Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com (Part 6)

Sramana Mitra: What do you want to do? Is this something that you are going to accelerate by taking outside capital or do you want to remain an employee-owned organization?

Tim Hentschel: Debt is so cheap. It’s 3% to 4%. People get excited about the private equity money out there. I agree that it has got some merit, but equity investment is expensive money. Whenever you go to pitch to an equity investor, you’re always going to tell them your strategy for using the money. If you really believe it and you know you can do it, then you’re better off getting debt because you can just pay that back with the kind of growth an equity investor would be interested in. You could easily pay back that loan two times faster than you’re supposed to.

Whereas when you got an equity investor, you get an equity investor for life. Finding agreeable terms for a buyout, especially if you’re a private company, can be difficult. You’re going to be constantly pressured to do a lot of things with that money and for those investors. It’s not something that you can take lightly. It’s one of the hardest things you can do. >>>

Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com (Part 5)

Sramana Mitra: All the business model is entirely predicated upon the hotels paying your fees and not the consumers. What are the key segments where you do business? Are we talking weddings? What are the top segments in which your business flows?

Tim Hentschel: Sports teams is big for us. It’s great to have a relative that had a lot of connections in pro sports as an owner of an NFL team. We’ve been doing pro sports team travel for 10 years—Los Angeles Clippers, San Diego Chargers, Washington Red Skins, New York Jets, and Brooklyn State Warriors. Over here in the UK, we work with AFC Wimbledon.

Sramana Mitra: What percentage of the business is now sports team group travel? >>>

Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com (Part 4)

Sramana Mitra: Between 2005 and 2015, there’s a ten-year journey. Can you highlight for us some of the major strategic moves that really helped your business propel forward?

Tim Hentschel: The years between 2005 and 2008 were very interesting because we had two competitors. One was Group Travel Planet and the other was Groupe. Groupe had the Travelocity contract. We had the Priceline contract, and the Group Travel Planet had the Orbitz contract. Group Travel Planet and Groupe went for the more traditional venture capital while we were the bootstrapped type. At that point, we were more lean and mean. When the economy went south after the real estate bubble burst, those two companies were already on their Round D’s, the funding dried up, and both companies went out of business.

Sramana Mitra: Were you able to get Orbitz and Travelocity? >>>

Bootstrapping Using Services: eMazzanti CEO Carl Mazzanti (Part 6)

Sramana Mitra: What scale are you at now?

Carl Mazzanti: We’ve been in the middle of the pack of the Inc. 5000 fastest growing companies for the last five years. We hit $7 million in 2014 and we’re on track for revenue between $9 and $10 million this year. If we continue this for the next 15 years as we have for the last 15 years, we’ll reach $100 million in revenue.

Sramana Mitra: When you think about what you want to do with this company that you’ve created, what’s your aspiration?

Carl Mazzanti: You’re talking to someone who gets votes from our customers on a daily basis for their confidence in our ability to deliver. I would like to see our firm get to a 100 million votes on an annual basis. The next thing is I do see us expanding into more offices that are geographically close to the offices that are important for our customer base. >>>

Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com (Part 3)

Sramana Mitra: What did you do with that? What was the next milestone after you got that money?

Tim Hentschel: We just used it for growth. We eventually bought our own office space in San Diego and started hiring some people.

Sramana Mitra: Why would you buy office space?

Tim Hentschel: There was a real estate bubble going on at that time. Everybody wanted to buy office space. Looking back, it’s not that bad a deal. We owned quite a bit of space in downtown San Diego. It’s a good long-term investment. Now, it serves as a great collateral for us. We own eight different places in downtown San Diego.

Sramana Mitra: You built a real estate business, almost. >>>

Bootstrapping Using Services: eMazzanti CEO Carl Mazzanti (Part 5)

Sramana Mitra: In terms of your current business, what percentage of that is selling your own product versus selling other people’s products?

Carl Mazzanti: 60% to 70% is our own.

Sramana Mitra: But Infrastructure-as-a-Service, right?

Carl Mazzanti: Let me answer your first question. Your first question is what percentage of it is selling your own service that’s unique to yourself. Somewhere between 60% and 70% is our own intellectual property. The remaining 40% is when someone comes up to us and says, “I don’t want your black box, but I know you’re the best. Can you do this for us?” >>>

Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com (Part 2)

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. >>>

Looking Forward to the Real Silicon Valley

I am one of those people who doesn’t like bubbles. Right now, we’re experiencing a bubble in Silicon Valley with funny money driving weird, unproductive behavior.

Some people want this party to go on.

I don’t.

Francisco Dao has written a poorly analyzed post on VentureBeat titled What will happen to Silicon Valley when demographics strangle the global economy:

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