‘I have one more new adventure left’: Amid big resignation, Tripadvisor’s Steve Kaufer takes next act
Kaufer’s situation is a twist on the “big resignation” that has hit the region’s executives as well as its rank-and-file workers. He is leaving the company he started and rebuilt at a watershed moment for Tripadvisor and the travel industry. And his story — particularly how he handled the existential crisis of the pandemic — holds new lessons for the business world.
When he launched Tripadvisor in 2000, there were few popular consumer technology companies in Boston. Its success has encouraged others, and the region now boasts a growing number of technologies brands such as DraftKings, Wayfair, Whoop and CarGurus. Tripadvisor remains one of the most popular travel sites in the world and has just exceeded one billion published consumer reviews.
Sitting by the grilled fireplace in the vast empty central atrium of the headquarters, the 59-year-old CEO, dressed in jeans and a Patagonia vest, said he was not going to retire or to spend more time with his family.
“I’m pretty sure I still have a new adventure left in me,” Kaufer said. “I haven’t decided what it’s going to be yet, but. . . I’m very comfortable with the Boston startup scene. . . will be the right home for everything I do next.
One thing seems certain: venture capitalists will be lining up to back his next project.
“He has a blank check from me,” said Joel Cutler, managing director of General Catalyst Partners in Cambridge. “Our firm would back him up in a heartbeat.” (Cutler, who has led investments in travel companies like Airbnb, Saber and Kayak, never had the opportunity to invest in Tripadvisor.)
Tripadvisor was not Kaufer’s first startup. After growing up in Los Angeles, he crossed the country to Harvard University, where he fell in love with computer programming. A 1985 graduate, he co-founded CenterLine Software, which created tools to help programmers write code.
In the late 1990s, he was planning a trip to Mexico and a travel agent gave him some glossy brochures of beach resorts. But when he went online to research, it was hard to find any useful information until he came across a blog post from someone who had visited one of the stations. His initial idea for Tripadvisor was to create a search engine that would gather articles about travel destinations and sell the results to large, established websites.
Kaufer steered a tight ship, recalled co-founder Langley Steinert, who went on to found auto sales site CarGurus. Early on, Steinert, who led Tripadvisor’s business development, wanted to buy a laser printer, but Kaufer refused.
“He was really frugal – we invested every penny when we were trying to achieve profitability,” Steinert said. noted.
But selling search results to other sites was a complete failure, and it took a while to find what worked: creating a forum for user reviews and getting paid by hotels and other travel sites when Internet users clicked on their ads.
Backed by just $4 million in outside capital, Kaufer built the startup and sold it to Barry Diller’s IAC/InterActiveCorp for over $200 million in 2004. The company was spun off from IAC as part of a ‘Expedia the following year. In 2011, Expedia launched Tripadvisor as an independent, publicly traded company.
After its IPO, the company grew strongly and entered new business areas, such as direct hotel bookings and restaurant reservations. The peak came in 2015 when Marriott joined Tripadvisor’s instant booking program, the company moved to its new headquarters, and its market value exceeded $15 billion.
But around the same time, Google, which had bought Cambridge-based airfare pricing company ITA Software, was becoming more aggressive in travel. And from 2015 to 2019, Tripadvisor’s revenue barely increased. His market value increased from $12 billion in December 2015 to around $4 billion in February 2020.
And then the pandemic hit.
With business and leisure travel shut down, Tripadvisor’s revenue has all but disappeared. Kaufer had hoped to weather the storm with temporary furloughs and pay cuts (including cutting his own salary entirely). But deeper cuts were needed. In April 2020, Kaufer announced that 900 employees, about a quarter of the workforce, would be made redundant. An equally large share of workers in Europe have been furloughed.
In the second quarter of 2020, Tripadvisor’s revenue fell 86% compared to the previous year. After years of profitability, the company recorded a net loss. Its market value has fallen to $2 billion, the lowest on record.
“It was surreal,” Kaufer said. “I was like, ‘We better go home for a few weeks, let this thing calm down’, and all of a sudden, wow, there’s no more travel. »
Asked about his handling of the crisis, Kaufer remained focused on business strategy and did not feel the emotional impact of seeing his life’s work threatened. His calm demeanor, for better or for worse, has helped the company in the past. Co-founder Steinert recalled that Kaufer kept his wits about him when their initial business plan fell through and they were six months away from running out of money.
“Steve is a very calm person, he doesn’t ride an emotional roller coaster,” Steinert said. “It’s like he’s in the middle of a hurricane and he’s just calm.”
Recent challenges have led some to write off Tripadvisor’s success. But it would be a mistake to ignore Kaufer’s legacy, said Jed Kelly, analyst at Oppenheimer.
“I don’t think he got enough credit for building a multi-billion dollar business,” Kelly said. “Not many people have done that.”
While travel has started to return, Tripadvisor’s business is also slowly recovering. Its market value has doubled since bottoming out and was around $4 billion on Wednesday, when the company reported its 2021 revenue was up 49% from the depressed 2020 level. Wall Street analysts forecast revenue to reach around $1.4 billion this year, or 90% of the 2019 level.
The company’s efforts to sell consumers travel “experiences,” like museum tours or mountain bike rides, have grown into a solid business, Kaufer said. And he still sees promise in last year’s decision to sell subscriptions to Tripadvisor Plus, a program offering hotel discounts and other perks for $99 a year.
This business has had to pivot in recent months as the initial idea of convincing hotel chains to offer special rates to members fell through. In September, Tripadvisor changed the program to offer discounts that can be spent on future travel.
“We are planting the seeds now,” Kaufer said. “And I’m super optimistic about how that’s going to play out over the course of several years.”
Analyst Kelly isn’t so sure. “Subscriptions work well for something you do a lot, like watching Netflix,” he said. For typical vacationers, “it’s a tough model to build.”
But the next big decisions will be up to Kaufer’s successor. After the grueling years of the pandemic with the responsibility of running a public company, he is ready for something different.
“I am 22 years old in the seat. I have another itch or two that I want to go scratch,” he said. “Let someone else take the reins. I hope and expect them to do a lot of things the same way and, I certainly expect, a lot of things differently. And that’s good for a business.
One thing Kaufer probably won’t do is travel a lot more. Despite the success of Tripadvisor, he was never a great traveler. As the pandemic waxed and waned, he managed to take a business trip to Europe and a family vacation to Mexico.
“Getting on the plane for business was a treat,” he said. “I was surprised myself to get a little emotional about sitting on a plane, but I really enjoyed it.”
Aaron Pressman can be contacted at email@example.com. Follow him on Twitter @ampressman.