What would you do with an investment of $1 million and a mind to change the way people discover, book, and (gasp!) afford luxury travel? Drew Patterson, founder of Jetsetter, a members-only travel site, took that initial investment from Gilt Groupe in 2009 and never looked back.
One reason is that before founding Jetsetter, Patterson spent over a decade in the travel industry, first in revenue management at Starwood Hotels and then at the travel site Kayak. Never satisfied with the status quo, Patterson is always thinking about how technology can make travel decisions easier for consumers. As such, he tells Fast Company he’s most fascinated by what motivates people to buy such perishable inventory as hotel rooms.
"In any economic climate, consumers like value. The more interesting commentary has less to do with savings and the recession and more to do with discovery," says Patterson.
With Jetsetter, Patterson is looking to crack the code to provide inspiration—and authenticity. "Consumers' relationship to luxury has changed." He believes they want an authentic personal connection, not just a label. "They want a story about what makes it distinctive," Patterson adds.
Though Jetsetter was created and launched in Gilt Groupe’s flash sales image, it operates a separate company with its own staff and board. This January, Jetsetter 24/7 became the first Gilt Groupe business to sell full-price retail packages. That segment has grown to represent 25% of Jetsetter’s overall revenue.
In June, Patterson dipped into the offline agent world with the launch of Personal Travel Planning. That too, was well received, outperforming leading U.S. travel agency Virtuoso in an undercover test conducted by the Wall Street Journal. "We have an in-house team of 18 people," he says, including Kate Maxwell, formerly an editor at Conde Nast Traveler. Each one of them has relationships with experienced writers who are out traveling the world for a living, and can provide firsthand accounts of the places and spaces that get recommended, he notes.
With the web's "vast and democratic" influx of consumer reviews on sites such as Tripadvisor, Patterson sees the need for Jetsetter services more than ever. "The consumer is very empowered but [the web] is also very noisy and hard to trust. I see a desire for expertise and editorial sensibility to help consumers understand options."
For the cash-rich and time-poor, Patterson points to his latest brainchild in the quest for delivering vetted products at exclusive prices. Jetsetter Homes, a collection of more than 200 homes around the world, leverages 1,200 industry partnerships in 90 countries, first-person reviews by Jetsetter’s cadre of experienced professional travel writers, and drool-worthy 360-degree photo tours.
"Flash sales as merchandising format is very powerful and the most interesting thing that’s happened to travel products since Priceline," says Patterson. For him it comes down to elasticity, or "How much of a discount do you need to change your behavior and buy." Still he says whether the customer is aspirational or truly affluent, Jetsetter’s service and quality are the same. "As long as we listen and respond, we are moving in the right direction. We are not profitable yet, but we’re growing quickly and trying to make our way in the world."
The big idea: Take one part Lifestyles of the Rich and Famous (think Bing Crosby’s sprawling estate in Palm Desert or the tropical paradise at Legends Resort Moorea in French Polynesia), one part National Geographic (Macchu Picchu weekend anyone?) and one part white glove concierge service ($200 for a 3-hour private consultation) and you’ve got Jetsetter’s e-commerce channels wrapped. Heart-stopping photography combined with the thrill of flash sales will basically prove that once again, money can buy happiness. At least in the form of a discounted destination vacation.
First career lessons: Before his stint at Starwood Hotels, Patterson’s first official job was a summer internship in the strategic planning group at Liberty Mutual Insurance while still in college. "I didn't really have professional experience, and my parents don't come from the corporate world (they are both clergy). I was looking to get some "real" job experience before leaving college. I didn't know quite what to expect (though "insurance" suggested that it might not be the most exciting summer in the world). In point of fact, I loved it. There were problem-solving opportunities, there were smart colleagues, and I felt like I had some responsibility."
Investment opportunities: Gilt Groupe incubated Jetsetter with an initial investment of $1 million. The company also provides marketing partnerships, and two of Gilt’s executives sit on the Jetsetter board to offer experience and oversight. "We have our own equity plan and are capital efficient," says Patterson, noting that no other funding has been raised. "Gilt has been clearly important in getting word out, but Jetsetter is not limited to Gilt membership."
Growth by numbers: Jetsetter currently employs 89 people and counts 2 million active members, which Patterson defines as "those who’ve opted in to receive their emails." Jetsetter runs 20-40 flash sales per week at prices up to 50% off and has sold over 450,000 room nights. Both Jetsetter’s recent launches, the vacation home business and its U.K. site, are outperforming projections. One member spent $200,000 on a vacation home over the holidays and the U.K. site has had triple-digit growth.
On hiring as the startup grows: "Hiring as the company grows has been a challenge, as our needs and risk profile changes. The kinds of people who want to join a five-person company are different than the ones who join a 50-person company. The one thing that has remained constant (and I think the most important trait to hire for) is cultural fit. As long as folks are bought into our culture and our vision, they'll be a great fit. Likewise, my biggest challenge has been to keep the culture vibrant as the company has grown."
On being a young entrepreneur/CEO: Patterson’s depth of industry experience belies the fact that he’s just 34 years old. Is a decade in the travel business like dog-to-human years? "Hmm... I don't feel that young anymore."
On management: Authenticity is as important for Jetsetter’s business model as it is for Patterson’s leadership style. "I'm passionate about what we do, and I want to get a better understanding of how our business is working. I ask a lot of questions, but I expect our team is independently motivated and self-directed."
On traveling for pleasure: Patterson contributes his own firsthand experiences to Jetsetter. Though his colleagues say he works non-stop, recent trips include a January jaunt to Grace Bay Club in the Turks & Caicos, where he partied with Keith Richards, who has a house there. He also attended an investor’s wedding in Turkey. Patterson used the Personal Travel Planning service to put together his itinerary as well as one for a trip to Iceland with his fiancée. He’s also planning a March destination wedding at a ski resort and "something experiential for their honeymoon, maybe a safari," says Kellie Pelletier, director of communications for Jetsetter.
On mistakes made: For a vacation package in Ireland that included a Kings of Leon concert, Patterson broke his firsthand rule of vetting the accommodations before sanctioning the sale of the trip. "It was a disaster. The operator didn’t get who we are as a brand and we screwed up. Our members called us on it. The [expensive] lesson learned is that important to stay true to our promise.
On the competition: Competing flash sale juggernaut ideeli launched a partnership with Voyage Prive in June to sell discounted luxury travel packages. Of Voyage Prive Patterson says, "They are a strong player in Europe but haven't seemed to connect with U.S. travelers."
Inspiration: "That's a tough one. The cofounders of Kayak, Paul English and Steve Hafner, would be high on that list. They had a huge vision, they were manically focused on the consumer, and they were a lot of fun to work for."
In an alternate universe: Patterson would like to be writing stories for This American Life. "Ira Glass and his crew have the most humorous, touching stories of American's lives, and I think it would be so cool to spend time learning what makes other people tick."
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[Image: Flickr user Gunnar Hafdal]