On a Thursday night in October, we opened our user conference at the Fillmore in New Orleans. The energy in that room was incredible. We shared that we 26xed the AI usage every Tern user got, launched a brand-new mobile app for advisors, and unveiled an all-new email marketing suite. Then we announced Hotels by Tern, with a guarantee that agencies get paid their commission the Friday after checkout, every time. I even had a slide saying "Tern will never become a host agency".
The next morning, we gave 90 minutes to a session on moments. Our investors told the room why they invested in Tern and what they believe about this industry.
Right after it ended, an advisor to Tern pulled me aside. Someone had just called and wanted to know what was going on. They'd heard Tern had a plot to become a host agency and steal all their advisors.
Instantly the euphoria of the event wore off. It was like I had been punched in the gut. We'd just watched agency owners, advisors, designers, and engineers tell their stories of the impact that technology has on their business and how it's freed them up to be more human.
Once the sting wore off, I started to understand why people were asking.
There aren't many venture-backed companies in this industry. One of them has made headlines building a tech-enabled host that competes with agencies for advisors.
Another software company launched a hotel product that pays advisors directly and cuts out the host.
Tern is venture-backed too. It's easy for people to assume we are running the same play more quietly. They assume the only way to build a business in this industry that would warrant the type of investment Tern has gotten is to compete for their economics.
So let me be direct. We will never be a host. We will not compete for the economics of hosts, agencies, or advisors. We will build a generational business that empowers advisors, agencies, and hosts to grow dramatically. In this series, I will explain exactly how.
3 promises you can hold us to
- Tern will never be a travel agency or a host. We will never recruit your advisors or try to become their agency.
- We will never build features that let anyone cut agencies or hosts out of the commission flow.
- Advisors and agencies own their data and their clients.
When Brian, Katie, and I started this company, we expected it to be our last job. These promises are meant to last that long.
Hotels by Tern follows the same rules
Hotels by Tern makes Tern a supplier, a lot like a bedbank. The agency that holds an advisor's credential decides whether that advisor can use it. The commission goes to that agency, paid the Friday after the guest checks out. Every time.
The combination of the agency back-office with supply is a new model. It's one that benefits advisors and agencies greatly in helping them get paid every time at a speed that was never before possible.
Before launch, we walked our agency partners through exactly how it works. Over two hundred agencies have signed up for Hotels by Tern in the first week.
Where Tern's revenue comes from
Tern makes money from software license fees advisors and agencies pay. We will also make money by replacing the aging infrastructure underpinning travel. None of it comes out of your commission.
That infrastructure is old, slow, and expensive. Suppliers pay GDSs a fee on every booking to reach advisors. Commission processors charge fees to move money that still arrives weeks late. These companies earn billions of dollars a year on the backs of advisors and agencies. Tern will change that.
That's the revenue we're going after. As we replace it with faster, cheaper infrastructure, more of every dollar stays with the people who sold the trip.
The value of an agency and why we would fail at it.
I've never met anyone who started an agency because they love commission reconciliation. Ask a host owner about onboarding paperwork or chasing late payments. Most will tell you it's the worst part of the job. That's the work Tern builds for.
Hosts are built on people. They recruit new advisors, train them, and help them run a business for the first time. They hold relationships with suppliers, where one person can call another and get an exception made when a trip goes wrong. Many run a dozen events a year. No app replaces 30 advisors in a room working out how to grow their businesses together.
I manage about 60 people at Tern. The hardest part of my job is the humans. Communication, onboarding, training, and building a culture people want to be part of. No software has done any of that for me, and I run a software company. A host does it for 1,000 independent contractors who don't even work for them.
Culture eats strategy for breakfast. We believe that about Tern, and we believe it about this industry. Travel is human, and the businesses that win in it are built on people. Tern builds the infrastructure, and agencies build the communities.
I'll write a lot more about that later.
Every advisor should be able to find a community that can support them in taking the next step in their entrepreneurial journey. I believe the only way that happens is with a diversity of agencies and hosts. Different focus areas, different cultures, different sizes.
By definition no one company can build that. I know Tern can't. That's why we wake up every day to build tools that empower every host and agency with great technology so they can focus on building great cultures.
Let's talk
If you run a host or an agency and have questions, email me at david@tern.travel. I'd rather hear a concern from you directly than secondhand.
This industry was built on relationships. We intend to earn ours.
David Shull
CEO and Co-founder, Tern