Kaufer’s situation is a twist on the “great resignation” that has hit the region’s executives as well as its rank-and-file workers. He is leaving the company he built, and rebuilt, at a huge transition point for both Tripadvisor and the travel industry. And his story — particularly how he has dealt with the existential crisis of the pandemic — holds new lessons for the business community.
When he started Tripadvisor in 2000, there were few popular consumer-tech companies in Boston. Its success encouraged others, and the area now claims a growing number of tech brands including DraftKings, Wayfair, Whoop, and CarGurus. Tripadvisor remains one of the most popular travel sites in the world and just passed 1 billion consumer reviews posted.
Sitting by the toasty fireplace in the headquarters’ vast and empty central atrium, the 59-year-old CEO, dressed in jeans and a Patagonia vest, said he isn’t heading off into retirement or to spend more time with his family.
“I’m pretty sure I have one more new adventure left in me,” Kaufer said. “I haven’t decided what that’s going to be yet, but . . . I’m very comfortable that the Boston startup scene . . . will be the right home for whatever I do next.”
One thing seems certain: Venture capitalists will be lining up to support his next project.
“He has a blank check from me,” Joel Cutler, managing director at General Catalyst Partners in Cambridge, said. “Our firm would back him in a heartbeat.” (Cutler, who has led investments in travel companies including Airbnb, Sabre, and Kayak, never got a chance to invest in Tripadvisor.)
Tripadvisor wasn’t Kaufer’s first startup. After growing up in Los Angeles, he traveled cross country to Harvard University, where he fell in love with computer programming. Graduating in 1985, he cofounded CenterLine Software, which made tools to help programmers write code.
In the late 1990s, he was planning a trip to Mexico, and a travel agent gave him a few glossy brochures of resorts. But when he went to do research online, it was hard to find useful information until he stumbled on a blog post from someone who’d visited one of the resorts. His initial idea for Tripadvisor was to build a search engine that would gather articles about travel destinations and sell the results to large, established websites.
Kaufer ran a tight ship, recalled his cofounder Langley Steinert, who later founded the auto sales site CarGurus. Early on, Steinert, who led business development at Tripadvisor, wanted to buy a laser printer but Kaufer said no.
“He was really frugal — we ground every penny when we were trying to get to profitability,” Steinert said.
But selling search results to other sites was a complete failure, and it took a while to land on what worked: building a forum for user reviews and getting paid by hotels and other travel sites when people clicked on their listings.
Backed by only $4 million of outside capital, Kaufer built the startup and sold it to Barry Diller’s IAC/InterActiveCorp for more than $200 million in 2004. The company was spun off from IAC as part of Expedia the next year. In 2011, Expedia launched Tripadvisor as an independent company on the stock market.
After going public, the company grew strongly and got into new lines of business, such as direct hotel bookings and restaurant reservations. The pinnacle came in 2015 when Marriott joined Tripadvisor’s instant booking program, the company moved to its new headquarters, and its stock market value surpassed $15 billion.
But around the same time, Google, which had bought Cambridge-based airfare pricing firm ITA Software, was getting more aggressive in travel. And from 2015 to 2019, Tripadvisor’s revenue barely grew. Its market value tumbled from $12 billion in December 2015 to about $4 billion in February 2020.
And then the pandemic hit.
With business and leisure travel shut down, Tripadvisor’s revenue all but disappeared. Kaufer had hoped to weather the storm with temporary furloughs and salary reductions (including cutting his own salary entirely). But deeper cuts were required. In April 2020, Kaufer announced 900 employees, about one-quarter of the workforce, would be let go. An equally large chunk of workers in Europe were put on furlough.
In the second quarter of 2020, Tripadvisor’s revenue dropped 86 percent from the year before. After years of profitability, the company posted a net loss. Its market value dropped to $2 billion, the lowest ever.
“It was surreal,” Kaufer said. “I thought, ‘We better go home for a couple of weeks, let this thing settle,’ to all of a sudden, wow, there’s no more travel anymore.”
Asked about his handling of the crisis, Kaufer stayed focused on business strategy and didn’t get into the emotional impact of seeing his life’s work threatened. His composed demeanor, for better or worse, has helped the company in the past. Cofounder Steinert recalled Kaufer keeping his wits when their original business plan failed and they were six months away from running out of money.
“Steve is a very calm person, he doesn’t ride the emotional rollercoaster,” Steinert said. “It’s like he’s in the middle of a hurricane and he’s just calm.”
The recent challenges have led some to write off Tripadvisor’s success. But it would be a mistake to ignore Kaufer’s legacy, said analyst Jed Kelly at Oppenheimer.
“I don’t think he’s gotten enough credit for building a multibillion-dollar business,” Kelly said. “Not a lot of people have done that.”
As travel has started to come back, Tripadvisor’s business is slowly recovering as well. Its market value has doubled since the low and was about $4 billion as of Wednesday, when the company reported its 2021 revenue increased 49 percent over 2020′s depressed level. Wall Street analysts have expected revenue will hit about $1.4 billion this year, or 90 percent of 2019′s level.
The company’s effort to sell consumers travel “experiences,” like guided museum tours or mountain bike rides, has grown into a solid business, Kaufer said. And he still sees promise in the move over the past year to sell subscriptions for Tripadvisor Plus, a program offering hotel discounts and other perks for $99 a year.
That business has had to pivot in recent months, as the initial idea of convincing hotel chains to offer special rates for members flopped. In September, Tripadvisor switched the program to offering rebates that can be spent on future travel.
“We’re planting the seeds now,” Kaufer said. “And I’m super bullish on how this is going to turn out over the course of several years.”
Analyst Kelly isn’t so sure. “Subscriptions work well for something you do a lot, like watch Netflix,” he said. For typical leisure travelers, “that is a tough model to build.”
But the next big decisions will be up to Kaufer’s successor. After the grueling pandemic years with the responsibility of running a public company, he is ready for something different.
“I’m 22 years in the seat. I have another itch or two that I want to go scratch,” he said. “Let’s let someone else take the reins. I hope and expect they’ll do a bunch of things the same and, I certainly expect, a bunch of things differently. And that’s good for a company.”
One thing Kaufer probably won’t be doing is taking a lot more trips. Despite Tripadvisor’s success, he was never an avid traveler. As the pandemic has waxed and waned, he has managed to take one business trip to Europe and a family vacation in Mexico.
“Getting on the airplane for business was a treat,” he said. “I was surprised myself that I was getting a little emotional about sitting on a plane, but I really liked it.”