Utrip

What did it do?

Utrip was a travel-planning platform that took a few basic details from travellers and used machine learning to produce personalised itineraries and sightseeing recommendations. The tool was free to consumers; its revenue came from licensing the software to hotels, cruise lines, airlines and destination organisations.

Why did it shut down?

Utrip had reached around 80 corporate clients, but it staked its future on a critical acquisition deal. A 94-page acquisition document was drawn up with an interested buyer; but three days before signing, the buyer's lawyers found a patent belonging to the rival WayBlazer that directly overlapped with Utrip's technology, and the deal was called off. Attempts to buy the patent also came to nothing. About seven weeks later, in May 2019, chief executive Gilad Berenstein told corporate clients that the company would cease operations. The closure caught clients unprepared; Atlanta's ATL Airport District had sent its USD 10,000 payment after a renewal request just five days before the closure announcement.

The story

Utrip, founded by Gilad Berenstein in Seattle in 2011, set out to personalise travel planning. Travellers supplied a few basic details, and the platform used machine learning to recommend activities and itineraries to suit them. The real business behind this tool, which was free to consumers, was licensing the software to tourism companies such as hotels, cruise lines and airlines. Starwood, JetBlue and Holland America were among its clients.

In early 2017 the company raised a USD 4 million round with participation from executives at Apple and Costco as well as Acorn Ventures, Plug and Play and Tiempo Capital. Over time it reached around 80 revenue-generating corporate clients, many of whom liked the product.

The beginning of the end came with acquisition talks. A 94-page deal document was drawn up with an interested buyer. Three days before signing, the buyer's lawyers found a patent belonging to the rival WayBlazer that directly overlapped with Utrip's technology. The deal was called off, and attempts to buy the patent also came to nothing. About seven weeks later, in May 2019, Berenstein told his corporate clients that Utrip would cease operations.

The closure took both investors and clients by surprise. Atlanta's ATL Airport District, responding to Utrip's renewal request, had sent a USD 10,000 cheque to use the software for another year, just five days before the closure announcement. In Skift's assessment, Utrip had the potential to become a respectable, if not spectacular, business.

Eight years of work ended when a future staked on a single deal collapsed at the last minute over a patent problem. Utrip's story is a reminder that the exit plan needs to be prepared at least as carefully as the product.

Lessons for founders

• Before entering an acquisition process, scan the patent landscape around your own technology; a conflict found by the buyer's lawyers can wipe out months of work at the last minute.
• Do not stake the company's future on a single acquisition deal; while negotiations run, pursue an alternative plan that extends your cash runway.
• Collecting renewal payments from clients when closure has become likely damages your reputation and your legal position; communicate with clients promptly and openly.

Sources

1. Seattle travel planning startup Utrip will shut down after critical deal falls through (GeekWire)
2. What happened to Utrip? Abrupt end to Seattle travel startup blindsides investors and clients (GeekWire)
3. What Utrip's Tragic Final Year Can Teach Other Travel Startups (Skift, 2019-06-25)

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