The WeHostels story began in 2011, the company gathering traction and momentum from the very start. Entrepreneur Magazine has awarded it has one of the 100 Brilliant Companies of the Year, and PhocusWright named it the Most Innovative Travel Startup. In 2012, the company’s founder, Diego Saez-Gil, was selected to join the ranks of Endeavor.
And this week, another piece of news has emerged from the WeHostels team that has to do with a new version of its app. Now, it will include upwards of 170,000 hotels in its catalog, on top of the thousands of hostels and discount accommodations it already features. The goal: to strengthen its appeal to travelers and students on the go and in need of a place to stay.
We chatted with Saez-Gil about the new version of the app and the post-acquisition landscape for his startup.
Clarisa Herrera: Why did you expand your offer? Did it have to do with demand?
Diego Saez Gil: Many of our users (students, young travelers who generally prefer hostels or B&Bs) often asked us to bring on hotels as well. Sometimes, on a long trip, or in certain cities, you also want the alternative to stay in a hotel – given that it’s within your budget. Now that we’re part of StudentUniverse and have a lot more power to negotiate in terms of the volumes we manage, and we were able to solidify a couple of partnerships that allow us to offer hotels with special discounts for young people. We have been working on this integration over the past month, and now, with the same user experience you had before, you can reserve hotel rooms all over the world.
CH: What specific changes came as a result of the acquisition?
DSG: We’re processing six times more bookings than during the same period last year thanks to the traffic drive from StudentUniverse. Now, we have their marketing team working for us, and that means a significant amount of organic traffic from them, as they’re sending emails to users, we’re on their website, etc. Moreover, we have an assigned marketing budget and advertise on Facebook, Google and other channels, which also increases traffic. Lastly, we’ve joined forces with their product team, which helps us to improve our engineering practices. Up to now, we’ve been doing things “startup style,” which is good for some things. But sometimes, you need better practices in a bigger company.
CH: It is often said that acquisitions make startups lose their essence or margin of action. Has that happened?
DSG: The reality is that if entrepreneurs lose their place when they’re acquired, things don’t work well. In our case, StudentUniverse wanted to maintain our company as a separate unit, whereas sometimes acquirers kill the company and brand and just integrate the team. That’s not what’s happened with us. We are still working on WeHostels, and we’ll keep concentrating our efforts there and remain an independent unit. The CEO of StudentUniverse is very young and is a good entrepreneur, and that’s the environment he’s proposed. He’s giving me quite a bit of liberty to move around and make an impact, and I believe that what all entrepreneurs want is to make an impact. When you run into a bunch of bureaucracy and can’t do that, you lose motivation, but if you’re given some space, as is our case, it works out.
CH: How, concretely, does that synergy work?
DSG: We also help them on the mobile front, examining their processes, doing research and understanding how to make improvements. In fact, the acquisition was part of the complementarity of both parties. In our case especially, mobile and budget accommodations were things that served them and that we could provide.
CH: You had a meteoric takeoff. What do you consider the key moments and challenges?
DSG: Obstacles emerge along the way regardless of where you’re coming from. We made the courageous and perhaps slightly reckless decision to build a business for the world using Latin American talent, and creating a global company has its pros and cons. The advantage is that the global market is bigger, and there are tons of things that are easier. Take payments, for example – in the United States and Europe, everyone pays with credit cards or through their phones or computers. There is also less bureaucracy involved doing business in the States. On the other hand, we competed against giants. We were in the big leagues, up against companies like Airbnb and Booking.com. Being immigrants is also challenging – having to understand local culture, adapting to doing business like locals.
CH: How do you get onto the radar of companies like StudentUniverse?
DSG: We did it by going to international travel conferences. Participating in – and winning – contests gave us a lot of visibility. We also tried to be in international and local press, and build a network. I asked my investors to connect me with the people they knew in the industry, even without a real purpose. Maybe I’d take a trip, still without a real objective, but the idea was to develop a network. With all of that, what we sought out were partnerships. When we sat down to talk to companies like StudentUniverse, the issue was achieving an association like what we’ve got now but without the type of tie that unites us with student Universe. We wanted them to send us traffic and in exchange give them something like commission or help them with their mobile products. That conversation turned into what ended up being an acquisition.
CH: What skills do you need to negotiate with the big guns?
DSG: You’ve got to go in with the idea that you’re going to devour the world. You’re not less than anyone – young, talented, energetic people are appreciated no matter where they’re from or what accent they have. It’s important to know how to communicate well, in English, of course, and I personally have worked on that. You have to surround yourself with a team as well – it’s never just you, it’s the team. When someone buys a company, they buy the team.
CH: You’ve said that WeHostels has a global target. Where does Latin America fall in that?
DSG: It’s moderately relevant. It’s not our main market, but we do have users in Colombia, Argentina and Chile. We’re focusing on it more now with the World Cup and the high demand for reservations, but for StudentUniverse, the main market is the United States and Asia. They’ve also got Latin America on the map, so we can help them there as well.