Founder’s story: how to capture an emerging market with an online travel agency
Now Hotels.ng says it has 60,000 monthly visitors. It claims to have the most weekly bookings of any OTA in West Africa, including its rival WakaNow. It also claims more hotel bookings than all foreign brands combined in Nigeria.
A thrilling ride
Hotels.ng was bare bones at the start, with staff going door-to-door to recruit properties. Back-end support was basic at first, with all calls logged on paper and filed in a cabinet.
Today the site has more than 5,000 hotels participating, and its back-office is digitized.
Along the way, the company made some mistakes, such as not spending enough time making sure the first hotels it listed were all appealing. Its biggest challenge has been staying focused on “moving the business to where it is supposed to be”.
Yet the Hotels.ng saga is an inspiring one, especially the part about how it fended off a rival German company. Essien recently blogged about his version of events, and we’re republishing his founder’s story here:
Two years in the trenches
Hotels.ng is about two years old now.
In the first year, it was just a website — no business built around it. It started off by me purchasing lists of hotels.
The entirety of hotels that were available in any known dataset that was available in public or in any government archive was about 1500 in Nigeria. I listed them all on the site and put the site up.
Only 100 of those hotels had pictures. The pictures were scraped from the hotel websites.
In October 2012 I moved to Nigeria to try to build a business out of this hotel booking website. I landed, rented a flat in calabar and convinced a friend of mine, Charles, to join the project.
Charles and I hit the streets of Calabar and started snapping photos of the hotels in Calabar. Soon we had the largest online list of hotels in Calabar. But none were yet bookable.
We coded a booking form one day and bought a company phone. We turned on the booking form and put the phone number on the site. We received 20 bookings for hotels in various parts of Nigeria that day, and had 100 missed calls on the phone.
We could not book the hotels yet and we barely had time to address all the queries we received, so we took the number back off. We kept the booking form, but nothing would happen when people booked.
Some time later, Jason Njoku wrote me a message on Facebook that he was starting an investment company called Spark and that he wanted to invest in Hotels.ng.
I went to Lagos, we had a 30 minute meeting on a hot balcony together with Bastian, then I returned to Calabar. The next day, they made an offer. A bit of negotiation and in January 2013 Hotels.ng received funds from Spark.
In the last year, I used the investment money to build Hotels.ng into a company. We have 15 full-time staff, 5 contract staff and more than 70 ad-hoc staff. Those 70 people went everywhere in Nigeria and got hotels on our site.
We now have 5,080 hotels on the site. We have full pictures for 4000+ of all those hotels. We have addresses and driving instructions for all these hotels – we have massively accelerated the move of an African industry online.
The total value of the bookings that we have done for hotels in Nigeria on our website alone is currently $2.3 million USD. That value was generated without spending any money marketing the site.
By its very existence, it is useful and people patronize it without us needing to tell them to use it.
By the end of the year 2013 we hit $40k in monthly revenue. I will follow up this post with other posts detailing how the process has been.
How has it been building a tech startup in Nigeria?
Everyone always on the outside tries to show how their startup is doing awesome and taking over the market and all what not, but that’s not how it is on the inside.
The past two years have been like climbing a mountain – blindfolded. To do what we are doing, there is no roadmap. There is no book teaching how to create something that has never existed in this market before.
So it was all experiments and trial-and-error. I never knew what would work and what would not, so we would need to spend to test out different things to find what seems to work good. And even when you find something that works, you need growth, so you need to find what works even better.
From composing the teams, deciding how to approach hotels, getting people across 36 states in Nigeria, figuring out how to book hotel rooms with hotels without internet, and even the small stuff like getting our own internet working, it has all been a journey of uncertainty.
Getting started with $50k
Our initial raise was $75k, of which $25k went to buy a car (to close deals in Lagos). So we had $50k to deploy people across Nigeria and pay a team of 12 people. That’s N8 million.
At the time, I thought that it would be more than enough. But quickly I realised that things were far more expensive than you think they are. If you have N8mill for 6 months, you have about 1.3m per month.
Salaries will take half that money. Developer will take a big chunk. Data purchase another big chunk. The money will finish very rapidly.
So we had to do another raise with Spark, this time $150k. In the first 6 months, the sheer amount of things that needed to be set up and built meant that it would have been very hard to build the necessary relationships to raise any kind of investment from other parties.
My take-away from the initial raising money is this: If you are going to raise money for something complicated, make sure the money will last at least 1 year.
You will need 6 months to build a lot of the processes and start generating revenue and another 6 months to build the relationships you need close your next round.
The initial building process
When we first started, I had no idea how to build a team. I had never been in any kind of managerial position with more than 4 people. Initially, we had the system where everything was being controlled by me.
After some wise advice from Victor Asemota, I split up into smaller units with team leaders. This was far more efficient and resulted in better performance.
Jason and Bastian were very helpful in this phase – they had far more experience than I in managing and hiring, and looking around at what was going on and discussing things with them helped clarify a lot of what the approach should be.
Jason told me one of the other useful things I learnt, which is that a low performer in one field can become a high performer if you swap their job roles. So (forgive me for this, co-workers), a lot of the initial stages was me moving people around till I could find a good person/job-fit.
During this period, we had to figure out how to make things work. Now it seems so obvious in retrospect how to book hotels, but back then I genuinely did not know.
I did not know how to fulfill a booking efficiently, how to approach the hotels to strike a commission deal and how to invoice the hotels in a way that would ensure that they paid us.
And most importantly, how do you do this across 4000+ hotels without getting confused with the amount of info you are dealing with?
Our first 6 months was just about building the processes, building the software systems we needed to manage this, figuring out how to field deploy people, etc.
The key take-aways from this period to me is: The things you do internally, they may seem super easy when you have figured them out, but they are not easy to discover. You cannot copy a company from the outside.
Also, very importantly, a word is enough for the wise! When you have a problem, someone with far more experience can tell you just one word and it will make things suddenly fall into place. Talk to people who have more experience than you in the things you are doing!
After the first 6 months of furiously building Hotels.ng, things started running on their own. I was no longer an essential part of the process.
The surprising importance of taking a vacation
So I took a 2 week holiday in Germany. That holiday was super-useful in discovering the parts of my process that were not working well and still needed me.
I advise everyone to disconnect from the company for two weeks and observe how well it runs independent of you. If it requires you to be there, then it is not a scalable business.
So the day I came back, a tech founder friend of mine called me and said he had to tell me something important. I asked him what he was.
He paused, then said: Rocket Internet are building a hotel booking website. It’s just like yours.
Rocket Internet. The guys with five hundred million dollars. Coming up against me. I had barely $70,000. I started sweating.
I had actually pitched those guys a while back to open a hotel booking website in Nigeria. I searched my email for the pitch-deck to see if it gave away anything.
Reading that document made me realize how different assumptions about a business are from when you actually start the business. That would not help them.
How do we beat Rocket Internet? They had everything. Over the following week, I kept thinking about that. But then I noticed something – they kept studying us, trying to find out how we did it. They were trying to beat US.
That’s when I realised that somehow or the other, barely knowing it, we had become the largest hotel booking website in West Africa. So I didn’t have to beat Rocket Internet, they had to beat me.
If you think of it in battle terms, at this point we have two armies, both moving in darkness, trying to get as fast as possible to a particular location. The battle has not started. We were in the deployment phase, and we were far ahead.
So far, we had moved much faster than them. We had done smart things. Even when they started moving, we were accelerating faster than them by any metric you could count. And at a fraction of what they spent. Our total budget of our 20 man team was not up to the annual salary of their managing director alone.
So on reflection, I understood how we could beat them. In this movement phase, I will always be faster because they have so far not demonstrated any ability to outsmart us.
At some point in the future, both sides would have arrived and it’s time to start the actual battle (which involves having the site the customers prefer to use).
A lot of that is based on your ability to market wisely and to build a product that delights customers so much that they market it for you. In both of those aspects, if this were something that more money means you must automatically win, then there would be no instagram or snapchat.
I don’t know what the future will bring, but I know that the team we have at Hotels.ng is good enough to win, even against a deep pocket competitor like Rocket. They have been around for 6 months now, and barely dented our number 1 position. The way we move will make it stay that way.
When you are doing something that is changing the way an old and established market like the hotel industry in Nigeria is, with a lot of old rich men involved, you will face a lot of people who do not understand what you are trying to do.
We have faced a lot of hassles from different sectors – from the troubles our inventory guys face to the banks not understanding our business to the police trying to find out more about what we do, to our cars getting arrested.
This is Nigeria. This is Africa. This is normal. My advice: Have backup, have friends in high places, because if you truly disrupt, you will need their help to solve problems.
The reason so many foreign companies came to Africa and left again is that they could not deal with the problems. You have to know that there will be major problems, and you just solve them and keep going, without ever being distracted from the mission and vision.
It’s not easy to work with someone in close proximity for many months and then fire them. But the role of the CEO of a company is to do the best for the company. If a person genuinely cannot contribute to a company, a CEO is obliged to lay the person off.
I think it is better to just maintain a high standard when hiring and fire fast if you must fire. Because we are all humans and all kind – when you know someone well, you may be hesitant to do what’s best for the company because of pity.
The Nigerian tech scene
What we are building is not in isolation, it’s in the middle of the tech scene. This scene has been invaluable for the company and for me. I have never been a big fan of Lagos, but the fact of the matter is that this is where Nigerian tech is going to be. It will cluster in Lagos and likely in Yaba area.
Since coming to Lagos, I have met a large number of the “twitter famous” people. Each of those people have straight-up provided me with ideas or information. And those words really made a difference.
I strongly believe that technology is so complex and wide that without being in a community, it can never really take fruit and become something significant in the countries economy.
One person discovers something, tells someone else. And the second person can use that info and connect it to solve a problem with his business.
The Nigerian tech community is small, but it is helpful. It needs to grow so that we can build a real technology industry here in the biggest African country.
The success of technology in Nigeria will determine the success of technology across the rest of Africa, and in my opinion, I think any continent that is left behind in technology industry will forever fall behind in the global economy.
These small apps and websites we are creating now are important for this continent. They have the ability to change and transform it. They are what will create the future industries. So no matter what, we must never stop trying to build a local technology eco-system.
Last thoughts for now
Building Hotels.ng has been hard. But it’s worth it to look at the site/business and see it working. See people booking hotels every day and it all somehow keeps running.
All of this was done with the help of a larger technology eco-system, people who were willing to risk capital and the persistence and hard work of the team.
It’s been a good two years. Looking forward to the next two!