Blazing-hot travel startup Hopper never left Montreal


Apple named Montreal and Cambridge-based travel app Hopper as the number one travel app in last week’s best apps of 2015, ranking it among the likes of Instagram, HBO Now and Periscope. The app was ranked No. 7 on Apple’s (US) Top 25 Apps of 2015 list, which was vetted by Apple’s staff.

Hopper, as many Montrealers may remember, was in stealth for about six years. Officially, it was launched in 2008 as a service to help users find new travel destinations, but it didn’t hit the public until 2014. In May 2014, reports surfaced that Hopper laid off several Montreal staff. Some thought it had relocated entirely to its Cambridge (MA) office, and little facts were revealed at the time.

We got the full story from CEO Frederic Lalonde, who revealed that Hopper will likely double its head-count in Montreal from nine, within months.

Frederic Lalonde

Lalonde

It’s best to start from the beginning, when Hopper was still in stealth. Around 2008, cofounders Lalonde,  Joost Ouwerkerk and Sebastien Rainville wanted to create an app that could solve the discovery problem: finding the best, direct flights anywhere, in one click. But it turns out that people aren’t that interested in buying a plane ticket in one search, said Lalonde.

For five years Hopper was acquiring loads of big data about the airline industry, but it wasn’t close to launching. What Hopper wanted to offer users couldn’t be built in six months.

“In order to get this data it took a long time to convince the companies that were sitting on it to actually build the connectivity,” said Lalonde. “We had to go to companies that were built in the 1960s, that are running mainframe computers in some cases, to tell them to write custom code for us. It took us years and years to negotiate those deals, and we spent millions of dollars just on the licensing.”

During the middle of 2014, Hopper started releasing some of its big data online, which amounted to years of research. The web caught on to what the startup was telling people and it gained about a million users to its site in a week. Hopper popped up on both The Today Show and Good Morning America.

With all the new attention, Lalonde and co realized it had something on its hands that it never planned for. It wasn’t even a product, and yet it had a million users.  They quickly pivoted to their current product, which is a mobile-only app that aggregates billions of flights prices every day and can accurately predict prices within five dollars and with 95 per cent accuracy how they will change.

With that pivot came a need to refocus investment, and about 20 part-time content creation jobs were stopped.

“When that started to happen we had to go all in. It was barely a decision,” said Lalonde. “Pivots are hard because they disrupt the organization, whether its two or 20 people. A lot of people are anxious about pivots because it brings change to things they’ve invested all their energy in. We never did any layoffs of full-timers, we didn’t cut our engineering team and it wasn’t anything to do with running out of money.”

In fact, the CEO said Hopper would never close its Canadian office. Over $2 million in data infrastructure is housed in Montreal. Moreover, the engineering team has worked out of that office since the beginning.

Lalonde went further, saying they’re not planning on selling the company, either: “We’ve already had multiple offers to sell, which I’ve turned down, even recently. We raised 33 million to date from a majority of Canadian VCs and we’re in the process of raising more.”

Hopper, the new

Between iPhone and Android, the Hopper app has been downloaded more than 1.5 million times. Lalonde said it has saved users a total of $30 million on airfare.Hopper processes anywhere between six and eight billion flight prices every day and has an archive of over three trillion prices going back five years. The company has invested over $12 million building its data platform over seven years. It seeks to build a relationship of trust with its users, since buying a flight is often an anxiety-ridden process given the instability of pricing.

“It’s an arcane process that nobody really understands. Everybody kinda feels crappy that they overpaid for their ticket.”

Instead of pushing people to buy right away, Hopper advises people whether a given price is good or bad, and often encourages people to wait to buy based on predictions. Over a quarter-million daily push notifications are sent out to users solely for timing advice.

Despite the enormous significance of the Apple recognition, the cofounder swears Hopper doesn’t spend any money on acquiring users. Meanwhile, the giants of the online travel industry, like Priceline, Expedia, Kayak and more are spending billions of dollars in TV and Google ads. “And we’re beating them in downloads,” said Lalonde.

Ultimately, Lalonde said he wants Hopper to redefine what buying a travel product is. If Hopper does reach that point, the payoffs will be generous. Travel is the largest consumer category in the world in terms of dollars spent and jobs created, said Lalonde. Within five years a billion people are going to take a plane for the first time. It’s a category that’s almost as big as oil and cell phones.

“We’re in his venture to cover five per cent of every ticket sold in 120 countries, and we think we’re one of the only companies in a good position to do that in terms our data advantage and our ruthless focus on mobile.”

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