Steve Kaufer, 47, co-founded TripAdvisor in 2000 and has seen it grow to become the world's largest travel website. Based in Newton, Massachusetts, it currently has a community of 34 million monthly visitors and contains 35 million reviews of hotels, restaurants and attractions written by its users. Profit margins are consistently around the 50 per cent mark and revenue last year was £238m. The company's latest venture is Trip Friends, which allows travellers to get advice from their Facebook friends. You can also read TripAdvisor travellers' reviews throughout British Airways' travel guides on ba.com.
How's business?
Business has been great for us. Last year profits were up 30-plus per cent from the previous year. In the first quarter of
this year we've had another robust gain. It's a little embarrassing to say so in the light of a worldwide recession but I think the recession probably slowed down some even more outstanding growth rates. What we've seen is that people around the world just love this notion that you can get advice from other travellers. There's no stopping it.
You had the original idea for TripAdvisor. How did it come about?
The original idea was based on a vacation that I tried to take back in 1999. I went to a travel agent and came out with three glossy hotel brochures with beautiful pictures, but what was I to do? One was cheap, one was expensive and one was in the middle, and
the travel agent said I'd be happy with all three. But would I really be?
So I went to the internet and did some research. It took a long, long time to find something insightful as opposed to the same picture posted on lots of websites. But eventually I found some comments that made me change my mind as to which property I was going to stay at. I went on vacation, had a great time, came back home and my wife said, "Hey, you should start a company that makes that easy for people."
And so TripAdvisor was formed in February 2000 with three fantastic co-founders and a million dollars in venture funding.
How do you start a review website with no reviews?
The very first day the site launched, we had no reviews, but we had a lot of links to other websites that talked about the hotels we had on our site. Then we had a big button that said, "Write your own review."
The original idea was to feature the professionally written content first, because surely people would trust the professionals more than the amateurs. But what we found was that our visitors were first reading the visitor reviews and then maybe reading the pros. So we reordered it and put the user reviews first. And that caused us to get more user reviews.
Have you found a country yet where the concept doesn't work?
Lots of people wonder if this interest in what other people have to say is truly universal. Sometimes they talk about Germany in particular, where the stereotype is that they like the authoritarian voice, the expert opinion. I can tell you categorically they may like the expert opinion, but they love user generated content.
Do you contribute reviews?
Oh yeah. I have a pseudonym and I almost always write a review when I stay somewhere.
How does the site generate revenue?
We make all our money from advertising. The majority of our revenue comes on a cost-per-click basis. So say you're looking at a particular hotel and you're reading the reviews and you think, hey, I think I might want to stay here. You click on the button to check availability and you have a choice of where to check, whether it's, say, Lastminute or Expedia or the hotel's own website. And for every place that you're checking, we get paid a referral fee, which is somewhere between 50 cents and a dollar on average.
We also make money from traditional banner advertising and we've introduced business listings. For an annual subscription, hoteliers can add their url, phone number and an email address and any coupons that they might want to offer for a whole year. We've been very successful with that.
Do you ever feel like you've invented a licence to print money?
That's a very colourful way of phrasing it! I wouldn't go quite so far. But we do know that as long as travellers are interested in unbiased opinions, and as long as we deliver a good quality experience, they'll tell their friends, which means more traffic. So if in two years I'm at 60 million visitors a month instead of 34 million, I'm going to end up making more money. It doesn't cost me much to run a website.
How do you manage to moderate all the reviews on the site?
We use software to check each and every review for a variety of things. We check for the obvious - is there profanity? Then we have a whole bunch of algorithms that check to make sure the review is legitimate. The vast majority sail right through that, but then there are a set of reviews that are suspicious and those get handed over to a team of internet detectives who do an extra level of investigation. Sometimes we'll catch folks who are trying to manipulate our system, so we send a letter to the hotel in question. If the behaviour continues, then we'll apply a penalty on that hotel, which is a drop in their ranking.
Tell me about Trip Friends.
Our thinking is that very few of your friends may have taken the time to write a review, but one hundred per cent of your friends, when you ask them a question about somewhere they've been, are happy to share their tips with you. So Trip Friends allows us to show you who of your Facebook friends have been to a destination you're looking at, and allows you to ask them a question either one on one or all together.
What's the future for travel?
In general I'm bullish on travel. The world just gets more accessible every time I turn around. Most people still want to explore.
Visit tripadvisor.co.uk
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