Welcome to our April Spotlight Newsletter

April showers bring May flowers and with them, spring weddings and the need to book hotel rooms for all those out-of-town guests. Small-group bookings of 2-25 rooms accounts for about 2/3 of the group travel and meetings space, but historically, has been a difficult segment of the market to manage or service. 

This month we shine the spotlight on Groupize. Groupize CEO, Charles de Gaspe Beaubien saw the problems first-hand, tackled them, and continues working to define both Groupize and the small group travel and meetings space segment. Since Thayer's first investment in 2014, Groupize has shifted its focus away from suppliers and is set to forge alliances  with some heavy hitters in the travel management segment. We know that Charles and his team are up for the challenge and Thayer is excited to be along for the ride. 
In this issue: Spotlight on Groupize

The group travel and meetings space accounts for approximately $600 billion of economic activity globally. Approximately two thirds of this activity is driven by small groups and simple meetings of fewer than 50 participants; 80% of which is non-managed. In the United States, the non-managed small groups and meetings space is approximately $56 billion annually of sleeping rooms, meetings space and food & beverage, and to Charles de Gaspe Beaubien, CEO of Groupize; it's the wild West all over again.

Unlike large meetings and professionally managed events, the small group & meeting space client; consisting of job crews, sports teams, wedding parties, corporate meetings and the like (usually requiring between 2 and 10 sleeping rooms and/or having simple requirements for meetings space and food & beverage,) is typically self managed or delegated to administrative assistants.

Over 80% of meetings are coordinated by employees outside of company travel departments, therefore unmanaged costs and non-compliance for preferred suppliers is rampant. For large corporations with negotiated programs, complex policies and duty of care responsibilities, and the need to know the whereabouts of its traveling employees; the ad hoc nature of small group travel and meetings is problematic. For individual planners, the challenge of managing travel arrangements and small room blocks is time consuming. And for suppliers like hotels, the inability to offer bookable blocks of rooms to small groups undermines competitiveness.

This is Groupize's whitespace and the company has spent the last four years writing software tools and engineering integrations to drive efficiencies for its customers. Yet the journey to this point was not always a straight path and the story of Groupize is one characterized by deployment of the classic startup tactic - the pivot. In fact, like many successful startups, Charles and his team have deployed 'the pivot' more than once and it is their grit and determination that make this team a Thayer Ventures favorite.
A Gritty CEO

Born and raised in Montreal, Charles spent the last twenty years in the group travel space. Starting out as an adventure travel operator focused on the whitewater rafting space, Charles went on to lead the groups business at a regional travel company. From there and as a result of acquisition, Charles moved to several global product and operations roles eventually ending up as VP of sales at Wandrian; the precursor to rail industry GDS - Silverail. It was during these years that Charles recognized a clear pain point in the market - it was hard to book small room blocks. Solving this problem set Charles down the path that gave birth to Groupize.

Groupize initially focused on solving the small room block booking problem, that is groups with fewer than 25 rooms, by focusing on large hotel chains and integrations with enterprise CRS platforms. The need was clear but the priority for the major chains was simply not great enough to drive business. Groupize won a couple of deals with major chains and brought several other large players to the brink including a global deal with Accor and IHG but after repeated delays, the company realized that its go to market strategy was doomed. Pivot number one.

The team regrouped and, bolstered by several successful beta deployment in Boston area independent hotels, the company switched its focus to the fragmented long-tail of the hotel industry. The thesis was simple; independent hotels had the same problem as chains and, in fact, the ability to differentiate by offering bookability for small room blocks and collaborative tools for small group and meeting organizers, would prove even more attractive. Further, independent hotels would certainly be characterized by a much shorter sales cycle. 

Groupize set out to develop a direct sales model for its independent SaaS product. Yet despite several successful months, the team realized that the same lack of urgency that undermined progress at the enterprise level, was also prevalent in the independents. To the operators, the process simply wasn't broken enough to energize rapid adoption. Pivot number two.
Steel on Target

This is where Groupize hit its first classic WFIO moment (see  "Hard Thing about Hard Things" by Ben Horowitz). During the summer of 2015 Charles and his Board, including Thayer Ventures, came together to rethink the problem. It was clear to all stakeholders that the market was large and the pain real. The challenge for Groupize was to zero in on the stakeholders who possessed the desire and had the means to act. The supply side agreed that a solution was needed but it simply didn't rise to a high enough level on the priority scale. That's when Charles dug in to the demand side of the problem and set out to meet with small group organizers at fortune 1000 companies and corporate travel agencies.

The process not only confirmed the scale of the pain but also illuminated other problems that Groupize tools might possibly solve by introducing discipline and workflows to manage their small groups and simple meetings. First, most large corporations work with travel management companies (TMC's) or mega-agencies with negotiated supplier rates; yet those providers struggle to connect their client's small group and meetings travel activity with their core services. Second, and particularly of concern, in these uncertain times, large corporations have elevated their focus on "duty of care", a responsibility to know where their employees are at any given time, and small group and meetings attendees often slips through the cracks. Finally, large corporations struggle with policy compliance when their employees travel in small groups outside of centrally managed events.

Charles found acceptance in the corporate travel space, both directly with the corporations themselves and with the major TMC's and mega-agencies. As it turns out, the CFOs and Travel Managers at major corporations were demanding solutions to fix their problem of a complete lack of governance on what is a sizeable amount of their travel spend and, therefore, were prepared to prioritize solutions to the problem. Groupize had found its buyer.

Today, the Groupize Strategic Management Platform is the first solution for enterprises to source, book, track and manage small group bookings and all requirements for simple meetings in one application. The intuitive user experience is designed for the occasional travel arranger such as admins and sales teams, as well as professional planners and procurement staff. Ideal for work crews, consultants, sales and marketing teams, off-sites, etc., Groupize products also enable self-book features for room blocks between 2 and 10 rooms in real time at over 150,000 hotels including access to pricing and negotiated rates, combined with an eRFP solution for meetings space and food & beverage needs.

Groupize is now focusing on white-label solutions for TMC's and mega-agencies that enable these clients to offer management tools to their corporate clients- "powered by Groupize". Groupize tools include not only room block management but administrative applications including an RFP product and collaboration tools that connect participants and suppliers alike. Target customers in the pipeline include American Express, Carlson, HRG and Travel and Transport. Customers include Travel Leaders Group (4th largest in the world) and certain BCD agencies. In addition to the Agency channel, Groupize is starting to focus on direct sales to large organizations. The company is working on a large deal with Concur that will integrate the Groupize platform into Concur's own platform as an independent application exposing the solution to some 30,000 corporations and 3 million personal assistants.
Bright Future

Groupize's product is sold as a 'freemium' integrated application with the bulk of revenue driven by commissions from suppliers (via room night bookings and the RFP tool). The company expects to grow revenues from $350,000 this year to $2.3 million in 2017 and $9 million in 2018. Thayer Ventures made its first investment in Groupize in May of 2014 and again in November of 2015. The fund currently owns close to 10% of the company at a relatively low basis due in large part to the challenging 2015 pivot period. At present, Groupize is finalizing a bridge financing and is looking for interested investors to fill the remaining $400,000. Potential acquirers range from large players in the group space like Cvent and Lanyon to the OTAs, GDS and the agencies themselves. 

Should Groupize continue to execute against the opportunity in the corporate travel space, Thayer Ventures will be well positioned to generate significant returns for its LP's. More than that, however, Charles will have proved that grit and staying power are the critical elements of entrepreneurial success.
           We hope you've enjoyed this issue and look forward to your comments and questions!
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