Raj Singh has an exquisitely English accent, all Hollywood villain and wood-panelled walls. It is received pronunciation at its finest, now somewhat incongruously settled in San Francisco’s innovation ecosystem, surrounded by rhotic American English and California’s infamous uptalk. But Singh stands out, not for his accent, but the work he does running the investment team of US airline JetBlue’s highly specialised strategic corporate venture capital unit.
Singh is managing director at JetBlue Technology Ventures (JTV), set up in early 2016. The unit is a balance-sheet investor, committing up to $3m for non-control positions in early-stage startups. The unit has made 21 investments so far, seeking to serve an entirely strategic mandate. While JetBlue is an airline, the conception of the venture unit is to provide, in Singh’s words, “strategic value to JetBlue as a travel provider writ broadly”. He continued: “When we think about our mandate, it is really about travel, transportation and hospitality. It does not have to be airline or aviation-specific”.
JTV’s team is 12 strong, with six focused on delivering strategic value to the portfolio companies, including integration into JetBlue itself. The other six, which Singh leads, constitute the investment team. JTV does not typically take board seats. It does not take control positions. Neither acquisition nor financial returns are goals – the sole focus is strategic return, although Singh does clarify this.
“Strategic return for us, just to be clear, includes the startup doing well, because there is no strategic return if they are financially unviable and do not exist in a couple of years.”
Other CVCs follow other models, and JTV’s model is not to everyone’s taste. For example, Ulrich Quay of BMW i Ventures makes a powerful case for a more financially-focused model (see interview). Yet it is equally hard to reject Singh’s case. JTV’s mandate is to help JetBlue prepare for the future, and while he wants each investment to be a financial success, each investment does not exist in a vacuum.
“JetBlue does something in the order of $7bn of revenue a year [2017 figures]. If I can find a startup that eventually becomes a supplier to JetBlue and that allows JetBlue to increase its revenue by 1% or 2%, I am delivering $70m to $140m worth of value.”
JTV’s early-stage model has been chosen for two reasons. The first is that JetBlue wants to learn, and that learning experience is most intense in the early part of a startup’s lifecycle, hence the focus on series A deals. It is in part also down to necessity. JetBlue does not have the cash on hand to invest at the levels of some of the more august VCs.
“We want to make our dollars count. Our sweet spot for that sort of money, to have an impact, means we need to be at the earlier stage.”
The other advantage that investing early has is that it gives JetBlue time to develop the product alongside the startup to get it to a viable stage of integration. This is particularly important in aviation, as Singh pointed out.
“We do not have a minimum-viable-product mindset in aviation. The thing has to work. It is not as big an issue if it is some great new way of accounting, but it is an issue when it comes to active stuff that will be in the air.”
For many, JetBlue is an airline, a transportation company. For insiders, JetBlue is a travel operator. That means that to look after JetBlue’s strategic imperatives, Singh’s brief is surprisingly broad. His team invests around five tentpole themes – seamless customer journeys, magnificent customer service, future of maintenance and operations, improving loyalty, distribution and revenue, and evolving regional travel. The result is a relatively technology-agnostic portfolio, with Singh looking for the best fit.
“Throughout the five themes, we do not focus on technologies. There are a lot of interesting technologies underlying things, but we do not chase artificial intelligence or blockchain or whatever it happens to be. We are looking for technologies that solve the issues that interest us.”
Singh welcomed the innovation that Uber and AirBNB have brought to the travel sector, glad to see VCs recognising potential in the future of mobility. He is particularly excited by the concept of flying taxis and a busy actively managed airspace, while acknowledging that these are still a few years away. Currently, the innovations Singh can bring to JetBlue are not frontpage deals, but sensible pragmatic solutions to existing business problems. Speaking to that, Singh gave the example of the second theme, customer service.
“You may have had an experience of going up to a gate agent to ask about your flight being delayed, only to have the agent not know about the delay until you show them the notification on your phone’s app.”
Ensuring that crew members have all the information at their fingertips minimises the disconnect between crew and representatives on the ground, JetBlue’s offices and customers. The underlying technology could be anything from wearables to a big data lake, but the key aim is to enable crew members to do the best job they can.
Singh calls the third theme, maintenance and operations, the “iceberg”, because it involves things that an ordinary traveller might not see. JTV’s work here is about improving the nuts and bolts of a travel provider, such as using predictive maintenance to replace a soon-to-fail component, which means better reliability, fewer delays and happier customers.
Whether a startup can identify legal risks or create tailored products for consumers out of existing assets, the aim is for technology to step in and integrate with JetBlue. For that to happen, JTV must bridge the gap between the startup and the business units effectively. JTV’s investment team derives its mandate from the investment committee, which is mostly from the C-suite, and then brings prospective investments back to the committee. Meanwhile, the strategic team, in Singh’s words, “walk the halls at HQ” in New York to ensure alignment with the business units themselves.
“One of the manifestations of that is what we call innovation sprints. In these 12-week engagements, we partner a business unit leader and say: ‘We will help you meet your strategic goals.’ ”
This regular exercise identifies pain points and objectives, looking for startups or technologies that help the business units meet those objectives, and then integrating and implementing the technology or startup into the business unit. Organisational alignment is one thing, but Singh said the team had a “secret weapon” beyond that – Bonny Simi, JTV’s president.
“She is a JetBlue officer, and she has been at JetBlue for 15 years. She understands the day-to-day of how JetBlue operates. She is in the loop in the strategy setting, the day-to-day, even sometimes in the board meetings.”
All this talk of alignment is not just marketing to Singh. It is why he joined the group, as he feels that it allows the unit to deliver on the promise of being a CVC. Four of the portfolio companies are now suppliers to JetBlue, with three more at proof-of-concept stage. JTV’s dealflow is typical for a CVC, and having a strong network is part of that, something that Singh attributes to an underrated quality. “We are a nice bunch of people. We are easy to work with and friendly – we build good relationships with the startups we are in and that should not be underestimated.”
Singh thinks few other companies in the travel space are doing similar work but believes more will be soon. In order to stimulate that, JTV has started a partnership program for companies within the travel industry that are not direct competitors, such as international airlines, hotels, airport operators and other transportation companies. Air New Zealand was the first partner, and the aim is to bring other partners into the Silicon Valley ecosystem, curated by JetBlue.
“We are seeing a lot of deals, close to 4,000 in the three years I have been here. Let us bring those deals to [prospective partners], not necessarily for investment, although that is possible if they are interested, but for proof of concept and eventual implementation. JetBlue cannot consume all the deals we do because we are going at such a pace, but if we have other partners who are interested, that increases our value proposition to startups.”
Looking ahead, Singh said he hoped to expand the partnership program across the travel industry while continuing to deliver value to JetBlue through new investments and potential exits, although Singh admitted that venture capital was a long game and exits would take time.