Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

Utrip

AI-powered travel planning services

General Information
Category
Travel
Country
United States
Started
In 2012
Business Failure
Business Outcome
Shut Down
Closed
By 2019
Cause of Failure
Mismanagement of Funds
Founders & Employees
Number of Founders
Two
Name of Founders
Gilad Berenstein, Yair Berenstein
Number of Employees
Between 11 And 50
Funding
Number of Funding Rounds
4
Total Funding Amount
$6M
Number of Investors
13
Description

Utrip was a travel planning startup that used Artificial Intelligence and user recommendations to create highly personalized itineraries for its clients. Utrip was started on July 15, 2012, by Gilad Berenstein, his engineer-father Yair Berenstein, and Edan Shahar. They managed to raise a corpus of $4 million from some high profile investors that included Acorn Ventures, Tiempo Capital, and some executives from Apple and Costco.

Apart from helping travelers, they also had a white-label product called Utrip PRO which was sold to hotels, travel agencies, and DMOs (Destination Marketing Organizations) that wanted to offer travel planning on their websites. With millions of traveler profiles and data points gathered through its partnerships, it did look like they had cracked personalization for travelers. But unfortunately, it was not the case.

Cause of Failure

Despite having 80 clients, most of them had limited budgets which made it difficult for Utrip to gain traction and be profitable. The costs associated with sales, marketing and keeping the recommendation engine alive was too much for them since their expenses were higher than their revenue at one point. The investors wanted to see growth and there was no way they could show traction without spending more. They were caught in a vortex they had little control over as only an external push could save them. 

For Utrip to survive, they either had to find investors or be acquired. The founders turned to their biggest clients to see if they would be willing to invest in Utrip. Many of them balked at the idea because they were worried that they would be investing in a product that its competitors would use. 

Another aspect of its failure was that the founder himself admitted that they spent more on their technology and concentrated less on sales and marketing. B2C travel startups have a tough time driving traffic as the biggies like TripAdvisor and Expedia could easily outdo them with their marketing. 

There was also a lot of banter about how the investors were not properly communicated with during the fag end of the company. While there is no way to ascertain that, we can safely say that things weren’t okay between the founders and the investors. Media company Skift says that trip-planning startups have failed more than other companies in the travel space. 

A buyer was interested in Utrip, a 94-page acquisition document was prepared and just three days before the signing, the deal was called off. The lawyers of the buyer unearthed a patent by a rival company called WayBlazer that had a direct conflict with Utrip’s technology. Attempts to buy the patent from the company failed. Seven weeks after this incident, Utrip shut down.

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