Wednesday, November 12, 2008

Stephen Kaufer, CEO of TripAdvisor on his company, Facebook apps and advice for startups

Stephen Kaufer, the President and CEO of TripAdvisor,  stopped by for a talk sponsored by the Sloan Venture Capital and Private Equity Club.   Key topics included the history of TripAdvisor, generating successful Facebook applications and Kaufer’s advice for an Internet company.  

Kaufer started off by talking about the history of TripAdvisor and how they arrived at their business model.  Interestingly enough, TripAdvisor was originally founded to create a database of reference information for travel.   They were going to license content and travel focused search to big portals (as that was the model when the company was founded in 2000).  Basically, they were going to power the travel channel for the Lycos, Yahoo and AOLs of the world.  

TripAdvisor’s first licensing deal was with Lycos – a revenue share.  And their first royalty check was for a whopping $500.  Kaufer and his management team realized that they had to change their business model (obviously a lesson for entrepreneurs).   The new model was to match content with commerce with CPC, CPA and CPM advertising.  Because of the relevance of their content, they were able to generate click through rates as high as 15% versus .2% for typical banner advertising.  

Kaufer on Generating Successful Facebook Apps

TripAdvisor has been using Facebook heavily to acquire content – in 4 months on Facebook, they collected more content on restaurants in terms of number of reviews than they did in four previous years.  They have also been using games on Facebook (like TravelPod) to build the brand.  One externality was that by allowing people to widgetize the game and put it on their website, they generated tremendous search engine optimization.  “Cities I’ve Visited” is another popular interactive application they have to promote the brand.   They also use these applications to generate contacts for their mailing lists.

Kaufer’s Advice for an Internet Company
  • Speed wins
  • Pay more for the best people at all levels
  • Strive to do more with fewer people
  • Don’t delegate hiring responsibilities
  • Don’t hire against deadlines
  • Don’t take away open requisitions
  • Software testing – responsibility is with the development team, not QA (TC comment: Amen!).
  • Focus on initiatives that can move the needle
  • Risk taking is good, just make sure the upside is worth the effort
  • Measure everything you can
  • Don’t be afraid to re-invent yourself.

Stephen Kaufer Bio

Prior to co-founding TripAdvisor, Kaufer was President of CDS, Inc., a successful independent software vendor specializing in programming and testing tools. Previously, Kaufer was Co-Founder and Vice President of Engineering of CenterLine Software, where he led the development of several award-winning programming environments that fueled the company's growth to more than $20 million in revenue. Kaufer, winner of a 2005 Ernst & Young Entrepreneur of the Year Award, holds several software patents and has spoken at dozens of travel and high-tech conferences worldwide. He is a board member of the Caring For Carcinoid Foundation, a non-profit charity dedicated to finding a cure for Carcinoid and Neuroendocrine cancers. Kaufer has a BS in Computer Science from Harvard University.

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