What Does It Take to Get Richard Branson to Fund Your Startup? 20-Something Entrepreneur Scott Ferreira Knows
Though still only his mid-20s, Scott Ferreira has already built quite a reputation for himself in the business world.
Scott Case has experienced the highest highs and lowest lows of building a company. He took his most notable startup, Priceline, from zero to a billion in sales in less than two years, and today, the company remains a major player in the travel booking arena. Conversely, his next startup took a much more common path: started strong, sputtered and eventually failed.
“It was a humbling experience,” Case says about shutting down the latter venture, Main Street Genome, which used big data to help small businesses improve their operations. “I learned a lot from that.”
Now, he’s back at it again.
Earlier this year, Case, fellow Priceline alumni Jay Walker and entrepreneur Tim Brier launched Upside, a business travel startup that seeks to trim employers’ travel costs by rewarding employees for flexibility around, say, where they stay or what time they fly. Business travelers can use the aggregator (via app or desktop) the same way they would sites like Priceline, but when if they opt for a less pricey airfare or hotel option when prompted, they’re rewarded with gift cards.
“I think we have an opportunity to really reimagine how travel is purchased and make the entire process easier for everyone involved,” Case, Upside’s president, said in an interview following his remarks at last week’s 11th Annual Capital Markets Summit, which was hosted by the U.S. Chamber’s Center for Capital Markets Competitiveness in Washington.
During our conversation, Case opened up about the emotional toll a failed startup took on him, the access-to-capital challenges that face companies are various stages of growth, and the most significant differences between running a startup today versus two decades ago, when Priceline entered the market. What follows is a transcript, lightly edited for length and clarity.
Let’s rewind to years immediately following your departure from Priceline. What did you do next?
“After Priceline, I moved down to D.C. from Connecticut, and my whole idea was to combine the work that the Obama administration, the Kauffman Foundation and the Case Foundation were doing and think through how we could spark a wave of startups across the country, and that became the Startup America partnership. We learned a bunch of stuff traveling around the country and meeting with other startups, and the biggest thing we discovered is that we need to build communities around these entrepreneurs, and those communities need to focus on the founders. Today, we are seeing startup communities thriving everywhere from D.C. to Nashville to Dallas to Des Moines.
“That project was designed to last three years, and when we got toward the end, we thought, ‘What are we going to do with everything we learned?’ So I got together with Eric Koester of Startup Weekend, and we started UP Global, which brought together Startup Weekend programs and TechStars and continued to think about how you run programs that build communities and ecosystems of startup founders.”
Then you decided to start another new venture, right?
“Right, I got together with Eric and we started something called Main Street Genome, which was intended to do a couple of simple things and was based on a few realizations. Number one, we realized that small businesses generate a ton of data. Second, we realized that data would be valuable to use to make small businesses better. And third, we thought we could use the data to create products that would help owners make the business better.
“The eventual headline is that it didn’t work — we failed. The third part, building the tools, is really what collapsed. We were able to get the data and find really cool and interesting stuff in it. But what we were unable to do, despite working on it for two years, was build the tools. We could never figure out exactly how to get small business owners a tool that could help them make the decisions they needed in a timely fashion to make the changes they needed in their business.”
Help me understand what that experience was like when you realized it wasn’t going to work.
“Honestly, I was self-diagnosed as clinically depressed for a while. To wind down a company, it’s not fun. There are a lot of difficult tasks you have to think through. My co-founder and I wanted to see if we could get everybody jobs, first and foremost. And we had to work with our investors to make sure we handled things properly. We sold the business, but for all intents and purposes, we sold some assets and it was unpleasant. It was hard for me for a long time.
How did you bounce back?
“I remember giving a talk a while later to a bunch of angel investors in Chattanooga, Tennessee titled ‘Startup Shutdown.’ I talked about how, even if you do everything right, you can still fail. I found myself talking to other entrepreneurs at the event about what had happened and what didn’t go well and what lessons I learned. It was surprisingly cathartic.”
Where did you turn next?
“I had a few projects that I was going to pursue that would be more or less solo projects — ones that would really let me take a break and chill out for second. But I found myself on the phone with founder of Priceline, Jay, who I have known for a very long time — we would catch up every 6 months or so — and I told him about my experience, and he was like, ‘You know I’ve been working on this idea.’ Jay being Jay, he was always working on something. It turned out, he was working on something really interesting.”
What exactly is the problem Upside is looking to solve?
When you look at business travel, you have the employee who is reimbursed for that travel, and you have the employer who pays for it. The employee makes all the decisions, and the employer deals with the consequences, in this case, the bill. There’s a misalignment there. So we thought, ‘What if you create a whole new product that reimagined the way someone bought business travel?’”
When was all this happening?
We spent most of last year building the team and the engineering and the product and all the sorts of things that go along with starting a company. In January, we began marketing our first signature product, which is a bundle of flights and hotels. Basically, we have lowered the cost for your employer and reward you for buying your flights and hotel together. We have fantastic customer service and we make it really easy. If you have an iPhone, you download the upside travel app and in 10 minutes you can buy a trip. Our goal is to make it really easy, and to reward the traveler for being flexible.
What are the biggest differences between starting and growing a technology company today compared to when you were building Priceline?
“In many ways, starting a company hasn’t changed; the stress, the emotional rollercoaster ride, none of that has changed at all. Whether you are starting a solo practice or you are starting what you think may be a multimillion dollar technology company, that part hasn’t changed. What’s a little different this time around is that our team has done this a few times, so we can see some patterns we can get ahead of. With that said, that doesn’t mean we’re not making mistakes — we’re just making new ones.
“On a more tactical level, there are two changes due to technology. Number one, for technology companies in particular, the speed at which you can build and deploy something has increased with advances in and the falling prices of cloud computing. Second, the collaboration tools among teams are much more robust and – whether it’s Slack or Google Docs or something else – these collaboration tools have really changed the dynamics and allow you to form teams and getting rolling more quickly.”
Let’s talk a little about the issues that brought you here today, which are capital markets and access to capital for growing companies. What’s it like today trying to get your hands on the funding necessary to start and scale a business?
“There are a few observations I have made lately. One, I think we need to rethink the structures for the way some capital becomes available. We have to think differently how we bring private capital into the market, and at the same time, there’s more than a trillion dollars locked up in foundations around the world. That’s a big area of opportunity, and if we want that capital to flow into the mission-oriented enterprises that are tackling the same challenges those foundations are focused on, we have to do something to free up that capital.
“My second area of concern surrounds taking the companies public. The process going public should be easier. Today, nearly every company is already thinking about transparency; I mean, transparency is the first principle for our company, we think about it every day. So if the main goal with the rules around the public offering processes is to foster transparency, which we hear about all the time, we need to look at the regulatory process in a new way that works for 21st century companies that are already prioritizing transparency. I have no problems with the rules of the road but let’s not make the enforcement part of the regulations so burdensome that promising startups look at them and say, ‘Forget it, I’m out.’”
What do you think the solution is to that second issue – the regulatory barriers for public companies?
“Honestly, I don’t know what to do about it; there are people here who have probably forgotten more than I’ll ever know about the regulations that impede that process. But I can tell you as an entrepreneur, my gut tells me that having more publicly traded companies would probably be good for our economy, but that being in a publicly traded company is not particularly good. We need to think about how we can adjust our policies to make it easier and faster and better for businesses to start, grow and scale.”
On that note, speaking of growing and scaling, what’s next for you and for Upside?
“We are continuing to improve the product every day. We’re all business as a company, so it’s about serving the business traveler — that’s the core pillar of who we are. Of course, we want to grow, so we want to get more customers, and we want to make the product better over and over again. I think we have an opportunity to really reimagine the process, and that’s exciting.”
Learn more about the Capital Markets Summit here.
Learn more about Upside here.