JetBlue’s daft venture

JetBlue has turned heads with its decision to set up a venture capital subsidiary – JetBlue Technology Ventures – in Silicon Valley.

The goal of the exercise is to plug the famously innovative airline into the latest developments in travel technology.

But while it’s likely that developments such as virtual reality headsets and mobile connectivity could transform the passenger experience on and off the aircraft, it’s less clear why JetBlue should become an investor in start-ups.

Venture capital (VC) firms come in three flavours: the independent, which raises money from institutional investors, such as pension funds, and then seeks promising companies to invest in; the government or local authority fund, which seeks to support start-ups in a specific region or country; and the corporate fund, which uses money from a parent company to add strategically useful businesses.

The latter two types have a poor reputation because they don’t focus on maximising investor returns. A corporate outfit like JetBlue Technology Ventures, for instance, might see a technology it likes, but buy into a team incapable of realising its potential.

Dedicated VCs, on the other hand, know what it takes to nurture and develop a pre-revenue product into a fully-fledged business, but even they expect to write off one out of every three investments.

Thus it’s of some concern that JetBlue has appointed a company insider – Bonny Simi, an ex-pilot and former VP of talent – to head its new unit rather than someone from the VC sector.

Of course, the whole matter may just be a publicity stunt to rub a bit of Silicon Valley geek glamour onto JetBlue.

The airline hasn’t specified how much it will invest, for instance, beyond a vague statement about a “multi-million dollar” amount, which could be trifling set against the funds of $100m-plus that most American VCs raise.

So while JetBlue will continue to innovate, the odds are that it will be using technology from businesses developed outside its own portfolio. 

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