Paul English’s Lola Nabs $20M For “Conversational Commerce” Play

Xconomy Boston — 

Paul English is more convinced than ever that something he calls “conversational commerce” is the way of the future. He’s talking about consumers ordering stuff via text messages with a software bot or, if you’d believe it, an actual human being.

The Kayak co-founder’s new travel technology startup, Boston-based Lola, is part of this emerging trend. The 40-person company, which today announced a $19.7 million Series A round, is currently beta testing its mobile app that enables users to hunt for and book trips by texting with a human travel agent on Lola’s staff.

English, Lola’s CEO and co-founder, ran an experiment two weeks ago in which he asked the company’s travel agents to try communicating more with customers via phone calls. In all but one case, users preferred interacting through text message, he says. “That caught me off guard,” he says.

But it makes sense, given the way societal norms and e-commerce have evolved, he says. Smartphone users spend most of their time on chat apps, like SMS apps, WhatsApp, Facebook Messenger, and Snapchat. “Chatting is just the natural way” many communicate these days, English (pictured above) says. “People live asynchronously now, where they’re doing multiple things at once. It started with teenagers five to 10 years ago, and now it has permeated culture.”

At the same time, he says, phones have become “a device to ask people to do stuff for you,” like deliver groceries to your home, pick up your dry cleaning, and so on. “Look at that shift and the fact that chat is the most popular app. That would predict that for a larger e-commerce category—that being travel—you chat with a strong travel agent and tell them to do all the research for you so you don’t have to do it yourself.”

Still, despite startups’ and investors’ increased interest in chat-driven commerce, English says he hasn’t seen much successful execution. “I’m also sure our first product is not going to get it right,” he says.

More than 1,000 people have tested the first version of Lola’s iOS app since December, and the plan is to release it in the App Store in May. However, it’ll be invite-only, so the company’s 15 travel agents don’t get overwhelmed. “I don’t want to suddenly have 50,000 people try and contact 15 agents,” English says. “We’ll gradually open the spigot up” once the company understands the workload people can handle.

Here’s a bit more about how the service works: You send a text through the app saying you want to visit, say, San Diego next weekend. A travel agent responds with a recommended hotel in the city, based on your prior purchases. They can send you a picture of the hotel, and if you click on it, it might link to more info about the amenities and reviews from patrons. If you don’t like that recommendation, they could also send you a digital map that pops up in the app and allows you to indicate exactly where in the city you’d like to stay while visiting, English says.

Users can book any facet of the trip through the app—flights, hotel, rental car, and more. They can also use the app to ask “any question whatsoever” of the Lola team, from finding information on passport and visa rules to sending a panicked message late at night confirming when their flight leaves. “People love the fact that at 3 in the morning they can text someone,” English says. (Lola currently has some travel agents pulling overnight shifts, he adds, and it will soon have agents reachable 24/7 after it hires more people.)

“You type [a question] into the app, and we do all the work behind the scenes to make sure what you need gets done,” English continues.

On the back end, Lola’s team of 15 engineers and data scientists are building software to make the travel-booking process as simple as possible. That includes improving the chat app and creating a predictive system that caters flight and hotel recommendations to the user. “One of the key things about Lola is we don’t show you 300 hotels and 500 flights. We make them all available to you, but we work really hard to show the two or three that best fit you,” English says.

Most of Lola’s software and data employees are developing “modern tools” for travel agents that boost their productivity, English says. “Imagine if we were to rewrite from scratch, but instead of writing it for tech-savvy travelers, we wrote it for professional travel agents.”

Yet the most advanced software in the world can’t solve every challenge ahead for the startup. For one, Lola can’t scale up to more users as easily as most software companies can. “To handle 10,000 people a day, I’ve got to hire a lot of travel agents. We have a supply and demand problem I’ve never done before,” English says. “It’s a radically different business.”

Right now, Lola’s travel agents are full-time employees with benefits and stock options. As the company grows, it could add more travel agents by … Next Page »

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