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Our Refined Investment Focus, Part 1: Routehappy, Consumer Empowerment & A Redefinition of Flight Search

September 5, 2012

Brad Svrluga

This morning we were very excited to announce our investment in Routehappy, the world’s first flight experience engine. Partnering with our good friends at Contour Ventures, we’re looking forward to helping Bob Albert and his team save us all from a world of crappy flight experiences. TechCrunch does a pretty good job hitting the basics of the company here, as does GigaOm.

This investment represents a very satisfying manifestation of some hard work we’ve been doing over the past year to refine our thinking and investment focus at High Peaks, and I want to share some of that in this and a second, upcoming post.

Looking back at the history of what we’ve done well and where we’ve succeeded, plus forward to where we see important trends emerging in the technology landscape, we’ve identified a couple of key themes that I hope will dominate our investing activities in the year or so ahead.

As our thinking has coalesced around these themes we’ve been working hard to identify the companies that best marry a manifestation of the theme with talented, experienced management. We’ve been fortunate enough to identify two real standouts in recent months. Routehappy is the first, and I’ll speak to the theme they represent today. The second deal, and a discussion of that theme, will follow in a week or two.

At a high level, our investment strategy starts with a clear focus on the application layer of the web, largely forgoing tech-heavy infrastructure plays. (Important note: like any good rule, we’ll consider breaking it, making occasional exceptions when an infrastructure play is consistent with a strongly held thesis we have about the emergence of an important growth market and also led by a truly exceptional team. See our highly successful investments in TxVia – alternative payments, and Enterproid – enterprise mobile security management.

Within the web/mobile application world we are not, as a rule, investors in what most people think of as classic consumer web companies. Gaming, consumer mobile apps, and e-commerce are not places we’ve played nor do we expect to play. Of course, in choosing to largely steer clear of these sectors we know we are eschewing sectors that have defined some of NYC’s more stellar wins of recent years – OMGPop,Foursquare, Gilt, and Fab.com, amongst them. But we know what we know and what we don’t.

While straight up advertising, virtual goods, or commerce driven consumer plays will not be in the fairway for us, there is a segment of consumer opportunities where we are very interested, and we use the term Empowerment to characterize them. Routehappy is a stellar example of an Empowerment play.

By Empowerment, we mean the following: Groundbreaking consumer experiences that harness existing data to empower broader, better-informed choice through business-class decision tools and game changing user experiences.

OK, so what does that mean? It means that a whole world of new consumer applications and services is being enabled by the easier-than-ever ability to aggregate, standardize and present data from disparate sources. And today, it’s possible to do that in one real-time, multi-platform application that enables a whole new level of data visibility and information. Think of Mint.com as a key 1st generation instance of Empowerment. By aggregating all of your important financial data, Mint empowered consumers with a breakthrough experience – offering the first easily accessible, truly holistic view of our personal financial status. The first time I got all my accounts wired into Mint it was truly a “wow” moment.

Like many of the services that we think will be most interesting in the empowerment theme, Mint is free to consumers, and offers what we call a b2c2b business model. The b2c part isn’t the business model, it’s the engagement experience that enables the business model. The business model emerges because of the way these businesses aggregate and engage consumers, creating new data and insights as well as marketing opportunities for businesses who want to reach these consumers.

Routehappy will work this way. As their platform rolls out and becomes more robust in the coming months, I have little doubt that it will become your go to first stop when you’re looking for plane tickets for your next trip, be it business or pleasure. And like any online travel tool, it will be free to you. There will be the obvious booking fee revenue stream, of course, but in the process of offering consumers massively more information to guide travel decisions, Routehappy will also be building a completely unparalleled collection of consumer preference data. Nobody else will be able to use real flight purchase information to generate empirical data that exposes just how important things like wifi, premium seating, and in-seat entertainment are in driving purchase decisions. Routehappy will hold the keys to this data, and that’s a powerful place to be.

Stay tuned for more news and thinking about our interest in Empowerment. We’ve got a couple of promising opportunities in the hopper on this front and hope to announce another deal or two before the end of the year. in the meantime, I’d love to hear your thoughts and ideas on the theme in general, and about your experience with Routehappy more specifically. Bring ‘em on.

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