Sheila Marcelo's Blog

TJ Mahony on FlipKey.com and raising funding for startups

Flipkey.com is a vacation rental review site with a twist—instead of promoting properties that pay for advertising, they allow past guests to give feedback to rank the homes, apartments, and condos. It's a free service that's "committed to helping all vacationers find the ideal vacation home rental." I was a seed investor, so I've been happy to see it grow into a trustworthy, popular vacation rental source since its March 2008 launch.

TJ Mahony, one of FlipKey's co-founders, was good enough to answer a few questions about his company, his past startup Compete.com, and raising funds for entrepreneurs.

Why did you decide to start FlipKey?
In 2006 I began renting [out] my condo in downtown Boston as a short-term vacation rental. I quickly discovered vacation rentals were in high demand, but I also learned that the experience was a bit unpredictable. I was able to easily rent my unit using a vacation rental listing service; however, issues of trust, information and expectations consistently arose between prospective guests and myself. The guests often asked me to prove my identity, requested referrals from past guests and typically contacted me for weeks after I had already rented the unit. The whole exchange made me think, “This [vacation rentals] is a wonderful product; however, there is no trust. More people would seek vacation rentals accommodations if they could simply trust the experience more.”

Trust is not a small problem to solve, so I boiled it down to one core element: Verified Guest Reviews

If FlipKey could design a new and efficient way to collect and publish real reviews of vacation rentals, we could allow the marketplace to create and deliver a new layer of trust.

How does FlipKey differ from other vacation rental sites?
FlipKey is the only service focused on creating an efficient and effective way to collect and publish guest reviews. There are plenty of hotel sites on the internet, but only one TripAdvisor. We felt it was time to offer a TripAdvisor-like resource for the vacation rental industry.

Tell us about your transition from Compete.com (a web analytics company) to vacation rentals. How are the two start-ups similar? How are they different?
The original vision of Compete.com was to promote online transparency.  We wanted to create a free resource to allow anyone to evaluate the safety and popularity of any website. Within a year of launching Compete.com the site was attracting over one million visitors per month.

The vision of FlipKey maintains a similar vision of transparency, but focuses on vacation homes instead of websites. We want to provide a service that allows vacationers to discover and evaluate the breadth of vacation homes in the market, leveraging verified guest reviews as the bridge to creating a new sense of trust and excitement with the product.

Why did you decide to go the angel/private investment route versus venture capital for your first round of funding?
There were two reasons. First, we thought it was critical to establish a product, early user testimonials and industry brand recognition before seeking capital. Without these support elements we risked not being funded or being forced to accept unfavorable terms. We were a young team, so we knew we needed more than a PowerPoint to receive funding.

Second, we needed to move fast and the only predictable source of cash would come from private investors. We knew private funds would only get us so far, but we also knew we could secure private funds faster than working with a VC.

Do you see a potential connection down the line between FlipKey and Care.com?
Sheila and I have toyed around with various ideas, but it’s too early to get ahead of ourselves. Ultimately, there are some clear needs among vacation rental consumers that can be serviced by Care.com:

“Let’s have an adult night out—how do we find a trusted babysitter in this town?”

“The vacation rental house doesn’t allow for pets—who's going to take care of the dog while we are gone?”

And so on.

For more information on FlipKey, visit their website or check out their blog, which TJ contributes to frequently. Back in August, TripAdvisor announced it became a majority investor in FlipKey. TripAdvisor reportedly plans to incorporate FlipKey's tens of thousands of vacation home rental properties into listings on its own network of travel websites.

Micah Chase on Customer Service

I met Micah Chase, the founder of eInvite and President and CEO of Checkerboard, through my Creative Good council (see this previous post for more info on Creative Good). Checkerboard is a designer and manufacturer of invitations and announcements. Its handmade products are featured in high-end retailers and online stores. Micah's other company, eInvite, is one of Checkerboard's customers and serves as its online portal for selling custom-made invitations and greeting cards. I've found Micah to be a great leader as well as an innovator. He comes from a techie background (his bachelor's degree is in artificial intelligence) and he owns the patent for an online ordering system that lets customers view a real-time proof of their card designs.

In the business world, he's focused on providing customers with the best possible experience and he's been very creative in his efforts to boost customer service. Micah's innovations led eInvite to achieve the highest Net Promoter Score (NPS) of all members of Creative Good—that's something to be proud of.

I invited him to Care.com this fall to talk about serving the customer and now I'm sharing his comments with you.

Building small, segmented teams
We took people from our customer service, typesetting, and billing departments and put them together into one group. That way, when people called with questions, they had them answered right away, no matter which department they applied to. Our processing time went way down and our orders shipped quicker. And we were more efficient because when customers wanted something, they spoke directly to the person who had the answer. In turn, there was less confusion and back-and-forth iteration for each project.

Changing the pattern
We saw the realignment was working. So, we blew it up.

We changed the pattern again and set up cross-functional groups. We kept the same inter-departmental model, but segmented it by our different customer groups. We serve chain stores—they tend to have a high employee turnover rate, so they're looking for a vendor that's easy to understand and quick to respond. We also supply boutiques—people there have been in the business for years, know the ins and outs, and don't need someone holding their hand. And we also sell to individual customers who are completely new to the process.

So we gave targeted help to each base. Our long-term service people took care of the boutiques and stores and we had our most effervescent people to handle the excited newlyweds looking for custom-made invitations. The teams split into groups that specialized in specific, simple help for experienced clients and others that offered comprehensive services.

That right there shot our NPR score up 15 points, which is quite a jump.

Picking the right people
Getting the right staff is really hard—I don't know if we've gotten it right, yet. During this whole reshuffling process, we changed management. That was a hard thing to do, but it was a step in the right direction. Making sure everyone's onboard is an ongoing process (one that initially caused conflict), but we're seeing the benefits. People in separate departments now understand what everyone does, team loyalty has improved and there's connection between employees that wasn't there before.

Above and beyond
We posted pictures of brides around the office to improve service—it puts a face to the customer. We have testimonials everywhere. We've also implemented a new technology in our sales system. When someone pulls up a specific store in the computer, they see a picture of that store or the employees.  It's a way to maintain focus on the customer, which is right where we want it to be.

Mistake? Fix it!
When it comes to the customer, it doesn't matter who's mistake it is (ours, theirs, another department's, whatever)—just fix it. In the long term, it ultimately costs you less to fix it right away than to drag out the process, even if you're losing money on that particular sale. We're a supplier to big retailers like Costco and BabiesRUs—the last thing we want is an angry customer going past us to them. Those companies would drop us and we'd lose a big chunk of our business.

So, our policy is to always offer options and an explanation. I also try, in any conflict, to send a personalized note. In an age where there's not much face-to-face interaction, it lets the customer see you as a person and not someone looking to make a bottom line.

For more information on Micah's companies, check out their websites: eInvite and Checkerboard.