How We Started: The History of iSeatz
On August 1, 1999, Founder and CEO Kenneth Purcell opened the iSeatz offices for the first time. Now, 19 years later, we sit down with Kenneth to talk about how the company began, how iSeatz was a technology pioneer in New Orleans and how it became the company it is today.
iSeatz: Can you take us back to the very beginning of iSeatz and tell us how the idea came about?
Kenneth Purcell: iSeatz opened its doors on August 1, 1999. Starting iSeatz was a collaborative process that involved a bunch of different things happening all at the same time.
The original concept was a software program that helped hotel concierge entertain their customers while they were waiting for the hotel concierge to book restaurant reservations.
In 1996-97, I was working for my aunt, who was the publisher of Where Magazine. She and I saw that people were just waiting at the concierge stands while the concierge was making restaurant reservations. One of the main distribution points for Where Magazine was the concierge stands. She developed a few versions of a CD-ROM that had different content about local things to do, and we went out and gave computers and monitors to concierge stands around New Orleans.
The technology at the time was still very clunky and slow. Her realization was that if there was some way to automate what the hotel concierge were doing to help them do their job better, there could be an opportunity to make a transaction fee.
Meanwhile, I had spent several years taking technology related classes in college, learning about databases and website development. I was also spending time raising money and interning for a startup biomedical company here in New Orleans.
Additionally, in college I was waiting tables when I broke my wrist. I could not carry the heavy trays of food, so they put me at the front host stands. I had to take notes when people called to make reservations and I had to write it down, with my left hand in a paper logbook.
It occurred to me that this restaurant needed a digital logbook, instead of paper reservation manifest. So, when I was selling ads for Where Magazine in the summer with my aunt, I overheard this idea, basically if we create a digital logbook and leverage the internet to control availability to a user experience with the concierge, I bet there is a way to make this happen.
iSeatz: In the late 90’s, the internet and technology were around. Were a lot of people leveraging it for front-end customer service? How did you sell this idea of a digital logbook?
Purcell: I remember there was a definitive question that a lot of restaurateurs were asking if this whole internet thing going to pan out. They felt like the internet was a very nebulous concept and they were not certain that it was going to continue, let alone move the needle in any meaningful way for their restaurant.
There was no high-speed internet yet, and there was no internet access at the front desk of these restaurants, much less even in the offices of these restaurants. They only had fax machines in the establishments.
So, I tried to get the restaurants to actually adopt a Table Management System, which was the first system that we built. We had to get them to give us inventory, and then explain to them the value of managing their tables through this system on the internet. The way we did this was to build these restaurants a table map and will help them allocate inventory.
We built in business rules for different types of tables and the time it normally takes to turn each table. And trying to school up these restaurateurs who knew all of this of course, like the back of their hand, trying to get them to use web-based tool when there was really a real lack of certainty whether or not this whole internet thing was going to pan out, it was a very interesting process.
And what we found was that really the concierge was an interesting use case for the tool. My idea was to not relegate this tool to hotel concierges, but to really be able to use this tool for any consumer.
So, the premise that I had when I started iSeatz was that it was the concierge booking restaurant reservations was one use case, but the much bigger use case was because of the potential for the general consumer to come to the site in droves looking for restaurant reservations. That’s what we built our business plans on. That’s kind of how we started raising money and that was when the current concept really took off great.
iSeatz: Now today, iSeatz is much more than a table management system. In fact, the business model has pivoted from restaurant reservations to a complete system for booking ancillary products. Can you talk about how you made that transition?
Purcell: While it’s a tale of one company, it’s a story of evolution. In 2000, We were pitching Expedia to use our private label restaurant reservation booking engine on their website.
At a dollar a person per transaction, that’s not a lot of money. What Expedia came back to us wanting was for iSeatz to go negotiate with restaurants for prixe fixe menus with a commission on every meal that was pre-sold. This is the same way Expedia pre-sells hotel rooms. So, we started calling on our restaurant connections. Sure enough we were getting 15-25 percent for every meal we pre-sold and we would share that transaction revenue with Expedia.
We then signed Travelocity and started pitching Orbitz on the same thing. Orbitz liked what we were doing with restaurants and the prepay dining. They wanted to know what else we could do with this technology. We were way ahead of our time and we tweaked the technology effectively. We started to add more capabilities to it, to be more comprehensive than just restaurants. In 2003, we started adding on things to do along with restaurants for pre-sale. I went around contracting a bunch of different suppliers all over the world. This allowed us to start contracting activities on margin. We built an inventory management tool that allowed us to load restaurant content and things-to-do inventory. This was then presented and distributed through an API. We were primarily focused on OTAs because that’s really where the volume was at the time.
And so, because iSeatz had seen great success with the OTAs in 2005 we started pitching airlines. We believed that airlines, just like the OTAs who had not been doing anything ancillary related, should start selling third-party ancillary products on their websites.
So, we started saying to the airlines that they should emulate what the OTAs are doing. Cross-sell ancillary products in your purchase path, and in other places on your site. Southwest signed on. Air Canada signed on. Delta wanted iSeatz to build a one-stop shop for all of their ancillary products including global rental car and activities booking engine from all ancillary things.
The first true iteration of our management solution was for Delta Airlines. In 2007, Delta was the first airline to launch an in-path cross-sell of third-party ancillary products, and that was 11 years ago. We started then taking that ancillary one-stop shop concept to North West Airlines. Subsequently many airlines signed on. They saw great returns from ancillary sales.
We were the first in the space to offer an API cross-sell booking of third-party ancillary products. We have yet again thought about where the market is, and we see that the hotels are feeling a tremendous amount of pressure from peer-based lodging companies. This indicates that there is disruption in hotel space. The hotel industry has yet to really adopt a well thought out and executed ancillary marketing program. That’s why we’re focused on the hotel ancillary market now.
iSeatz has a proven record of success with OTAs and airlines, we know we can help hotels with ancillary strategies.
This is part one of our two-part series for Founder’s Day. We also talked to Kenneth Purcell about where he sees the industry and iSeatz are headed.