When Vacation Fund got started, founder Erica Pearson just wanted to help employees achieve their dreams outside of work. But when she started interviewing people, vacation kept coming up as something they wish they could do, but couldn’t. When pressed about why they couldn’t take vacation, Pearson said half didn’t have the money and half felt their employers wouldn’t support them.
On the employer side, the story was different. They needed employees to take vacation, otherwise they had a massive payroll liability from unused vacation they’d need to pay out.
With feedback from employees, their target market, Pearson pivoted from achieving dreams to paying for vacations, and Vacation Fund was born.
In the pivot from achieving dreams to planning vacations, the Vacation Fund team continued to do research on why companies would encourage employees to take time off. This was happening as more studies showed that taking vacation increased productivity. That “business case” seemed secure, but as they did more research they found multiple other reasons. Many businesses feared payroll liability, but more so they had a different motivation: the war for talent.
“Some really want this as a recruitment strategy to say ‘we’re allocating money towards your vacations,’” said Pearson, noting that vacation experiences are a key lifestyle trend among millennial talent, but they often can’t take vacations for many reasons.
On the employee side, this perk acts like additional income that’s earmarked for vacation. They can request to withdraw their Vacation Fund, which is usually done through matching contributions from employers, at any time. While employers can choose withdrawal parameters, for example only for long vacations, the money is cash-on-hand for employees to use on their vacations.
The whole platform also provides aspirational elements, where people can document their dream vacation. You can think about locations, where you want to stay, and the kinds of experiences you want to have. There’s even the opportunity to think about “staycations” where you use the money to treat yourself – without ever leaving the comforts of home.
“We coordinate with the employer to make sure that these vacation days are actually being taken,” said Pearson. “So it can fund something during a staycation [or] it can fund a camping trip.”
A platform play
At the beginning, many people considered Vacation Fund to be more of a feature than a stand alone platform. It seemed to fit nicely as a benefit that could be offered by employers, but would better fit as part of a benefits administration platform than a single product. Pearson thinks differently.
With vacations being such a fundamental part of the millennial generation’s life experience, Pearson sees a platform play at hand. Right now, the platform operates like a niche marketplace of sorts. Employers put money towards a vacation and employees can plan out their dream vacation within the Vacation Fund interface. But Pearson hopes to add a third dimension to create a true marketplace platform: hospitality and travel providers.
Since employees already can research and plan their dream vacations within the Vacation Fund interface, the company has what Pearson calls “lead [generation] gold” for the travel industry. This provides an opportunity for Vacation Fund to own the entire employee-vacation-planning experience, from research to purchase, through the platform.
And travel may not be the only goal of Vacation Fund. Pearson already sees opportunities to move into other areas, since the fundamentals of the platform are transferable.
“We’ve gotten into a lot of employee financial wellness conversations,” said Pearson. “Some people really want to use this to actually just save for a down payment on their house.”