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#2 nemo

#2 nemo

The modernised travel agent doing £2.7 million in ARR

Luke Knight
June 07, 2024 • Reading time: 7 minutes

I sat down with Tom Harding to talk about the Numbers of his company, nemo.

What is nemo, and who is Tom?

nemo is a bespoke trip-planning platform. Focusing on three core regions: Africa, the Indian Subcontinent, and Latin America. These destinations, expertly crafted, all combine adventure and beach—the perfect trip. Customers can choose from expertly selected hotels and personalise the trip they want to take. They deal with all the booking faff, creating unique experiences in a modernised way.

Tom has a background working at safari lodges out in Kenya, as does his co-founder, with experience in the travel industry. After spending a few years there and seeing all the travellers come to the lodge, Tom realised that the demographic was a lot older. He felt strongly that he wanted to come home and start a brand that focused on the younger millennial travellers. The space was there; it needed to be modernised.

Timeline and numbers

Tom met his co-founder while working at Black Tomato, a luxury travel company in London. They naturally balanced each other out, where one would work on the brand side and the other on sales. The brand was started in 2019, when Tom was 24. They spent four months of effort building the website and initial infrastructure, manually writing content, and reaching out to hotels.

Tom reckons they reached out to over 1000 hotels to put them on the platform. In hindsight, he felt that they were too focused on maintaining brand image in the beginning. In reality, they should have gotten some copy from another website and dragged it onto theirs. Also, against most classic startup advice, they didn’t focus on customer surveys or the ‘Mum test’ at the beginning. Mainly because they had worked in the industry before and they knew people wanted their stuff. During this time of figuring out their offer, the co-founders quit their jobs after 4 months and received ~£20,000 in initial F&F funding to get them going. However, they were abruptly thrown off track when COVID-19 hit. Before COVID, the pair managed to hit four sales through trade shows. With the offer being long-haul trips abroad, COVID made the business naturally stall.

Looking back, Tom believed this was actually great timing for them. COVID forced the two to go to social media to do quizzes and giveaways with the nemo brand. They grew their following to 15,000 during this time and had ample time to think about the business model. As restrictions began to lift, nemo began slowly expanding from around the UK, out to Europe, and eventually long-haul again.

The model nemo applies is more like a trip operator than a travel agent. nemo uses suppliers in different destinations picked by experts and takes a margin of the sale when it converts. At the moment, their average margin is around 23%. Larger companies have a higher buying power and, therefore, can get up to around 28%. This comes with time.

An interesting metric the business model relies upon to be profitable is average profit per trip. In the early days, when they sold their first four tickets before COVID nemo generated £200 per sale. With an average trip price of £10,000, that's a 2% margin. Gradually, this margin increased over time, hitting £400, then £800, and now nemo generates £2,500 per trip sold.

In terms of revenue, the business has been growing comfortably year over year. At the beginning of COVID in 2019, nemo hit £75,000 in revenue, which grew to £81,000 the following year. After 2021, the business really began to kick off, doing just under £1 million. In 2022, nemo doubled this, hitting just under £2 million, and most recently, in 2023, they turned over £2.7 million. Bear in mind that in this industry, revenue far outweighs profits as a result of high supplier costs. Tom is no longer selling trips but focusing on scaling the business to hit larger revenue milestones. In 2024, so far, they are at around £2 million in sales and are in good shape to be close to doubling last year's revenue. This equates to circa 110 trips sold in Q1 of 2024.

In its 5-year lifetime, nemo has provided ~1100 trips to their customers, totalling an overall revenue of £7.25 million in total trip value.

Distribution

Mainly, nemo is generating around 75% of its customers via paid acquisition through meta ads. Churn is less of a problem for nemo as Tom and his co-founder focus a lot on the customer experience. This makes repeat purchases and up-selling a key revenue lever.

nemo work with an agency for £1,500 per month and spend on average £6,000 per month on paid ads.

The strategy with the paid ads isn’t necessarily to get a sale on first contact with customers. Especially with the competitive nature of selling high-ticket products on Google. nemo plays a patient game, which works best when what you’re selling has an average price of £10,000. By drip-feeding ads to prospects who have shown interest in the past, the sale cycle is a lot longer compared to other business models. However, now that they’re generating consistent sales, this deal lag time has less effect on cash flows than it used to.

Lessons so far from building nemo

So far, the co-founders have raised £350,000. Tom said that they probably could have waited a lot longer than they did to raise. Raising can add complications at times, especially if investors have differing opinions.

Trust in yourselves (first-time founders are prone to imposter syndrome) is a key lesson. If you trust that your idea will work, there is a greater chance that others will believe you too; they’re a bit like sheep. This makes selling, raising, and running your team a lot smoother.

Additionally, Tom mentioned that there is no need to always look to advisors for help, which was something that he saw himself doing a lot. He was asking advisers for everything because they had skin in the game.

In reality, “founders should think about asking the right questions, not every question.”.

Next steps for nemo

Being 5 years old at this point, Tom knows what they need to do to really grow and scale, and that includes the increasing number of booking trips per agent.

Currently, they are at 6 bookings per agent per month, and they want to get to 12 within the next 3 years. This will ultimately help to foster relationships with agents bettering margins and making the whole thing more profitable.

Alongside looking to raise again, which will help nemo to scale, they are going to start hiring more aggressively. Having recently moved out of their London office, only half the team is in London. Remote hiring will play a part in this hiring stint. With team members working in Cape Town and Lisbon already, they want to expand their network of remote workers around the world. A cool touch for the modernised travel agency.