Interviewing Rod Cuthbert, CEO of Rome2rio, and Michael Cameron, one of the two co-founders of the multi-modal search site is like watching a ping pong match in action – Cuthbert incidentally was a table tennis coach in his hometown of Tasmania.
There’s a sense of camaderie and mutual respect between the two – Cuthbert, the elder statesmen brought in to steer the tech business out of the garage it was built in by Cameron and his partner, Bernhard Tschirren.
And it made me realise this is what most startups need – a blend of wisdom and experience and youthful arrogance and smarts. Energy and the belief “I can change the world” can only get you so far; to go the distance, you also need a good coach and stewardship.
In the beginning …
It was in 2009 when Cameron, travelling in Europe, needed to get from Budapest to Antwerp. “I spent days in my hotel room trying to figure it out, doing research on airports and train stations.”
Cameron saw a big problem and an opportunity. With his background in search – he worked with Bing, had a PHD in Computer Science and worked on genomic search algorithms – he wanted to solve the search problem of getting from A to B, from home to destination. In end 2010, he and his co-founder launched the business out of Melbourne. The name Rome2rio reflected the global ambitions they had even at the time. “Plus it didn’t have the word ‘trip’,” laughed Cameron.
Of course, it is the oldest cliché in the startup book – most founders start businesses because they had a problem and most realise either that not enough people have the same problem or that it’s too hard to solve.
But Cameron knew they had the expertise to solve this problem of multi-modal search, as hard as it was. “The hardest part was coming up with algorithms, getting search accuracy and good alternatives – not just the fastest but most interesting – so that there’d be a diversity of routes.
“Yet we didn’t want to dumb it down, we wanted to be complete, to show users all the options and we were confident that the more thorough we were, the more people would trust us. People don’t trust if you dumb it down and say, here’s one choice.”
But they were to eventually realise that the hardest part was getting traffic, the biggest challenge for all consumer sites.
Enter elder statesman
In 2012, Cuthbert came into the picture. He had just returned to Melbourne from the US where he’d been building the Viator business. (Viator was later sold to TripAdvisor in August 2014). Through an introduction, they met.
“We were still in the garage in Bernie’s apartment – Rod helped us raise money and grow,” said Cameron. “Otherwise we’d have stayed in the garage a lot longer, we loved programming.”
Said Cuthbert, “For me, having just moved to Melbourne, I was pinching myself – a true startup with clearly a very valuable product and to be able to get involved from the beginning with an engineering-led product rather than a Viator-kind marketplace.”
A mistake, and then serendipity
The first decision he made though was a mistake-ish. Because consumer traction was a challenge, Cuthbert wanted to find another runway to go out on. Leveraging his personal relationships, he worked on B2B partnerships while keeping the B2C humming quietly in the background.
After a year, they found that B2B slow to take off while B2C was running ahead. “Partners loved us, but they asked, how can we use this? We had such an enormous amount of information and to get that into an Expedia results page was hard.”
And so back to B2C they went. As it turned out, the 12 months of building B2B partnerships had an unexpected result – it gave them profile in the industry and when it won the Phocuswright innovation award in 2013, that was like the “good housekeeping seal” we needed.
Today, the site achieves 8 million monthly uniques and wait for this, it has not spent a single cent in SEM. Their secret sauce is having four data scientists onboard and through SEO, science and machine learning, they’ve been able to acquire traffic. (Rome2rio won the WITovation award from Web In Travel for best use of data last year.)
“We wanted to invest in our own team, not spend on Google. We want to be masters of our own destiny,” said Cuthbert. “There are not many people like Michael around, he’s got a computer science background and he knows his stuff. We were prepared to be driven by the market – to just get out there – see which direction we get pulled in.”
The Rome2rio team: Keeping the startup culture strong
Profitablity at last
For Cameron, the tipping point was when the site reached 3-4 million monthly uniques. “Now we are improving revenue per visitors and last year we became comfortably profitable and we have doubled our team size. Now we feel we have a sustainable business and we can be bigger than or as big as Skyscanner or Kayak.”
Cuthbert added, “We are not a startup anymore but we keep the team dynamics. We occupy a very tight physical space in a co-working area – 20 of us – and we like that. We do lots of group things, we want to keep the startup culture.”
To date, the company has raised $1.6m in two rounds, including $1.2m from the Australian government. There has been no fund raising the last 2.5 years and ‘we have no intention ever of raising funds now that we are profitable”, said Michael. Cuthbert, Cameron and Tschirren hold 70% of the equity with the rest by the executive team.
Melbourne has also turned out to be a good place for a startup. “There are not a lot of tech startups, salaries are not as high and we find that staff want challenging projects,” said Cuthbert.
The next stage – onsite booking – and acquisition or IPO?
The journey is by no means complete – in fact, you could say the hardest is yet to come. Now the focus is on on-site booking, selling rail tickets in the UK, Europe and North America. It is also working on bus aggregation and distribution.
“Search is what we are good at, now we are layering the booking functionality,” said Cameron. “It’s a big tech task.” He sees it as another 5 years of building– “there’s an awful lot of rail and buses. We have 4,000 operators now in our database – and we have to connect to them.”
Cuthbert acknowledges that search is evolving to be a hybrid between meta and an OTA. “It’s not necessarily useful to be one thing or another, that’s the way it is evolving.”
For Cameron, Rome2rio is the “best thing we have ever done”. For Cuthbert, “it’s a breath of fresh air.”
“Today in the online travel space, you need to have a crystal clear plan on how to get customers. Just having a great product is not enough, you need to keep people coming back. We are in a unique position – we get tons of traffic every month because Google loves us. It consistently refers traffic to us.”
As for an exit, Cuthbert smiled. “Well, it is an acquisitive market right now.” Asked about the possibility of an IPO, he was more hesitant but Cameron said, “We wouldn’t write that off.”
When I asked Cuthbert if his value to the team was in coaching and mentoring, he laughed and said, “No, they are good on their own, they don’t need that.”
When I asked Cameron the same question, he said, “Coaching and mentoring.”
So is this a good formula for startups – older guy-young techies? Said Cameron, “It depends on who the older guys is and who the founding team is. In our case, it works.