MOVE FORWARD is a series outlining the approaches of successful leaders to taking a business strategy on paper and making it a commercial reality.
Many entrepreneurs start out with huge, long-term, world domination plans but for Australian hotel booking engine SiteMinder, the key to success has been a laser focus on the present.
Founder Mike Ford started the business with $180,000 in personal savings in 2006 after leaving his full-time job at health technology company ICS Global. Ford had a stake in Northern Beaches hostel operator Australian Leisure Operators at the time.
“We were digitising claims between hospitals and health funds, and I had the idea of marrying the two [digitisation and hospitality bookings],” he said.
Ford convinced ICS Global colleague Mike Rogers to join him as technical co-founder and build a proof-of-concept in exchange for shares.
As of September 2006, SiteMinder was a three-person operation, with a customer support person, Rogers on technical development and Ford on sales.
By June the next year, SiteMinder had 5 staff, about 100 customers and “revenue coming in”. That was enough to convince two of Rogers’ wealthier contacts to tip a total of $250,000 into the business as angel investors.
“The pitch was a three-page document and two-hour chat,” Ford said. “It was, what was the vision, what we had achieved so far, and what we would achieve in the next two to three years. It was about establishing a need, and proving that we had sold.”
While many start-ups re forced to adapt a dream business plan to reality, SiteMinder was in the enviable position of being able to scale faster than planned.
SiteMinder was hitting its targets and by the end of 2008, the angels agreed to tip in another $1 million to fund overseas growth.
“We had been successful in Australia and had some inquiries from people in the UK [who wanted to use the service]. We had put a customer support people onto the UK market from Australia but we thought we could ramp up the business over there,” he said.
“We didn’t plan to do that when we took on initial funding, or when we started in 2006.”
As of 2008, SiteMinder had about 14 staff in development, sales and service delivery. Ford said balancing the three requirements was key to growing sustainably.
“Our strategy was to maintain a three-phase balance in the business,” he said. “You had to balance sales and service delivery, and product had to keep up with customer demands.
“I think what we did well in the early days was we had strong metrics in place and developed ratios for the support people we’d need for customers. The founders were quite analytical in terms of our backgrounds, so that came naturally.”
By 2010, SiteMinder had grown to a company of 45, with fledgling operations in London to service the European market.
By 2012, it had about 15 people in the UK focused specifically on “three and a half” countries in Europe.
“We could have gone to 15 markets, but we didn’t want to spread our resources too thin,” Ford said. “As tempting as it is to go everywhere quickly, you have to choose your markets and keep focussed.”
SiteMinder approached a number of funds in a Series A capital raising round in 2012, and in May announced a $5 million deal with Bailador Investment Management.
The company counted as customers more than 6,000 hotels in 90 countries, and handled more than $2 billion in reservation revenue a year.
By July 2013, that grew to 10,000 hotels in 105 countries $4.2 billion in reservation revenue, which grew its own revenues by 80 per cent.
US venture capitalists became interested, leading to a $30 million deal with Silicon Valley’s Technology Crossover Ventures this month.
“Over the last 18 months, we’ve been approached by a number of US funds,” Ford said.
“[The TCV deal came] earlier than we expected; from here, we’ll complete our global footprint, and unless we need to make any major acquisitions, we’ll grow organically for the foreseeable future.”
SiteMinder now has 200 staff and 11,000 customer hotels. Customer numbers are up 70 per cent year-on-year, booking revenues up more than 100 per cent and SiteMinder revenues up about 80 per cent.
Ford said he hoped to have 400 staff within 24 months thanks to the TCV deal, to drive 100 per cent year-on-year revenue growth for the company, and 80 to 100 per cent growth in customer numbers.
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