William Herp, the Founder and CEO of Linear Air Taxi, grew his company’s revenue from $302,000 in 2014 to $4.5 million in 2017, a 1,388% increase, and to around $4.5 million in 2018.
Linear Air Taxi is an air taxi marketplace that connects hundreds of air taxi operators throughout North America directly to regional travelers.
In this interview with Eversprint‘s Malcolm Lui, William shares how he and his team accelerated their high value sales by:
- Expanding their platform to cover regional airports across all states and all air taxi aircraft types.
- Expanding their SEO footprint with thousands of static web pages that map two regional airports together.
- Integrating their marketplace into the major reservations systems SABRE and Amadeus, with more integrations to come.
Malcolm Lui: Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with William Herp, the Founder and CEO of Linear Air Taxi, an air taxi marketplace that connects hundreds of air taxi operators throughout North America directly to regional travelers. Welcome to the call William.
William Herp: Thanks Malcolm. Glad to be here.
Malcolm Lui: William, you grew your company's revenue from $302,000 in 2014 to $4.5 million in 2017, a 1,388% increase, and in 2018 you hit around $4.5 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?
William Herp: Sure. So linear air taxi is an online marketplace platform that connects operators of technically advanced small aircraft three to eight passengers all of whom are commercially certified by the FAA. With people looking for an alternative to expensive jet charter or lacking regional airline service for trips of 300 to 500 miles where their alternative would be driving and what we found is that we're sort of at an interesting intersection of a number of different competitive spaces there's the air charter market which is typically jet charters which are very expensive and 15 to 20 thousand dollars on average. And then there's airline service which because of the hub and spoke system with which we've all become familiar has led to a decrease in direct service to regional destinations. And then of course there's always driving. So we found that that we've been able to get a lot of traction and find folks who are looking for this really kind of this fourth alternative to private jets airlines and driving
Malcolm Lui: Can you share how you differ from the. The what from the alternatives you just mentioned and perhaps to two other air taxi like operators
William Herp: Sure. So air taxi is a term that the FAA really originated to describe commercial operators of small aircraft but you know that includes a range that includes everything from a three passenger aircraft to really up to 60 seats. So it's a wide range. And most people when they think of private charter or private airplanes they think of private jets and they think of rock stars and CEOs you know flying around in these and frankly that's not too far off from the truth. That is a very expensive way to travel and it's a fairly rarified group of customers that can afford to spend 15 or 20 thousand dollars to fly one of these trips at the at the least expensive end of the private charter market. Are the operators of these technically advanced small three to eight passenger aircraft. And what we found is that there are several thousand of these aircraft that are certified by the FAA to be flown commercially in the United States. In fact all of these small operators of the smaller planes have to comply with the same rules and regulations as the operators of the larger jets in terms of aircraft maintenance pilot training and so on and so forth. But these operators of these smaller airplanes because their average trip transaction is a couple thousand dollars have not gotten the same love from the charter brokerage community as the charter jet providers have. So they don't have access to the market to the jet charter market because they're just you know not expensive enough for the people who are selling those trips to really get excited about.
William Herp: And then on the other side of the marketplace there are people who are searching for an alternative to regional airline travel. And basically the airlines have have provided you know have been been decreasing the amount of regional service. So as an alternative to the airlines for direct trips say from Austin to Norman Oklahoma or from West Palm Beach to Tallahassee Florida or from the Los Angeles area to say you know Northern Arizona you know there are these trips that constitute about 15 percent of the total market for US domestic air travel that are poorly served by the airlines. So really the people that are are coming to linear air taxi are facing a four to five six hour drive each direction and they go online and they're looking for an air travel alternative. And we've connected the marketplace with Internet travel search sites. We've been on hit mountain kayak for a number of years and just recently in the last couple of months we've completed a technical integration with Sabre which is the system created by American Airlines back 50 years ago to connect travel agents with the airlines and now travel agents both offline and online travel agents are able to see linear air taxi as an alternative as well. So really we're competing against private jet charters on the basis of affordability. We're competing with the airlines on the basis of of serving routes if you will that the airlines don't serve and we're competing with automobile driving on the basis of time savings.
Malcolm Lui: Now they're other air taxi marketplaces out
William Herp: There are a number of air taxi marketplaces that focus on high end jet charter. So there are companies that have staked a claim trying to create technology solutions for jet charter companies to sell directly to their consumers but because of the high ticket price if you will 15 to 20 thousand dollars for a transaction most consumers who are able to spend that kind of money you know seem to prefer personal service provided by charter brokers. There are companies lots of companies out there that provide charter brokers service that a customer can call and that broker will then go out and look at all the different jet charter providers and come up with a solution for them. There are a couple of companies that are more direct competitors of us competing for the lower you know the lower priced charter alternatives the air taxi alternatives. However so far it seems that all those competitors are focusing on really organizing the supply side and really don't have much in the way of demand generation capability where we've really spent a lot of capital and a lot of time investing in the technical connections to the travel search channels that represent 60 to 70 percent of how all air travel gets booked in the US.
Malcolm Lui: Now if I were to fly from Austin to Norman on an air taxi I found through your marketplace what's the price differential between flying and air taxi that found through your marketplace versus a commercial airline. If any that have a
William Herp: Yeah.
Malcolm Lui: Route between the two
William Herp: Well I could go to our Web site and give you an exact price if you like and email it to you so that you can buy it. But off the top of my head let me just give you some sort of estimated numbers. So a flight from Austin to Norman would probably be you know an hour to an hour and a half in an air taxi. It would probably be what six or seven or eight hours driving you probably would have a better sense of that than me. And so you can see you know you'd be able to if you wanted to for example go up and meet someone at the University with a couple of your colleagues did get up there in the morning have your meetings turn around and come back and do that all in one day. There would be a challenge to do that if you were driving just because of the amount of driving that you would have to do.
Malcolm Lui: Right
William Herp: And I'll venture to say there are no airlines that fly directly from Austin Texas to Norman Oklahoma. You might be able to find one that connects. Chances are that you might not be able to find connections that would allow you enough time to have your meeting meaning that you might have an overnight stay leading to more time and efficiency and more expense and cost. So for you know roughly three hours trip an hour and a half up an hour and a half back in an air taxi that would seat say three people that would be about twenty five hundred dollars something like that. So
Malcolm Lui: Ok.
William Herp: We look at a hundred dollars plus per person which puts it into the realm of feasibility for many travelers
Malcolm Lui: Right now we are comparing say between San Jose and Los Angeles with air taxis. Be a good option in that situation where there are lots of flights between the two and
William Herp: Overall
Malcolm Lui: Sometimes they can be very inexpensive as well as very expensive depending on how when you book
William Herp: Yeah less so. That's that's definitely further away from the sweet spot for the value proposition of air taxi because there are good airline alternatives. What we found is that sometimes on the margins of the airlines schedules there still is an opportunity for air taxis to provide value if someone wants to say depart you know early in the morning or return late at night after the airline schedules have stopped providing service there still can be an opportunity. So there is still a fair amount of demand between you know L.A. and San Francisco if you will between the Bay Area and Southern California
Malcolm Lui: Right. Okay. And can you give me an idea of the kind of planes that we're on. I know you said advance planes. What is that. Are we talking about jets. Obviously my turboprop. So are we talking about something altogether different. A little Cessna that has leather seats. So
William Herp: Ranges from a little Cessna with with leather seats up to turbo props and light jets. But the sort of you know probably the poster child for the air taxi industry is an airplane called the serious the serious says 22 which is a very modern design it's made from you know basically composite plastic materials so it's very fast and and the lines are very flowing has going doors has leather seats has a full glass cockpit meaning that it has computer screens instead of the old round dials that you know that the old aircraft would use. And those computer screens and the computers behind them essentially provide a tremendous level of capability ground proximity you essentially get Microsoft flight simulator in the cockpit you see the numbers on the runway as you're rolling out onto the runway and so on and so forth. Advanced weather avoidance capability you have the Weather Channel in the cockpit advanced traffic avoidance capability you can see and avoid all the other aircraft flying around you there on the screen advanced autopilot functionality that can maneuver the airplane and in three dimensions and fly it approach down to within a couple of hundred feet of a runway providing envelope protection so the airplane won't be stalled and it will be you know can't can't be flown outside the envelope in the case of the serious It even has what's called a whole frame ballistically deployed parachute system.
William Herp: So there's in the event of a catastrophic failure that the parachute can be deployed it's a 30 foot diameter parachute that lowers the whole airplane to the ground and serious is the is the number one producer of small airplanes in the world today. They've been at it for twenty five years. They just recently introduced a small jet a small engine jet. And you know they really are the market leader. And as a result of serious bringing all of this advanced technology to the light plane market all of the other manufacturers have followed suit. So every small plane produced today be it a Cessna Piper or a beach a serious Moonie what have you. They're all produced with these advanced glass cockpits. So they all have this advanced technology that makes the airplanes very safe and very credible in terms of their ability to get from here to there and be able to do that safely in most weather conditions. The power plants are typically piston engines so they're piston propellers. There are a few that are that are turbo props meaning that's a turbine engine or a jet engine that spins a propeller. And as I mentioned serious now has this new small jet which actually has a single turbo fan engine mounted on top of the fuselage that provides the thrust for the airplane. So
Malcolm Lui: Ok so so while you're talking I cheat in Cirrus s our 20 to my web browser and I
William Herp: Woman
Malcolm Lui: Pulled it up so I see what it looks like. Looks like
William Herp: Woman.
Malcolm Lui: A small plane. It looks like it's kind of a tight fit. It's not like you can stand up and go to go to the bathroom or anything right. I went through in the plane you're there and until the light takes off and lands right
William Herp: That's right. I mean the experiences is in many ways like riding in a black car right. You know you're you're in a luxury automobile type environment and you've got a headset which is noise canceling. So you know any of the wind noise or engine noise is cancelled out. You can communicate with the pilot. You know you can listen in on air traffic control but yet you know the the average trip length is probably between an hour and an hour and a half. So that's you know mostly mostly what it is. So yeah once you're in you're in. You go fly and you land and and you depart from the private terminals and arrive at the private terminals so they use the same facilities as private jets and the pilot you know personally greets you and carries your luggage and you know it's a it's a very very genteel experience. Let's say.
Malcolm Lui: Right. Okay. Got it. I'm now going back to your sales growth where you grew from three hundred two thousand in 2014 all the way to 4.5 million in 2017 and 2018. Hey share what were the three biggest drivers of your sales growth over that period.
William Herp: Sure. Well when we first started we the marketplace we had been for several years prior. An operator of air taxi aircrafts so we understood from an operational perspective what the issues were. And further we had made investments in our technology platform to provide you know essentially leverage around the ticketing and customer service and sales functions. So we took those that experience and those assets and turned them into the marketplace platform. So the first year or two was about adapting the technology from an in-house computerized reservation system into a marketplace platform. And we started with a small number of third party operators integrating the man until we could get a handle on the process. The process of acquiring a customer booking a trip with an operator taking payment making payment providing customer service for changes cancellations all those sorts of things.
Malcolm Lui: Was this back
William Herp: And
Malcolm Lui: In 2014 or before then.
William Herp: That was 2013
Malcolm Lui: Jennifer
William Herp: Really and
Malcolm Lui: Okay
William Herp: Into 2014. And then in 2014 we decided to spend expand geographically and began with with a with a single aircraft type. We started with a single aircraft type the seriousness our 22 and we just expanded to all of them in the United States. And then in 2015 we decided to essentially expand to all of the air taxi aircraft in the country. And so we expanded into all of the we buy. We basically took all of the aircraft. That are these three to eight passenger propeller driven aircraft from the database that's published by the FAA and loaded them into our marketplace platform.
Malcolm Lui: Okay
William Herp: And then and then and then in 2016 we began expanding our marketing footprint had a big project in 2016 to take all of the possible routes we could serve create static web pages around of about three hundred fifty thousand and make them available for search engine optimization. And then 2017 2018 we're all about building the technical integrations to connect with the systems used by the airlines to sell to travel agents. And it was a two year project because it's it's not an insubstantial project to try to take an air taxi purchase which is a whole plane purchased at a schedule determined by the customer ultimately and sell it through a channel that is designed to sell seats on scheduled airline flights. So suffice to say it's it's a difficult challenge which we have finally managed to surmount. So the expectation is that in 2019 our growth will start to take a more vertical trajectory again. And you know somewhere it's still early days in terms of the impact of Sabre but from what we're seeing we're expecting 50 to 100 percent growth this year
Malcolm Lui: Nice. Now just to recap from the drivers you shared with me over the past few years when you dig out the platform. So that's one driver. You made it happen to
William Herp: Yeah.
Malcolm Lui: You expanded the supply of air taxis available on your marketplace both by expanding geographically for the SA 22 and then opening up to all different types of air taxis. Another driver is that you start ramping up your marketing right. You created 350000 static web pages which I assume is essentially every point to point destination is now that you did so for Austin you would have a static web page for every airport that your air taxis could fly to. Is that how it would work.
William Herp: That's exactly right.
Malcolm Lui: And then. And then in 2017 you spent a lot of time and resources integrating a platform into Sabre. And there's another one that's great. Vega to Sabre and then there's one other one that's huge if you get the name
William Herp: Amadeus.
Malcolm Lui: Of it Amadeus. Right.
William Herp: Amadeus is the global leader and yet we've integrated with those two
Malcolm Lui: Awesome. Fantastic. And so that would be a next next big driver. I just. You've essentially increased the demand for your product because now more people can find it more easily
William Herp: That's right. And depending upon how things go in 2019 we may tackle integrating with the the last couple major reservation systems that are used by the airlines there's under the umbrella of travel port. There are three systems that that we could integrate with that would essentially get us the rest of the travel agent systems covered. And one thing that's important to note. You know you did a great job of recapping what we've done over the course of the last six years. And one way that you could think about it as sort of a spiral staircase right where you sort of revisit the same issues as you continue to go up. So you know we started off with building the staircase at the base of it by getting the platform constructed and then we started by loading in some supply and then selling that supply creating demand for it. And then as we went around the staircase increasing the supply focusing on increasing the demand for that and so on as we've gone up and I think one thing that may be of interest to your listeners is just a reminder about how the availability of capital affects the pace at which you can essentially move up that staircase. We've had a relatively modest amount of investment you know a few million dollars over the course of six years which has you know required us to proceed at a measured pace and be able to really demonstrate the return on investment of the of the actions that we're taking both in terms of building out the supply and in terms of generating the demand and the expectation now is that in 2019 it's going to be about you know essentially levering the investments that we've made in the travel agent channel
Malcolm Lui: Right. So going forward are you able to find your expansion from internally generated cash flow or do you have bigger plans that might require additional investment from
William Herp: Well
Malcolm Lui: Investors
William Herp: It's it's interesting I'm sure you've heard the old saw that right bank won't lend you money unless you don't need it. So
Malcolm Lui: Right.
William Herp: What could be applied to investors more generally right. You know we've had conversations with a variety of different kinds of institutional investors over the years. We've experienced what a lot of small companies have experienced when they've gone out to the traditional venture capital community which is you know this is interesting. You know I'd like to see you get to know a thousand trips. OK. We've got two thousand trips. Oh that's interesting and now I'd like to see you do this. You know so the old phrase Bring me the broom and the Wicked Witch of the West right.
Malcolm Lui: Yep
William Herp: And that all of that said based upon the funding that we've that we've deployed which has come mostly from private individuals and existing investors in our business. You know we've gotten to the point now where the plan we have for 2019 is self funding. And of course that means that now we're generating interest among prospective investors I had a call over the weekend with a gentleman whose wants to write a check. He likes to write checks of a million dollars just a wealthy individual very interested in the aviation space whether or not anything comes out of that. Who the heck knows. We certainly would be able to accelerate our efforts with know additional capital. We're at the stage now however that you know the prospective of self-funded growth is real. And you know the the offset to that is you know do we really want to give up a significant portion of the equity that we've created and dilute in order to bring in more capital. So you know we're we're working our way through that. And so I'm sure there'll be opportunities to spend some time talking about what we do with prospective institutional investors and there may be a deal to get made
Malcolm Lui: Right. Exactly. Yeah. And from your perspective of these institutional investors wanting to see you hit some milestones right. If you're a watch Shark Tank you see those guys doing the same exact thing right. They want to know that they're more keen on business ideas that are proven where they have a certain level of business that that happened as opposed to just a nice idea
William Herp: And that makes perfect sense right. You know as a putting on my investor hat you know it makes perfect sense to me. You know it just makes it challenging you know as a as a startup Enterprise you know to kind of get the capital that you need unless you know you really have some venture capitalists who's really taken a shine to a particular market segment.
Malcolm Lui: Yeah.
William Herp: It'll be interesting to see frankly this year with the perspective IPO is of a number of big marketplace companies whose names I don't even probably need to say for everyone to know. But you know whether or not that liquidity will find its way back into more marketplace investing or you know we'll we'll move on to something else that no one's even considered yet
Malcolm Lui: Yeah. Well for me I think you need to let me know which bitch marketplaces are you talking about that have been
William Herp: Oh
Malcolm Lui: Listening.
William Herp: Well Uber Lyft. Right.
Malcolm Lui: Okay. Right.
William Herp: Those sorts of companies that are talking about a big IPO is this year
Malcolm Lui: Right.
William Herp: Which you know ostensibly would generate liquidity options for their existing investors and be listening to see what happens with what with that liquidity you
Malcolm Lui: Yep.
William Herp: Know.
Malcolm Lui: Now do you see yourself in any way as being an Uber like Lyft like business
William Herp: Well there are certainly some parallels. We're an online marketplace. They're an online marketplace. Our suppliers are a fragmented group of small business people with a couple of thousand aircraft and a few hundred operators. That's the average number of aircraft operated by any of these small businesses as is too you know. So they're quintessential small businesses. You know the fact that the existing private air travel ecosystem doesn't really pay much attention to these to these operators. So from that perspective there is a parallel then. You know that's where it's sort of ends and that we're using on the demand side existing distribution channels to try to turn to attract demand as opposed to going out and spending hundreds of millions of dollars developing a a customer base through the deployment of a of a proprietary app let's say which
Malcolm Lui: Yeah
William Herp: Is how Uber and Lyft have approached it. So there are some parallels.
Malcolm Lui: The biggest
William Herp: And
Malcolm Lui: Difference
William Herp: Certainly
Malcolm Lui: Though
William Herp: Sorry
Malcolm Lui: The biggest difference though might be that the like Uber and Lyft there's almost always cars available wherever you may be but for your particular case there may not be airplane available where I am right now that's willing and able to take me to where I want to go when not be safe to say
William Herp: Yeah I mean I think that gets to the sort of demand profile of a prospective customer right. You know you know very few people need an air taxi to take them you know pull up in front of their office you know in 10 minutes to take them someplace most most of the these regional trips are planned out a week or more in advance. So that's another difference. That said you know we have like a ninety seven percent you know fulfillment rate with getting getting you know getting trips that are requested fulfilled. So we do have a very high match rate between know requested trips and the ability to provide for those. And if we even have an you know in many markets multiple suppliers with multiple options. So you know it's the the the supply side is actually fairly rich. As it stands right now based around most of the major metropolitan areas in the United States
Malcolm Lui: Now your air taxi operators now are these people that own the planes as a business or are they people who own planes and they're hobbyists or or part time pilots and they just like to have more flights
William Herp: Yeah and I guess this is another difference from the current Uber and Lyft model that really you know what we have are people that have small businesses similar to the original Uber model which was originally it was commercially licensed black car service providers if you remember that far back and then Lyft got into a guy with car and it kind of made Uber no match for the competitive perspective guy with car. But Guy with airplane is not is not a great idea. You want to have you want to have commercially qualified and commercially regulated aircraft and pilots which is what all these companies are. So even though it might be an individual with one or two airplanes and a very small business again they have gone through the process to be certified by the FAA to operate commercially which is usually a more than 12 month process to get that certification. The airplanes go under significant scrutiny from a maintenance perspective before they're allowed to be flown commercially and then they have to have regular maintenance at a much higher level more frequently and with more replacement parts than an airplane that's flown privately and the pilots themselves have to go through rigorous training to achieve the level of a commercial pilot and then have to go through specific training for the operation and the aircraft that's being flown by that company and then every six months the pilots have to do recurrent training and recurrent checking so every six months the pilot of one of these air taxi operators has to go for a ride with an FAA inspector and if they don't perform up to standard they're no longer able to fly and until they get retrained and can pass the ride. So it's a very high standard that carries a lot of risk. You know the guy could be out of a job so the the the traveling public can can count on the qualification of both the pilots and the airplanes because of a very high standard that the FAA holds them to
Malcolm Lui: Are these standards any different from the ones that the commercial airline industry has to adhere to as well from a pilot training and maintenance perspective.
William Herp: Well so there are sort of different levels within the commercial business depending upon the complexity of the aircraft that's flown and how big it is. So commercial airlines are sort of at the top of that because they're flying the biggest airplanes that require two pilots to operate them with the largest number of passengers. That said they essentially are subject to the same level of maintenance and training as the guys flying these small these small planes.
Malcolm Lui: Right
William Herp: You know they have to you know the airline guys have to go for an instrument proficiency check every every six months the air taxi pilots have to go for an instrument proficiency check every six months the airplanes have to be maintained to the manufacturer's recommended program which you know a private a private owner could choose not to do that and in many cases they do know privately owned airplane has to have an annual inspection where a plane operated commercially has to have you know sort of every three or four months typically is going in for an inspection. So you know and if there's any issue it can't be deferred. It has to be repaired right away were privately owned airplanes don't. So even though they're sort of different levels of oversight and the amount of organizational capability that an operator has to have at the at the baseline the pilots and the aircraft are essentially maintained to the same standards.
Malcolm Lui: Right. Okay got it. Now from a marketing perspective before we did got on the phone here I did do the research to take a look at what kind of marketing you're doing at least online. I see that you have a pretty heavy SEO presence. From my tool six point three thousand organic keywords I see I see that's how the destination pairings that you have in the United States right between the two cities. And but am I seeing any paper slick advertising. What's your thinking beyond that
William Herp: Yeah. Well you know we've we've done some testing with Google AdWords in the past and we've had some success with it. You know somewhere in the neighborhood of four depending upon keywords set four hundred and six dollars four hundred six hundred dollars to acquire a customer. And so we've had some testing. And certainly if we had you know additional capital to spend to accelerate growth we might consider spending it on you know SVM. But you know given the relatively constrained amount of capital and the requirements that we discussed earlier about having to continue to build out the technical connections we found that you know the better bang for our buck currently is in focusing on building out the connections to Sabre and on the dais and the others and doing the search engine optimization piece to try to improve our organic
Malcolm Lui: Have you been able to do the analysis to figure out what your cost per customer acquisition from your organic search efforts work out to
William Herp: Well you know the effort to to create all those static pages is sort of a a significant one time effort. And then there's been a modest amount of maintenance. So it's not the same as SVM where you're sort of paying per click or paying for view or whatever.
Malcolm Lui: Right
William Herp: You know. It's a more it's a more sort of longer term. Look it's not just based upon how much do we spend this week and what did we get this week. But you know I can say that the you know these days you know the continued investment is minimal. And you know we're getting no signal significant numbers of people who are tracking through our Web site who originate from an organic link you know every week. So it's you know on from that perspective you could say the return is infinite. But because you know the the variable cost is is essentially zero. And it continues to you know continues to pay big dividends.
Malcolm Lui: Right. For example if you had a thousand visitors who come across your site from your SEO efforts. How many of those become a customer.
William Herp: It's probably in the order of about 10 or 15. You know we're sort of down at the one to one and a half percent conversion range which is you know pretty standard within the aviation industry. And I'll tell you by contrast the number of people who request quotes through the Sabre system and the Amadeus system and then convert into bookings is about 10 percent. So it's like a you know it's a 10x 10x increase or 10x difference between those two channels
Malcolm Lui: Right. The costs are astronomically different between the two as well right. For.
William Herp: Absolutely.
Malcolm Lui: For Sabre if they go through there is a marginal cost that you're paying right whatever that per I imagine you're probably paying a certain dollar amount per per transaction occurs through Sabre
William Herp: Yes although it's a relatively modest amount because the pricing and Sabre is based upon you know tickets which you know the Sabre pricing model is designed around airline tickets. And so it's a it's a relatively modest sum as a percentage of our average transaction value which is you know as mentioned between two and three thousand dollars. And of course there's some other fees that we're paying to maintain the system.
Malcolm Lui: Mm hmm.
William Herp: So which are periodic and some of which are monthly but the variable costs on a transaction basis are are fairly modest
Malcolm Lui: Right. So even with the connections you have to savor and Amadeus you still need to generate demand right now. You want people to to ask their travel agent about a flight from Austin Norman because they know it existed because they've done some search and some research or they saw your marketing and talked about it right. Otherwise
William Herp: Absolutely
Malcolm Lui: They might just have an agent booked in between the major cities and then the expectation that they're going to hop in a car drive an hour or two to get to their final destination
William Herp: We know one thing that we found that we had anticipated and it's now bearing out is that saber powers a lot of corporate travel systems like SJP concur for example and others and so corporate travelers are seeing us now inside their their systems inside their travel management systems because we're being power because they are being powered by Sabre and we're showing up in that way. So it's great that we have you know end users travelers essentially finding us through these travel agent distribution systems just the same way that people going to hit Monk or kayak would find us. So that's great. But you're right. I mean you know we need to we need to be able to explain the value proposition of air taxi relative to private jets and airlines and driving. We need to be able to you know answer people's questions about you know what is a technically advanced airplane and how is this you know how are these commercially operated airplanes you know different from the privately operated airplanes small planes all those sorts of things and not only end users now but now we've got the channel to educate as well going out to travel agents. So one of the significant uses of proceeds that we're contemplating if we raise another round would be to essentially create a B2B sales organization to go out and educate the travel agent community starting with large corporate travel agencies like American Express Gold business travel and Carlson wagon Lee and also concur and you know the large corporate users you know about those things. So yeah marketing marketing never sleeps. You're right.
Malcolm Lui: Yeah we've got to squeeze it in. The next question I have for you and I think you've touched a little bit upon them already but maybe we can elaborate a bit more. What do you see as your biggest challenges in 2019. From a marketing and sales perspective
William Herp: Well you know. So back to the spiral staircase analogy right. So where I feel we are is you know a few revolutions up the staircase in terms of building the platform bringing in all the capacity making the connections to travel search and now the travel agents systems. So you know now we're sort of you know we've we've created this this travel agent system connection that really this year our biggest challenge is going to be communicating the value proposition of air taxi to those travel agents and to the end users who use those travel agents systems.
Malcolm Lui: So what what would you say would be the metrics the measure that you've been successful in communicating the value of leaning or air taxi to the travel agents in it and the end users. What metrics are you looking at to to gauge your success in that endeavor
William Herp: Sure. So one key metric that we have that appears to be significantly different in the travel agent channel than it is in our direct channels is the cancellation rate. So again this is early days. We went live with Sabre January 10th. So we're you know whatever that is 40 days beyond that at this point. But in those you know five weeks we've seen that that the booking rate as mentioned is very high as a percentage of the quoting rate. And we've also seen that the cancellation rate is very high. So we've got a few theories about why that might be you know that the travel agents are booking you know booking linear air taxi because it looks just like an airline to them. But then as they dig into it further you know they start to have objections which we're not in a position to overcome because we don't have a direct communication channel with them. You know small plane oh this is charter. You know my my CFO has has a more toward has is a ban on charter. You know those sorts of things. So I think reducing the cancellation rate will will be a will be a metric that will give us comfort that we're doing a better job of of addressing that big challenge that I described for this year which is educating the agents and the end users on the value proposition of air taxi
Malcolm Lui: So now you say your cancellation rate right now is on the low side. Or did I miss here you
William Herp: Notes. Well for the for the travel agent channel it's it's higher than it is for our direct channels. So they book at a higher rate
Malcolm Lui: Okay
William Herp: And they cancel at a higher rate and we're just starting to understand reaching out to those travel agents to say OK. Why'd you book it in the first place. What about it was attractive to you and then the you know the the the next question will be and then why did you cancel it. What happened you know between the time that you thought it was a good thing to book and the time that you said oh we have to cancel this and you know what in there represents an objection that we could overcome through marketing or through some sort of sales effort.
Malcolm Lui: Right now when someone books through saber you you can tell who the other party is is no safe but doesn't hide that from you.
William Herp: No they don't hide it. However the communication protocol for transferring data back and forth is very very clear. Gee you know remember Sabre was was created when computers were created back in the 60s. Right. So the message transfer protocol is t t y right. Teletype. Right. So we've got we've got two messaging gateways one asynchronous and one that's a little bit more synchronous but the the the messaging is is a very arcane and requires a fair amount of intelligence on our side to pass it out be able to manage it. So we have you know in a transaction that comes across through Sabre we have the name of the travel agent and their contact information. We have that of course the passenger information we have the billing information which goes through actually as a separate entity in order for us to get paid and for Sabir to get paid and the travel agents get paid and and most of the time we have contact information for the traveler as well when a booking gets completed. But because of the the nature of the of the messaging being this very old you know as one of my CTO friends called it effed up text although he wasn't he was he wasn't as discreet in terms of you know describing it you know it's a bit of a challenge to be able to pull that information out and make it useful
Malcolm Lui: Yeah and I imagine the travel agents. They know they're their whole game is volume right. So they mean that they might not be receptive toward dropping whatever they're doing in speaking with you about why they don't go ahead of the booking as well.
William Herp: Yeah. Exactly. I mean you know I understand that the travel agents main concern is is providing a good service to their customer. Right. They are the agent of the traveler. And you're right. You know we've we've created some connections with it at a high level within a couple of organizations American Express Global Business Travel Carlson wagon Lee SJP concur. And you know our hope is that by working at the management level the executive level there we'll be able to start to communicate the value proposition down through their traditional communication channels to the to the to the to the people sitting at the desk.
Malcolm Lui: Right now are you marketing to the past passengers who had booked through your platform over the past few years as well
William Herp: Oh yeah. Actually going back prior to prior to get to starting layer air taxi I was on the internet marketing business and in the mid and late 90s up until the early 2000s I started a company called E dialogue which is an online marketing company that initially was focused around email Back when email was first becoming a thing. And and so we carry forward that you know that that sense of the importance of Internet marketing direct marketing and of course you know marketing to your base and all the rest. So we have you know it's email based program of communication with our with our customers with a little bit of segmentation around those who are higher value and you know trying to provide a little bit more personal contact with those folks and the people that that arrange their travel. But yeah definitely. You know continuing to market to the people that are bought from us is an important consideration.
Malcolm Lui: If you're doing that through email primarily or are you also marketing to them through other channels direct mail perhaps. Maybe
William Herp: It's it's it's mostly through email that's the bulk of the you know of the no repeat purchase marketing program that we're doing
Malcolm Lui: Mm hmm.
William Herp: And we've got a an email program that you know that includes you know a welcome message when people first become customers and then we've got kind of you know three different themes that we rotate through on a monthly basis you know picking out one of the classes of air taxis and talking about that talking about prospective destinations and then just generally for people that have gotten on the list but may not have been a customer you know the benefits of air taxi
Malcolm Lui: Right.
William Herp: You know kind of what is sexy.
Malcolm Lui: Right.
William Herp: And then we have you know for our platinum customers those people who travel more than four trips in a 12 month period. You know we have some direct mail and some you know some premiums that we send out to them in their offices and those sorts of things.
Malcolm Lui: Right now doesn't make any sense to leverage your air taxi operators that get them involved in your marketing. Say you know here's a here's a platform that you can refer your customers to and make it easy for them to book a flight with you. Does that make sense.
William Herp: Yeah well it's certainly we thought about that. And you know if I were to show you our you know our our Our architectural roadmap for our platform which is very much driven by you know marketing objectives and business growth objectives you'd see that in there along with lots and lots of other ideas like building you know right now where we don't have apps where we've decided that given the relatively modest resources that we have we're better off building you know desktop and mobile optimized versions of our sites. And that's continue to work well for us but. And we've talked about building interfaces for the operators so that they can do a better job of telling us what their availability is and refer customers and all the rest of those sorts of things. So you know all things of course are made possible with with money and in the short term know we have our we have our bubble chart that says OK you know these are our biggest impact strategic ideas you know where those are in the upper or upper right hand corner of the chart and the ones that are you know sort of a little bit further down doesn't mean they don't have any value.
William Herp: It's just that they represent a lower priority as it stands right now. So so we do have operators though even without a specific organized program who refer customers to us. In fact we've got a number of operators. Again if you think about the average operator I described you know one or one or two people in an organization with one or two airplanes they are more than happy to offload the marketing the sales the customer service you know people calling up saying I want to change my departure time from 10 a.m. to 10 15 a.m.. Hey can I bring my dog. What about golf clubs you know my my you know whenever someone's sick and where all these different kinds of things they're more than happy to have us and deal with that know in exchange for our 15 or 20 percent of the transaction. So we have a lot of operators now who tell their customers call in your ear you'll eventually come back to me. But I can offload all of these non core activities.
Malcolm Lui: Yeah. Yeah. So should he be their marketing and sales are
William Herp: Absolutely.
Malcolm Lui: Right.
William Herp: That's right.
Malcolm Lui: Ok so if there is one big challenge you like to overcome for 2019 would it be. It sounds like it might be the education of the travel agencies especially those who are using sabre. That sounds like that might be the biggest challenge that once you can overcome that can have the biggest revenue upside as well.
William Herp: Yeah that's absolutely correct and you know we do see again in the very early days of being online with Sabre a tremendous amount of activity. So there's a lot of of interest in being able to have an air travel option for these routes these city pairs these airport pairs that aren't served by the airlines and certainly aren't served in any sort of direct flight capacity so that I think gives us you know a lot of excitement and a lot of comfort around the quality of the investment that we made making these connections. And now we need to do is just kind of improve the communication and the travel agents understanding of the value proposition and
Malcolm Lui: Yes. And what are your plans to do that this year to do the education how how are you going to reach out and I know you talked about building about B2B sales force
William Herp: Yeah
Malcolm Lui: But that takes time.
William Herp: Yeah that does take time. And that would be a use of proceeds of a round of capital. So what we're doing in the in the short term is you know it's good old fashioned test and learn. You know it's the basic hallmark of direct marketing. So you know we've we've now got data you know that around quote requests people looking for trips how those convert into bookings and we've got information about how many of those ultimately fly and how many of those canceled. So you know on our dance card for this week is to take the e-mail addresses that we've collected of those bookings that have ultimately canceled and send out an email campaign to those to those travel agents. And if there are any ultimate travelers in the mix to them and you know ask them a couple of structured questions one why did you book it in the first place. And number two why did you cancel it. And we'll get some data back from that. We may find that we don't get as much of a response as we would like and we'll have to come up with another way to try to get that information. But you know it's all about testing and learning. And we will be taking what we're learning from this direct interaction to some specific high leverage meetings with those large travel agents that I described A.S.A.P. concur we're already sort of like iterating with them back and forth on how best to display and describe what linear air taxi is. And we have we have a meeting in process of being pulled together with Amex global business travel doing some research on their side about what they're seeing for activity. So we'll you know we'll test and learn and we'll take the resources that we have. Basically myself and the other executive member of the company and spend some time spend some of our time having you know high level meetings with these entities that have the potential to give us a lot of leverage in terms of communicating
Malcolm Lui: Right. So how many an e-mail actresses do you think you're going to reach out to the council booking so far you know of the past five weeks how many council bookings have you had
William Herp: Know I don't know that number off the top of my head. I know as of our board meeting at the end of January which was you know three weeks into it. We had we had several thousand quote requests and several hundred bookings and about about a third of them had canceled at that time. And you know of those bookings which is
Malcolm Lui: Okay
William Herp: Which left us with net bookings still at you know a very high rate you know still at if you figure you know 10 percent conversion from quote to booking and you know a third of those end up canceling you're still at six and a half seven percent net bookings on those quotes still very happy. So you know there's more of that there's probably 100 or 200 there's probably a couple of hundred people that we can reach out to at this point. It's a site it's a large enough database that I expect that we'll get you know a representative sampling of response back and then we can start to craft a message that we can then use in our discussions with these larger travel agent companies to be able to communicate to their end users to their agents and their end users.
Malcolm Lui: Yeah. So if you reach out to two hundred travel agents who have done a booking and then canceled and just get a few get some feedback as to why they canceled you know of the 200 how many you think will reply
William Herp: Great question. You know when we send out we use a net promoter scale Net Promoter Score paradigm to track customer satisfaction if you're familiar with that you know on a scale of zero to 10 how likely would you be to recommend us to a friend or colleague we send that out automatically from our system to everybody who flies. So right after the trip is completed gets a day later they get an email like that. And I'm not sure if there's a selection bias or whether or not we could extrapolate from that but you know we get about 30 percent of those people respond. So I'd be I'd be happy with 10 percent of the travel agents responding. My guess is we could probably get again based upon my email experience crafting an email in terms of who it comes from not looking like spam. It will come from me as the CEO of the company asking them for their input and advice. And there will be a follow up to non responders a week or so later my guess is probably yet between 10 and 20 percent participation
Malcolm Lui: Okay yeah for me whenever I've gone survey requests people want me to respond to whatever I did do I didn't do it. I personally rarely respond
William Herp: Yeah
Malcolm Lui: Unless I had an extremely great experience or an extremely poor experience right on the fringes. Otherwise in the middle I personally I rarely ever respond to these things.
William Herp: Yeah I agree. And that's one of the reasons why we won't be making it a survey won't be click here to take our survey. It'll be and the CEO of this company you booked this trip and then you canceled it. Would you share with me the reason why you booked it and the reason why you canceled it. You know I'm just basically
Malcolm Lui: Right.
William Herp: Looking for a text email back and if someone reads that email then they could say you know I could see them responding with a few words and make it relatively easy. That's one thing that's
Malcolm Lui: Yeah
William Herp: You know the ease of response certainly has a a positive correlation with the with the number and percentage of respondents that you get when you do these sorts of things.
Malcolm Lui: Yeah definitely. So. Three last questions for you if you decide to put up a billboard somewhere and one of your markets along a fast moving yet busy freeway. What would be your message on that billboard. And keep in mind now people in Germany only have six seconds to see your billboard if they drive by it
William Herp: Yeah well we've actually tried billboards way back in the day and that the billboards that we did were targeted to specific travelers on specific routes. So you know. So from that perspective it's sort of you know you know there's a you can you know there's a better way to get to Nantucket right. You can fly from this airport that's outside of Boston as opposed to having to go all the way into Boston and then to fly to Nantucket which is an island off the coast of Massachusetts. And so you know it really needs to get down to some you know very very focused you know segment of people who are experiencing a very particular type of pain in order for that to work. And as a result we don't do much billboard advertising. We've never done
Malcolm Lui: All
William Herp: Any
Malcolm Lui: Right.
William Herp: In the past. So you know our our billboard advertising has been you know someone says Gee I wonder if there is a way to get from Hanscom Field outside Boston to Nantucket and they go on and they google it and then they come up with you know essentially our billboard which is our CEO result. Right. So so the the ad so just to sort of generally re restate that you know the the best messaging in terms of its its responsiveness as we have seen it over the years relates to specific destinations.
Malcolm Lui: All
William Herp: Right. Departure destination pairs because that's where people are feeling pain.
Malcolm Lui: Yeah I guess I just as you're talking about I did this thinking like you last summer you're driving from Austin this to not the San Antonio. Forget this other town that's on the eastern edge of Austin. It's a fairly big town El Paso Austin the El Paso. I was thinking if you had a billboard it simply said you know how do you drive to El Paso coming along. You only have
William Herp: Right.
Malcolm Lui: Four more hours to go. What
William Herp: Right.
Malcolm Lui: Do you do over the next four
William Herp: That's
Malcolm Lui: Hours.
William Herp: Right.
Malcolm Lui: So
William Herp: Yeah exactly.
Malcolm Lui: Something
William Herp: You know
Malcolm Lui: Like that I think with what caught my
William Herp: Playing
Malcolm Lui: Eye thinking
William Herp: The license
Malcolm Lui: Man I wish you'd flown there. The
William Herp: And again you know so that's been the most successful marketing for us has been that which is related to a specific trip man. Because that's where people feel specific pain. They don't feel it generally is sort of like taking her taxi instead of flying the airlines it's like what are you talking about right. You know there's not enough specificity in that in that message to an individual in order to motivate any action. It has to be as you said you know save five hours driving from Austin to El Paso and do it for a price that's affordable and fly privately when you
Malcolm Lui: Yeah
William Herp: Do it. So
Malcolm Lui: Definitely. Two last questions for you. Who are your ideal customers. The end buyers of of your flight and who are your ideal travel partners. Air taxis or travel agents who you would like to attract and what's the best way for them to contact your firm
William Herp: Short. Well as it stands right now our best customers are those people who have obviously a need for a regional trip you know 300 to 500 miles ideally in a small group. Because remember they're paying for the whole airplane so they're per passenger. Cost is lower if they have enough people to fill up the plane and then further ideally for a day trip going out for a business meeting going out for a sporting event going out for you know a graduation a wedding those sorts of things. And then because under those scenarios the the you know the sort of same day round trip price you know is more affordable than you know a multiday round trip price which is effectively doubles the cost. So those people who have same day round trip traveling in small groups on regional regional trips you know represent our best customers right now. And it's and of course you know people can find us on kayak on hip mountain. They can work with their travel agent and they come directly to us at www.youtube.com and search and buy from us directly there. And you know the in the future we expect that to be able to do things like make the empty seats available on a flight available for others to purchase at you know a few hundred dollars at a fraction of the price of a full charter.
William Herp: And be able to provide pricing on an empty leg if someone's flying out to El Paso today. But they don't need to be picked up until next Monday. You know the airplane will fly back empty. So being able to offer those which will come with volume the more volume we have in the marketplace those opportunities will present themselves in the future. I think there will be many more opportunities for people to get involved because the price point will come down. And then on the supplier side you know our ideal supplier is is really the the independent entrepreneur in this space. Someone who owns the airplane flies the airplane. They you know they are giving terrific customer service because it's their plane and they're in their name on the line. Those are our best customers. And then of course you know those who've invested in you know more technically advanced aircraft that improve passenger comfort and improve their ability to fly and will weather conditions. You know that that helps us as well. And one of the things we're seeing is that you know more as we bring more demand. Operators are adding more supply both you know individual companies adding airplanes and other companies adding airplanes of this type in order to participate in the business
Malcolm Lui: All right. And how about on the travel agent side are those folks that you like to attract and engage
William Herp: Yeah. So you know those that we're there we're going after first would be those who would be ostensibly we think working with the types of customers I described right. People traveling on regional trips and small groups for day trips. And so that leads us to the business community. So you know again working with corporate travel managers and travel agents who specialize in business travel we believe we'll be the sort of lowest hanging fruit as we go out and start to communicate with the with the travel agent community about the value proposition of plenty of air taxi.
Malcolm Lui: Okay and ask them. Got it. Well thanks so much William for sharing with me how you've been growing your business
William Herp: Sure thing. Malcolm It's my pleasure. Thanks again for the time.
Malcolm Lui: We've been speaking with William Herp, the Founder and CEO of Linear Air Taxi, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.
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