OutofOffice.com entrepreneur Darren Burn seeks rapid expansion of LGBT-friendly travel brand

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Darren Burn of OutofOffice.com stood in front of the London Eye

LGBT-friendly luxury travel company OutofOffice.com has enjoyed month-on-month growth since launching in January. As co-founder Darren Burn – an IoD 99 member – looks towards expansion, he asks our expert panel how best to attract venture capital

Few entrepreneurs can claim to have interviewed three prime ministers, covered the London riots and produced coverage of a royal wedding. But former journalist Darren Burn says that his nine years in ITN’s newsroom proved a perfect grounding for the rollercoaster ride of launching a start-up.

OutofOffice.com, the travel business which he launched last January, offers tailor-made luxury holidays that are gay-friendly but not aimed exclusively at the LGBT (lesbian, gay, bisexual, transgender) community. The idea came after he and his ex-boyfriend were refused a double bed in an Egyptian hotel, despite Burn having extensively researched where would be safe for them to stay.

“That shouldn’t have happened. I know there are places where it is technically illegal to be gay but fine to go there. In the Maldives it is punishable by death under Sharia law to be gay but if you go to a five-star luxury resort on honeymoon you are perfectly welcome,” says Burn.

His plan might have remained on the drawing board had he not read, in summer 2013, that Ross Marshall and Andrew Harding, founders of Palatinate Group, were running a competition to find a new website idea to complement their existing Your Golf Travel and Spa Breaks sites.

Burn beat 250 entrants in a Dragons’ Den-style pitch to win £60,000 investment to launch OutofOffice.com. Ownership is split “roughly equally” between the three. “The LGBT travel market in the UK is valued at £6bn a year and in the US at $85bn (£69bn). Ross and Andrew saw the potential to change the travel market for gay people and make some money,” he says.

Burn, who swapped the newsroom for Palatinate’s offices in Farringdon, London in April 2014, hit the ground running, working with finance departments, learning how to forecast and developing content strategies. “Skills I learnt at ITN came in handy, such as meeting important people and having three deadlines a day. In the newsroom you work on a story and forget about it the next day; now I get to work on a long project, which I love.”

With destinations as far-flung as Easter Island and St Lucia, as well as popular gay resorts such as Sitges in Spain and the Greek island of Mykonos, OutofOffice tries to set itself apart from mainstream travel companies by working with local LGBT groups and charities, and the hotels themselves, to ensure customers are welcome, safe and informed.

“There’s a phrase, ‘pink washing’, where someone takes an existing product and adds an image of a gay person on it and that’s it. The LGBT market isn’t necessarily looking for anything different but they are looking to know you understand them. We’ve mystery-shopped a lot of travel companies over the last nine months and they’re giving out the wrong advice. You don’t want to send someone to a country where it’s illegal to be gay with the wrong information.”

The brand name, he says, reinforces his aim to appeal to a wider market (“everyone switches on their ‘out of office’ when they go on holiday but the word ‘out’ appeals to the LGBT market,”) while photography on the website includes images of same-sex and opposite-sex couples – a rarity among mainstream companies, says Burn.

Of the hundreds of the customers who’ve booked with OutofOffice this year, 35 per cent are straight. “Everything we do from the ground up is LGBT-friendly and by default that usually means it’s straight-friendly. We’ve been embraced by a wider market because we’re inclusive. Other travel companies are scared to break the mould.”

With business growing month-on-month, Burn aims to double OutofOffice.com’s 10 sales staff by the end of next year and see turnover exceed £2m in his second year of trading. Overheads are kept low by using some of Palatinate’s back office functions including finance personnel and outsourcing IT.

“The beauty of our business model is we have no inventory or assets. Our main overheads are staff salaries and marketing spend. The business model is similar to the way Golf and Spa work. They don’t own any golf courses but they take a commission from suppliers. We like to think if a customer can dream it, we can build it.”

Despite sterling’s fall since the EU referendum and the “short term knock-on effect” in terms of pricing from suppliers, Burn remains positive. “You have to be mindful of what’s happening and how it may impact on your business five years down the line. Inevitably there will be people who change their travel plans but I think there are fewer price-conscious people at the luxury end of the market. Those people will always want to travel and recognise the value.”

He has also lengthened the opening hours of his sales office to capitalise on the American travel market. Opening a US office remains a possibility.

“A higher percentage of LGBT people in America have a passport than the wider market, and 23 per cent more disposable income, which goes on things like travel.”

Venture capital, he says, is the next logical step to expand the brand in the UK and into other territories. “The next year or two are about honing the business model and achieving the highest possible margins on the right products for the target audience. In early 2018 we want to look at a bunch of venture capitalists to bring in the ability to scale in a big way.”

Which brings Burn on to his question for this month’s panel of experts from Director‘s reader panel

How can I attract venture capital to fund OutOfOffice.com’s next stage of growth?

Simon Greenly, chairman, Greenly’s

A portrait of Simon GreenlyMay I start by slightly rephrasing the question to read: how do I make my business sufficiently valuable to attract a VC who both understands and agrees with my vision of the future?

The point being that it is really important to get alignment between investors and the business leadership. Some want to invest and flip, others to invest and build. Both positions are valid: what is yours and does it align with theirs?

So what are the essential ingredients for building a VC-investible business? Sound financial control, a compelling value proposition operating in a clearly defined niche market, a strong leadership team and a business that is not totally reliant on one person. Add to these elements sustainable and preferably high margins and a clear, scalable – especially into overseas markets – business model with tested pricing.

The icing on the cake is to be found in growing recurring income streams. These are highly valued by investors of all categories and can hugely improve multiples when a business is being valued.

Lastly, if you are aiming to raise money from an invest-and-flip VC, make sure you are very clear about the exit route. Simon Greenly is a member of IoD Surrey

Justin Donne, president, Justin Donne Consulting

A portrait of Justin DonneIn the consulting world I use a systems thinking approach to engineer turnarounds. I analyse the businesses on 10 different leverage points for intervention and rank them in order of impact. Along the way I’ve advised and consulted several companies in raising venture capital as well as managed venture capital myself.

You have all the elements in place to make your company attractive to venture capital. The question is how you present it and find the right people to present to. The statistics you mention are very attractive. List the ones that would be most appealing to venture capitalists, such as those that show trends in growth.

If I’m investing money, or if I’m responsible for investing someone else’s money, I’m looking for roughly a 10-fold growth.

One way is to highlight trends and then tie them to where you’re heading. Show numbers such as your gross income and the number of customers, and demonstrate where there’s a growth trend. If there is a prospect of expansion, can you reach 10-fold growth in value and in what timeframe? The shorter the better but, of course, some long-range investors don’t mind. Justin Donne is a member of IoD East Midlands

Paul Martin, managing director, Excel in Business

A portrait of Paul MartinWhenever you’re looking to get VCs involved you’ve got to think about how you want the VC partner to affect your business, because typically what comes with the money is a person on your board.

For example, there might be a fantastic engineer who has a wonderful product but no knowledge of sales and marketing – and they may want the VC to plug those areas, or they might just want the money and the chance to plug those areas themselves. Knowing which you are will help you attract the right investor.

I would also recommend consulting with a lawyer in order to get a common contract (if applicable) that would apply worldwide. From a VC’s perspective having different contracts and liability in different countries can be seen as a risk – consistency and simplicity when it comes to contracts will save you a lot of money and reduces the risk for the investor.

It sounds like you are on top of the analytics of your business – and the more you can be seen to be on top the better, as VCs will ultimately be looking to minimise risk and maximise potential. They want proof that you’ve delivered in a market and proof you’re prepared for the next step. Paul Martin is a member of IoD London

Darren Burn of OutofOffice.com stood in front of the London EyeBurn’s response Thanks very much to Simon, Justin and Paul for their comments and time. We certainly know that the model is scalable and I was particularly interested in Simon’s point about overseas expansion being attractive to VC. We have a lot of work ahead to continue growing the business and proving ourselves but the analytics stack up and I’m excited about the potential to excel in the years to come and turn OutOfOffice.com into a truly global tailor-made travel offering both in destination and client base. I’m looking forward to exploring the world of VC and finding the right partners to work with to take our business to the next level while continuing to appeal to a large, yet niche audience. Darren Burn is a member of IoD 99

outofoffice.com

CV

Darren Burn

Age 30

Education Winchester College; King’s College, University of London, a First in business management and economics

Career Roles at ITN (August 2005 – April 2014) included researcher, reporter, deputy news editor and acting head of UK planning, where Burn interviewed the likes of David Cameron and Gordon Brown, covered the Woolwich terror attack, and worked on the 2010 general election

Hobbies Age UK volunteer, self-confessed “newshound”, Janet Jackson fan (Burn interviewed her for ITV), fine dining, self development “through both reading and mindfulness”

What advice would you give to OutofOffice.com? Comment below

To join our reader panel or to seek its advice, contact us

About author

Richard Dunnett

Richard Dunnett

Richard Dunnett has been the associate editor of Director magazine since March 2013. He writes about entrepreneurs, SMEs, FTSE 100 corporations, technology, manufacturing, media and sustainability.

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