Apr 21, 2012
Move over Alvin and friends, there’s a new popular chipmunk to reckon with: the mascot of a flight search startup called Hipmunk, co-founded by fresh-faced MIT graduate Adam Goldstein (Class of 2010, Course 6 – Electrical Engineering and Computer Science). The idea came to Goldstein during his extensive travel as a member of the MIT debate team. Finding flights was a difficult endeavor. Simply put, he thought “it [the experience] sucked.” Inspired by his experience in Founder’s Journey (6.976), a MIT elective taught by Senior Lecturer Ken Zolot and designed to give engineers the toolkit to launch a new business, Goldstein decided to try to start a company that would provide a better flight search solution than what was currently available.
The pain in commercial aviation had been comparing airline ticket prices in addition to the duration of the flight and the layover. Goldstein admits that he was not alone in this realization; online travel is a crowded space, and other startups such as KAYAK had attempted to solve this very same problem by gathering flight information from the likes of Orbitz and presenting them in a more palatable visual format.
However, Goldstein felt the graphical user interface and website layout could be further improved upon. He approached startup incubator Y-Combinator along with two other entrepreneurs (a co-founder of Reddit and also its first employee) and pitched their idea. They were accepted into the program, and the initial seed investment has been followed by a $1 million round of additional angel funding and a Series A round, $4 million of which closed in February 2011.
Hipmunk’s business model is similar to that of KAYAK. They rely on a commission from the relevant ticket vendor (originally Orbitz and now ITA – as all flight search aggregators now use – with the exception of several direct airline websites that do not use either), redirecting the user to purchase tickets there. Hipmunk, like KAYAK, has expanded from their initial airline focus. Hipmunk also offers hotel bookings, train rides and even couch crashing via Air BnB in an effort to provide an aesthetically appealing one-stop shop for your travel planning. They have also expanded from just a website to offering mobile apps for Android and the iPhone to find flights while you are on the go.
My first up-close-and-personal encounter with Hipmunk was when I was an “intern for a day” in its San Francisco office this past summer (disclosure: I was also a summer intern for one of their financial backers, Ignition Partners). Since then, Hipmunk has been gaining altitude, becoming a popular flight search alternative to its major and larger competitors such as KAYAK and ITA Software, which was acquired by Google in 2011. According to DoubleClick AdPlanner, Hipmunk has over 100,000 unique visitors per month and 1 million monthly page views as of mid-April 2012, and has been steadily growing. This still places it well behind KAYAK – which enjoyed a 6 year head start over Hipmunk – but Goldstein is doing his best to catch up.
This spring I had a chance to ask Goldstein about what led him to make the move from Cambridge to Silicon Valley and, in a short time, from student to startup. Here’s what he wrote in response:
For those who do not already know, what is Hipmunk?
“Hipmunk takes the agony out of travel. We help people find the best flight, train, hotel, vacation rental, and more—and we do it in a way that makes it incredibly easy and fun.”
Flight search is a crowded space. As a first time entrepreneur, why that area?
“I was on the MIT Debate Team and we did a lot of travelling—I remember going to England, Botswana, and Turkey to compete. Since I knew a fair bit about airline routes and schedules, I became the de facto “travel agent” for the team. One day I looked up from my screen and noticed I’d spent the last 3 hours searching for flights for my teammates. That’s when I realized the experience was broken. I didn’t know anything about the industry, but figured it was worth a shot.
And, although Hipmunk started with just flights, we’ve since moved on to hotels, vacation rentals, and more. We’re attacking the underlying problem in the travel industry: it’s agonizing!”
What led you to being an entrepreneur right out of MIT?
“I always knew I wanted to start a company. In fact, I started a company called BookTour part-time while I was at MIT—the goal was to help readers and authors connect in real life, but it didn’t succeed. Once I found a problem I wanted to solve, Hipmunk was a no-brainer.”
There is controversy in the startup world over whether it is best to launch a startup from Cambridge or the Bay Area. Hipmunk is based in San Francisco even though you graduated from MIT and are originally from the East Coast. Why did you pick San Francisco over Kendall Square?
“The most important thing to me when starting Hipmunk was who my co-founder was going to be, not where I lived. I convinced Steve Huffman (the co-founder of Reddit) to join me, but he was recently married and his wife was finishing medical school. He was going to move wherever his wife was assigned her residency, and I was going to move wherever he did. So once she was assigned the Bay Area, that was the end of the story.”
Given you ultimately made the move out West, what do you think the MIT area’s greatest strengths are for entrepreneurship and what do you think is its biggest area for improvement?
“MIT has incredibly smart, creative, and ambitious students and professors. Many are great entrepreneurs. And the existence of those people tends to draw more people like them to the area, which I believe is still Boston’s greatest strength when it comes to entrepreneurship. The biggest area for improvement is the weather!”
At MIT you were on the debate team. Have any of those skills transferred over to the startup world, and what other skills and experiences would you recommend to would-be entrepreneurs, skills that maybe wouldn’t seem like they are relevant later on…but in your experience have been?
“Those skills have definitely transferred over—I’m more comfortable giving presentations in front of large groups than most founders, which is a skill that comes directly from the debate team. But debating per se is not particularly helpful in a startup—it generally antagonizes people.”
Any other advice you would give to current MIT students who want to start their own company after college?
“Start with what you know. If you’re going to start a company, it’s tempting to jump on a hot trend. But it’s hard to build a great product if you aren’t deeply familiar with the problem.”
Is there anything else you would like to add about Hipmunk or being an entrepreneur?
“Starting a company is exciting and stressful. It’s a similar kind of excitement to MIT—the excitement of building and learning new things. But it’s a different kind of stress, since you’ll let down employees and investors if you fail. Be sure you’re ready for that!”