Can you give us a description of Masabi and where the name came from?
Masabi is a mobile ticketing technology company. We provide a service that enables people to use their mobile phone to find train times and prices, buy the ticket and use their phone as the ticket – thereby skipping queues and catching trains they might otherwise have missed. The aim is to reduce the amount of ticket machines needed by the train companies and the massive capital outlay incurred by those businesses as well as take a bit of pain away from the customers.
We’ve been around for ten years. When we started the business, we were in a sushi restaurant and we were starting a mobile gaming company and we thought we needed something cool and Japanese. We wanted Wasabi but somebody had already taken Wasabi.com, so we simply changed the W into an M, checked that it was not a swear word and registered the name.
For the ticketing solutions, does one need a special handset for this?
Any type of handset with a colour screen will work - even the simplest of phones like a Nokia 6300. We can give people the full timetable experience, take full credit card payments off them, give them back a human readable ticket as well as a machine readable encrypted barcode which can be shown to a gate or to a scanner held by guards, or to the mobile phones the guards would have for them to then check your ticket. We do have some NFC systems in development but it currently has quite a fragmented ecosystem and will take a bit longer to reach the mass market.
Since the app is free, please explain your current business model?
We charge the same price that they would pay if they bought the ticket at the ticket machine or on the web – including cheap advanced tickets. In the UK market there is a commission for selling and delivering tickets and we charge a small fee to the train companies out of that commission.
Masabi has been able to secure large stakeholders/partners (Virgin trains, thetrainline.com, Chiltern railways, Cross Country) in the rail industry and amassed several awards, in your opinion, what has contributed to the team’s success?
There are some quite strong barriers to entry in the rail industry and we had to establish our credibility with a number of major stakeholders. We initially did free work on a very small scale, learnt more about it and with what we learnt began to give consultancy to the regulators on how they could set up a system for mTicketing and then helped develop the UK rail national standard. Having set the standard was really a massive change for us. It provided us with huge insights to the rail industry, which we combined with our mobile experience. On the back of that, we were able to put in place deals with Atos, a massive integration company in rail, and also the trainline.com, another massive supplier in the industry. Signing those major deals was the point where the business went from a hope into a real business which had a real access to market.
Already being a dominant force in the industry with the m-ticket, what other products can we expect in the future?
The mobile will sell more transport tickets than the internet ever will. We are also looking to supporting customers throughout their journey. To start off we have live disruption information and live platform information delivered through their mobile. What will follow is notifications. i.e. If you bought a ticket to Birmingham next week you don't have to check if there is a problem yourself, the app will alert you if there is a delay etc. Also adding services such as ordering taxis when on the train or recommendations for places they can visit when they arrive. The aim is to make the mobile a helpful companion in the customers’ journey from the start to finish.
Masabi is gaining traction in the US - how has that experience been?
There are major transit operators in the USA that are excited about what they have seen in the UK. We are in active discussions with a number and hope to close on a few deals in the USA shortly. It is very exciting for us because normally when a UK company tries to move to the US, it often takes a long time to get traction. However, luckily for us the product appears to be the right fit and has come at the right time. As a result we are looking to actively expand our presence in the US. The UK is currently leading the world in mobile ticketing and our railways are also quite advanced. So they look to the UK as an example of what is possible.
You have been through all types of funding, from friends to angels to VC funding. You successfully raised a total of $6M in your last two rounds, please shed a light into your fundraising experience and what would be the key things you learnt?
The one thing I would say is that initially if you can get away with doing things with your own money, using bank loans, with grants or angels especially EIS, I highly recommend it. Never ever start out thinking that VC funding and an IPO are immediately the best end for a business. Moreover if it makes sense strategically to work with one of your big customers in the space and get investment from them together with advice on your board then that may also be a good way to start. The big customer/client will be more excited about actually having your product and how you can help them change the business they are doing. We have had a very good experience with our VCs who are highly supportive of our business and understand our market very well. This was a central factor in our choosing to work with them, as beyond finance they also provide useful contacts and industry knowledge.
You touched on IPO, in your opinion, when do you consider to be the right time for an entrepreneur to exit?
It depends on the company and individuals. There is no perfect time to exit. It depends on what you really want to do with your life. Some people would really want to concentrate on doing the technical side, some people really want to do another start-up. It’s good to recognize what your skills are, for instance if you are really good in doing the early inception stage of a business and you’re less good in doing the steady state growth then don't try manage the steady state growth and hand it to someone else and go back and do the early stage again.
Whenever you’re running a business there will be value inflection points, times when you have announced something or done something which results in a massive jump in value and after that there is a period of steady growth and you have to find the next big thing you are going to do. Every time you have done one of those very big value inflections, have a quick look around the state of the market and your own business and decide if that is an appropriate time to exit. If you have external investors who have exited before then they will really help you have a look at that, if their goals are aligned. What is important is when you look at VCs, find out where they are in their fund life-cycle you might find that it is the right time for you but it is not the right time for them.
What advice would you like pass on to the younger and upcoming generation of start-ups?
Solve a real customer problem - solve a real business problem. If you have only done one, you will not get through the credit crunch. Make a solution where the mobile isn't a baby internet. Don't be confused to think that only lawyers can understand contracts and only lawyers can question them. It boils down to using real normal English and making sure that everyone in your founding team understand what they have agreed to do with each other and with the business. Draw up a standard agreement when you start that sets up what all of you are going to provide and under what circumstances someone might have to leave. You have to agree in advance how you are going to handle a founding members’ choice to leave. Don't leave things expecting someone is going to make it right. Let everything be clear for all involved parties to understand. When the business grows then get lawyers to re- draft the agreements.
Lastly if people want to learn more about growing a business rapidly then they can come and spend time with us growing our business in the USA, UK and expanding our products. We are currently aggressively recruiting due to the phenomenal interest we’re receiving, so if you want to get experience in a start-up check out the job openings on our website. Thanks