Having constructed up Zanadu into China’s premier way of life travel platform after a troublesome however rewarding 5 years, Zan Wu, collectively together with his co-founder, Dirk Eschenbacher, now needs to create a brand new startup, Atlas, into “the next generation TripAdvisor and Booking.com combined” utilizing blockchain and crypto.
As Wu sees it, the large alternative in travel is to convey collectively content material, transactions and consumer knowledge. “But the big players have taken most of those three buckets, the window of opportunity is gone and you can’t create a TripAdvisor or Booking.com or Ctrip by doing something similar. You have to be fundamentally different.”
To be totally different means utilizing blockchain know-how that hyperlinks purchaser and vendor immediately by disintermediating the normal center man and creating tokenised economies by which each stakeholder, together with content material creators, advantages.
Atlas, which will be launched in Singapore since there isn’t a mandate in China but for crypto companies, will join resorts and eating places, with content material, immediately with clients in a tokenized financial system.
Wu, who spent six years in Singapore in highschool from age 14, is conscious of the present skepticism surrounding blockchain and crypto tasks. “There’s a number of hype round it and six months in the past, it was something goes. However attitudes are altering. Now you could have conventional VCs like Sequoia getting into it. There are actual groups popping out to do one thing. And individuals are wanting on the fundamentals – group, execution and enterprise case.
“I feel it is a good thing the market has calmed down and now that people are taking a more realistic view of things, we can weed out the bad projects that have given it a bad name.”
To build its platform, which will be developed in Shenzen and Hangzhou, Atlas is wanting to increase US$20m by promoting 35% of its Atlas token provide. Buyers pay in Ethereum and “their outcome is the size of the token economy we will create”, stated Wu.
Wu, who was in Singapore internet hosting an business night time at Straits Clan, stated he’s already secured a number of buyers. “Who we raise the money from is more complicated and critical than just raising VC money. We want investors who can give us diversity and we will also open up to our ecosystem partners.”
Wu’s monitor document in having constructed up Zanadu into a worthwhile enterprise stands him in good stead. Since founding in 2012, Zanadu has raised up to US$30m, from buyers comparable to Tencent.
I sat down with Wu to ask him the next questions.
Q: Firstly, why would I, as a shopper, ebook with you and in a roundabout way with a lodge?
Inns are asking clients to guide instantly with them as a result of then they earn loyalty factors. However frankly, shoppers don’t care about loyalty factors.
For those who purchase from us and pay $200, you get a 5% rebate in Atlas tokens which will have extra tangible worth, it’s extra liquid than factors and our Atlas ecosystem will be greater than a single lodge or airline ecosystem.
Q: It’s actually robust now to build a shopper model – you stated your self that Expedia and Reserving Holdings, between them, spend $7b on promoting on Google. How are you going to compete?
It’s virtually unattainable to compete in visitors as you possibly can by no means outspend the enormous travel platforms and their spending has jacked up the price of acquisition for internet advertising too. Promoting is now reserved for the large gamers. Until you could have reached sure measurement and have adequate funding, it’s arduous to play this recreation.
You’ve gotten to have your personal method to generate visitors moderately than purchase visitors. Up to now, Zanadu constructed model by content material and collaborations. That is how we did it.
- Content material-marketing: Producing nice content material that travels virally as a means to build branding. We additionally leveraged on KOL and movie star assets provided that lots of them are our clients.
- Collaboration with different established manufacturers and channels. So as to do so, you want to have constructed a top quality status and additionally strong core market strengths so that folks outdoors of travel need to work with you (for instance, Uber, LinkedIn, Lane Crawford, Internet-a-Porter, Monetary Occasions, China Service provider Financial institution and and so forth)
- Clear market positioning – phase the market and be the number one model in a subsector. For instance, #1 in luxurious travel, or #1 in travel blockchain.
- Good PR can also be value efficient.
However to be really profitable, you will want a revolutionary concept that’s disruptive and international and present clear financial incentive to each shoppers and distributors, like Airbnb and Uber. And the disruptive and controversial nature garner robust media and public pursuits and present free advertising. I feel blockchain-backed know-how has the identical potential.
Q: Your consumer evaluations – how will they be totally different from TripAdvisor or the critiques which might be already being collected by the OTAs?
TripAdvisor is ripe for disruption, it’s not cool, it’s like your grandmother’s underwear now.
One way or the other they’ve not produced suggestions based mostly on personalization. The best way we would like to do it, will really feel like Instagram, it will be like moments however you will want to tag location, so it will be extra purposeful than Instagram, like TripAdvisor and Reserving.com mixed. The best way you publish content material says lots about who you’re. Taobao, based mostly in your posts, can determine who you’re and personalise suggestions.
We needed to launch this function in Zanadu in 2017 and we started testing it. However it was not drastic sufficient to collect the momentum I felt we would have liked. We might even have to increase some huge cash and we felt it wasn’t disruptive sufficient, it was only a marginal enchancment. But when we mix it with blockchain and crypto, we will create a controversial sufficient mannequin to give us advertising mileage.
Q: Why do you want blockchain to build this platform? It feels like you possibly can do it with the present web. And why can’t it be finished with out tokens since that appears to be what individuals are involved about?
Sure, you possibly can create the identical enterprise mannequin with out blockchain. And sure, you can too do it with out tokens. However then buyers will ask, how do you become profitable in case you are so selfless not charging shoppers and giving consumer knowledge free to the customers? And in addition how do I measure the worth of what you’ve got created?
That’s why you want each blockchain and tokens. How do I consider you’re giving 100% again to the ecosystem? With its distributed ledger and sensible contract system, blockchain provides you Immutability, traceability and transparency.
Blockchain allows a tokenised financial system that restructures distribution of welfare, you need to eliminate the center man and substitute it with a non-profit center man.
Within the conventional financial system, the platform makes cash with transactions and a revenue maximization entity. It’s the zero sum recreation of the buyer enterprise.
In a tokenized financial system, we run a non-profit pushed platform. We don’t make income or revenues that method however we personal the ecosystem. Tokens turn out to be the brand new measurement of the economics and your economics are aligned to the token holder. The result is the dimensions of the financial system you create.
Q: If blockchain removes the center man and is pure P2P, then within the case of a authorized go well with between purchaser and vendor, who’s accountable?
Clients nonetheless want service help. We will nonetheless be legally accountable because the platform operator.
Q: Why a brand new startup now once you haven’t but made an exit from Zanadu?
As an entrepreneur who goals massive, I would like to build a enterprise that may make a much bigger dent, change the ecosystem. The realisation that Zanadu, due to the character of its enterprise, can’t scale the best way Reserving.com can, bugs me. I can’t be utterly glad till I do that.
Now as you develop into extra clear-minded, you already know what you’ll be able to do and what you’ll be able to’t do. With Zanadu, the technique is far clearer now. We’ve 80% progress yr on yr, with out spending on advertising, simply by sustaining what we do. We’ve expanded on the B2B aspect and we’ve raised the funds to fund it past profitability. It’s not taking all my time and we now have a robust staff of 800. I’m nonetheless CEO of Zanadu however we have now an MD for the travel enterprise and an MD for the content material enterprise.
Atlas isn’t competing with Zanadu, it’s complementary and it provides us a professional entry to convey blockchain into the dialog.
I additionally felt I missed the Web, I used to be too younger. Then with the cellular Web, I wasn’t skilled sufficient. Now’s the second, I’ve 5 years’ expertise, I’m 36, it’s my time.
Q: Why did you begin Zanadu within the first place?
I did my internship with Microsoft in Hong Kong in 2005. There was loads of euphoria out there then about China and no one from Microsoft needed to work in China. I moved to Singapore and later to Shanghai, that was in 2009. I knew I needed to be an entrepreneur and two issues occupied me – shopper improve and the Web. China had the most important luxurious items market and as individuals acquired wealthier, they went from materialistic consumption to experiential particularly in travel and well being care.
Travel was dominated by mass market gamers, Ctrip, eLong, Qunar. Our angle was to build a premium shopper model in travel.
Q: What have been the early classes?
It was a sluggish begin, the primary 2-Three years have been difficult. I’m not from travel and there was a romanticism about this business that I didn’t know. It’s additionally very low margin, even for top finish merchandise, it’s arduous to get 30-40%, which limits what you’ll be able to do. It’s additionally a low frequency transaction – even probably the most loyal travels solely Three-Four occasions a yr.
This makes travel totally different from different ecommerce. The availability chain and service chain is as long as nicely and there are numerous belongings you want to do properly to full the loop.
We additionally knew the posh market would take some schooling and we would have liked to build a model for the longterm. As current as 5 years in the past, Chinese language couldn’t get visas to Europe. In 2016, half of Chinese language travellers have been travelling for the primary time – you’re not going to be a luxurious traveller the primary time.
Once we began, we targeted extra on excessive finish lodges. Then we realised if it was pure lodge reserving, we might haven’t any benefit over the large OTAs – there was no means we might problem them.
That’s once we began to go together with the buyer want – they want providers, hand-holding, packages. Immediately hotel-only reserving is 5% of our enterprise, the remaining are tour teams, packages, tailor made holidays. The typical transaction is US$10,000. We’ve created an Web model and all our merchandise are bought on-line. 90% of bookings are standardized packages.
However it’s not a platform enterprise, however extra like a travel company enterprise, simply extra Web. Utilizing social content material, we now have lowered the prices of buyer acquisition.
Q: Once you realized how onerous it was, you didn’t consider quitting?
I’m not a quitter. I persevered. Now I’ve a extra sensible expectation of this enterprise.
Q: What are the tendencies in Chinese language luxurious travel?
Now markets are beginning to phase and suppliers are too – you now have six star, boutique, expertise/journey inns. Channels will phase too
The wants of the mass market and excessive finish usually are not so numerous. Everybody began from “I’ve never been out of China before” and all you wanted was one grocery store. Now you could have Metropolis Tremendous, Entire Meals.
We would like to place Zanadu because the #1 chief within the premium sector and that’s one thing cash can’t purchase. Be worthwhile, be affected person and maintain our place and because the premium area grows, so will we.
Q: What books have influenced you?
Once I got here to Singapore in my teenagers, I couldn’t converse English so earlier than 1995, I solely learn Chinese language books. One of many first English books I learn was Donald Trump’s The Artwork of Negotiating in 1995. That had an enormous affect on me.
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