START-UP ISLAND. ‘We won’t do customer acquisitions at a loss’

High valuation and funding announcements have a way of keeping the spirit of enterprise afloat in the middle of news of employee layoffs as well as some names getting the rap for operating poorly. These instances also come as learning for everyone running a new business, because big ticket funding alone won’t keep them going.

In this edition of Start-up Island, we catch up with The Active Holiday Company two years after its founder Gauri Jayaram first talked to us. This start-up’s growth story may have lessons in fundamentals for everyone.

She’d positioned her start-up as India’s first activity-based experiential adventure travel firm. In 2014, Jayaram told us, “This is a business of tomorrow, not an enterprise of today or yesterday.”

According to Jayaram, the turnover has trebeld from the previous fiscal; the business finally breaking even and making a small profit. “We need to ensure ROI. Burning cash for customer acquisitions is a bubble that will burst,” she says.

She’s convinced claiming high numbers of ‘bums-on-the-seat’ is not equal to customer satisfaction. “I want to maintain 2-2.5 times growth, but I won’t do customer acquisition at a loss,” Jayaram underlines.

Admitting there was doubt and funding difficulties assailing the business early on, alongside thoughts of having left a two-decade career in the travel industry and quitting a plum role in an international firm, she reveals she managed to raise funds through friends and family.

“The connect with our kind of customer was not easy to establish. It took us time to get the word out… but now people come to us asking us to design and arrange trips they’d like to take,” she says.

Her customers ask to be taken on a UNESCO Heritage Walk in Austria, or a walk along the Amalfi Coast, or they want to go cycling in Tuscany. It comes as a sign: adventure travel and fitness holidays have potential, and India is a huge opportunity.

But Jayaram also indicates she’ll be careful in spite of customised trips contributing about 40 per cent to the business.

“Scale comes from less customisation and more standardisation without compromising on the quality of the experience,” says Jayaram, adding that a sustainable business model and responsible fundraising keeps a high capex business going.

“We’re introducing diving and sailing holidays. We’re adding to our marathon holidays. We’ll add high quality products in the adventure segment, even if they’re not luxury offerings,” Jayaram explains.

With the base of the pyramid continuing to expand, and top-of-pyramid customers seeing value in The Active Holiday Company’s offerings, Jayaram will focus on keeping both topline and bottomline healthy.

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