this to an extent?
"It's the innovator's' dilemma. Booking.com and Expedia are making so much money already, and they don't just do hotel bookings, and that's their focus. Their best people aren't looking at mobile in the same way as we are. We just focus on hotels and put all our resources into price optimisation, and we sell lots of rooms.
"If they wanted to, the giants could probably crush us. But disruptive start-ups either replace incumbents or get acquired by them. I don't expect we'll put them out of business; it's more likely that someone like Expedia or Booking.com will acquire us. We've got four years of data that's easy to analyse, and to a large company that alone could be very valuable. Travelport bought MTT because they wanted a better understanding of mobile app bookings."
His background as a founder and ongoing work on the start-up was key to him being hired to lecture at the IE school in 2006, where an MBA costs €65,000. Its students have worked for investment banks and the world's biggest companies.
"I look up to serial entrepreneur John Teeling, who taught at UCD, but don't come close," he laughs.
Can such fees be justified when you can do online courses from Harvard for free, or follow the advice of the No-Pay MBA blog?
"The value is in the networking. IE has no problem attracting people but less than one in five who apply get in. The MBA course I teach is called Trillion Dollar Challenges, and I try to inspire them to take these on. Good debate comes from diversity: our students are from 70 countries. We have climate-change deniers and people who might never normally meet, like Israelis and Saudis. The best classes are when I'm just a referee."
He also lectures on exponential technologies. What's his view of AI and its potential dangers, about which the likes of Professor Stephen Hawking have warned?
"These kinds of advances enable small teams can do what was previously only possible for governments and large corporations. Smartphones will give three billion new minds access to education that only a privileged few had. We will need better regulation, but I try to believe robots and scientific advances will be good."
Asked about the amount of power of Silicon Valley and the likes of Google and other large tech firms have over all our lives, the opinionated and prolific tweeter, voracious reader and sports and climbing fan isn't overly concerned.
"Silicon Valley is now in decline. Science has eliminated distance. The next great companies won't come from there. Its billionaires are more accountable and democratic than people give them credit for."
Sunday Indo Business