Business Monday

What it’s like to run a billion-dollar startup — at age 28

Sergey Petrossov is the 28-year-old CEO of Fort Lauderdale-based JetSmarter, a private jet transportation marketplace that launched in 2013, in his Fort Lauderdale office on Jan. 31, 2017.
Sergey Petrossov is the 28-year-old CEO of Fort Lauderdale-based JetSmarter, a private jet transportation marketplace that launched in 2013, in his Fort Lauderdale office on Jan. 31, 2017. ctrainor@miamiherald.com

Sergey Petrossov, the 28-year-old founder of JetSmarter, says when you go all-in as an entrepreneur, you don’t look back.

That may be, but 2016 must have provided quite a tailwind.

In December, the Fort Lauderdale-based private jet marketplace announced that it raised $105 million from new and existing investors, including the Saudi royal family and celebrity rapper Shawn “Jay Z” Carter. Investors value JetSmarter at $1.5 billion, which in venture-capital speak makes it a “unicorn,” a private company valued over $1 billion.

[READ MORE: JetSmarter attracts $105 million to bring jet-set lifestyle to the merely wealthy]

“In 2015 we had no more than 50 employees. The majority of all our cities were launched in 2016,” Petrossov said. “We have done massive hiring spread all over.”

Today the company has more than 260 employees, Petrossov said. JetSmarter already flies into cities in the United States, Europe and the Middle East, and plans to soon expand into India, China and South America. In addition to its corporate headquarters in Fort Lauderdale, it has offices in London, Dubai, Zurich, Moscow and Saudi Arabia.

JetSmarter offers a mobile app that lets its members charter an entire jet, travel on a private jet shuttle or create their own shared charter. It doesn’t own jets but works with a network of charter companies. Annual membership fees are $14,000. JetSmarter reportedly has about 8,000 members.

The company offers four flight services, both scheduled routes and on-demand, where members create their own flights on their own schedule. Most innovative is its shared services for both customized, on-demand flights and its scheduled JetShuttle services on more than 50 routes on three continents. The company also offers JetDeals, last-minute flash sales that pop up on “empty legs.”

“We’ve been able to surround the globe. Last year we had close to 45,000 unique passengers,” Petrossov said.

But that’s just one pillar of the brand, Petrossov said. It’s also a social community between members and a service that extends to on-the-ground services that a customer will not even have to ask for. “Our vision is to create this travel and lifestyle community and to deliver an end-to-end experience for how you get there, who you meet and where you go,” Petrossov said.

The Miami Herald sat down with Petrossov in his office in Fort Lauderdale earlier this year to talk about his vision, what’s ahead and the entrepreneurial ride so far. Over the past few weeks, however, that ride has been rocky.

Since the Miami Herald’s interview, JetSmarter has run into turbulence in its executive ranks: One of JetSmarter’s former executives, Edward Gennady Barsky, was arrested on grand theft charges in a California case unrelated to JetSmarter and has resigned. Barsky was JetSmarter’s president, vice chairman and one of its first investors. JetSmarter’s statement: “Gennady Barsky has resigned from JetSmarter for personal reasons. The charges he faces are wholly unrelated to JetSmarter, and pre-date the founding of JetSmarter,” said spokesperson Ronn Torossian. There’s been public relations turbulence too, with tech media site The Verge reporting that JetSmarter required a positive article if it let a reporter take a free roundtrip flight to try out the service.

Here are excerpts of the Miami Herald’s earlier conversation with Petrossov.

Q. How did you end up in South Florida?

A. I was born in Moscow, I moved to the U.S. when I was 4, and I’ve lived between California and Colorado and South Florida. I moved to South Florida when I was 11 or 12.

Q. How did you get involved in technology?

A. I went to the University of Florida [studied finance], and I always had a math and analytical bent. When I was 18, I wasn’t really into college that much — I was more interested in getting out of college — and I got involved with my first startup. It supported chat for audio and video for website customer service. I wasn’t the founder but since I got involved early they called me a co-founder. That was my first experience working with engineers and I learned with technology how much value you can bring in a short amount of time. I knew then that I wanted to start companies and tech was the field I wanted to be involved in.

Q. What was the first company you founded?

A. In ’09, I graduated and I went off to co-found my own company, in education technology. We built a team of engineers in South Florida and we were building cloud-based software for schools and universities that wanted to teach people online and remotely. We targeted Russia and Eastern Europe, meaning the universities and schools that didn’t have big budgets that needed a cheap software solution. The name of the company is the Federal System of Distance Education and it is still operating today.

Q. How did you make the leap from ed-tech to private jet aviation?

A. In ’09 an acquaintance had introduced me to a private jet company (in South Florida) and the operator invited me to take a flight. The topic of that was how they needed some help potentially expanding into Eastern Europe and Russia, but to me it was like, what do I know about private jets?

I was just having fun with it. I didn’t think I could be helpful to them and I was just going for the experience. But in going through this I quickly found out the only way to reserve this on your own was to call and talk to somebody and a couple hours later they would send you an invoice. The bottom of the invoice said sign it, scan it or fax it back ... and I was thinking what the heck is going on here, this is ’09 and this is like the ’80s. The airline and hotel industry had been revamped with the concept of dynamic pricing yield management and a digital interface. Nothing like that existed if you looked on the back end of this company. It was a mom-and-pop operation and everyone was operating like this, like one big mom-and-pop industry.

I then found out there are 21,000 private flights a day in the U.S.; there are only 23,000 commercial. There are 17,000 private jets around the world; 12 to 13,000 are in the U.S. The average airplane is only flying 200 hours a year, and optimally they could be flying 1,500 hours. And out of those 200 hours they were flying, one-third were empty. They were repositioning. Out of the ones that were occupied, the percentage of seats filled was only 25 to 30 percent. This was like a plague of inefficiency.

I was intrigued. I started doing some consulting work with them, thinking some day I might want to get back in it, while continuing to work with the ed-tech startup.

Then in 2012, I started a side project. I had the relationships; I had already learned a lot about how data interacts in this space and I wanted to build a real-time pricing engine. From January through August of 2012, I built a little team. We built a beta, a prototype, and we gave it out to friends and family and people I knew that flew now and then. Literally in 30 seconds, real-time prices and you could see this was something that could really get traction. People wanted me to drop everything and I had some initial investors. By March 2013, we went all-in and launched the company.

Since then it has been one long hectic ride.

Q. You say JetSmarter is more than a private jet service. Can you explain your vision?

A. What we realized is that in this process of sharing in the sharing community, what we are building is a community. The people who are sharing rides together are like-minded and are similar, and the value as the community has a lot to do with that social effect. People will join just to meet other people in the community, not for the flying.

That transcends this concept of commodity and price. Today people are thinking about travel by how much it costs — do you think of your health like that, do you think of the food you eat like that? It is not a price discussion, and when you add a community effect to it, there’s relevance to you and your life and who you are sharing it with.

I believe the future of travel is going to transcend the language of commodity. It is going to have association, it is going to have a community effect. So what JetSmarter really stands to be is what we call the world’s greatest travel and lifestyle community. It’s built on three pillars. It’s built on air travel; we deliver air travel on private jets so we’ve solved the first problem of how to get there and we’ve made flying fun again. In the process you are meeting great people, and when you land, we want to navigate where you go.

Q. How will you solve that last piece?

A. That’s built on something we call predictive hospitality. We have enough data on our consumers that we understand the behavioral patterns so much we can help them have a unique experience when they land. That end-to-end experience of how you get there, who you meet and where you go is the JetSmarter experience. You can go to your same favorite locations and you might have a unique JetSmarter experience there and you will use us to transact there. You’ll go to your favorite restaurant and say put it on my JetSmarter account and you won’t even have to ask for the bill, and it’s all based on GPS technology.

All of this is part of our vision to create this travel and lifestyle community and to deliver an end-to-end experience for how you get there, who you meet and where you go. This is what we are capable of delivering now and we are working on the technology and digital interfaces to help bring it to life in a digital software form. It’s more proactive than reactive. It’s not you asking, ‘can you get me something.’ It knows what you want when you go somewhere. That’s where the future of lifestyle is, it’s just going to be simpler, easy.

Q. Can you give me some examples?

A. We are about to launch access for our members to 8,000 or so luxury residences through a company called ThirdHome. These residences you can’t just request, you have to be part of a club. Our members will have access to it. We’re creating a JetSmarter experience on top of it. This is one big relationship that is key and important to us.

We are also working with a few restaurant groups that will allow us to create a unique experience in 100 to 110 restaurants. We are going to start in four cities — New York, London, Los Angeles and the Miami area — and our members will have a unique experience there, unique menus custom-curated for them and they won’t have to ask for a bill when they leave, like a country club. That’s around the corner.

We are working with a few luxury hotel brands, big ones, for unique partnerships and benefits for members at those locations. We are working with a very large luxury retailer; we believe we can create a unique retail experience for our members when they go shopping. There will be a loyalty system built in to that; as our members transact business they earn flight credit they can use on JetSmarter — it’s a virtuous loop.

Q. What do you think most attributed to JetSmarter’s progress so far?

A. When we launched sharing deals — we call it JetDeals — in mid-2014, that is when we started aggregating supply, offering last-minute flash deals. We lowered prices significantly, and that is when we saw a new consumer set come into the market very fast. That is when we discovered this was really big and that people wanted to have another experience that wasn’t waiting in a commercial airport. That’s when we realized those products had a lot of power. Then we launched JetShuttles in early 2015. We had to raise capital to do that, and that allowed us to offer a unique product to consumers.

Q. What are your goals for this year?

A. From a brand perspective, we want to be seen as an overarching brand and lifestyle community so we want to make sure the other two pillars of our business are presented in the forefront as much as the aviation piece — the social network and the predictive hospitality piece.

Q. What has been most challenging in all of this?

A. Getting someone to try something that is completely new. It’s why our marketing is word of mouth, because you can trust your friend. But it is very hard to get someone to take that initial leap of faith.

Q. Your team is 260 people?

A. Yes, a little more. About 120 are here. We have every function of the business here and the executive team. We also have a sales and biz dev team in London, operations in Zurich, engineering in Moscow, sales and operations in Dubai and Riyadh. And for each of our cities [that JetSmarter flies to], we have employees that will meet and greet you when you land.

Q. How many do you have on your top management team?

A. Probably 12 to 15 people. We are fairly decoupled, we’re circular, people operating on independent teams. We’re not a traditional vertical corporate structure.

Q. Why did you base your business in South Florida?

A. I grew up in South Florida and I got exposed to aviation here. I had a lot of relationships for aviation here, and this is one of the capitals for private aviation. A lot of people take residency here and park their airplanes here for tax reasons.

The only bad part about South Florida is there are not that many high quality engineers here. We took that handicap on and we built an engineering team in Moscow, where we have 25 to 30 engineers today. We import some, and moved people here, and we have still hired people here but it is much harder.

Q. Where did you get your tech know-how?

A. I’m not an engineer by trade but I can understand complex problems, and that is a lot of what we do. We solve an optimization and yield management problem by building out predictive algorithms on demand and supply [that] you can dynamically price and make sure you operate at optimal efficiency — meaning you reduce the amount of dead-head flying, you increase the load factor on flights that are occupied. We pride ourselves on our flights between New York and South Florida — we fly as many as 30 times a week round trip, as many or more than many commercial carriers — and we have a load factor of 96 percent. It’s a very efficient operation.

Q. Do you think entrepreneurs are born or made?

A. There’s an age-old saying, managers are taught, entrepreneurs are born. I’ve always had a bent for it since I was 10 or 11, I always wanted to do something. When I was little, I’d have a lemonade stand and a car wash and I organized garage sales.

Nancy Dahlberg: @ndahlberg

Sergey Petrossov

Age: 28

Title: CEO of JetSmarter, a Fort Lauderdale-based private-jet travel company he founded in 2013.

Previous entrepreneurial experience: Co-founded Federal System of Distance Education, an education-technology company focused on Russia and Eastern Europe markets. He is no longer active day to day in that company.

Education: Bachelor of science in business administration/finance, University of Florida, 2009

Personal: Born in Moscow, moved to U.S. at age 4, and as a kid managed lemonade stands, car washes and garage sales. Moved to South Florida just before his teenage years. Named to Forbes magazine’s 30-Under-30 list in 2016.

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