Stephen Kaufer | Crain's Orlando

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Stephen Kaufer

Background:  

TripAdvisor helps consumers plan and book travel, with access to millions of reviews from fellow travelers on hotels, vacation rentals, restaurants, points of interest and more.

The Mistake:

When I started TripAdvisor, the team and I had what we thought was just a fabulous idea. How could it go wrong? We were going to collect all of the best, opinionated information out there that a traveler would want about where to go, where they'd stay, what to do when they got there—and put it all on one website. And we'd solve the problem of the uninformed traveler relying upon a brochure or a travel agent for outdated advice. It seemed like the internet would be perfect for this.

The problem was going to be, how do you get people to notice your site? And we had a solution to that, because we weren't going to build a consumer-facing website. The business plan for TripAdvisor was to build this incredibly rich database of all things travel and then license that information to other consumer-facing travel sites, like AOL Travel and Expedia. And that way, we'd be able to build a great service and we wouldn't have to go through all of that stuff about building a brand, building traffic tyour website.  

So we funded the company, and started to build it. About a year and a half into it I came to the conclusion that it was a complete and abject failure. We had zero revenue. We could not find a single client. Well, one client paid us a couple of dollars per quarter in order to license our search results. We had built this service—we had actually built demo.tripadvisor.com as the website to show off what a licensor could use—but we couldn't find anyone that was willing to pay us for the search results. 

Talk to the specific individuals who you would be asking to sign a purchase order.

The Lesson:

They call it a pivot now. We called it a run for your lives, the sky is falling—which it was. We were six months from going out of business when we noticed our demo.tripadvisor.com had started to get some traffic on its own and that we could actually sell cost-per-clicks against it. Consumers did in fact like what we had—we just had to find a way to get paid for it.

Great timing, great service—we just hadn't talked to the people that would write us the checks. It wasn't clear to them exactly how it was going to make them more money. 

It sounds cliché, but go talk to the specific individuals who you would be asking to sign a purchase order to pay you for a service. Say, "How much would you pay for what I'm offering?" and if the answer is, "You know, I'm not really sure," that's not a good answer. If the answer is, "How much were you thinking of charging?" you can make up any answer you want and test the value.

Figuring out if you're talking to someone who has enough pain they're willing to spend money for something you have is the difference between nice to have and need to have.

Photo courtesy of Stephen Kaufer. 

Follow Stephen Kaufer on Twitter at @kaufer.

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