EP 107: Steve Kaufer (Co-Founder, Tripadvisor) - Why He Left & What He’s Building Now

33:02I'm told that you can actually comment or maybe people can come in and read it. So what has that done for you and building trust with your employees and helping them understand your working style? I got to that rather late. A very good friend, Luke Lovac, had introduced it to me as kind of a blueprint for kind of who he was. And he shared it with his team. He used to work for me a trip. He's now gone off to do lots of great stuff. and it's just an acknowledgement that every individual is different and this is the blueprint in your own words of like who you are. What are the things that make you really happy, generally professionally?

33:47What are the things that drive you nuts after you've worked with someone for three or four years? Yeah, you don't need the document. You already know that. But it's a great way to explain what excellent ways to interact. And so in my document, I'm like, don't ask me to make a big decision, even if it's an obvious one right away. I'm just like, I don't like the pressure. I want to sleep on it. My real estate team had done a lot of work to figure out where we need to like. And they presented me like, okay, so here's the lease we're recommending you to sign. There was 0.0 chance I was going to say no.

34:31I was unlikely to even ask an intelligent question. It's just not my forte. I totally trusted the team. But they're like, and we're hoping to get a signature today. I'm like, whoa, no. This is a multimillion-dollar decision. I need to sleep on it. Totally stupid, right? I'm not going to learn anything by sleeping on it. And so I mention it purely as a personality quirk. They get it to me a day earlier, and they say, hey, so hopefully we can have your decision by tomorrow. I'm happy, they're happy, and it all goes smoothly. If you didn't read the blueprint, you wouldn't have noticed that. I hate it when people, and I think most people do, wait till the end to deliver some bad news.

35:16Like, no, tell me about the problem up front. Maybe I can help solve it. But flip side, hey, if you share a problem with me, again, if you're vice president and you're sharing that you've got a challenging team member or something, in return, I promise not to ask you in our next one-on-one, hey, did you solve that already? Like, no, I want a relationship where you can come to me and I can help with something without there being a negative consequence to sharing that you were, in this case, vulnerable in this particular situation. leadership i think can be innate in some ways i don't know if you agree with that but uh i've found that people can have uh qualities naturally that sort of uh come come along with uh what we would call leadership but i think management is only a learned principle totally i don't know if you agree with absolutely um you had mentioned management wasn't your uh your favorite thing initially but you've obviously had to manage thousands tens of thousands of people over the years what have you learned about managing in general that you would impart to a uh founder entrepreneur you know someone growing in their career trying to figure out management style yeah yeah don't do it what i don't do what i did which is what which is try to wing it i like my biggest mistake early on in my career was just like, oh, I'm managing people who are just like me.

36:52Like, sorry, that's not the way the world works. You hire a bunch of different people that have very different motivations for being there, different learning styles, different ways they ask for, receive criticism, stronger egos, quieter egos, just different personalities. And my biggest mistake really early on was, again, assuming they were all like me. Biggest advice I would give to somebody learning how to manage, find one or two people in your current company who have a reputation for being a great manager and ask them, what do they do? Hey, you've got a great reputation as a manager here.

37:41I want to be a great manager. What do you do? How do you have a hard conversation? I'm like, learn from the stories of others before you start committing all the egregious sins that most new managers do. Second, I get a couple of book recommendations. Some of it is blindingly obvious if you take the time to actually read and study the topic. It boggles my mind that I could graduate from a good school and never having taken a class in personal psychology. What motivates people? Why do they want to do? Like, how helpful would that be to your personal life, your friendships, your business colleagues, your career ladders?

38:34Like, super useful. No, I had a good music class, an art class, a computer science class, a math class. Like, yeah, that's way less useful than learning how to interact with people. So, if as, again, I have an engineering background. So if you're going up the engineering management route, read a book, study from friends, watch those around you, watch how the good ones do a good job, and learn from the bad ones that are causing a problem. I listen, sometimes you'll end up knowing both sides of the story, the manager's viewpoint and the employee's viewpoint, and think, hey, how might I have handled this situation differently if I were the manager or I were the employee?

39:31like you get to think about this case study for free you don't even have to live it but through the eyes of your friend uh you you get to try any book recommendations or anything that stands out i it uh no high output management is the one that i typically uh will recommend to people within that um what what culture uh getting set within a company obviously i think culture is a set of, I don't know if this is the right definition, but a shared value system that a organization kind of imparts and maybe it's what people do when you're not in the room or something. How do you think about setting a culture?

40:15You have a new company and you wanted to set a culture for Give Freely as well. How did you go about doing that in a prescriptive way versus what was implicit to it? Yeah, I find it's best to be as explicit as you can about what you value as a company. Like every company, like, hey, we value communication and transparency. Or at least I haven't found one that doesn't say that. But do you live it? Like, is that how the weekly meetings go? You know, if really we're tiny. but like every single person in the company kind of knows what I'm doing each week because I share it at the weekly team meetings they don't need to know it per se but like we're a small company I'd love everyone's input into anything like I don't uh and like I try to explain everyone should come with or can come with a viewpoint, share it.

41:26If you hold an opinion strongly, say the opinion strongly. Know when you're the decision maker and when you're not. And if you're the decision maker, it's not whoever yells the loudest, it's what you think the right thing to do is. Put a strong, healthy discussion or debate in both Tripp and the company before that, and this one, like, very respectful company. We don't scream at each other. It's just not the culture I choose to set. And we're just not going to tolerate anything that we view as unethical, overtly political. Hey, when this benefits you but not the company, no. I'm like, you'll get a very direct conversation from me about, hey, this isn't what we're looking for here at this company.

42:20And at the end of the day, I'm always looking to reward, in talking about setting the culture, to reward with public praise the folks that are doing what is best for the company's interests. Trading open headcount is an excellent example when, hey, times are tough, and the headcount in the plan And the market team says, hey, I'd rather use this open head to go hire another engineer to build that because that's going to be more valuable to achieve our marketing objective. Great. Love to see that. And I want to publicly reward it and encourage it. There's this Silicon Valley ethos that I think Y Combinator has done a really good job espousing that is basically kind of the shipping, the minimum viable product, iterating quickly on it, getting feedback from customers.

43:21I get the feeling that in reading some of the stuff, you both at Trip and now give freely kind of agree with that. I'm wondering about the trade-offs and were there times at which you were more measured in your approach rather than putting something out in the wild and getting it to the MVP state and iterating on it? Yeah, so I'll give you two examples. Paul Graham actually invited me in to give a little kind of a short luncheon speech to one of the earliest Y Combinator classes on this concept of 404 testing. And 404 refers to the HTML error code when a page isn't found. And it was and is an awesome way to test whether a consumer on your website wants whatever it is you have a call to action for.

44:19So in TripAdvisor's example, it was, would you like a weekend getaway guide? Free. And do you build it? or do you put a button on the homepage that says, sign up for a free weekend getaway guide and see how many people click it? And if you click the button, it went to a 404. Sorry, this page is missing right now, which scares the bejesus out of any marketeer to say, you put that on your homepage? I'm like, yeah, depending on the stage of the company, for an hour so I can see how many people click it so I can get a real life estimation. And that happened to be a great example because 10 out of 10 friends that I asked, would they want to sign up for it?

45:02They all said, yes, of course. And we actually put that button on the homepage and nobody was interested. Like, whoa, were my friends lying to me? No, I don't. I mean, friends will lie to me all the time about various stuff, but not generally about something like that. But the user coming to the TripAdvisor homepage didn't want a newsletter. They wanted to go research their trip to a specific location that was in their mind. So I'm like, anything else was in the way, and so that feature didn't work. That was a fabulous A-B test because we didn't have to build a big product to then find out that even though users said they were interested, they weren't.

45:48Flip side, fast forward 20 years, and we built a subscription-based travel product. You subscribe for$100 a year and you get great discounts and other perks. And we were appealing to TripAdvisor's massive audience and the set of whom that would be traveling enough such that a single trip would pay for the subscription and then they'd get the savings for the rest of the year. relatively simple product conceptually super logical payback period like not even in doubt i was a big product to build not something that i could figure out a way to a b test and so hey we invested in building this and it did not work out the way we had hoped i hindsight lesson hey when you can't figure out how to do a an mvp a quick test be really careful especially if your company is of decent size or that opportunity cost is going to be high that you've researched enough of the psychology involved in our case on the hotelier side as well as the consumer side to to walk people down the journey and that killed me because it meant oh that means we can't start building it yet we have to go slower but my lesson in hindsight still learning that i was in my 50s at that point it's like there are times when i you'll save yourself a lot of heartache if you actually go slower how do you set a culture of adaptability within uh an organization at different points in time you i think a trip advisor saw different existential threats or considerations coming down.

47:50And this isn't 9-11 or COVID necessarily, the unexpected one certainly. But I think link traffic at one point and trying to build more direct relationships with customers was one that where you really needed to pivot the company's mindset or make it more concerned about the threat that you were seeing that maybe wasn't yet showing up in the metrics. Maybe can you speak to that specific example? And then also, how do you instill a culture and a willingness to adapt within a company? every entrepreneur is is formed or runs their life based upon the scars they experienced in their previous lives and one of the scars on my back is a company that had a a good it was a software tools product and we just we weren't always looking even in our most successful days we weren't always looking for what that next move would be.

48:52And so in the theme of, hey, I'm never going to repeat the same mistake twice, I was always hyper aware of like, how am I investing for that future? And TripAdvisor, we had a lot of traffic coming in through search. How were we going to wean ourselves off of that dependency? That was one constant threat because Google can and did change the search game all the time. Google entered into the hotel, we call it the hotel meta business. You can search for a hotel, you can get prices. I'm like, oh yeah, that's a lot of what people do on TripAdvisor. And they took a lot of traffic that otherwise would get to TripAdvisor.

49:39And that hurt along the way. Okay, well, if Google's coming in and playing in your space, what are we going to do differently? So again, at various points, there were key moments where absolutely had to rev the company up for a change, which is surprisingly hard to do when the company is very successful at that moment in time. Because people are like, why should we change? Like record profits every quarter. This is going great. and as CEO, it's kind of your job in my book to always be paranoid and to try to think of where you need to be in that three to five year and at least make some bets that could get you there.

50:25So I had like in my tenure, I made a number of different bets. A couple worked out really, really well, thank goodness, and a handful didn't. A number of small bets were complete disasters, but hey, they're small bets and that's kind of living up to the like, yeah, if we're not taking enough risks of utter failure, as we did in some of our acquisitions, we weren't trying hard enough. But we bought an attractions company at a relatively low price, invested in a lot, And it's a huge part of TripAdvisor's value now because we saw threats coming back then and we knew we need to do something and we thought that that was a great plan.

51:14So that one worked out. Vacation rentals, less so as a counterpoint. As you think about hiring individuals into an organization, I guess, are there certain characteristics you're trying to tease out? Are there non-starter things that you definitely would never hire someone if it comes out in an interview that might be counterintuitive? The non-starters are when they're talking about, you know, a couple of techniques I try to use. And certainly to any company starting, I would urge the founders to continue to directly interview every finalist until you get to several hundred people. And a lot of founders are nervous about being accused of micromanagement or not delegating, which is generally a fair thing to be concerned about, but never delegate that last step in the hiring process.

52:14yes uh so you know hiring traits i look for i if someone is telling a story about what they worked on i might ask hey tell me about a really hard project and why was it hard and i'm gonna like weave in is it hard because the other people weren't cooperating was it hard because it was just a hard technical problem is it and i'm listening for are they blaming other people are they empathetic to what other people have to go through is there teamwork involved is it hard just from a solo perspective was it really hard because they had to work one saturday like oh that's kind of a red flag if they view that as the hardest product they've ever project they've ever worked on.

53:09Yeah, I just have a different definition of hard work. That can often tell me, are they a team player? It can tell me, are they ever taking responsibility for why something became difficult? And again, it can tell me their definition of hard. Personality traits? I look for people near as I can find in an interview setting that look back and say, how could things have gone better? And so I'll often ask, hey, tell me about a project that you're really happy with that kind of viewed it as successful. And they go into something that they've practiced during the interview, pre-interview process, because everyone likes to talk about their successes.

54:00And they say, all right, well, given that was clearly a win, Like, if you had to do it all over again, would you do it exactly the same? Or would there be anything that could actually have gone a little bit better? Ooh, that'll sometimes catch people off guard. And I can see kind of by the pause, they've never thought about it. I'm like, okay, I'm looking for people that, whether the project worked or didn't, are always in the mind of self-improvement. Hey, I was running this. We're working on this. It worked. Yeah, I wish I had done blah, blah, blah. Not because I want people to get down on themselves or always strive for perfection.

54:48But if you go through life learning on your past experiences of how you can do things better, you're going to do something a little bit better. You won't make the same mistake. You'll do something a little bit better. you see a couple of themes coming out here. And then I love curiosity. I love the, like, hey, if I were interviewing someone today, you played with any of the AI chatbots, agents? If I'm talking to a software engineer and the answer is no, like, I just don't understand it. and I probably don't want to work with that individual because they're exhibiting something that is so, like the fit is not there with my personality.

55:37Like I'm looking for people who are like, oh, I don't know, I'll figure it out. I don't want them to be too distracted on the job, mind you, but like they're always interested in learning what's coming next and especially at a startup, as I'm sure most of your guests have iterated on, you can't really predict what's going to be next, and you need people who are adaptable. I don't know a good question for adaptability. I do know good questions for curiosity. On the point of adaptability, we referenced this earlier, but there were two, I guess, major milestones when running TripAdvisor milestones is probably the wrong terminology, but catastrophic events.

56:21One was most recently COVID and the pandemic, and before that, 9-11, both of which I think uniquely impacted travel. Obviously, they uniquely impacted society, but as a derivative, travel was certainly impacted as well. What have you learned about managing through crisis or managing people's expectations as these jolts happen to um to to society but then the business specifically i mean trip advisor was not yet successful when 9-11 hit we're like oh shit like it was difficult enough to build a pipeline of potential partners now is like hey the potential partners were hoping they were going to stay in business.

57:09It was pretty traumatic. So, you know, don't start a startup unless you're willing to fail. And it sure looked like we were going to fail then. So, you know, we brought the team together and said, hey, looking for ideas. Let's try to think as broadly as we can because we don't have a lot of time left. brutally honest like we're all going to be out of a job in about six months unless we can figure out something what should we try there's no panic it was like the very realism but these were people that like we were already struggling as a company i knew a bunch of the people and so there was less of a communication challenge.

58:01Fast forward 20 years, TripAdvisor been profitable every quarter since shortly after 9-11. And then COVID hit and boom, revenue plummets immediately. And everyone knows something's coming. If you remember, we didn't know how long the pandemic was going to last. We didn't know how bad it was going to be, whether travel would ever recover. And so, you know, fortunately we were in a financial situation where there wasn't panic. We had to go borrow some money, okay, but the banking system was wide open. We had a terrific CFO who was able to, like, put a checkmark next to the can I hit payroll. and so then it became like okay we can't run business as usual our industry is suffering so how can we help them travel shifted domestically pretty quickly that was a modest change for us we were already a very global company layoffs were coming that if you were to ask me the hardest moment of TripAdvisor that would certainly announcing a layoff over Zoom or the impact of a layoff, not a pleasant experience.

59:27The items I would impart upon other CEOs is the standard, like, be transparent. Folks can know. I couldn't say, hey, this layoff and there's never going to be another one. That's not true. I can't say. All I can say is, hey, we've cut deep. so that if things progress the way we expect, we won't have to do another layoff. Okay, that's not exactly the comfort everyone wants to hear, but it is the truth. And at the end of the day, that's how I want everyone in the company to behave, so I have to model that behavior in addition to just being the right thing to do. Empathy, how do you help people that are affected find other jobs?

1:00:18And then, yeah, we held weekly, for a while at least, it was like weekly regular Zooms with the company, trying to stay in touch, trying to help people move. You know, TripAdvisor's IT department, fabulous, kind of like we were set up to run remotely. We didn't have supply chain issues like so many other companies had to struggle through. So we survived. And once survival was not assured because we didn't know how things were going to end, but once the basics were taken care of, the exec team got to think about, hey, nobody's going to be looking at our financial results for the next year or two.

1:01:08Okay. What's the bright side of this? what can we do differently? And we had a chance to kind of reinvent where we were going to choose to invest without the quarterly financial pressure. We had to deliver enough revenue to stay alive to meet our numbers, but we weren't going to be judged as a company. So we just wanted to go think about how we wanted to look as a company post-pandemic. And we really did change a strategic plan to emerge looking different. So backing all the way up from Los Angeles, originally Hollywood, is it Hollywood or? I was born in Hollywood, technically. And you were the your father was a lawyer.

1:01:56That's right. And one of the interesting things I heard is that he would actually make you flip positions. If you held if you held one, he would make you argue the other side. Can you speak to that? Do I have that correct? Pretty close. It was a fun game we played. He was a trial lawyer, so he would, you know, debating and arguing in front of a judge, he was very good at it. And so we'd have, you know, I'd call it typical conversations at dinner, or it might be an issue of the day. And I would take a position, and whether he agreed with my position on it or not, he would argue the other side. and he was very good at it.

1:02:42So he would usually or always back me into a corner where even though I kind of know I'm right, he's just nailed me and I got to say switch. And then like, because I didn't know how to get myself out of this. I was in high school at the time and he would then, And I would get to say, and now what do you say in his tone? And he would then have to argue himself out of the position he had just put me into. And it was just a fun game and it was a great learning experience for me to see how a good lawyer could kind of twist and push you into a corner. And therefore, how on the receiving end, how do you stick to the things that you know are true?

1:03:34How do you not get distracted by other things? And I'm sometimes asked, and is that just a fun story, or did it help me later in life? And pushing someone into a corner and debating with them is a terrible way to run a business or a personal relationship. persuading somebody to what you think is the right idea by enabling them to see where you're coming from, enabling them to see a different perspective, or even pulling out of them a piece that they had almost agreed to. I'm like, hey, just as you were talking about, there is a point, blah, blah, blah. So it makes them feel like it's their own.

1:04:25So from that hard debating, in a sense, I learned how not to persuade people in a company to do something, but to take the other side. So you ended up at Harvard and you were one of the first classes of CS grads. Is that right? Yeah. Thank God I was a math major and they opened up the computer science major of my senior year, getting me out of a third year of differential calculus and into the computer stuff that I was doing and enjoying anyway. So that was the first year you could actually graduate with a major. Okay. So, and, and was it obvious at the time how the job prospects for a CS grad and the opportunities that would present itself, or was it still sort of nebulous?

1:05:11Yeah, no, it was pretty, like, my fellow CS grads were off working at tech companies. Software is so embedded in so many things at that point that it was a great career. And, like, I had enjoyed, like, woodshop back in high school, creating stuff. And, yeah, now I'm just typing. but in my mind I was still creating a software program. And unlike that English paper, which was a very subjective grade, hey, the computer was telling me whether my program worked or not. I kind of like the definitive nature of it's right or it's not in software. Yeah. And so then right after that, you started Centerline?

1:05:59Did you have any other job or did you end up being an entrepreneur right out of the gates? It was the accidental entrepreneur. So it was a senior class project to build what's called the Interpreter for the C Programming Language, which was a fun project at the time. But it turns out like, hey, other professional software engineers wanted to use it because you could experiment quick, you could prototype, you could find errors in this tough language called C. And so we ended up building a company around it. started off as Sabre Software and then became Centerline Software. And that grew to 150 people, 20 million revenue, and product won awards, and I was running engineering for most of that.

1:06:51Terrible engineering manager, as I say, but it was a lot of fun. So that was a roughly 15-year run. You mentioned being nimble and some of the mistakes or not being paranoid about what was going on in the market. I guess, what could that company have become? Like what's the maybe modern equivalent or what was the contemporary equivalent had you executed on it the way that maybe had hoped? Yeah, I mean, it was in a good market at the time we started. It's called CNC++ programming on Unix workstations. we missed a move to develop tools that were helpful for engineers in client-server environments, and then we completely missed the move to Java, the new programming language.

1:07:42And, like, or testing tools, which was another venue that we had considered. And what that experience taught me, because we were always doubling down on, like, oh, but we just need to fix the next bug, we just need the next version, the new piece of software to come out. without really paying close attention to how the market was shifting outside. And I settled on the phrase, invest in change when things are going well. And when things weren't going well at Centerline, on the way down as revenue was declining, change was forced upon us and it was not pretty. We could have been a lot more efficient when we were growing, but you know, who cared?

1:08:38We were growing. No, change, get more efficient every quarter because you can, not because you need to. Invest in that new Java programming tool. at the expense of what your business is running on because you should always be taking 10 or 20 percent of your available priority choices and putting it in something that has no benefit right now but could be super important to you in three years. And sometimes those will fail and you need to mentally be willing to accept that. But absolutely critical and there would still be a centerline software if we had done that successfully. And we didn't, and I was in charge enough to bear real responsibility for the failure.

1:09:33Is that the rate ratio, 10 to 20 percent? And how do you make that resource allocation? Do those end up being kind of skunkworks teams that are off to the side, or how do you think about it? I love the skunkworks possibility. It's very hard. I found, at least at TripAdvisor at scale, hard to do skunk works. There's just so many mechanical things going against you. I'm not a fan of the 10 % of everyone's time gets to do something because I just haven't seen the cases where that's delivered anything. Hackathon days, hey, they're fun for an engineer. I've just rarely seen the benefits from them. so hey if you want to innovate go set aside a team or focus led by someone that really cares about just that thing they don't have any other responsibilities and then give them some i'll call it ceo love the attention that says from the ceo that this project even though it's into the future is deserving of the CEO's time.

1:10:47So therefore, everyone else who may not give a hoot about the project kind of has to say, all right, well, we'll help you if you need this. Because they know the CEO is going to ask about it if the answer comes back zero. And then the other way is through acquisition. Often way easier for a company at scale to acquire their way. And it could be a five-person company because you get five people that really care about it. It could be 50 or 50 people or obviously it could be way bigger. And so then that business was sold. Where did it end up being? It was sold to a company called CompuWear at a prior sale price.

1:11:29And I went along for a transition, but they knew and I knew that that was not going to be a long-term. So how'd you go from the world of B2B dev tools into UGC consumer internet? I realized the business model originally was meant to be B2B, but what was the kernel of insight that you had at that moment? I love software development. I love the tool space, but I had now done it for 15 some odd years. I'm like, great. My focus going forward was anything other than software development tools and world's my oyster canvas, whatever you want to call it. I, to experiment, I went around thinking of different ideas in this one.

1:12:08I, you know, came up along the way. I actually didn't think it was that good of an idea when, when I first heard it. I, I, but when I was finally ready to do something different and kind of leave the, leave the job and start something, this, and the, this at its core was like, the internet is here. It's going to be awesome for getting real information about where you want to go, what you're going to do there, where are you going to eat, where are you going to stay, like travel, massive category. and people were still using travel agents. Even the best ones were super limited in what they knew and everyone kind of knew that was going to be disintermediated.

1:12:59People were going to go booking direct on Expedia or similar sites and then they would need advice on where to go. And UGC existed, but was far from proven. And so we're like, hey, we should be able to do this. And we originally described the company as a vertical search engine for travel. because Google or AltaVista at the time, it could turn up a ton of hits for a particular term, but they weren't helpful in planning a trip. And so then it was a four-year run before IAC or what became IAC acquired the business. You only raised$4.8 million or something like that? Yeah, four-point something. Four-point something.

1:13:59And it sold for$200 million plus to IAC. What were the inputs at that point in time? Obviously, traffic was, I assume, growing quite quickly. But the traffic was great. It was almost all free search traffic. We weren't buying much traffic at that point. But we had a site that covered hotels in the U.S., and I think we were in Europe at that point, and restaurants and attractions. And so if you type in the name of a hotel or an attraction or restaurant, odds are high we were on the first page. And because the other travel sites often were behind, I'll call it a database firewall, they weren't visible to search engines, we were often beating out the hotel's own website or Expedia that was not part of the search engine at the time other than their homepage.

1:15:00So we got a lot of free traffic. And guess what? If you were searching on the name of a hotel, you as a consumer were thinking of staying there where you had already decided to stay there and you wanted to know whether it was available and how much. A lot of those people typed in the name of the hotel, landed on TripAdvisor, got to read some reviews and said, wow, I don't want to stay here. And look, we present you with a bunch of other options. Or this is perfect for me. It's got the gym I'm looking for. I like these pictures. And what's the next thing that a user in that situation wants to know?

1:15:37Is it available and how much is it? And we had a link that said, check prices and availability on Expedia. And if you were on the page and you wanted to stay there, of course, you click that link. So the key thing I'm trying to convey is it wasn't advertising. To Expedia, it was advertising because they were paying us for that click. But to the consumer, it's what they wanted to do next. That became a beautiful flywheel. More traffic. And Expedia, this didn't come out of their brand marketing budget. This came out of their performance marketing budget, which meant they were paying me a dollar for the click.

1:16:18They were making two bucks, and they would do that all day long. so our challenge at that point just became hey how do we put more things on the site how do we get more reviews how do we get more traffic how do we get a few more clients we didn't even like lots of hotel chains but we didn't need a hundred thousand clients top 10 created most of our revenue and that was a very profitable business because i just didn't need a lot of people to run it. And so it's not that we were afraid of spending money, but we didn't need to. And so we were like a 50 plus percent margin business in the really early days with tons of room to grow in a trillion dollar industry.

1:17:04And then the question came like, okay, if someone offers you $200 million cash and you're a 30 person business having been there in business for four years, you hang on for the multiple billion or you sell at that point. And with all the benefit of hindsight, sure, I would have hung on. But I would tell my younger self with all the risks and variables, like, great time to sell. That's a lot of money. And so you stayed on, though, through that journey. I guess, what did you learn? I mean, I hold IAC and Barry Diller and that whole organization. what they've been able to do in optimizing businesses and different brands within that hold co and spinning them out and all that.

1:17:57Was there anything that you take away from that period of time of being under that parent umbrella that's particularly insightful at an operating level? Yeah, and I tried to model it later as TripAdvisor bought other companies. I truly expected to stay a full year after we were bought. That was important to me reputation-wise. I'd want to hand this off in a smooth way, but being part of a big company, operating at big company speeds, it's just not my DNA. And more power to it if you like that, but I would go off and start something new. and that's exactly what I thought I see like they're a big company they own a ton of other stuff and we would get absorbed and we would be told to do five-year plans and I'd live in spreadsheets and talk to investors I'm like not not not my d my idea of a fun time I and to my absolute delight, IAC ran us with, you guys are doing great.

1:19:15We don't want to F it up. Have at it. In our very first quarter under IAC, we missed our numbers. And I'm like, oh, shit. It's going to come. And sure enough, IAC sent a senior exec to come visit us. We explained what happened and why. And OK, thanks for the info. Nice lady. She went back and we continued to run the company. And obviously things worked out fine. It was a blip. But all credit to IAC, to Barry Diller, to Dara Khosrowshahi, who was CFO of IAC at the time and had championed the deal for just leaving us alone, recognizing a good thing. Absolutely always there when I had some questions.

1:20:04I remember visiting New York and I got the briefing from the finance person in charge of us. And I was expecting 30 pages of what I could and couldn't do. One side of an eight and a half by 11 piece of paper saying things like, yeah, you can't sign a lease for more than$10 million. You can't like none of these things I would ever have considered doing on my own without seeking some sort of approval. So I'm like, I think I'm going to like it here. and then I see spun us out as part of the Expedia business. There were a few other CEOs I reported to there, but they were this big transaction business.

1:20:44They were kind of told to leave us alone. I got to be part of a quarterly session kind of absorbing. They were a big client of ours and absorbing some of the other nuances of the travel space that I didn't understand. And so it was great education for me. And again, keep doing what you're doing, Steve. Speedy came and said, look, we'd like to put all of our reviews on our site. And I said, no, that wouldn't work out very well for me. They said, please. And I said, no. And that was the end of the conversation. So we were able to run as a separate company. And if you want to hang on to a founder or founding team and you don't need a lot of integration because we didn't that's a great way to let a business thrive so i mean it sounds great at a personal level the shared fabric or uh like what's enabled the success of that model that that dara and you know barry i guess really spearheaded for so long is there is there anything unique uh to there's certainly a type of business they acquire but were there a set of operating principles outside of that that card that you got or was there some expertise or hand holding around i don't know performance advertising or things that they uniquely leaned into to try to help no i got the invitation the frequent invitation there's anything we can help you with let us know

1:22:19So, I, like, and, like, we did have some specific chats with some folks that were helpful, no doubt, but, like, nothing really significant. And likewise, hey, we gave them some tutorials on doing SEO because we kind of knew that better than Expedia back in the day. And they listened sometimes. so it worked because there wasn't a lot that needed to be integrated we integrated the finance packages and tax but sure

1:22:58but I didn't need to go to anyone at Expedia to get approval to buy anything so I was still in charge of TripAdvisor and again that worked out very well for them and so So fast forward to 2011 when we spun out, I had to like, okay, I have to go build a tax department. I had to find a CFO. I had to do a couple of things, you know, health and benefits that we hadn't done. But the rest of the company didn't really notice the difference. And the investors, oh, now that you're not part of Expedia anymore, what are you going to be able to do differently? I'm like, sorry to disappoint you folks, but you're not going to see any changes because I've had a lot of flexibility in the past.

1:23:46So the order operations were TripAdvisor acquired by IAC within the Expedia group or got combined with it? IAC, which houses a lot of different brands. And so for the first year, we were part of media and local services. We were with Interval Vacations and Evite and some other service magic, I think it was called. Okay, go ahead. And then a year later, Diller and others decided, we're going to spin out all of our travel assets into a travel company called Expedia Inc. And that was Hotels.com and TripAdvisor and everything else. And so then 2005 to 2011, you're a subsidiary of that group, which is a public company.

1:24:39And then 2011, you spin out as your own standalone public business. Got it. And so you stayed on and did that through 2021? uh through 2022 22 okay got it what um impetus to uh move on to something different how'd you reach the decision that it was time you've been at it in different ways for 22-ish years but yeah so uh i you know i i certainly wasn't i'd always thought that i'd have like at least one more startup in me. And I've been saying that for the better part of 22 years. And I'm like, obviously, I enjoy the job. I'm not going anywhere. I'm not under any pressure to go anywhere. Company has its ups and downs along the way, but that's life as a public company CEO.

1:25:36And then I'm approaching my 60th birthday, and I'm thinking, you know, it often takes 10 years to build a company. And I might not get it right the first time, so I might need a little extra time. Don't know. Darn it, if I'm ever going to actually do this, I better get my act in gear. I announced it in 2021, took a little while to find my successor. but it was basically me saying, I'm very proud of my impact in travel, built a great company, somebody else can run it now, certainly didn't need me. For the past decade, it didn't need me. And I want to go think about a different, interesting challenge.

1:26:30And I literally left, I announced I didn't know what I was going to do. By the time I left, which was about nine months later, I still didn't know what I wanted to do. And I was busy, like I'm a very operational guy. I was busy running the company until I left. And then like, ooh, woke up the next morning and I had nothing to do. And I probably took a week vacation and then I thought, all right, I got a whiteboard in my home office. What am I going to put on it for ideas? And how did you end up landing on Give Freely? I had told myself, I really want to come up with a half a dozen, ideally 10 different ideas that all would be exciting, interesting, I could see myself doing.

1:27:19And I think I got to six or seven. I couldn't make it all the way to 10. And then I'm like, all right, let's be a little bit logical about this because you're about to invest a good chunk of your life, another 10 years into something. Let's be deliberate. which ones are fun ideas but don't have a business model which ones are defensible which ones you like absolutely passionately believe in but that's gonna be a real tough nut to crack in the competitive landscape i uh so i had a uh you know uh an idea of like, I want to be able to ask questions in English to my database of record at my company and get great answers without having to go through an analysis.

1:28:18There's a bunch of AI tools that are starting to do that well. And that's clearly the wave coming. And yeah, maybe Snowflake or someone or the big companies will own it. I don't know. but love the concept. There's some really fun stuff coming with augmented reality and the technology and the glasses that I just believe in would be a lot of fun to work in. But the idea that kept capturing my imagination in my, like when I'm working out in the morning, my shower time, I'm thinking, oh, that would be fun to solve. That would be great. Impact would be this give freely, which is basically a mashup of Amazon Smile, the program where Amazon gave a half a percent of whatever you bought to the charity of the user's choice, combined with a product like Honey, where you're getting, the tool is automatically finding you discounts.

1:29:18And so with Give Freely, we've kind of mashed it together so that you install a browser extension. We're finding you savings on coupons that are out there at over 15 ,000 stores, and every time you buy something, whether you find a coupon or not, at one of those stores, the affiliate fee that gets paid to give freely by the store for facilitating that transaction, I turn around and give 100 % of that to the charity that the user specified when they signed up, just like Amazon Smile. Amazon Smile closed their program not because it wasn't successful. They were doing$100 million a year in charitable donations, but for other reasons.

1:30:06We can speculate why. But for me, this was like, hey, I want to get 50 million users using GiveFreely. If I get 50 million users that are donating or that are generating affiliate commissions, buying stuff that you'd otherwise buy at a rate of, call it 20 bucks a year, 50 million times 20 bucks, that's a billion dollars a year going to charity, year in, year out. That's, as they say, real money. So that would be a way bigger philanthropic impact than anything I could ever do personally, obviously. But when I think of a combination of like intellectually challenging, I don't know how to do that.

1:30:53I know how to build the product, but getting that level of distribution, hey, that's a work in progress. But the reward is pretty fun. I'd be happy to have that on my, I think it was Warren Buffett that said, decide what you want written on your tombstone and then live your life to do that. I'm like, I like TripAdvisor. That deserves a footnote. But if really, if that's the biggest thing on my tombstone, I'm happy. Now, where are you in the journey? It's self-funded so far? Self-funded because I can and I don't need the pressure for, or I don't need the responsibility on the investor side. And I don't want to generate any profit ever.

1:31:36So we built the product. We released it last October, mobile version coming next month. And we already have the network of the 15 ,000 stores. So I'm excited to be in a small company, super nimble. We have an idea. We can go implement it. I'm looking for distribution right now. So great. I post on my social media accounts. I'm now up to 10 followers on TikTok, I think. So I'm like, this is not my forte. We can teach you how to do the dances and stuff. We need to go figure out how to tap into what we believe, influencers, perfect product for social media, influencers who give a shit about something besides whatever they're famous for.

1:32:28And then the people that are following those influencers, be it on Instagram or Twitch or wherever, like folks that have a following, for them to be able to say to their audience, hey, all you folks shop online. here's a way that you can support your favorite charity or mine which is ABC for free saving you some money along the way download you freely cost you nothing you don't have to use it you don't even have to remember it exists because it's a browser extension when you're actually on the store and you put something in your shopping cart and we have a coupon for that store or we just have an agreement with the store for the donation, we deliver a little pop-up that says, hey, 2.6 % of your purchase.

1:33:21But my cute story here is like, I'm living and breathing this as an entrepreneur, right? And so I'm printing out a document. I need somebody else to sign it. Like my printer notifies me it's low on ink. I, oh shit. Okay. Got to go get some more ink. Why can't i do all this electronically standard complaint i go to staples.com i go put some ink in my printer boom the give freely pop up appears saying hey do you want 2.6 going to the ms society my favorite chair i i'm like this is cool i was not even thinking about it of course i hit yes now i just generated albeit a small but i generated donation and 15 million people doing that that's a shitload of money so that's distribution option kind of one social media influencers maybe bragging a bit about how they're good people and how you can help them or you can help your favorite charity and like it's it's good to be philanthropic and the influencer is literally not asking their follower to take out their wallet and credit card and pay for anything the other is businesses I give freely is currently offering a$10 donation to whatever charity that user is picking just for installing it no purchase necessary as they say this is my cost of customer acquisition and I'm out there talking to businesses saying would you like to reward your customers for anything Reward for a purchase.

1:35:00Reward for a review. Reward for downloading an app. Anything. Reward for registering. Reward for signing up for the newsletter. Because this reward, a$10 contribution to the charity of your choice, isn't something that can be, you know, it's not subject to fraud. No one's going to say, oh, my God, I'm going to write, I'm going to make a thousand new accounts because I get$10 each. And fraudsters are out there doing that. but no one's going to do it to get$10 to a charity. So here's a nice way to either incentivize, hey, leave us a review and we'll make a$10 donation. Download our app and we'll make a$10 donation.

1:35:44We being the company that wants the download. It freely funds it so it's a neutral P &L. It's kind of no cost to the business. And then I think, and imagine if Ticketmaster were to do that. a lot of transactions wayfair they're down the street in boston a lot of transactions and for them to get more downloads obviously in their interest to have more reviews on their shopping to be able to uh thank their users a surprise and delight thanks for shopping on wayfair we're nice guys here's 10 bucks to favorite charity your choice or if they have a charity they like the homeless shelter great happy to designate that and then if a user is too busy and doesn't want to claim the donation it's fine no harm if they do it's like three clicks to download it you pick your charity i send the donation company or me sends the thank you and like so So, hey, to this audience, to everywhere I go, if you have a site that has a bunch of traffic and you want to say thank you or incent behavior, come give me a call because I'm a startup hustling for business.

1:37:06Will you accept all 501c3s or all charitable organizations? Do you end up putting your finger on the scale of what types of donations you can give to? Great question. We go off of the IRS database and the separate California database of allowed charities, which is up to like 1.3 million now. And so the only finger on the scale that I've put on at this point is there's a set of charities that, things that should never be approved charities because they're essentially hate groups in disguise. And so there's one or two lists out there. Southern Poverty Law Center, I think, has the one that we use of like, yeah, you can straight face support these folks.

1:37:58and we just apply that list. You're not doing any manual selection of it. You're cross-checking some lists around it. Well, it's a very cool and noble service. And hopefully, how many months into it are you now? We launched last October. And as I say, the mobile version starts next month. So we're excited about that. Definitely need that for the social media audience there. Yeah, sounds like people should sign up. And it should be something that, you know, I'm hoping I can gamify it a bit with some sort of team activity because you are all looking to support a particular charity. I mean, the number of people that participate in walkathons or rides or whatever, huge number.

1:38:42And again, to my perhaps too logical brain on it is like, it's just a win all around. The charity is happy about it. the user's happy about giving money. It doesn't cost them anything more. The store's happy to pay because they're helping to close a transaction. So it's coming out of their profit. It's not a pure media spend for them. So it's a win-win-win. And now I just need 50 million more users. You're on your way. Well, Steve, thanks for doing this. Oh, my pleasure. Thanks for the conversation.

1:39:18Thank you for joining this episode of the Logan Bartlett Show with co-founder and former CEO of TripAdvisor, Steve Kaufner. If you enjoyed this discussion, we'd love for you to share with anyone else that you think might find it interesting, as well as subscribe on whatever podcast platform you're listening on. We look forward to seeing you next week with another great guest on The Logo Bartlett Show. Have a great weekend, everyone.

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