The TripAdvisor IPO

Great startup story. Raised a total of $4.2m in venture capital, sold to IAC/Expedia for $210M, and had some interesting adventures and pivots along the way. They started out by trying to aggregate reviews from other websites and white label their product to Expedia and other large travel websites. TripAdvisor.com was just a showcase that accidentally became a destination site. As of today TripAdvisor is an independent public company, trading at a market cap of $3.5B.

Great for Boston. Fairly or not, Boston is often typecast as an infrastructure, B2B, hardware, and biotech town. Between Tripadvisor and Kayak, Boston now has at least two very important consumer internet companies.

Big win for the “golden age of SEO”.  By which I’m referring to roughly 2001-2008 when “demand” for content (people typing in search queries) far outpaced supply (good content). Companies like Yelp and TripAdvisor (along with Wikipedia, IMDB, etc) grew huge during this period, almost entirely through SEO. They did this by getting highly defensible flywheels spinning where more content meant more SEO which meant more users which meant more content. It is now far more difficult to grow a startup primarily through SEO. Almost all monetizable search categories have vast excesses of SEOd content. Moreover, Google is creating their own content (e.g. Google Places) which, at least at times, they have favored in their search results.

The user experience should improve. MG Siegler and others have criticized TripAdvisor for an excess of ads. I don’t disagree with MG, but I also think this is largely the result of the broken online ad attribution system that punishes intent generators and rewards intent harvestors. Travel reviews are for users at the beginning of the travel research process (which on average takes weeks), but all CPA and CPC ad programs pay only for the last click which usually means when users are purchasing tickets or making reservations. Hence review sites are forced to saturate their website real estate with purchasing widgets and display ads. Hopefully as online ad attribution improves this will no longer be necessary.

It’s weird how little coverage this IPO got and how the financial press missed the interesting stories. TripAdvisor ended the day at ~$3.5B in market cap, making it the second most valuable East Coast consumer internet company (after Priceline). Every story I saw focused on the share price drop over the day. The fact that the price dropped from its opening price simply means the bankers mispriced the stock and therefore insiders didn’t get the sweetheart deal they thought they were getting.

Update: I interviewed the CEO/founder of TripAdvisor on TechCrunch yesterday. Topics include the company’s origins, relationship with Google, SOPA, and advice to fledgling entrepreneurs.

5 thoughts on “The TripAdvisor IPO

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