Kaufer speaks on entrepreneurship
On Wednesday, founder and CEO of TripAdvisor Stephen Kaufer spoke about his experience building a million-user website in an event titled “Turning a Frustrating Experience Into A Business.” The event was sponsored by the Hiatt Career Center.
Kaufer spoke to about 150 students about how he got the idea for TripAdvisor, his struggles keeping the business running and what he sees as TripAdvisor’s greatest strengths. He also shared his three biggest pieces of business advice for new entrepreneurs.
TripAdvisor allows customers to write reviews of hotels. Hotels felt hesitant that negative reviews would hurt their services, so TripAdvisor started giving hotel owners the ability to respond to users and give their side of the story, giving “credibility to the site,” according to Kaufer. TripAdvisor has over 315 million visitors a month and 10 to 20 million visitors a day, 75 percent of which are international clients. TripAdvisor also acquired other companies and brands, as well as “new markets,” in the hotel, restaurant and attraction sectors.
Andrea Dine, executive director of the Hiatt Career Center, introduced Kaufer, noting that TripAdvisor has a reported revenue of over $1 billion and has about 3,000 employees. Dine mentioned the similarities between TripAdvisor and the University, among them the “spirit of entrepreneurship,” and TripAdvisor’s owl logo, which is similar to Brandeis’ mascot, Ollie.
“The real idea behind TripAdvisor was how I avoided the doghouse by doing a little research planning a trip and actually picking the right hotel,” Kaufer began. In 1998, Kaufer reached out to a travel agent to help plan a vacation for him and his family. The travel agent handed Kaufer brochures on resorts in Mexico, ranging from inexpensive to moderately priced to expensive. His wife wanted to check the resorts before booking to see the differences between the prices. After researching online, the Kaufers finally found “the other picture” of the inexpensive resort, as Kaufer described it, which showed a lousy wooden chair on sand, and caused the family to upgrade.
After this experience, Kaufer found the time to start up a company “to help travelers around the world plan and have the perfect trip.” Kaufer said he wanted the company to be “unbiased [and] truthful” by letting users post reviews and help users decide on destinations and activities. Kaufer spoke to five or six venture capitalists who dismissed his idea, thinking it would never work. The venture capitalists believed that most reviews would be negative as clients discussed the bad experiences of their trips. They also questioned the company’s ability to grow, and they doubted the company’s ability to make money.
Kaufer told the audience that the venture capitalists contributed to his depressing feeling, and he noted that most business ideas do not work.
According to Kaufer, even though we hear about the successes, there are “a lot of failures behind the scenes. ... That’s the entrepreneurial way. You’re going to have some misses before you have a hit.” Kaufer said that although Mark Zuckerberg, founder of Facebook did not have any failures, Kaufer had three failures before TripAdvisor launched.
Finally, one firm gave the company a small amount of money that helped TripAdvisor get started.
In discussing the reviews his company has received, Kaufer said the ratings on his website show that 4.1 out of 5 have a great time on vacation. In order to make money, TripAdvisor’s business model relies on online transactions.
Hotels pay a lead fee for every reservation on TripAdvisor. They also pay TripAdvisor “cost-per-click” when someone books a hotel on TripAdvisor. Regarding restaurants, TripAdvisor makes more money on banner ads on its site because the company does not “sell restaurant reservations in most cases.”
Kaufer said that he is a “hard-wired, Type A” and shared some of the challenges that he thinks about regarding the future of the business. TripAdvisor makes sure to have instant booking, customer personalization and a mobile app for its users in order to retain the customers. TripAdvisor recently expanded to China, and the company has had to do a lot of work in order to acquire the travel market.
Kaufer also shared several of his favorite quotes on how entrepreneurs can succeed. Kaufer first said that “speed wins,” suggesting that within a company, entrepreneurs should get from one point to the other in as little time as possible in order to get things done quickly. Kaufer also advised caution on the hiring process, saying, “hire slowly, fire quickly.” Finally, he advised that although people do not like change, people should “embrace change, and reinvent when times are good.”
Kaufer is a Brandeis parent to alumnus Harry Kaufer (’13). He is also a recipient of the 2005 Ernest & Young “Entrepreneur of the Year” award.