TripAdvisor CEO Stephen Kaufer is a rare bird in several ways. Not only is he chief executive of an industry-leading website based in Massachusetts — TripAdvisor is the world’s biggest travel site — but he took the company public in 2011 after first selling it to InterActiveCorp. (More on that here.) I sat down with him last month to talk about the company’s four acquisitions so far in 2014; his take on travel startups like Airbnb, Uber, BlaBlaCar, and TripIt; and whether he’s happier or less happy being the CEO of a public company.
Kaufer had some great advice for CEOs of newly-public companies, like Wayfair (which IPOed last week) and HubSpot (expected to start trading on Thursday.)
“At internal company meetings, I don’t put up the stock graphs, ’cause that’s not what I want people thinking about,” he said. “Ask me what the stock price is, I’ll tell you, ‘I don’t know.’ ‘Hey Steve, the stock was over $90 yesterday!’ ‘Didn’t know — don’t care.’ It just has nothing to do with the fundamentals of the business. Our stock will go up or down because somebody else with far less knowledge than anyone internally says something good or bad about the company. …But it has no bearing whatsoever on what the stock is going to be like in two years, how strong the company is going to be.”
He continued, “When I talk to investors every quarter, they can ask what margin we target. And I go, ‘I don’t target a margin. I’m looking to grow the business.’ If I can find a way to spend money today that I know will help me grow tomorrow, I’ll do that. It drives some of them nutty, ’cause they can’t predict what I’m going to do in the next quarter or the next year. To them I say, ‘I understand, we’re a tough business to predict. Sorry.’ I am utterly convinced that the way I am running this company, for the long-term, making what we think are the right investment decisions, as opposed to caring what the world thinks for next quarter, we’ll deliver better long-term growth. Which, at the end of the day, makes the company more valuable for the shareholders who are asking me the question today.”
TripAdvisor ended its first day of trading in 2011 at $29. Today, it trades at $90. (Pictured at right are a few TripAdvisor-branded bikes that employees use to go between its Newton and Needham offices.)
Here’s some of what we discussed; you can hear the complete audio of our conversation below…
– TripAdvisor has acquired four companies so far in 2014. What’s the thinking behind TripAdvisor’s acquisition strategy?
– Kaufer says the company is “investing more resources” in helping people book activities and tours when they travel, following the acquisition of tour site Viator in July. “You haven’t seen the fruits of it yet.”
– Why isn’t there a strong #2 to OpenTable for restaurant reservations in the US?
– What’s happening in the vacation home rental arena? What’s the “magic” of Airbnb? Kaufer says that Airbnb “did an amazing job pioneering a model that the rental space hadn’t really considered. Before them, it was $200 or $500 to list your rental on a site, and the renter talked to the homeowner. Painful transaction. I used to rent that way, and it involved sending a certified check to a PO Box. I hope the key is underneath the mat, like they promised. That’s kind of scary. That’s why the traditional rental agency was there to hand you the key and show you the house. Airbnb came along and said, it’s a community of trust. Hotel rooms in cities, the prices are sky high. Want to stay in San Francisco? Get ready for $300 a night. Want to stay in a spare room? $50.”
Kaufer says he has stayed in an Airbnb for research purposes, when they first started, “and it was the spare bedroom. That just had no appeal to me.” But now, he says, much of Airbnb’s inventory is comparable to the kinds of home rentals users can find on TripAdvisor. “It’s a nice ecosystem that [Airbnb] has built, that we and HomeAway, in part, are copying.” But he says “it all converges, at the end of the day, to whoever has the demand. Who has the traveler looking to stay somewhere?”
– Kaufer names Airbnb and Uber as the two most disruptive startups in the travel industry. “At the end of the day, Uber is going to win. It’s hard to imagine what part of the world is actually going to permanently ban Uber, versus regulate it. Same thing with Airbnb and occupancy taxes and zoning rules. People want [Airbnb], folks who own an apartment want to be able to rent it out, and the government has some interest in collecting taxes and making sure it’s a safe rental. A license of sorts. It’ll sort itself out.”
– We talk about airplane-sharing and carpooling startups. The challenge of matching drivers and riders in cars “will be solved, I am personally convinced,” he says. Kaufer mentions BlaBlaCar‘s success in Europe. “Fundamentally, it’s no safer or more dangerous than hitchhiking, which people did for years and years and years. Whether [BlaBlaCar] comes to the US, or whether someone else successfully copies it, I just think it’s a natural win.”
– What’s new with TripAdvisor’s mobile apps, and whether the company believes in a “one app strategy” or a constellation of apps. Kaufer says there’s some debate internally about that. “There’s a pretty good argument that for the traveler, everything you want to do is in the TripAdvisor app. But if you live in Paris, should you be using the TripAdvisor app or the LaFourchette app, which is geared just toward restaurants, and doesn’t have any of the other distracting stuff on it.”
– We talk about the TripIt app for organizing travel itineraries and reservations (which I’m a fan of.) “Our perspective was, it might catch on, and if it does, we can build it or license it,” Kaufer says. “If it doesn’t, OK, we don’t need to be a first mover. It doesn’t seem to have caught on. Could TripAdvisor do it in a way that would finally make it catch on [for the] mass-market? I don’t think so.”
– We talk about the concept of “instant booking” and TripAdvisor’s interest in social sharing. When you see reviews on TripAdvisor written by friends, or friends of friends, “it just takes some of the mystery” out of booking a given hotel or visiting a particular attraction, he says.
– What is it like running a public company? New CEOs, Kaufer says, sometimes “worry about the quarter. What are the investors going to think? They have shareholders, and early investors who want to get their money out. When I talk to investors every quarter, they can ask what margin we target. And I go, I don’t target a margin. I’m looking to grow the business. If I can find a way to spend money today that I know will help me grow tomorrow, I’ll do that.”
“As we grow, the privilege I have of being able to focus on the two-, three-, five-year timeframe — not the 2014 timeframe — that’s pretty cool,” he says.
Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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