Frederic Lalonde, co-founder and chief executive officer of Hopper. The Hopper app has more than 120 million downloads, and 70 per cent of users are Gen Z and Millennial.Christinne Muschi/The Globe and Mail
Frederic Lalonde once tried to predict the weather. When customers purchased coverage for their trip through his travel marketplace app, Hopper, he’d refund them if it rained the whole time they were away.
“It turns out that’s a hard thing to do,” laughs Mr. Lalonde, co-founder and chief executive officer of the Montreal-based company. “There have been a lot of things that we’ve tried that didn’t work, but there have been way more that have.”
Founded in 2014, Hopper is a technology platform that facilitates billions of dollars of travel every year. The app has been downloaded 120 million times. Hopper has raised more than $750-million of private capital, and is considering going public. Past equity deals have valued Hopper at $5-billion.
The company’s path hasn’t taken a straight line, something that’s not just common but a necessity for many businesses. One-third of respondents to a 2024 PwC Canada survey of CEOs said their business may not be around in 10 years if they stay on their current path.
“Leaders face a choice: to rethink how their businesses create, deliver and capture value or watch their companies fall behind their more agile competitors,” writes PwC. “It’s all about embracing business model reinvention to secure the future of your organization.”
That’s what Hopper has done, from their start as a flight price prediction app. The company’s first iteration required a database that took six years to build, in the era before cloud-based computing and widespread use of artificial intelligence. “It’s called deep tech now, but back then it was just called being slow,” says Mr. Lalonde, a former Expedia executive.
When the COVID-19 pandemic hammered the travel industry, Hopper had to adjust. “First of all, we had to refund half a million customers. That was chaotic. We decided to invest heavily in building automatic refundability because we learned a lesson.”
Hopper experimented with price freezing and travel disruption products. For a small fee, users could protect themselves against increases in booking costs or the costs of rebooking if their travel plans changed.
“Give me a little bit of money and I’ll pay the difference if the price goes up. Or if you need to cancel, we can pay for your difference. We’re underwriting all the risk,” Mr. Lalonde says.
“The fact that they [Hopper] continue to create new values that investors are willing to jump on board with is a testament to a scrappy company,” says Daniel Clark, an assistant professor of entrepreneurship at Western University’s Ivey School of Business.
Mr. Clark’s research explores the decision-making of entrepreneurs around starting, expanding and taking their ventures global. For Hopper, a key to growth came with the creation of HTS, or Hopper Technology Solutions. This business-to-business division launched in 2021 with the announcement of a Capital One Travel portal executed through Hopper.
Since then, Hopper has entered into numerous partnerships with banks, airlines and travel brands around the world, including Air Canada, SMCC (the largest credit card provider in Japan) and Tripadvisor. They can integrate the HTS travel fintech products into their own direct channels. HTS now makes up 75 per cent of Hopper’s revenue. “It completely outstripped our consumer business very quickly. It took about a year to take it over,” says Mr. Lalonde.
“They’re not leeching money off an existing transaction, they’re adding value to the transaction, which is a really brilliant thing to do,” says Mr. Clark.
Data are always at the roots of the company. Hopper’s algorithms process and archive trillions of data points, and analyze over 30 billion price points in real-time every day, so that users never miss a deal.
A big part of the company’s success, says Mr. Lalonde, is being nimble and maintaining a startup mentality.
“A lot of what I’ve learned around this is creating a culture that embraces the wonderful, wild journey of invention, and having people comfortable about changing what they do – killing the thing they started and making it better.”
He says there’s a notion in business that everything is about risk. But risk isn’t just about mitigating potential negative effects. “What if the greatest risk was the thing you didn’t do? What if you didn’t start Airbnb, you didn’t invent Google or you forgot to start OpenAI? What if you had that great idea, but didn’t execute it because you were worried that it wasn’t going to work, or that you’d break this other thing?”
Keeping his company relatively small is also a deliberate creative strategy. Hopper has about 500 employees, only two-and-a-half times more than the 200 it had six years ago. Since then, the company has had exponential revenue growth. Although Hopper doesn’t share precise figures, some reports estimate that revenues are up at least 35 times over 2019.
“We try to do with hundreds of people what other companies do with thousands,” Mr. Lalonde explains. “We find that smaller, more focused teams do better. They’re more adaptive, and it creates better working environments.”
Failure is part of creativity and invention, he says; what matters is what comes next. It takes maturity to admit something hasn’t worked, ask what has been learned and figure out how to get it right.
“Just failing doesn’t cut it. But if you find your own voice in that and have the right people, you can create incredible things.”