Feb 28, 2017 · 20m · top-founders
EP 584: FlightFox YC Founder: We Talk About When To Quit All The Time, $700k Revenue, Making Travel Way Easier with CEO Lauren Sullivan
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Top, host Nathan Latka interviews FlightFox co-founder and CEO Lauren Sullivan about pivoting the Y Combinator-backed travel platform from consumer crowdsourcing to high-frequency corporate bookings, achieving $800,000 in revenue, and navigating the operational hardships of running a lean startup.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 51.3% of the talking time here. How this is scored →
Nathan as informed peer 3.9 Guest teaching 2.4 Guest disagreement 0.7 Nathan pushing back 1.6
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:26 Correcting tool pronunciation
Lauren corrects Nathan's misinterpretation of PocketSmith when he jokingly asks if it is spelled with 'nose'.
Hardest push from Nathan ▶ 11:32 Probing recession vulnerabilityNathan pushes Lauren on whether they have hedged against potential economic downturns given travel is typically the first budget item cut.
Biggest teaching moment ▶ 8:18 Consumer vs B2B travel economics lessonLauren walks Nathan through the math of why consumer travel CAC is unviable at a $15-$20 net take per customer against Kayak/Expedia, justifying their B2B pivot.
Nathan holds their own ▶ 14:39 Live gross-to-net financial calculationNathan quickly breaks down Lauren's top-line revenue to deduce that after the 65% contractor payout, the company operates on roughly $200k in net gross margin.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Weekly Cash Giveaway Winner Announcement | 4 | 3 | 0 | 1 | Nathan introduces Lauren and shares his personal experience using FlightFox. Lauren explains the basic consumer and business pricing model and how their fee structure differs from commission-based travel competitors. | |
| Multi-City Pricing and Best-Price Guarantee | 4 | 3 | 1 | 1 | Nathan asks about complex multi-city pricing and discusses the best-price guarantee. Lauren explains how FlightFox waives fees if they cannot beat an existing quote by at least the fee amount, and recounts the company's pivot from contest crowdsourcing to 1-on-1 expert matching. | |
| Travel Expert Compensation and Contractor Model | 5 | 4 | 1 | 2 | Nathan drills into contractor compensation and unit economics. Lauren clarifies the 65/35 revenue split with experts and explains why individual consumer CAC is unsustainable, driving their pivot toward corporate accounts. | |
| Corporate Client Demographics and Booking Volume | 5 | 3 | 1 | 3 | Nathan presses on corporate customer volume and probes downside macro risks in the travel industry. Lauren openly admits they haven't planned for an economic downturn, sparking a candid exchange about startup resilience, team downsizing, and questioning whether to shut down. | |
| 2016 Financial Performance and Growth Strategy | 6 | 2 | 1 | 2 | Nathan calculates net cash flow from top-line revenue ($700k-$800k) minus expert payouts (65%) to estimate net margins. Lauren confirms the numbers and notes they will not raise more venture capital until customer acquisition for corporate clients is figured out. | |
| The Famous Five Rapid-Fire Questions | 3 | 2 | 1 | 2 | Nathan conducts the standard Famous Five rapid-fire questions, clarifying a misheard software tool name ('PocketSmith') before wrapping up with Lauren's advice to her 20-year-old self. | |
| Previous Episode Highlight: Sociedo CEO Asim | 0 | 0 | 0 | 0 | Nathan delivers a solo outro promoting an earlier episode featuring Sociedo's CEO and an advertiser offer for AdWords via HostGator. |
Statements from this episode (17)
Sullivan: FlightFox Charges Per-Trip Fees Unlike Commission-Based Competitors
“So our revenue model we charge a fee for every trip which is unlike all of our competitors who make most of their money from commissions.”
Sullivan: FlightFox Charges a $50 Minimum Fee for Standard Trips
“The minimum fee is 50 dollars and that's for just a normal trip, either going one way, or round trip to anywhere in the world”
Sullivan: FlightFox charges companies $30 search fee plus $20 per person per place
“And for companies we charge a 30 dollar search fee and then
A booking fee of 20 dollars per person per place.”
Sullivan: FlightFox waives fees if it cannot beat existing travel quotes
“So if you give us you know, a valid quote up front, like if you've already searched for your trip and you found, you know, a thousand dollars on Expedia, if we can't beat that by our fees, if our fees, 50 dollars, if we can't find you a price for nine 50 or le…”
Sullivan: A Small Group of Experts Won Most FlightFox Contests
“We found in the end that, you know, there were a small number of experts winning the majority of those contests.”
Sullivan: FlightFox Trimmed Travel Experts From 5,000 to 20
“We only have 20 today. At our peak, we had like 5000 but we kind of just hand-picked the best ones from that group.”
Sullivan: FlightFox Takes 35% Cut, Experts Keep 65%
“No, we, ah, so Roland will get 65%, and we get 35%.”
Sullivan: FlightFox nets only $15-$20 per consumer booking
“Well, so say for you know, we only make 35% on 50 dollars, so we're getting, like, 15, 20 dollars per per person, and the, you know, the normal person travels once a year, maybe, on a holiday.”
Sullivan: FlightFox pivots to weekly high-spend corporate travel clients
“So we've started going after companies and organizations where they spend, you know, they're spending hundreds of thousands of dollars per year on travel and, you know, they're booking travel every week kind of thing.”
Sullivan: Five to 10 FlightFox Clients Book 30 Trips Monthly
“I'm just gonna say, we probably have a group of five to 10 companies that are booking probably 30 trips a month.”
Sullivan: FlightFox Raised $850,000 Before Y Combinator
“Yeah, we raised it in 2012. We raised about eight 50 K and that was just before we went into YC.”
Sullivan: FlightFox Has No Contingency Plan for a Travel Downturn
“We haven't thought, thought through that.”
Sullivan: FlightFox Closed Its Canadian Office and Fired Everyone
“We had a big office in Canada for a while and had to fire everyone because, you know, it just wasn't working.”
Sullivan: FlightFox Generated $700,000 to $800,000 in 2016 Revenue
“Total revenue was about seven to 800 K.”
Sullivan: FlightFox will not raise capital before finding B2B acquisition sweet spot
“Like at the moment I said, you know, we're going after corporate and organizations. And we haven't really found our sweet spot for customer acquisition yet. So until we find that we don't want to raise any more capital.”