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Unicorn travel startup Hopper is facing a pandemic-fueled customer service nightmare

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Mobile travel app Hopper has been hit hard by the COVID-19 pandemic as consumers canceled their trips and airlines dropped their flights. But the complications around getting airline credits and refunds have since turned into a customer service crisis for the airfare prediction and ticket booking startup, which had been valued at $750 million back in 2018 before reaching unicorn status thanks to an undisclosed round it closed amid COVID lockdowns this year. Currently, hundreds of Hopper customers are trashing the app in their app store reviews, calling Hopper a scam, threatening legal action, and warning others to stay away.

The key complaint among many of these users was not only how their flight was canceled by an airline and that they couldn’t get a refund, but that there was no way to get in touch with someone at Hopper for any help. There wasn’t even a phone number to call, the user reviews said.

These complaints on the app stores have been harsh and a PR disaster for Hopper’s brand.

To give you an idea of what’s being said, here’s a small sampling:

  • No phone number to reach and takes a week or more to get back to an email.”
  • “No way to contact customer service no [one] has responded to my inquiries at all. The help tab just sends you in a constant loop.”
  • “Warning. This company will take your money. They give zero refunds and there is no one to talk to.”
  • “Customer service continues to be an absolute joke. We…put support requests in a week ago, zero response.”
  • “Hopper is great if you want your flight cancelled and money never refunded. There is LITERALLY no customer support.”
  • “I understand there is a lot of traffic on the app due to COVID, but having to post a review in order to receive any sort of attention and being unable to reach out through the app for my issue was very frustrating.”
  • “There is no way to contact anyone. The Contact Us page is just a Q&A page.”
  • “I was never refunded and when I reached out to their ‘need help’ I received the generic email which stated someone will get back with me. I waited a week and sent another message and I still have not heard anything. Hopper took my money on a flight that was cancelled by the airline and never notified me.”
  • “Not [sic] existing customer support. If you need help your [sic] only option is ‘read a post.’ Buyer beware. It’s a total scam.”
  • “I’ve reached out multiple times regarding a flight a credit from April of 2020 and they have yet to provide me with any details or help me with using the credit.”
  • “This company is a fraud! Do not use Hopper! I will be getting a lawyer!”
  • “Can’t say enough bad things about this service…Have to wait 15 days for response. Unbelievable.”
  • “I booked a flight back in June that I still haven’t been refunded for because the airline will only refund the agent directly. Non-existent customer service.”
  • “I spent over 3K and 3 months later, still no refund.”
  • “I have been waiting seven months for a refund.”

To date, users have left over 550 one-star reviews on iOS and 302 on Android, per Sensor Tower data. Hundreds of these are visible when you sort by “Most Recent” reviews on iOS, which is damaging to what had been, before the pandemic, a trusted and respected travel brand.

@.sp2020##hopper is getting trashed — no customer support? Can’t get refund? ##covid ##travel♬ Trouble’s Coming – Royal Blood

Hopper, to its credit, openly admitted to TechCrunch it’s been massively struggling with what it referred to as “unprecedented volumes of customer support inquiries since the start of the pandemic began,” or 2.5X its normal rate.

The company says it’s currently receiving over 100,000 inbound support requests per month, as consumers and airlines alike changed and canceled their flights. Since April, it’s seen over 980,000 inbound customer service requests.

A number of the inquiries are from customers are asking for refunds due to COVID-related cancellations. Typically, airlines offer a modified flight when they make a schedule change, and many consumers will take this modification. Some customers, however, will want a refund so they can rebook a different flight or because they’ve chosen to cancel their travel plans entirely. The pandemic has exacerbated this problem, driving cancelation rates around five times higher than usual, Hopper says.

Another point of confusion is who should handle these refunds. Hopper says customers can either reach out to the airline directly for a refund for help rebooking or they can ask Hopper to handle it. It also noted a small number of airlines don’t allow refunds, only travel credit. The airlines dictate these policies, which means Hopper can’t just offer to refund everyone — it would have lost too much money to survive, if it did so.

“We would have had to put out about half a billion dollars,” explains Hopper CEO Frederic Lalonde, describing the situation to TechCrunch. We had reached out to understand the situation, given the sizable customer backlash against the previously popular app.

“The way the airline system works is if I refund you as a customer who booked from us, I’m not going to get that money back. We would have put ourselves out of business,” Lalonde saus.

In addition, Hopper doesn’t generally received the refunds itself. They go directly from the airline to the customer. And many customers had to wait on refunds this year due to COVID issues. But there are some exceptions. For a few low-cost carriers, like Frontier, Spirit and others, Hopper does have to process the refund from the airline and then return these to the customers. So in these cases, Hopper’s non-responses to customer support inquiries left customers without options. (We’re documenting how the airlines are responding to our inquires about Hopper refunds here. It’s confusing to say the least.)

But the root of Hopper’s customer service nightmare wasn’t the chaos caused by the pandemic and the airlines’ cancellations themselves. It was how Hopper approached handling the situation.

“We failed our customers,” Lalonde admits. “We had a bunch of people that trusted us.”

He said Hopper has now addressed many of the customer complaints and issues. But many more than still remain. “There’s no universe where that’s what we set out to do,” he adds.

During the course of the year as the customer service crisis escalated, Lalonde says his personal email and mobile phone was published on the web. He’s since opened up several thousands — or maybe even tens of thousands — of emails and voicemails of customers in need of assistance.

In hindsight, one misstep Hopper made is that it didn’t hire more customer service agents to deal with what the pandemic would bring. In fact, Hopper did the opposite — the company furloughed agents in an effort to cut costs and stay in business. At the time, Lalonde explains, there was just too much uncertainty to hire. Stores were out of toilet paper. The Western world had closed for travel. Vaccines had typically taken years to create. This was looking like a long-term, worst-case scenario.

“We had to build an operational plan of zero dollars of revenue for four years. That’s what I gave my board,” Lalonde says.

When lockdowns lifted and travel started to come back, so did some of Hopper’s agents. But the customer service issues, by then, had skyrocketed as airlines canceled and changed schedules at high rates, and began to issue Future Travel Credits (FTC). Instead of adding more agents to help solve customer service problems, Hopper decided to apply automation, with a goal of allowing customers to solve more themselves. During the course of 2020, Hopper automated exchanging flights in the app, redeeming FTC issued by airlines, managing schedule changes, adding self-serve cancellations, and it rolled out follow-up emails to customers after they requested a cancellation.

Lalonde had believed automation would ultimately be more critical to long-term survival than hiring more agents.

“Would it have made a big difference [to add more agents]? Honestly, I don’t really think so. I think it would maybe have gotten 10% more done,” says Lalonde. “Could you find thousands of customers that would have gotten [help] sooner? Yes. But would it really have moved the need on the millionth inbound request we got? No.”

Another area where Hopper fell short was on customer communication.

This is most apparent from the App Store complaints.

Customers may be expressing frustration over refunds, but they’re even angrier that they can’t get in touch with anyone. And Hopper didn’t necessarily do itself any favors here by sending out emails which said it was aiming to get back to customers within 24 hours — an entirely unrealistic promise. (See below)

 

Image Credits: Hopper email (provided by customer) / Hopper email (provided by customer)

Hopper also chose to shut down its phone line when it realized that 80% of customers were waiting on hold for 45 minutes, even though, arguably, some customers would have preferred that to nothing at all. Instead, it rolled out an online structured triage system that helped prioritize incoming complaints. It even had a button to push if users were stuck at the airport so they could get more urgent assistance.

The problem was customers couldn’t find Hopper’s help features.

“Was our communication strategy broken? Yes,” admits Lalonde.

He says he decided to put the team on actually dealing with the FTC and the refunds, and not talking to people. “That made us look a hell of a lot worse, optically, but we got through a lot of work…because at the end of the day, after the fifth repetitive email, people got just as angry [as when they were ignored].”

Hopper has since apologized to customers and sent out an additional $1.5M in travel credits to its customers, in addition to the refunds it has now processed, to help make up for its issues. It’s still working through the backlog of customer service issues. And it expects another good six months of chaos as the vaccines shipping now aren’t immediately going to solve the airlines’ travel problem.

Over the next two months, Hopper also says it will be increasing its support team by 75% now that future looks more certain. It also plans to roll out in-app updates including a resolution center, escalation path, status check to prevent duplicate requests, and add in-app structured requests, in addition to more communication updates involving email campaigns, better in-app messaging, and website access to check on booking status.

It’s a wonder how a company in this nightmare situation could even survive, much less raise funds, when its brand is being dragged through the mud and hundreds — or even thousands of customers — have been unsatisfied.

As it turns out, Montreal-headquared Hopper will survive, at least in the near-term, thanks to a Canadian government bailout.

In early May, Hopper raised $70 million from both institutional and private investors. The Canadian government chose to save promising tech business impacted by the pandemic with direct financial support. The largest portion of the $70 million round (more than half, but not, say, 99%) included funds from the Business Development Bank of Canada (BDC) and Investissement Quebec. In addition, all of Hopper’s existing investors returned, joined by new investors Inovia and WestCap.

The Canadian government — which Lalonde describes as “more like socialists than you would think” — helped by de-risking the other investors by leading venture rounds into tech businesses that had been doing well pre-pandemic.

“They did this at a very large scale and it’s stabilized the tech sector in Canada,” he says. The new funds now value Hopper “right at unicorn level” in U.S. dollars, Lalonde adds, meaning the business is valued around $1 billion.

One reason why Hopper may have struggled with how to proceed during the pandemic was the sizable uncertainty around the U.S. market, which Lalonde says was “very scary.”

“We never knew what was going to happen. If there had been a better plan there, we probably would have been able to provision a bit more. But we had no idea. The lockdowns were at the state level,” he explains. “If you’re trying to figure out how aggressive you want to be on investing, spending, emergency injections, or how things are going to recover, the more predictability there is at the government level, the easier it is to make a decision. The U.S. wasn’t the most predictable environment,” Lalonde says.

While Hopper’s business is saved for now, the app’s brand reputation has taken a huge hit.

The question now is whether that, too, is recoverable?

“I don’t know,” says Lalonde. “I’ll tell you this, the only way that the only right way to approach that is just keep doing the right thing, one customer at a time.”

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Snowflake latest enterprise company to feel Wall Street’s wrath after good quarter

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Snowflake reported earnings this week, and the results look strong with revenue more than doubling year-over-year.

However, while the company’s fourth quarter revenue rose 117% to $190.5 million, it apparently wasn’t good enough for investors, who have sent the company’s stock tumbling since it reported Wednesday after the bell.

It was similar to the reaction that Salesforce received from Wall Street last week after it announced a positive earnings report. Snowflake’s stock closed down around 4% today, a recovery compared to its midday lows when it was off nearly 12%.

Why the declines? Wall Street’s reaction to earnings can lean more on what a company will do next more than its most recent results. But Snowflake’s guidance for its current quarter appeared strong as well, with a predicted $195 million to $200 million in revenue, numbers in line with analysts’ expectations.

Sounds good, right? Apparently being in line with analyst expectations isn’t good enough for investors for certain companies. You see, it didn’t exceed the stated expectations, so the results must be bad. I am not sure how meeting expectations is as good as a miss, but there you are.

It’s worth noting of course that tech stocks have taken a beating so far in 2021. And as my colleague Alex Wilhelm reported this morning, that trend only got worse this week. Consider that the tech-heavy Nasdaq is down 11.4% from its 52-week high, so perhaps investors are flogging everyone and Snowflake is merely caught up in the punishment.

Snowflake CEO Frank Slootman pointed out in the earnings call this week that Snowflake is well positioned, something proven by the fact that his company has removed the data limitations of on-prem infrastructure. The beauty of the cloud is limitless resources, and that forces the company to help customers manage consumption instead of usage, an evolution that works in Snowflake’s favor.

“The big change in paradigm is that historically in on-premise data centers, people have to manage capacity. And now they don’t manage capacity anymore, but they need to manage consumption. And that’s a new thing for — not for everybody but for most people — and people that are in the public cloud. I have gotten used to the notion of consumption obviously because it applies equally to the infrastructure clouds,” Slootman said in the earnings call.

Snowflake has to manage expectations, something that translated into a dozen customers paying $5 million or more per month to Snowflake. That’s a nice chunk of change by any measure. It’s also clear that while there is a clear tilt toward the cloud, the amount of data that has been moved there is still a small percentage of overall enterprise workloads, meaning there is lots of growth opportunity for Snowflake.

What’s more, Snowflake executives pointed out that there is a significant ramp up time for customers as they shift data into the Snowflake data lake, but before they push the consumption button. That means that as long as customers continue to move data onto Snowflake’s platform, they will pay more over time, even if it will take time for new clients to get started.

So why is Snowflake’s quarterly percentage growth not expanding? Well, as a company gets to the size of Snowflake, it gets harder to maintain those gaudy percentage growth numbers as the law of large numbers begins to kick in.

I’m not here to tell Wall Street investors how to do their job, anymore than I would expect them to tell me how to do mine. But when you look at the company’s overall financial picture, the amount of untapped cloud potential and the nature of Snowflake’s approach to billing, it’s hard not to be positive about this company’s outlook, regardless of the reaction of investors in the short term.

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A first look at Coursera’s S-1 filing

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After TechCrunch broke the news yesterday that Coursera was planning to file its S-1 today, the edtech company officially dropped the document Friday evening.

Coursera was last valued at $2.4 billion by the private markets, when it most recently raised a Series F round in October 2020 that was worth $130 million.

Coursera’s S-1 filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year. It paints a picture of growth, albeit one that came at steep expense.

Revenue

In 2020, Coursera saw $293.5 million in revenue. That’s a roughly 59% increase from the year prior when the company recorded $184.4 million in top line. During that same period, Coursera posted a net loss of nearly $67 million, up 46% from the previous year’s $46.7 million net deficit.

Notably the company had roughly the same noncash, share-based compensation expenses in both years. Even if we allow the company to judge its profitability on an adjusted EBITDA basis, Coursera’s losses still rose from 2019 to 2020, expanding from $26.9 million to $39.8 million.

To understand the difference between net losses and adjusted losses it’s worth unpacking the EBITDA acronym. Standing for “earnings before interest, taxes, depreciation and amortization,” EBITDA strips out some nonoperating costs to give investors a possible better picture of the continuing health of a business, without getting caught up in accounting nuance. Adjusted EBITDA takes the concept one step further, also removing the noncash cost of share-based compensation, and in an even more cheeky move, in this case also deducts “payroll tax expense related to stock-based activities” as well.

For our purposes, even when we grade Coursera’s profitability on a very polite curve it still winds up generating stiff losses. Indeed, the company’s adjusted EBITDA as a percentage of revenue — a way of determining profitability in contrast to revenue — barely improved from a 2019 result of -15% to -14% in 2020.

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The owner of Anki’s assets plans to relaunch Cozmo and Vector this year

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Good robots don’t die — they just have their assets sold off to the highest bidder. Digital Dream Labs was there to sweep up IP in the wake of Anki’s premature implosion, back in 2019. The Pittsburgh-based edtech company had initially planned to relaunch Vector and Cozmo at some point in 2020, launching a Kickstarter campaign in March of last year.

The company eventually raised $1.8 million on the crowdfunding site, and today announced plans to deliver on the overdue relaunch, courtesy of a new distributor.

“There is a tremendous demand for these robots,” CEO Jacob Hanchar said in a release. “This partnership will complement the work our teams are already doing to relaunch these products and will ensure that Cozmo and Vector are on shelves for the holidays.”

I don’t doubt that a lot of folks are looking to get their hands on the robots. Cozmo, in particular, was well-received, and sold reasonably well — but ultimately (and in spite of a lot of funding), the company couldn’t avoid the fate that’s befallen many a robotics startup.

It will be fascinating to see how these machines look when they’re reintroduced. Anki invested tremendous resources into bringing them to life, including the hiring of ex-Pixar and DreamWorks staff to make the robots more lifelike. A lot of thought went into giving the robots a distinct personality, whereas, for instance, Vector’s new owners are making the robot open-source. Cozmo, meanwhile, will have programmable functionality through the company’s app.

It could certainly be an interesting play for the STEM market that companies like Sphero are approaching. It has become a fairly crowded space, but at least Anki’s new owners are building on top of a solid foundation, with the fascinating and emotionally complex toy robots their predecessors created.

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