PhocusWire Interview: Serko CEO Darrin Grafton

1 December 2019
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This is a copy of the PhocusWire interview series "In the Big Chair" with Darrin Grafton.

Read the full article here. 

Q: You co-founded Serko more than a decade ago. What has been the biggest change in business travel management since then? What still needs improvement?

Business travel is going through a new era of change. Although NDC may seem like the latest buzz word, it fundamentally changes the world of air travel to a true modern retailing model.

By changing the model, it impacts everything it touches at the same time, and we're going to see the knock-on effects in other areas like hotels, who already have dynamic rates but will also end up "unbundling" their services as well.

The outcome will be the kind of retailing that we haven’t seen before, where a flight to London includes not only a seat and bag but a hotel, taxi, and meals all managed as a journey on a corporate rate. Loyalty will get blended across brands and the outcome is going to be something very special for this industry.

The industry needed to move away from the traditional approach of booking travel to support modern retailing, and this required a new generation modern retailing platform that is built to manage the entire journey.

Google picked this back in 2012 and code named this Google Traveler by defining the modes of travel as how we fly, stay, move, eat, work, play and rest. Booking travel is just one aspect; disruption and change management all needed to be blended into this new dynamic journey and marketplace.

We have to remember that change doesn’t just affect the traveler, it affects the travel arranger, authorizer, company, travel management company and suppliers at the same time.

It also means faster, more user-friendly design and systems need to be built that make the journey more automated and touch free so stress points are removed from all aspects of travel.

Q: The business travel sector has been criticized for being slow to innovate, with some of the recent developments credited to pressure being caused by startups such as TripActions and TravelPerk. What’s your take on that?

Competition is fantastic and healthy in any industry and there is enough room in this $1.3 trillion market to support new and emerging offerings, but our approach is to focus on our strategy not on the competition.

People think that change just happens, but in fact change requires advocacy.

As an example, Serko has supported NDC for years to get behind the airlines and industry change, we worked with Routehappy as their first customer in this space and helped drive the change in the visualization of air retailing in the corporate space.

With Zeno we know are building a next generation platform that enables all aspects of the business travel eco-system to come together and accelerate off a common platform.

We have to connect all GDS systems, direct airline, ATPCO, aggregators and related parties; not just one part but all of the parts together and manage the entire journey and eco-system. This hasn’t been done before, but we have now laid the foundations and the market is realizing that this platform approach is the way to move forward.

Our partners can become technology leaders in just a few weeks by white labeling the Zeno platform and creating their own brand and servicing model, enabling their own set of content and third parties to build and work with them to become a major player quickly.

As a traditional travel management company this means you can add your years of experience onto a platform that can bring your identity and value to a new set of customers at scale.

Q: Last month Booking Holdings took a nearly 5% stake in Serko with a $11 million investment. How did this deal come about? What opportunities does that create for Serko and for Booking – do you think it’s eyeing a more active role in corporate travel?

We have been a partner of Booking.com for a long time and have built up a trusted relationship with the team there.

We actually share the same vision for management of the entire trip, and with our technology and patents we can enable true journey management and booking holdings can look at the content acquisition needed to continually make the traveler journey the best experience yet.

We were both aligned on the impact we could make on the industry and booking made the investment because they believe Serko and Zeno can change the industry and move it forward. It was fantastic to have the endorsement not only of our strategy and vision for travel but also our technology too.

Q: In August you announced a partnership with FaceMe to add a human-looking virtual assistant into the Zeno booking tool. Yes that’s cool but what does it really add to the interaction?

The digital assistant was really designed around a new way for people with a disability to interact with technology, we want our products to stand for something so pushing the way the user interfaces with design is key.

When we went through the design process and chat models we realized that this appeal of a digital human had wider applications. By using Microsoft Cognitive Services we could tell from visual or voice tone if a user is getting confused or frustrated and we can then adapt our messaging and technology to support users.

It was no surprise how much appeal this technology had, as travel is an industry that is used to being based around the concept of a ‘travel consultant’, so having a digital assistant that can remind you about a visa application or to select a different fare because you have previously expensed an additional bag on your expense report just makes life easier.

It is more about creating this type of interface as a true omni-channel experience; the ability to use text chat, voice, digital assistant, web browser and switch between any of these channels as you desire.

Q: What about security concerns around the use of bots and the sharing of personal information? How are you managing that?

Data security has become such an important issue for tech companies that our former CTO now leads our own internal data security team.

Before any code is written we build security in by design and our dedicated security team works through the compliance and storage encryption processes needed to meet each global market we touch.

The reality is that things like bots are just a different user access layer over the smart back-end we have built.

Q: About a year ago, Serko acquired a U.S.-based expense management software provider, InterpIX, and you described it as an important part of Serko’s global growth strategy. Can you tell us more about those goals?

InterplX was an essential step in giving Serko a strong US base and immediately referenceable clients. They were strategically located near some major partners in the USA and a central point close to a hub where our main carrier flies into.

The technology was also unique in that the parts that InterplX had built around fraud, payment and compliance were very strong. Interplx has now become Serko's center of excellence for expense and they are building the new technology called “No Expense” which we believe will disrupt an industry that has been built on automating 1980s excel spreadsheets of spend.

Zeno is about making this process disappear especially for the travelers and users of our technology.

Q: What are the biggest challenges Serko is facing?

We are building a platform that can never go down. In technology this is the ultimate challenge to think about; software that should be available 24/7 and someone should be able to always have access globally and do the job your software was intended to make easier.

Building this at scale across all the regions, with the changing world of compliance is a fantastic challenge and one we are getting closer to perfecting every day. We have learned a lot, and we adapt quickly but as we go into every country we need to be mindful of the way they do business and that the way their content works could be different.

Being born out of the Asia Pacific region we know that we are not experts in rail so employing product people in market enables us to listen and learn.

Some people still believe we are building a corporate online booking platform, but the fact is this is a true platform of the future of travel it is more than an online booking tool - it is a shift in journey management and our own expectations of what this can do is extremely high.

What I feel proud of is that we are doing this with humility, transparency and honesty and building a community at scale that is being endorsed by some of the biggest brands in the world as the future of corporate travel.

Q: New Zealand tops the World Bank’s “Ease of Doing Business” ranking – how has that environment been a benefit to Serko? And conversely, what are the challenges of being located there?

New Zealanders are naturally welcoming, our culture as a nation is built around inclusion.  Being a small nation and remotely located we are forced to innovate and think global from day one.

We don’t have the fear of going global or of different cultures due to the underlying foundations of who we are. The biggest challenge of course is distance and the time it takes to go between countries, doing on average 100+ flights a year makes you laser focused on the travel experience and where you can make changes.

One of the persistent challenges of being located in New Zealand is around attracting talent when we have so many outstanding tech companies competing for the same talent pool, but on the flip side because of how New Zealand is view around the world there is amazing talent coming in from Silicon Valley and wider wanting to relocate and have a change in lifestyle.

Due to the success New Zealand has had on the world stage we are attracting the backing of some of the largest VCs and investment banks who are always looking at New Zealand tech.

Q: You began as an entrepreneur more than 25 years ago when you co-founded Interactive Technologies Limited. What have you learned along the way that would be useful to today’s startup founders?

I always have the saying that cash management is one of the foundations entrepreneurs should work on and manage well. I use the mantra “Cash is more important than your mother” when I talk to startup founders, because it creates a reaction.

But the fact is the best ideas fail through poor cash management. Commercialization of an idea is hard, you need to learn to run early, fail fast and fix fast, being late to the game can mean game over.

The other part founders need to get their head around is not being afraid of having a small piece of a bigger pie and also learning to let go and become the conductor of the business so they are expending energy and time on the business and not just in the business.

The transition to surrounding yourself with people that add strength to your weakness and trusting them is key. The last point is to make sure everyone in your company understands the strategy and what you are doing and why deals are being done.

If everyone is heading in the same direction, beating to the same drum, then you’ll be unstoppable.

Q: What do you like to do in your free time?

My downtime is mostly spent with my family and friends. I also enjoy being on the water and have a special spot on the Tutukaka coast, about two and a half hours out of Auckland, which has the best diving and fishing in the world, and I just love to switch off and think.

Some of my craziest ideas come from a weekend away, which always drives my executive team crazy!

I think they prefer me to be constantly busy as they know if I have down time I’m probably coming back with another crazy way of disrupting an industry.

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