I admit that our offering sounded far-flung to most people in the travel industry as well. The early days of Winding Tree were all about the search for the right pitch, the simplest possible explanation of what decentralization can do for travel. We'd had hundreds of meetings and calls with industry professionals, and we were often dismissed as borderline crazy. A few persisted in unraveling the crypto enigma, and even the best of us took at least a few days to put two and two together. Understanding crypto is no harder than that! But humans are not wired to think in terms of decentralization, or perhaps blockchains are too magical, too good to be true. I get it; it took a while for me to wrap my head around it. But when you get there… As a prominent venture capitalist acquaintance told me: "I saw the light!"
In early 2022, I was approached by Mitra Sorells, editor-in-chief at Phocuswire, a news outlet spun out of Phocuswright, the "most respected travel research authority and events brand in the world," as they say on their website. We'd met before, briefly, and Mitra wanted to know the latest Winding Tree news. We were working on WIN then, a fully smart-contract-based hotel booking website, and we'd already signed up DoubleTree by Hilton in Amsterdam for the upcoming Blockchain Week. It turned out that Phocuswright Europe was taking place in Amsterdam in 2022, and their whole team was staying at the same DoubleTree that we'd already engaged for business! Naturally, I suggested that Phocuswright try out our booking experience and save 50% on the booking cost. To my utter astonishment, she refused the opportunity to both save a fortune on their hotel bookings and at least try and see for themselves how a blockchain-based booking system could work. Mitra and her team had written tens of articles about blockchain and its applications in travel, and perhaps her lack of enthusiasm made me ask her whether she had a crypto wallet. I took it for granted that she did. One assumes journalists are honest people who try to get to the nitty-gritty of the subjects they write about. Well, I've already spoiled the punchline on this one. Of course, she never tried to do anything crypto-related. To this day, I am puzzled by this. Is it the bad rap that crypto gets because of all the scams, all the exchange collapses, etc? We'll never know.
WIN (short for "Winding Tree") was an absolute pleasure to work on since we used all of our own infrastructure, and we made it for crypto people, who, perhaps for the first time in their lives, could use crypto in real life. It was straightforward to book, the check-in experience was speedy (of course, we had to teach the staff to work with our system), and DoubleTree gave us a whopping 50% discount off their market rate because they were so excited to give WIN and Winding Tree a try. We didn't even charge any commission since we only wanted to test whether a blockchain-based system like the one we were building would work in real life. It worked like a charm! We had a bunch of happy customers, but behind the scenes, we couldn't convince the hotel to receive crypto as payment or designate a person to manage room availability and bookings as they came in, so we had to be the evil intermediary. What we proved with WIN was that crypto people are happy to book hotels given a sizeable discount. Well, at least something. We understood that even big hotels like DoubleTree lack the resources to deal with crypto.
-Our next step was to scale our moderate success in Amsterdam. With ETH Barcelona and EthCC (Paris) approaching, we got to work. A few hotels were secured for both events, and organizers promoted WIN extensively. And yet we failed to sell a single room! The only insight we could salvage from the wreckage was that a 20% discount is not enough even for crypto-conference goers to change their behavior. Considering the amount of work required to manage a single hotel (remember, they could not deal with private keys or accept crypto), the remaining slim margin of, at best, 5% was not enough to sustain this model.
+The reluctance of most companies to deal with crypto at all, let alone to accept it as a form of payment, is not a mystery. Regulatory uncertainty of the status of crypto in most countries and complete prohibition in some did not help our case at all. Moreover, business process optimizations enabled by smart contracts only work when you operate entirely in the world of crypto. Everything falls apart when you have to convert crypto to fiat to pay for a hotel booking (and the hotel then has to convert it back to fiat on their end to pay their suppliers). Instead of saving and optimizing, one would experience a monstrous complication and increased prices (crypto/fiat conversions aren't free.) But I'm getting ahead of myself…
+We had to build upon our moderate success in Amsterdam and prove the demand hypothesis. With ETH Barcelona and EthCC (Paris) approaching, we got to work. A few hotels were secured for both events, and organizers promoted WIN extensively. And yet we failed to sell a single room! The only insight we could salvage from the wreckage was that a 20% discount is not enough even for crypto-conference goers to change their behavior. Considering the amount of work required to manage a single hotel (remember, they could not deal with private keys or accept crypto), the remaining slim margin of, at best, 5% was not enough to sustain this model.
A system like Winding Tree can work in a world where the general public is comfortable dealing with crypto. And that world is definitely coming. It's hard to know whether it'll be here in 5, 10, or 20 years. So, we thought, perhaps the winning strategy for Winding Tree was to use whatever blockchain-based components we had built and apply them to generate a profit in the meantime, hoping we'd slowly build out the decentralized future we all so desperately wanted to get to.
The work on that alternative approach had started years before WIN (we knew we had to pursue different strategies to maximize our probabilities of success). I'm talking about our project with Ernst & Young, a company that dazzled us with the prospect of serving thousands of people who collectively spend more than a billion dollars on travel each year. Creating a two-sided marketplace, like Winding Tree, is extremely hard, and the tech is the least of your worries. What's hard is to coordinate buyers and sellers! It made sense to cut corners and, instead of dealing with many companies, buyers, in this case, replace them with a single one. We formed a separate company called Simard (many firms still don't like crypto), signed contracts with suppliers E&Y wanted to buy from, and underwent extensive audits. Big companies like EY are notoriously slow, so it took us years until we got to a working product. When we did and had transactions, revenue, and promises from our partner to gradually scale it, EY management changed, and the project was canceled.
It has been a while since I started to think that the world, or at least its travel-tech subset, isn't ready for blockchains. Over the years, we met many people excited and supportive of Winding Tree's vision. But after a while, I realized we suffered from a selection bias. We talked to conference attendees whose job is to be excited about anything new (hello, Chief Innovation Officer!). These journalists surf the buzz waves (chatbots yesterday, blockchain today, AI tomorrow). Some people were genuinely interested in what we were trying to achieve. Still, even then, they didn't realize what our vision entails: the changes they would have to make in their organizations, not just in terms of the tech stack but also business models, security practices, etc. A good friend of mine, a devotee of Winding Tree, once showed me the results of a short introductory course we performed for him and a few employees of the hotel he was in charge of: his seed phrase was posted on the wall of his office. He was adamant nothing would happen to it since he trusted every one of his employees. Indeed, it is something to strive for in an organization, but not the best (crypto) key management habit.