TripAdvisor CEO Kaufer: Reinvent the Company in Good Times

Yes, TripAdvisor. You use it. I use it. But do you know the man behind this popular travel site? And why he is leading a major push to revitalize the company?

Founder and CEO Steve Kaufer (pictured) keeps a relatively low profile around town. That’s the way he likes it, but he probably wouldn’t mind if TripAdvisor got a little more attention and buzz.

The Newton, MA-based Web company (NASDAQ: TRIP) is one of the biggest names in the travel industry. It came from humble beginnings in 2000 to get acquired by IAC/Expedia (2004) and then spun back out as a public company (2011).

It is now growing on its own again with some 1,900 employees, a market capitalization of about $12 billion, and annual revenues approaching $1 billion—$255 million in the most recent quarter. The company’s network of travel sites attracts 260 million-plus unique visitors a month.

This year has been an interesting one for TripAdvisor, which is best known for its user reviews of hotels, restaurants, and other travel destinations. In June, the company changed how it displays hotel booking options, moving into “metasearch”—whereby room-price comparisons are shown on its site, rather than users having to click on pop-up windows from other sites like Expedia. Kaufer believes the move will pay off with a better user experience and stronger revenues. TripAdvisor has also continued its push into vacation rentals and international markets (China in particular). And it has made six acquisitions in 2013—Tiny Post, Jetsetter, CruiseWise, Niumba, GateGuru, and Oyster.

I sat down with Kaufer earlier this fall to get an update on the company—and where online travel is heading, more broadly. He had some surprising things to say about potential competitors—could Apple or Facebook move into travel?—as well as why it’s important to push the company and try new things when times are good, not bad.

Here’s an edited transcript of our chat, boiled down to five questions and answers:

Xconomy: TripAdvisor keeps evolving, building, and acquiring small companies. Where are you strong, and where do you still need work?

Steve Kaufer: We’re amazingly profitable. We’ve had a long, steady stream of growth, growth, growth. We’ve gone beyond that core hotel business that we once started in to doing a dozen-plus acquisitions, and other categories like cruises and a big push in vacation rentals.

We’ve collected a phenomenal amount of incredibly rich content to help you pick a hotel. We took a step further and said, online we’ll show you what your friends want to do, where they want to go, and where they’ve been [via Facebook]. One thing we hadn’t done all that well was price comparison. We did it, but it wasn’t particularly convenient. Nobody particularly liked the economic model behind it: you click a button and have to open up six different windows, and you have to compare them. OK, we changed it. Now we’ve got something that’s unquestionably best-of-breed content, decision support, and superior price comparison—globally. That’s a pretty nice picture.

[On acquisition sizes] we’d consider anything, there’s no religion on the topic. We’ve proven to ourselves we can successfully acquire a brand, a standalone site, and grow it. Other acquisitions we gave a ton of exposure and added to the scale of our business. They have varied in size from a couple million dollars up to the tens of millions. Would we do a billion-dollar acquisition? Sure, anything’s possible—it comes down to which one. If it’s “Hey, I want to buy a hotel chain,” that’s not going to happen.

X: What are your key challenges heading into the new year?

SK: There are markets where our products aren’t number one. I look at vacation rentals, and China. Culturally, what are our key assets in how we do stuff? And how do we not lose that if I think it’s great, and kill it if I think it’s hurting us? I’m always on the lookout to say, are we absolutely as efficient as we can be? I’m a huge believer in operational success. We’ve made some right decisions and we’ve made some wrong decisions about who to buy, what to do, and when. At the end of the day, our engine is in a good, growing sector—we think of travel planning, hotels, restaurants—globally.

The product gets better and better every night, with more reviews and more photos. There aren’t a lot of others like that on the Web. People have to actually go build more stuff to make it better. Expedia doesn’t get better overnight; someone has to get another hotel onto the system.

X: So how has the competitive landscape in travel evolved over the past year?

SK: In terms of global market share, there are only a small number of players. There’s Google, Expedia companies, Priceline companies, and TripAdvisor.

Google, they spend a lot of money, but really they’re not doing much. But they could do more, because they’re Google and they control the big funnel into the Internet. So they want to direct people. So we keep a close eye on how might they choose to force their users to go experience that experience.

Online travel agencies like and Expedia have reviews, but can only tell you about what they sell. And the metasearch guys [Kayak, Trivago] don’t have the content or the community. The only reason we’re competitors is that we’re trying to get you, the traveler, to first come to our sites.

X: Any potential new entrants that would be interesting? Someone like Amazon?

SK: Amazon could create a travel tab and license Expedia there, or TripAdvisor, or somebody else. Which they did seven or eight years ago, and it was a complete disaster for them. They might, but that would be odd. Facebook or Apple or Samsung might be more interesting thought exercises. They each have an audience.

Facebook, they give social recommendations in their search box, but we have a lot more social information on travelers than they do. So it’s a little hard, but plausible, to think of a horizontal company like Facebook building out an awesome travel experience without all of our content. It would be hard for them to build up the level of content that we have.

Apple, they’ve got the users, they’ve got a map, but they don’t actually have much content. So they do a license deal with Yelp, and they might do a license deal with us. Which still sends the traffic over to us, as opposed to keeping it on their platform. They could develop a white-label booking engine, but it’s a little hard to see why they would do that.

Could a voice-recognition company [like Nuance] use our content to help provide recommendations? Sure, sounds pretty cool. What’s in it for the content provider— traffic or revenue or brand? That doesn’t work all that well with voice. You have to have the voice send you somewhere to actually make a transaction. If Apple wanted to get restaurant recommendations, they’d have to figure out where they’re going to get that content from. Someone’s going to want to get something in return.

Samsung had expressed an interest in having “Samsung Travel.” We talked to them at great length. We reached an arrangement with them whereby they simply preloaded our application onto all their S4 phones. So if you open it up, it’s called TripAdvisor Samsung Edition. It’s got some extra bells and whistles unique to Samsung, but it’s fundamentally the reviews and opinions we have everywhere, preinstalled on the phone.

X: Talk about your mental approach to leadership. How do you run a business through good times and bad?

SK: The lesson I would seek to impart would be: In my last company [CenterLine], we had wonderful early success, growth rates—darling of our space—we thought we were king of the hill. And we believed in ourselves too much. We thought we were doing everything right. Hindsight says we had phenomenally good timing, a good product, but we weren’t ready for the world to change. And our world changed. And we didn’t change very quickly. We stuck to our old way of doing things. We persevered. We tried even harder. And the company went up, and it went down. It was sold before it went bankrupt.

I learned way more about business management on the way down than on the way up. And a bunch of what I brought to TripAdvisor was, hey, when times are good is a great time to reinvent how you should be even better. When times are good is a great way to sit down and think, should the business be like this? You have the luxury, the ability to change, tweak, move, and not continue business as usual because it’s working—why change it—but to optimize.

We’re very successful in almost every dimension here. I ask the various departments all the time, hey, we’ve got to be doing something different next year or next quarter. What is it? What do you think we can improve upon? Do we do double great here or do we try a different angle over here? And it drives people nuts, because to one degree it’s, “God, are you never satisfied with anything that we do?”

I’m not complaining about anything—it’s going great—but how do we mentally challenge ourselves to do better? Because the guys chasing us, that’s how they’re going to catch us—we’re going to get comfortable in the way we’re doing things.

And in turn I have to apply that to myself. For more than a decade, I said we’re not doing TV [ads], we don’t need to. We’re doing fine. But we have the opportunity to challenge ourselves. I got some extra data that said TV works really well in certain markets. So even though I have a 10-year bias, we’re doing it. Lord, I hope it works. But if it doesn’t, it’s not going to kill the company. It’s using that opportunity, while we’re successful, to challenge ourselves.

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One response to “TripAdvisor CEO Kaufer: Reinvent the Company in Good Times”

  1. jb says:

    Great advise. Reinvent yourself when times are good. Don’t sleep on your laurels…