mergers and acquisitions never work out the way they are supposed to. There are
of course many reason for this. Travelstart has been sold and bought back and
nearly sold a second time. We have acquired some four companies. Some worked
fine, I’ll perhaps talk about them later. Some didn’t work out so fine. This is
a story about the latter.
2004 we were growing making money having fun and saw endless opportunities. We
were looking of ways to expand our business and through my endless search I
came across this small company in Ireland that sold low cost carrier flights
online. They were, if not THE first, one of the first to do that properly.
was openjet.com. They had a unique value proposition, at the time, and it was
the possibility to mix and match carriers as you wish. The company was backed
by one of the largest tour operators and the largest car intermediary in
Ireland. So the founder had done a great groundwork and lined up some
interesting people to support him in his vision. Something Travelstart never
managed to do.
I had chats
with the founder on and off several times trying to tie collaboration between
our firms. After several talks me and my colleague decided to fly over to
Dublin to try to formalize something.
was a very odd young man. He brought a couple of his board members and investor
to the show. They said “ we are here to keep him honest”. An interesting remark,
no doubt. We later understood why. We sat down at a local pub because the company
had no real office. The pub was cold and I was freezing like hell. The Openjet
founder started to drink Beer as soon as we sat down.
We had no
idea what to expect, but we sensed this was probably going to be interesting. About
2 minutes into the meeting we found out that the company had run out of money
and they needed some, like now. It didn’t take an idiot to realize that the
board members wanted out as soon as possible. But why? Well that took us
another six months to figure out.
about the technology, about opportunities. Openjet was a really small company
only doing 40 bookings per day. But I saw endless opportunities. The meeting at
the pub got more and more outlandish as I slowly realize that they wanted us to
purchase the company.
us the usual business plan and P&L. This is not something you do for a
the car my colleague who was a master in numbers said. “I think they will give
us the company for max 100.000€.” I thought he was kidding. Just the technology
was worth a lot more than that.
By the end
of the evening we shook hands with the founder to buy his company. After a
glass of wine he was already applying for a job with us.
day we met the company that had built the technology, Openjaw. They decided to
go into the venture to use it as a showpi.jpgece. They weren’t too happy about the
collaboration, because the company never paid the bills and they had, we later
found out, simply gotten tired of promises of cash that ever came. Never the less
Openjaw, with their legendary founders built openjets technology and in my books
that was really cool. I deeply respect the two Johns, Mc Quillan and Lambe for
their epi.jpgc work in the travel tech industry. We talked about the debts and
decided a plan how to pay of them off. They were happy and we were ecstatic.
meeting we went over to the Guinness brewery, which was just right next door.
We listened to the story of the company and I felt like we were on holy ground.
In Dublin there were 500 breweries at the time Guinness was founded. All but Guinness
disappeared who rose to world fame because of business acumen and because they
went a different route. They decided to close their successful Ale production which
had too much competition and go for the porter type Stout, all in. Their vision
seemed very clear and they created a niche that they to this day dominate all
over the world. I could sense the chills in my spi.jpgne. THIS was a sign. Openjet
and Guinness. Oh brother was I wrong.
the deal my colleague travelled across Ireland to get the investors to buy into
our offer. All bought into it. Even a local governmental business development
board bought into it and wrote off all the debts. The only one who didn’t buy
it was the large local tour operator.
We paid the
investors off in the first tranche and kept the founder on. He was going to get
his money in the second tranche. Everything was fine and we started our journey
– to hell.
media wrote about the Swedish Vikings that took over the hope of Ireland in
online travel. I was in love with the business model and I still think it’s a
killer. No work with GDS, no IATA, no bonding, hardly any customer service and
very little maintenance. I loved it.
was hunky dory until we paid the second tranche to the founder. Then we realized
why all the investors just took their money and ran. The guy was … lets say
different. The company was cursed.
When doing the due diligence we, like most people only saw the opportunities.
We failed to care about the fact that we were buying a company who months
earlier had tried to sue RyanAir for anti competition. Which is something you
just don’t do. Definitely not in Ireland. And why did everyone just run away?
Well that’s a long story.
using old company documents to acquire new credit cards and work up 6000€ bills,
which we had to pay, and making it impossible do business under the name of
Openjet the founder used all kind of text book examples how to completely screw
up a business. We were later threatened by EasyJet for using their “company
colours” and the list goes on and on.
with the man for another year or so and then decided to simply close the
business down. Left today is only the url, which I detest to a degree that if I
could I would burn it.
We lost a pi.jpgle
of money on the project. we lost time and a great opportunity. At the end you
can always blame everyone around you for failures but it doesn’t make any sense.
We should have taken better control of the project. But sometime I wonder if
you can really turn around a cursed project or company.