“Our Main Mistake Is The Reliance On A Single Private Investor”

Director of development services city audio guides and audio tours Izi.travel Egor Yakovlev told the editorial Board vc.ru how the company survived bankruptcy. From 2011 to 2016, the service developed the money of one investor who has invested in the project “about €20 million”. When for personal reasons he decided to withdraw from the project, the team was forced to fire staff and hire a bankruptcy Trustee. The idea of Izi.travel Alexander was born at tours in 2011 while traveling from Holland to Italy.

Driving through Europe, he saw from the car window the castles, villages, cities, and he would like to learn about these places more, but he could not distracted from the road searching for information in Wikipedia, or to spend time for frequent stops. “He thought. “How so. There are so many interesting flies in my car there is a device that has Internet, GPS, it can play music, media.

All the knowledge that somewhere there, as to make it so that wherever we went, we could hear the history of all these places in your language?””, — says development Director of izi.Travel Yegor Yakovlev. Returning to Amsterdam, where he lived for some time on an ongoing basis, of tours had found an investor, have assembled a team of developers and managers and began to consider the principle of the service. One of the key people in the team was a former employee of the company Informap, 10 years engaged in projects in the field of digital cartography, Yegor Yakovlev.

The team started the market research and analysis of existing mobile applications and services that were involved in the creation of audio guides. There were selected about 80 companies. “We found that in most cases such companies do not last long — their average lifespan was two years,” says Yakovlev. According to Director on development of Izi.travel bug these companies is that they try to simultaneously create the platform for the content and the content itself and the mobile app for users.

“Their main idea is as follows. “Oh, well do a tour of Vienna, will assign the cost of the listening guide for the price of a Cup of coffee — €2, there will be many people, and we will defend ourselves”. However, users are not willing to spend the same amount for the product, since I see no advantage to free content are not in audio format. In addition, these companies do not take into account the cost of development and support applications, as well as the cost of its marketing and promotion.

“Owners forget that cool app with great content, people still wont download, if not to exert great effort not to advertise it, not to spend money on advertising and marketing,” explains Yakovlev. And it turns out that when you do things right, the money you earn from the sale of content is not enough. And the company goes bankrupt.

In five years, we such striking occurrences and deaths have seen dozens, if not hundreds. To avoid unnecessary costs, the authors Izi.Travel decided to abandon the creation of audio content, shifting this problem onto the shoulders of concerned organizations — museums, cultural centers, and subsequently brands. Instead, they focused on creating a CMS-platform Toolkit for download and tinctures geopresence audio content, and a client application to play it.

The platform called Izi.cms and the application — Opas, and initially, between them there was no logical connection because the platform is meant for content creators, and application for end users. Content providers can create trips in two types, street and Museum. In street audio is tied to a specific point based on its GPS coordinates, and content is played when the user crosses a special area, which is established by the author of excursions in CMS.

The author can create a tour by combining several tied to certain minutes of audio in one route, and to make it easier to get to the next point in playback — add audio cues, as in the Navigator. “The user inserts the earphones, presses the play button, takes the phone and goes to the tips. In Museum mode, GPS not working, but there is another logic — search for exhibits by number, QR code or photo navigation,” — says Yakovlev.

The team designed the app and was looking for the first partners-content creators from 2011 to 2013. All this time the project was closed. “We are faced with the problem of chicken and egg. How do we get content providers to put to us the content yet users who will listen to him and how to attract users to the application where there is no content?”, — says Yakovlev.

Then the leaders of the Izi.travel drew attention to the museums that I wanted to implement audio tours. However, they had a problem they needed to either purchase the audio guides — a personal device for playback fun, or to create its own platform for content storage. Both options demanded financial expenses, which I could not afford to let the majority of medium and small museums. Museums by their nature want to share content — its their job.

We went to them and asked. “You want a free audio guide on your mobile device?” They say. “Of course I do. What to do?”.

And do in General not need anything. To register, to articulate stories, share, and hang a sign. “Dear visitors, we have the audio guide, download the app and use”. And for museums it was a good decision, and we closed two issues — on the one hand, the appearance of the content, with another — the appearance of the user.

The team came out of the private mode of development by 2013 and introduced the service in the Russian exhibition “Intermuseum”, also opened in other countries. During the year the service registered more than 40 museums of Russia, as well as cultural institutions from the Netherlands, Finland, Germany and Austria. In addition, Izi.Appeared Travel tours the cities of Russia and the world — more than 150 audio tours.

By the end of 2016 on the platform registered more than 11 thousands of content providers from Russia and other countries, including 1,400 museums. The number of audio tours increased to 3700, and the number of cities to 1300 in 90 countries. The content was available in 50 languages, and the number of users of service exceeded three million people. “Starting with the museums, we then started to attract other types of content providers.

Publishers, private bloggers, historians, researchers, tourist information centers of cities, libraries, zoos and so forth,” — says Yakovlev. For all time of existence of the project does not bring profit, getting money for the development from one investor, which over five years is estimated Yakovlev invested in the business “about €20 million”. “The company consciously did not generate any profit, because our idea is to make the platform in the first place popular, the largest in the world, promoted.

Our ambition is to become something of a YouTube for video, Instagram for photos, only for geoprivacy audio content,” — he said. In December, 2016 investor “for personal reasons, not related to faith in business” decided to stop funding the project. “He changed priorities, changed the situation with money and stuff. And for us, it happened unexpectedly.

Naturally, this was accompanied by internal conflicts, because it is ugly, bad and unexpected,” says Yakovlev. After the company began the difficulties with payment of wages, 5 January 2017 was in bankruptcy. Since the company was registered in the Netherlands, she was appointed interim Manager — curator. “He was interested to sell as expensive as possible to satisfy as many creditors”.

First and foremost, is a Dutch state, with its taxes, then people with salaries, and then partners with unpaid bills, and last but not least — the owners of shares of the. His task — at least to satisfy the debt to the people and the Dutch government. During the preparation of the sale documents, the curator realized that the company is of no value as a collection of separate assets, and to save as much money as possible, it must be sold as operating business.

“So he undertook the necessary efforts to ensure that the company remained afloat during this period. This primarily relates to the payment server, hosting, internal systems and others — as we serve the world is a significant burden,” — says Yakovlev. To cut costs, had to fire almost the entire team of the service except for key executives, which was estimated to Yakovlev, was “about 70 people”. “When the company goes to bankruptcy, formally lost all the people.

The people who worked in the Netherlands under the Treaty, was insured through Dutch social security and received during a certain time portion of the salaries in compensation from the government. Those people who were on freelance contracts, just stopped to do the job, and thus money,” he explains. To accelerate the search for a new investor, the curator decided to publish on the main page of the project information about the bankruptcy of the company. However, when this advantage of the competitors, ad it was decided to remove.

Learning about the difficulties Izi.travel company Cloud Guide, which is also engaged in the creation of audio guides, began to send letters to the creators of the content, inviting them to move their materials to their platform. “The letters were similar to the following. “As you all know, Izi.travel is a bankruptcy, so we have a cool solution to shift all the content to us””, says Akovalev.

Thus Izi.travel does not restrict the dissemination of content by its creators, keeping them all rights to intellectual property. In addition, the platform offers the same services your API that allows you to embed audio. We own the platform, but do not own the content.

Content 100% owned by the authors, museums, cities and others, who spread it on the platform. And at all conferences, exhibitions, master-classes, we have always advocated the idea and tell them. “Guys, your value — not the technology, your value content. Therefore, we are one of the platforms, put it to us, but also put it in other places and other platforms”.

We boldly share their names, links, answer questions — do not sit like a dog in the manger on this content, on the contrary — codigem authors to use other platform too, because Im not afraid of competition, and are ready to these platforms to distribute data via the API. In response to attack by the bankruptcy Trustee took the decision to remove the banner with information on bankruptcy from the home page, and also instructed to reassure content creators that began to contact the company for clarification and information about the further fate of the project. The parallel guide Izi.travel has contacted representatives of the Cloud Guide to find out the cause of their behavior and try to resolve all “in a civilized manner”.

“The representatives pretended that it wasnt them, its their PR experts got it wrong. While they understood the messaging was launched in several countries,” — says Yakovlev. And when a mailing campaign is over, they came and said. “Weve dealt with, talked.

Perhaps, that is too bad. We will no longer be available”. They tried to save face, but everyone already did. According to the Director for the development of Izi.travel, the company suffered serious losses due to communications with content providers.

In addition, the bankruptcy Trustee decided not to make the story public plane in order to avoid attention to the fact of the bankruptcy from the media and subsequent reputational damage. While the company management was in the hands of a temporary administrator, the user had no right to take any independent decisions and had to coordinate all their ideas and initiatives with the curator. In parallel, the team led the search for a new investor, keeping the company afloat.

In February identified a range of investors interested in the acquisition of the company. In early March were trading, and among them was determined by the investor-winner, who will develop this business. According to Yakovlev, management learned the lesson and discussed with the new investor with the opportunity to attract future investors. “The service was not errors.

Our main mistake is lack of diversification of the investment model, when you depend on a private investor. On the one hand, its convenient and allows you to easily and quickly make the decision, on the other — there are situations in life that can change the whole picture,” he said. In addition, the service plans to develop monetization models to be less dependent on foreign investment. One of them is advertising.

“We still understand that service a few years will be one hundred percent unprofitable, and our goal now is not to earn some money, and get out on billions of levels later,” says development Director of Izi.Travel. Apple, Google, Amazon, Microsoft — all do voice assistants in the future we will make the voice more and more things. We understand that part of life when a person can not look at the screen when he is walking, driving, riding a bike, running on the track — it is not rendered in modern media, except radio.

And radio, and music has no properties typical of other modern apps — they cant give targeted content targeted advertising in the target language, given a bunch of options. But it will be. I am absolutely sure that all those advertising a content-type monsters Facebook and Google will come to the audio content. And with geoprivacy content, because it is a very powerful targeting — they will be able to tell the person that here is a unique coffee shop that came up with this sort of coffee precisely at the moment when I pass the doors and smell the coffee.

During the period of bankruptcy utilization and growth “is also not changed,” says Yakovlev. “Service all the time lived his life, we received more than 600 contributors, including museums, schools, universities in Russia and Europe. Published more than 200 new fun and monthly indicators remain the same as they were before bankruptcy”.

Through this experience, the service will review the development strategy. “History has taught a few things. Firstly the fact that you should not forget about focusing on specific goals. I cant say that we were somehow blurred, but the goals and directions of development were many, which required significant investment. Now we will create a more compressed, but more focused team on two or three tasks.

Continue to develop in this way — from a wide front to a more specialized and narrow,” concludes Yakovlev.

Leave a Reply