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His last job is his best

Steve Hafner, CEO of Kayak, still has much unfinished business at the travel search engine giant he co-founded
Saturday, November 26, 2016 - 05:50

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"You see, I hate going to grocery stores. I would only need seven items but there are 30 aisles I must navigate. Online shopping eliminates that. Online travel should be the same. We have the beauty of operating a storefront that has no aisles."

HE was part of the team that launched travel website Orbitz in 2001, and went on three years later to co-create a platform that would become the travel search engine giant, Kayak. But Steve Hafner would say he's no serial entrepreneur.

In fact, he would be thrilled if his current job at Kayak, where he's the chief executive officer, is his last, says the Peru-born, 48-year-old Swedish American, who had a traditional corporate career as a consultant before venturing into business. Interestingly, the two companies that he co-founded are today competitors to each other.

"I'm not looking to start a new business," Mr Hafner tells The Business Times with a laugh, when asked if a third startup is in the works.

"I would be content if Kayak is my last job, especially if I end on a high note."

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Launched in 2004, Kayak was listed on Nasdaq in July 2012 and acquired by online travel group Priceline for some US$1.8 billion four months later.

Before Kayak, Mr Hafner helped to found Orbitz, a predecessor to Kayak. In 2015, 14 years after it was launched, Orbitz was snapped up by another online travel group, Expedia, in a US$1.3 billion deal.

Both Kayak and Orbitz run platforms that let travellers find and book flights and hotels online, but while Orbitz charges a booking fee, Kayak takes a cut of the referrals - which is a better business model, according to Mr Hafner.

"Orbitz was not the best search engine out there. It was a good company, but a not great one. Users were using it as a search portal but booking directly from the airlines and hotels."

He adds: "Orbitz had also grown too quickly."

When he left to start up Kayak, Mr Hafner contends that it was much easier the second time around. "We wanted Kayak to make search great, and to allow users to book hotels or flights via any medium they desire."

Unlike most other booking sites that sell their own inventory, Kayak is a travel tool that doesn't sell anything. It searches other travel sites and shows their offerings in a clear, intuitive display, so that users can easily compare and filter the results.

Once users find what they want, Kayak lets them choose where to book (even directly from the airline's or hotel's website) whereas most other travel sites do not.

Mr Hafner says: "Kayak is more of a search engine rather than an e-commerce site. While the latter shows you what they have, the former takes from everywhere and shows all answers in one place."

When asked why he would be happy to dedicate the rest of his career to Kayak, Mr Hafner says: "There is so much unfinished business. I've still got lots of ideas."

These ideas include expanding the business to new markets - a major target being the Asia-Pacific - as well as incorporating new technologies such as artificial intelligence (AI) and robotics to make the platform smarter.

"Currently, travel websites still present results in a list. This is not what it should be."

He explains: "You see, I hate going to grocery stores. I would only need seven items but there are 30 aisles I must navigate. Online shopping eliminates that. Online travel should be the same. We have the beauty of operating a storefront that has no aisles."

While Kayak has integrated Facebook's Messenger chatbot and Amazon's AI assistant Alexa onto its platform - through which travellers can "talk to" Kayak and enquire about their flight status or where they can go this weekend for US$300 - AI technologies are still nascent in the world of travel sites.

Mr Hafner says: "In terms of processing capabilities, CPUs (central processing units) do not work well with AI. But GPUs (graphics processing units) do, and it is still early days."

He adds that it will take some time for the technology to evolve, but once it's cracked, the innovation will soar.

And if he has his way, Kayak's search engine will be able to automatically generate personalised results for every user, made possible by data analytics and machine learning.

"Say if a traveller never chooses a one-stop flight in his search, the platform should pick that up and intelligently show him only direct flights in future searches.

"But today, we still show him everything."

Mr Hafner projects that AI technologies and robotics will evolve and first be applied to improve customer service, followed by the online trading of products.

"All consumer-facing websites ought to be looking in that direction. E-commerce sites will get there first."

He points out that traditional retail giants such as Walmart could, however, be "slow to the game".

In May, Walmart reported a slowing e-commerce growth rate of around 12 per cent in fiscal 2016, compared with 21 per cent growth in 2015 and 30 per cent growth in 2014.

The retail giant has said that it will invest over US$1.1 billion this year in e-commerce, pointing to the tremendous potential in the buying and selling of goods and services online.

Mr Hafner sees the travel sector as a big part of e-commerce. Global online travel sales amounted to US$533.52 billion in 2015, according to Statista. This figure is forecast to grow to US$762 billion by 2019.

After 12 years, Kayak is still in startup mode, according to Mr Hafner. This allows it to innovate, fail quickly and move fast.

Asked how Kayak does it, he says: "It's pretty easy to maintain a startup culture. We need a clear vision and mission; talented people but not too many of them; and to give them the freedom to innovate."

On failing, Mr Hafner says that while not a lot of ideas have failed at Kayak, he would be happy for the company to have encountered "a handful of failures" than "not try to innovate at all".

He adds that the startup culture of solving problems or pain points is fundamental to Kayak. When asked how and where he even begins to find problems or pain points to resolve, Mr Hafner says that he is naturally a keen observer in everyday life.

He advises: "For everything you do, think if there's a better way to do it. Look at the world as primarily dissatisfied."

Mr Hafner says he could have developed this wonder about life, openness to ideas and general astuteness from his first job.

Prior to becoming an entrepreneur, Mr Hafner worked at the Boston Consulting Group (BCG), one of the world's most prestigious management consulting firms and certainly a very different entity from a startup.

The job as a consultant offered insight into various industries, developed his problem solving skills, and gave him access to great talent, Mr Hafner says.

"I learnt how to identify and motivate great talent. A lot of the people I worked with at BCG followed me to Orbitz and to Kayak. It's nice to have history.

"Another good trait I picked up is self-awareness. That led me to find a co-founder who complements me and makes up for my weaknesses. Paul English (his partner at Kayak) is great with people, for instance."

Mr English is a well-known philanthropist who has founded several software companies (and so might properly be called a serial entrepreneur). His latest endeavour is Lola, a startup also in the travel space. Through a smartphone app, Lola provides on-demand, personal travel services ranging from finding hotels and booking flights to even offering help while users are on the road. Mr English is known to be an outgoing person who is fond of meeting new people.

Mr Hafner is known for a few "specialities" himself - his belief about luck, his bravado, and for staying out of the way of talented people who work with him.

On luck, he says: "Timing is everything. Look at BlackBerry and PalmPilot, the pioneers of mobile devices. Today, Apple and Samsung are the winners."

He shares that in the case of Kayak, the company's initial public offering (IPO) timing was "bad". Kayak had filed for an IPO in July 2012, just two months after Facebook did.

Mr Hafner says: "The Facebook IPO completely botched, and the IPO market completely closed after that. And we went after they did."

But it all worked out, he says. This was because Kayak "went public for the valuation", and not to fund the business, for it was already profitable at the time of its IPO.

On his second "speciality", bravado, Mr Hafner says it is an important trait for a founder to have.

"Many times, you will be going up against a lot of people or they will tell you it can't be done. You have to have self-confidence and also, do what you say you are going to do.

"This is known as credible bravado."

Talent is absolutely critical to a startup like Kayak, adds Mr Hafner.

"You've got to be able to hire talented people, because even if you've got a bad idea, these people will be able to fix it."

And it's certainly not all-work-and-no-play for the technopreneur who's the father of five daughters - with ages ranging from two to 17 - and with a sixth girl on the way.

Mr Hafner has been reported as saying in another interview: "Work-life balance is working as little as you can to get the important stuff done and then taking all the other time and putting it against your family or your interests."

As busy as he is at work, he's quite the hands-on Dad who ferries his daughters to school whenever he can - and also a self-proclaimed workout buff, telling BT that he would "go crazy" if he does not work out daily.

When he was younger, he played contact sports such as American football and rugby. He jokes: "Nothing concentrates the brain more than the fear of getting hit."

Mr Hafner is also a certified lifeguard at NASA, the National Aeronautics and Space Administration.

He shares that while he would like to spend time with his family every day, travelling for work makes that a challenge. Mr Hafner owns five cars but he - and his family - use Uber to get "everywhere".

As an Internet entrepreneur, he believes that the sharing economy represents the new age of consumerism, where people will own much less and share much more.

"The next wave of consumers are going to be more adept at electronic and social media. Their purchasing power will exceed ours. And they will spend money differently from people now."

That is, young consumers today will spend money to "acquire experiences", and less of "things".

He says: "It's more efficient that way."


STEVE HAFNER

CEO, Kayak

1968 - Born in Lima, Peru

1987 - 1991: Studied economics and history at Dartmouth College

Career

1991 - 1996: Worked as consultant at Marketing Corp of America

1996 - 1997: Did an MBA at Northwestern University

1997 - 2000: Worked as consultant at Boston Consulting Group

2001 - 2004: Co-founded and launched Orbitz

2004 - Co-founded and launched Kayak

Since 2004 CEO of Kayak

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