Chris Dixon

Chris — excellent observations indeed.  I was part of TA during the IAC acquisition and as part of a spin-off for several years after that — I admire and respect Steve Kaufer as a person who simply was not stupidly greedy: he is instead smart, talented, calm, canny and shrewd in perhaps the most flattering way possible.

Many people raised an eyebrow when he sold his company to IAC for a “mere” $210M.  At the time, the company had I believe around 50 employees, but had bottom line profits of over 50% (gross, not net!).  But Expedia was the big fish, and a huge customer already, and it was absolutely the right thing to get bought in order to make TripAdvisor the success it is today.  Who knew that you could sell a company more than once?  Steve did.

TA is a company that is run like a real company, not the zoom-and-dive companies that seem to characterize most of the first Internet bubble, and a few of the current one.  Not to mention any names.  (Groupon).

At the time of the IAC/Expedia acquisition, there was a running joke that TripAdvisor’s revenues amounted to no more than rounding error in Expedia’s mighty balance sheet.  But Steve and his brilliant team were just quietly and persistently able to soldier along, through recession, through all of the competition, through a major reorg of the travel industry (partly due to TripAdvisor).  They just stuck to doing what they did great, and when other companies did complementary things, or even did what TA did better, they bought them and kept them running, doing those great things, and learning from them.  No hubris, no grandstanding, just smart and sensible deals that worked for all parties.  

And over a few years, TA’s contributions, became a great deal more than just rounding error, and soon enough became a core part and driving part of Expedia.  Indeed, I think it’s safe to say that TripAdvisor outgrew Expedia, and that is what likely lead to their IPO.

Nope: not greed, or the need for VC’s to cash out, or even for people to get rich.  Just because it makes good business sense.  (And Chris, major credit to Hunch for making the same kind of smart decision recently — congratulations!)

The idea that TA’s price didn’t double on the first day is just a simple reflection of Steve Kaufer’s workmanlike and sensible view of the world.  He is honest, fair, smart as hell, and a good guy.  An IPO whose first trade is 50% above open is nothing more than a trick to make the original investors even more rich, at the expense of the people who are true believers, and then get the shaft.  An opening price that reflects the fair market value of the company has Steve’s handwriting all over it.

And for those of us who are working hard to make equally successful Boston-based businesses, I would like to think that these New England values of common sense, honesty, hard work, and being experienced and smart are, after some years in the Internet world, beginning to have real and sustainable value.  While there are certainly land-grab opportunities available, there’s something to be said for building a company that’s about providing real value to people, as TripAdvisor has done.

Congratulations to the great team at TRIP!