Sramana Mitra: Before we go to the post two-year bootstrapping phase, what did you achieve? You launched a website. You started getting customers. How did you get customers? How did the customers find you?
Tim Hentschel: It wasn’t that hard in those days. The Internet was new. Blogs were just beginning to become popular. I remember Craigslist would be a place where we would go trolling for some free traffic back in the early days. They don’t have that stuff anymore. Hotels were willing to put up links to the site on their websites. The Internet back then was a lot smaller and pretty friendly too. Google was just about to put in their minimum 10-cents bid. If you can find a Google Click these days for 10 cents, I’d be shocked.
Sramana Mitra: You figured out Google PPC at that point.
Tim Hentschel: I might be wrong on this but I think we were one of the first online travel companies to do a Google PPC campaign. I know of my business partner John Prince, they called him Johnny Google because he liked the site so much.
Sramana Mitra: We’ve seen a lot of stories like this from that time where people hadn’t figured out Google PPC, but the entrepreneurs who had figured that out early on did very well in terms of traffic. Your business model is on commissions?
Tim Hentschel: Yes, referral fees, as we’d like to call them.
Sramana Mitra: What year did you say you started?
Tim Hentschel: August 2003 is when we started. The first six months involved a lot of tech work. We didn’t really have anything working until January of 2004. 2004 was the year when we did sales and brought in the money. I think we did $60,000 in our first year. It takes six to eight months to complete a group. Then it takes another 30 to 60 days for us to get paid. So, we didn’t see much cash until September or October. We didn’t have a lot of time to make a lot of sales.
We did well in year two and three. We broke even. We got a quarter of a million in 2005. We raised money in 2004. John and I had savings that we went through. We maxed out our credit cards. Even though we were getting traffic super cheap, it’s still expensive to be in B2C.
Sramana Mitra: It’s expensive to build businesses absolutely. You said you raised money in 2004?
Tim Hentschel: Yes.
Sramana Mitra: Whom did you raise money from?
Tim Hentschel: It was a friends and family round. I had a cousin who came in as an angel funder. We had connections with AAA Mid-Atlantic, which does angel funding. We had some good angel funders. Apart from money, they also brought in connections between the tour operations business, which has synergies with group travel and AAA Mid-Atlantic.
Sramana Mitra: How much money did you raise in that round?
Tim Hentschel: I can’t say unfortunately.
Sramana Mitra: Are we talking millions or a few hundred thousand?
Tim Hentschel: It’s above six figures.