TripIt’s Short Trip to a $120M Exit: A Travelogue from CEO Gregg Brockway
San Francisco-based TripIt has some very happy investors right now. As I wrote yesterday, Redmond, WA-based travel management software company Concur (NASDAQ: CNQR) has agreed to buy TripIt for $82 million in cash and stock plus up to $38 million in contingent payments between now and 2013; the startup had raised less than $13 million in venture cash.
Back in November, well before the acquisition news, I visited TripIt’s Mission District offices and had a long conversation with co-founder and CEO Gregg Brockway about how the company found its niche within the notoriously competitive—but potentially lucrative—travel business. Travel is actually the largest single commerce sector or “vertical” on the entire Internet, and Brockway has gotten pretty good at scouting out the opportunities within it: he founded the discount hotel and airfare site Hotwire in 1999 and sold it to InterActive Corp (IAC) four years later for $665 million in cash.
But like all entrepreneurs, Brockway and his TripIt co-founders Scott Hintz and Andy Denmark have had to adapt their initial business strategies to the realities of the market. Brockway told me the company originally thought that TripIt’s service, which gives travelers an easy way to create mobile-accessible master itineraries for each trip they take, would make money through lead generation—i.e., selling targeted ads to hotels or rental-car agencies in travelers’ destination cities. But then came the 2008 economic collapse, which forced the company to come up with what Brockway calls a “Plan B”: selling a premium, subscription-based service that, among other things, helps members take advantage of drops in airfares.
In the edited interview transcript below, Brockway tells the story of that pivot and of some of the other lessons the startup has learned on its four-year journey. He also speaks about the need for—and the barriers to—ongoing innovation in the travel industry.
Xconomy: What’s your elevator-pitch version of TripIt’s business?
Gregg Brockway: TripIt helps people organize and manage their travel information no matter where they book it. Few people book everything in one place—they book a hotel here, a hotel there, a rental car from Hertz.com, and a dinner reservation on OpenTable. It’s a very fragmented space. Bringing that all together in one place, we thought, would address a very real pain point for travelers, which is how do you keep track of it all. Most people still use the old manila travel folder, and we thought there was a better way. So at its core, TripIt is a travel organizer.
X: How does personal travel information get into TripIt—and what happens then?
GB: Most people get their information into TripIt simply by forwarding their purchase confirmation from United or JetBlue or wherever to us. You don’t have to manually enter information. But the real magic happens once you bind the information together, because then we can start to understand you and your trip and do things for you to make the travel experience easier, whether it’s adding maps or weather or directions from the airport to your hotel. Or maybe it’s automatically adding information to your calendar, or getting it onto your mobile phone so you always have access to the latest updated information, with flight delays and cancellations. Part of our premium service is that we monitor your flights for refunds. If airline prices drop below what you paid, we let you know. People are saving $100 on one out of every 10 flights. So there’s a value proposition there.
It comes back to taking all of the information we can glean about you and your travel and putting it to work in ways that make travel easier. The more you travel, the more you … Next Page »