As I sit across the table from Stephen Kaufer, I sense a mind that moves at light speed. Beneath his calm demeanor, it’s clear that Kaufer is constantly planning ahead. And it’s not hard to see why: His company–the world’s largest online travel website–gives him plenty to think about.
Kaufer is the founder and CEO of TripAdvisor, which grossed $944 million last year. While the company’s success is obvious, the online market is competitive and rapidly changing. Kaufer is always thinking about how his company can stay ahead of the game.
But TripAdvisor’s CEO wasn’t always concerned with staying ahead. Like any other entrepreneur, there was a time when Kaufer’s focus was simply staying afloat. Thirteen years ago, TripAdvisor had yet to make a single dollar. Facing a burn rate of $70,000 per month in 2001, Kaufer had to figure out how to turn a profit–and fast.
So how did he take his company all the way to the top? When I ask Kaufer this question, he responds with five key principles that every entrepreneur can follow:
1. Be ready for change
Kaufer learned the hard way that if a small business can’t adapt, it will struggle. His very first startup, which he launched while a senior at Harvard, experienced early success that led to a sense of complacency among the staff. “We got comfortable,” Kaufer says. As a result, they were unprepared to alter their business when the market began to change.
When the company tried to use a business-to-business model without success, Kaufer knew he needed to make a change. Instead of sticking with a method that wasn’t working, he and his colleagues switched to a different model. They began to sell leads to Expedia.com–and it worked. Because of TripAdvisor’s willingness to change, the company was soon bringing in $70,000 per month.
2. Move as quickly as possible
Kaufer’s friends often tease him about something he used to say when he first launched TripAdvisor: “Once we get to 100 people, I’m going to move on.” Over 2,000 employees later, he still doesn’t seem to be in a rush to leave.
He had wanted to avoid a large company because he always thought that big companies moved slowly. But Kaufer soon realized that TripAdvisor didn’t have to be that way. The key? “It’s about pushing down the decision-making process, while making sure that people know what’s going on,” he explains.
Kaufer strives to make the company move just as quickly now as it did when there were fewer than 100 people working there. He does this by fostering a culture of open communication and transparency throughout the company.
For example, TripAdvisor’s weekly product review meeting is open to anyone in the company and allows employees to explain any changes they intend to make to the site. Initiatives like this encourage ideas to turn into actions as quickly as possible.
3. Don’t play the “might want it” game
Kaufer knows exactly who needs his product and why they need it. He explains that understanding the demand for your product or service is integral to success. “If you’re in the ‘might want it’ game, that is a tough place to be,” he says.
Back in the early days of TripAdvisor, Kaufer was always clear on why people needed his product. In fact, the very idea for the company was born out of Kaufer’s own frustration at planning a trip to Mexico without reliable information to inform his travel decisions.
As a result, user-generated reviews about hotels, travel methods, and destinations became a central component of TripAdvisor. Kaufer knew first-hand that there was a need for them.
4. Be able to articulate exactly how you’ll make money.
This is another lesson that Kaufer learned the hard way. When TripAdvisor first started out, Kaufer says he was unsure about how the company was going to make money. He knew that TripAdvisor was serving a critical function for users, but didn’t fully understand how to monetize it. The company came close to failure right before Kaufer and his colleagues discovered a monetization model that involved selling leads to other travel sites.
As Kaufer put it, one of the most important aspects of building a successful business is to “know exactly who is going to pay you, and how much.”
Even non-tech entrepreneurs can take this advice to heart: Companies are often more focused on their products than they are on figuring out how to sell them.
5. Have an all-in mentality
“If an entrepreneur wants to launch a business but intends to [work] 45-hour weeks in the early years, that’s not the all-in mentality that you need to run a business,” Kaufer explains.
He underscores that launching a business is always tougher than it seems.
In order to be successful, Kaufer says that an entrepreneur must be willing to fully commit to making their venture successful. That can mean making sacrifices in other areas of life. “Back when the company was little, I often didn’t have time for the family dinner,” he says.
The upside to this all-in mentality is that entrepreneurs like Kaufer have a tremendous amount of passion for what they do. Kaufer has used that passion to build a company that changed the way people travel–while generating nearly a billion dollars a year.
By applying Kaufer’s five principles to your own venture, you can increase your likelihood of making your venture a success, too.
Which of these principles are most critical to your own success? Please share below.
—Marc Wayshak is the bestselling author of two books on sales and leadership, Game Plan Selling and Breaking All Barriers. Marc’s sales strategy is based upon his experiences as an All-American athlete, Ivy League graduate, startup entrepreneur and years of research, training, and selling.