Hugo Burge believes that within his £90 million tech business beats the heart of a start-up, putting customers first and rolling with the punches. But it wasn’t always UX and brainstorms at Momondo Group HQ. Burge tells GrowthBusiness why and how he pivoted Momondo Group at a time when sales were at an all-time high.
Can you talk us through the early days of the business?
It’s been a hell of a journey. We’ve been building the business over the last 16 years. I think things have really come together over the last year, and it’s extraordinary. It always feels like we’re just at the beginning, and we’ve been through a period of reinvention of the business ourselves over the last few years.
The business has completely changed, and we’ve come out the other side. We feel like we found our mojo. We’ve now got products that I’m very proud of, a team that I’m very proud of, and great friends that I’m very proud of. We had a few lessons from between 2000 and 2007, when we grew really well, and then we lost our way a little bit. I guess we went too commercial and didn’t concentrate on the user. But we’ve bounced back with a user-focused business.
I recognised that the Internet was going to change everyone. I could see it happening. I looked at over 30 companies to see what opportunities were around. I was almost starting my own, but then I came across Cheapflights, and it was like “wow”. I could see the power of the model. Cheapflights wasn’t trying to sell anything online. It was trying to be an aggregator, trying to create an overview. I love that. I think the medium model really appealed to me, having the honest broker trying to give an overview, trying to make a better product for consumers. It was the only Internet company I saw that was growing and was making money.
I almost didn’t need to think about it. Every box I thought of it, it ticked. It was growing quickly. It was – shock, horror – making some revenue. It was in the top 10 UK travel websites. It was growing extremely fast. Something that excited me back then was the idea of rolling it out internationally, so I was very excited about that. I was then very young and hungry and wanted to make my mark, wanted to find something to get my teeth into. It was a very easy decision, and I felt it would be an exciting adventure. I think I was proven right on that. I didn’t realize I’d still be here 16 years later. If you would have told my younger self then, I would laughed. I would not have believed you.
But it’s been an incredible adventure, an incredible privilege.
What changed post-2007?
There were good things and there were some bad things. We were in the Tech Track 100 of the fastest growing companies in the UK for seven years in a row. It was magic. We had a formula that was incredibly successful. It was very commercial. It allowed us to grow from £20,000 in the bank to a business with over six countries around the world.
Also, I would credit Google. We had amazing free search engine positioning with Google, and we managed to get free traffic. We had a lot of growth on the back of that. We had a very successful formula that we, for want of a better word, ‘cranked out’. We rode the wave, and it was extremely exciting. It was a sweet spot.
But I think if we look back and think about the mistake we made, we got too addicted to the commercial success, and we were unable to keep a laser-like focus, to make very difficult, painful decisions on delighting the user. We had a business that was so successful we perhaps over-delivered on that.
We’ve managed to re-invent the business over the last three years, put consumers first. It’s been quite a painful, delicate dance. We’ve had to decrease our revenues a lot to move from a supplier-friendly model to a consumer-friendly model to cannibalise our own revenues.
The hypothesis was we’ve moved from a product that was perhaps not as consumer-friendly to a product consumers love, and then increased direct and repeat users. We’ve seen revenue decline and then bounce back and grow. Our hypothesis has worked out very well.
Where is Momondo Group at right now as a business?
We’ve got amazing repeat users, direct traffic, and I put it down to really focusing on the purpose of the business, and on what it was we wanted to achieve. When we looked at the landscape, we thought why is travel so boring? Why do they all look so geeky? Why are they all trying to look like Google? Why are they all soulless and incapable of expressing passion for travel in a good way? Also, why are they cluttered with adverts? Why are they corrupted, and why do they not seem to manage to convey the passion for what they’re doing?
We thought it was really important to bottle up what was our passion, and what drove us, and what made us leap out of the bed in the morning. What is the energy that drives the business? We really strongly believe that opening our world is what makes us passionate. It’s articulated a few different ways.
Is it hard to stand out in the marketplace?
We started with things like survey on whether travel makes people more open-minded. There’s a hypothesis that people who travel actually break down their prejudices about themselves, about other people, are more open-minded about the world, and these experiences change them forever. That’s a good thing!
People travel for a reason. Often, it’s not just getting away and having a break. They want an experience. They want to be challenged.
We started to work out different ways in which we could express this, from our work with charities for doing school swaps, to our DNA journey video. I’m blown away that 200 million people have watched our video and it’s gone viral.
People are frightened and worried about populism, about exceptionalism and prejudice growing in this rather heavy political climate. Momondo’s message of challenging who you are by taking a DNA test and actually questioning the differences between ourselves is really resonating. We think we have reached 400 million people.
What is your secret sauce?
We know we don’t have to be just another search engine. We can articulate that passion by having a cleaner, more beautiful product. We can articulate it by having, I suppose, a political point of view on breaking down prejudice, breaking down political boundaries, articulating, expressing what it is about travel that makes the world a better place.
‘Opening our world’ means different things to different people in the business. It’s about creating a more inspiring and a better product. I think if you compare our products to others, we’ve won awards that people say hands-down, it’s the best way to meta-search. It’s less corrupted by advertising. It’s beautiful. It’s clean. I think that sends a purpose, is perhaps the secret sauce that I found in my years of working in this business.
How has 2016 been for you?
This year, things have really come together. We’re on track to grow 40 per cent in revenues. Even in Q1, we grew at 22 per cent year over year. Our growth rates have been accelerating and we are really benefiting from Brexit. The weak Sterling, actually, is fantastic for us.
But even stripping out currency, our year over year growth rates have been improving every quarter this year. This year, we’ll hit around £90 million in net revenues. We’re a media business, so we obviously generate trillions of pounds’ worth of downstream revenues for our partners, but we don’t want to get carried away by that. The hard cash coming to our business is around £90 million.
When I look back, this year in particular started to really exceed to my expectations and what I thought could be possible.
To summarise, here we are. We’ve built over a million visits every day to our website. It’s in over 30 countries and 19 languages with a team of 350 people, spread across London, Copenhagen, Boston, Sydney – we’re a truly global business.
What are your thoughts on securing external funding to fuel growth?
We were very lucky to have a private equity firm buy a majority stake in us at the end of 2014. They’re a growth equity business. They’ve been amazing to work with, incredibly supportive, and being bolder, and thinking bigger. We’ve been executing on the plan that we agreed with them.
In 2007, with the re-invention, we took a huge risk. Also, we acquired Momondo in Denmark using debt, which was very scary. We’ve learned a huge amount along the way. We’ve got a lot of things right, and we’ve made some mistakes. That’s inevitable, but I think overall, we’ve managed to build a very capital-efficient business.
We’re in a very substantial, leading European business, which has scaled without raising money. There’s horses for course. For some businesses, I think it’s great to raise money. But I think when you look at the travel industry, some of the very best and largest global players grew out of their own cash flow. They didn’t raise money.
There’s this mythology, and this probably isn’t the message you want to hear, but I think it’s good. Sometimes private equity money is perfect, and it’s the right thing to do for disruptive businesses. Some disruptive businesses can grow out of cash flow, and can grow profitably. Those businesses can be global winners.
You look at businesses like Booking.com, Trivago, TripAdvisor and Skyscanner. They all raised minimal amounts of money. That’s an important message, I think, for entrepreneurs to recognise. I think modest backing is good, but raising money in itself shouldn’t be a goal. It’s important to remind ourselves that the goal should be to build a sustainable business, to delight users, to disrupt, and grow adequate cash flow across the business.