Episode 447 of The VentureFizz Podcast features Steve Kaufer, serial entrepreneur & tech CEO.
People often ask me how I land guests for my podcast. After 8 years of podcasting and over 450 episodes, I’m fortunate to get a lot of amazing inbound requests. But another key way I land guests is at events, and this episode is a perfect example.
Back in July, I was fortunate to attend Founder Collective’s summer party and spotted Steve in the crowd. I had never met him before, but I knew this was my chance to land him as a guest and record the definitive story of TripAdvisor. Needless to say, I was thrilled when he said yes to my invite.
Similar to my recent interview with Eran Egozy, co-founder of Harmonix, creators of the Guitar Hero and Rock Band franchises.., we went long-form, Joe Rogan style. This interview is almost two hours long, but we obviously had a ton to cover.
TripAdvisor is one of the greatest consumer success stories to come out of Boston, but I don’t think we give the company enough credit for its sheer scale and impact. While TripAdvisor didn’t invent user-generated content or online reviews, it basically institutionalized both well ahead of the pack. Their marketing strategy was absolutely brilliant, as you see their brand everywhere, along with hotel operators who are regularly asking guests to “please leave reviews.”
What’s also remarkable is that the company raised just over $4 million in funding. Then, only four years later, TripAdvisor exited for over $200 million to IAC before later spinning out as its own public ticker.
It’s extremely rare to have the same co-founder serve as CEO through every single phase of a company from its origins as a B2B model (yes, originally a B2B model) through hypergrowth and navigating a global pandemic.
Steve shares incredible stories and hard earned advice from across that journey.
In addition to the full lifecycle story of TripAdvisor, we also discuss his previous company, Centerline Software – which I didn’t know about and was surprised to hear about the outcome (TLDR – it wasn’t the return that investors had hoped for)… plus his current mission driven venture, Give Freely, a browser extension and charitable giving platform.
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Transcript:
Keith Cline: Steve, thanks so much for joining us.
Stephen Kaufer: My pleasure.
Keith Cline: People who listen to this podcast know I love acting as a Boston tech historian. I tell current-day founder stories, but I also love covering massive success stories—and can you get any more massive than TripAdvisor?
Before we dive into the TripAdvisor journey, I want to address one of my pet peeves about the local tech scene: the narrative that you can’t build a giant consumer tech company in Boston. TripAdvisor is a global travel juggernaut. We also have WHOOP, SharkNinja, CarGurus, Wayfair, and iconic footwear brands. What is your perspective on building a consumer giant in Boston, and why do you think that negative myth persists?
Stephen Kaufer: I’m not really sure why that myth exists. I was born in California, but I moved East for college and stayed. The talent pool here is exceptional at all levels.
I love Boston and had zero trouble growing a company here. Along the way, we made several acquisitions and ended up with offices in different locations. Honestly, our Palo Alto office was the one I was happiest to close—not because the talent wasn’t good, but because of the mercenary mindset of people jumping to the highest bidder. I have zero regrets about starting and staying in Boston.
Keith Cline: Do you have advice for a budding entrepreneur trying to build a consumer company in Boston today?
Stephen Kaufer: There is plenty of existing consumer talent here—just look at Wayfair. Boston offers exceptional talent, a great environment, and a much lower-ego ecosystem than Silicon Valley, which I personally find far more enjoyable.
Keith Cline: Let’s rewind the clock. You grew up in the Los Angeles area. Your dad was a trial lawyer, which meant you learned how to debate early on.
Stephen Kaufer: My dad was very rational and supportive. We used to get into debates on topical issues. I might take a super liberal position in high school, and he would argue the conservative side until he backed me into a corner. Then we’d play a game called “Switch,” where I’d call out “Switch,” and he’d have to take my side and argue his way out of the corner he just put me in! It exposed me to civil debate in a really fun way.
Keith Cline: You were also a junior Olympic fencing champion and the fencing team captain at Harvard. How did you get into fencing?
Stephen Kaufer: My dad wrestled in college and wanted me to play tennis. I took tennis lessons, but I chose fencing through a local rec program in junior high and stuck with it through college. It’s surprisingly mental: you’re thinking three or four moves ahead, anticipating how your opponent will react to a feint.
Keith Cline: You studied Computer Science at Harvard and bought an Apple II early on. How did your career get started after graduation?
Stephen Kaufer: For our senior thesis, a couple of friends and I did an independent study to write a C-language interpreter. After graduating, we decided to launch a company around it while taking part-time jobs to pay the bills. That became Saber Software—named after fencing—which we later renamed Centerline Software. It was a great ride up, and then a ride down.
Keith Cline: Centerline built C/C++ compilers, interpreters, and debugging tools. It scaled to $18 million in revenue and 150+ employees before hitting major headwinds. What caused Centerline to fail?
Stephen Kaufer: With hindsight, Centerline failed because we latched onto our existing market and tried to squeeze out incremental customer growth without paying attention to a major shift: the rest of the market was moving to Java. Our products didn’t naturally fit Java, and we failed to reinvent ourselves.
That taught me two crucial lessons:
- Keep your head up: Markets change, and if you aren’t anticipating shifts, your future is at risk.
- Reinvent when times are good: Don’t wait for a crisis to rethink your business processes or product line. When things are growing, that is precisely when you should re-evaluate how to do things better and faster.
Keith Cline: After Centerline was sold to Compuware, how did the idea for TripAdvisor come together?
Stephen Kaufer: In 1998, my wife and I were planning a vacation to Mexico. A travel agent gave us three paper brochures: cheap, moderate, and luxury. We didn’t have much money, so I chose the budget resort, which looked beautiful in the brochure.
I went online to do research and eventually found a personal blog. The write-up was fine, but the photo showed the run-down back of the hotel, not the glossy front! We upgraded to the mid-range hotel and had a great trip.
On the way home, my wife said, “You should build a travel site that helps people find the good and the bad about hotels.” Two years later, in February 2000, that idea became the foundation for TripAdvisor.
Keith Cline: You co-founded the company with Nick Shanny, Tom Palka, and Langley Steinert, working out of a tiny office above a pizza shop in Needham. What was the original business model?
Stephen Kaufer: Our original model was B2B. We raised $1.2 million from Flagship Ventures and other angels to build a web crawler that aggregated travel reviews and information across the web. The plan was to license that engine to Yahoo Travel, AOL, Expedia, and Travelocity so they could show “the good and the bad” on their portals.
We assumed we’d have no consumer marketing costs because partners would pay us licensing fees. But when we pitched Yahoo Travel, they flipped it on us and said, “We’re not paying you; you should pay us for putting your logo in front of our audience.”
We eventually signed a 50/50 ad-revenue share deal with Lycos. We expected $20,000 a month, but our first quarterly check was for $500! They were running house ads on our pages and saving paid ads for pages where they kept 100% of the revenue.
Keith Cline: So you were down to six months of runway right around 9/11. How did you pivot?
Stephen Kaufer: It was total desperation. We tried a list of half a dozen alternative business models. Ideas one through five failed quickly, but because we built prototypes and failed fast, we had enough runway left to hit idea number six.
We launched our consumer-facing site, demo.tripadvisor.com, and Google’s early search engine started indexing our 50,000 hotel pages. Search Engine Optimization (SEO) became our free traffic flywheel.
Keith Cline: How did user-generated content (UGC) and reviews become the heart of the product?
Stephen Kaufer: We discovered that travelers were eager to write reviews if we framed the request correctly. Asking people to “write a review for us” failed, but asking them to “pay it forward and help future travelers” worked brilliantly. User reviews provided fresh, highly relevant content that ranked exceptionally well on Google.
Keith Cline: How did you monetize all that SEO traffic?
Stephen Kaufer: We looked at GoTo.com’s pay-per-click model on Yahoo. On a hotel review page, we asked: what does a traveler want to do next? They want to check prices and availability.
We placed a subtle link at the top of the page reading “Check price and availability on Expedia.” Standard banner ads had a 0.1% click-through rate, but that “Check Price” link hit a 10% click-through rate! We charged Expedia 50 cents per click. By March 2002, we were cash-flow positive, and revenue scaled rapidly with virtually no sales team.
Keith Cline: Just four years after founding, in 2004, TripAdvisor was acquired by IAC (Barry Diller’s company) for $212 million on just $4.2 million of total capital raised. At the time, you had around 40 employees generating $50 million in revenue and $25 million in profit!
Stephen Kaufer: It was generating a massive amount of cash. VCs wanted to invest, but we didn’t need the money.
Dara Khosrowshahi (then CFO of IAC) was our deal champion. I expected working inside a corporate parent to be bureaucratic, but IAC gave me a one-page list of basic corporate limits and let us run completely standalone. In 2005, IAC spun out its travel assets into Expedia Inc., and Dara became CEO. He was a fantastic boss who let us operate with complete autonomy.
Keith Cline: Over the years, TripAdvisor expanded through strategic acquisitions like Viator (tours and experiences) and TheFork / La Fourchette (restaurant bookings).
Stephen Kaufer: When Google began directing search traffic to its own hotel products, it created major headwinds for our core hotel business. Following my rule to “reinvent when times are good,” we acquired Viator for $200 million to expand into tours and experiences. Today, experiences represent the core backbone of TripAdvisor.
Keith Cline: In December 2011, TripAdvisor was spun out of Expedia as an independent, publicly traded company (NASDAQ: TRIP). What was it like ringing the bell?
Stephen Kaufer: It was a very cool moment. But as a public company, I set the tone early: I didn’t display our stock price in company meetings. I wanted the team focused on execution, cultural values, and customer growth.
Keith Cline: It is extremely rare for a founding CEO to lead a company from a pizza shop basement all the way through an IPO and beyond. You served as CEO for over 22 years. Why did you stay so long?
Stephen Kaufer: It was never a cling to power. I stayed because of the sheer impact: going from helping 100 million travelers a month to 200 million, then 400 million, while giving millions of small businesses global visibility. Plus, travel is just an awesome industry to work in.
Keith Cline: After stepping down as CEO in 2022, you launched your next venture: Give Freely. What is the mission behind Give Freely?
Stephen Kaufer: Give Freely is a Chrome browser extension similar to Honey or Capital One Shopping. We partner with 15,000 online stores. When you shop at Best Buy or Home Depot, a pop-up appears at checkout asking if you want to donate an affiliate percentage (averaging 2.5%) to your favorite charity for free.
You choose from 1.1 million registered US charities. The retailer pays us the affiliate fee, we pass 100% of it to the charity, and I cover the operating costs of the company personally. It’s a way to leverage technology to generate millions of dollars in unrestricted funds for charities forever.
Keith Cline: Looking back at your career, you operated by two core hand-written slogans on your office door: “Speed Wins” and “If It’s Worth Doing, It’s Worth Measuring.” Why were those so important?
Stephen Kaufer:
- Speed Wins: If we hadn’t tested so many ideas so quickly during our early TripAdvisor pivot, we never would have found the model that saved the company. The default must always be learning in weeks, not quarters.
- If It’s Worth Doing, It’s Worth Measuring: We were a deeply data-oriented culture. Whether running A/B tests on site design or launching a physical marketing campaign, I always demanded data to determine whether we should kill, improve, or scale an initiative.
Keith Cline: What is your favorite interview question when hiring executives?
Stephen Kaufer: I ask: “What is the hardest project you’ve ever worked on?”
I don’t care about the accomplishment itself. I listen for how they define “hard”—was it hard because of ambiguous goals, tough team dynamics, or heavy technical obstacles? I want to hear excitement in their voice about reframing a massive challenge into an opportunity to win. If their “hardest project” just meant working one extra weekend, they aren’t going to fit our culture.
Keith Cline: Steve, thank you so much for taking the time to share the definitive story of TripAdvisor and what you’re building next at Give Freely.
Stephen Kaufer: My pleasure, Keith!
