Kayak’s Co-Founder and the Secret of Travel Startup Success

Paul English met his soon-to-be Kayak co-founder Steve Hafner in December 2003 almost by chance in the offices of General Catalyst in Cambridge, Massachusetts. Over a 45-minute lunch at nearby Legal Sea Foods, they agreed to go 50-50 on the Kayak travel-search engine while each of them chipped in $1 million of their own money to have skin in the game.

English, a coder and entrepreneur by trade who had hacked his grade-school computer teacher’s password years earlier to get access to more commands on his “dumb terminal,” turned his $1 million Kayak investment into $120 million when the Priceline Group acquired Kayak for $2.1 billion a decade later in 2013.

Paul English, and the CEOs of TripAdvisor, Expedia, Booking.com, and More Are Speaking at Skift Global Forum 2016. Join Us.

A new biography of English, A Truck Full of Money: One Man’s Quest To Recover from Great Success (Random House), written by Tracy Kidder, details this meeting of then-soon-to-be Kayak co-founders, and provides a fascinating glimpse into the rigors of software coders, entrepreneurs, venture capitalists, team-builders, recruiters, and sometimes-slightly-mad creative types.

The takeaways about love, life and business — pimples and all — for people involved in all facets of the travel industry and elsewhere are nearly ever-present in the book, including at the food and drink fest at Legal Sea Foods that led to the creation of Kayak.

It’s Not Just About Having A Good Idea

Unlike Kidder, the book’s author, English did not graduate from Harvard but attended commuter school UMASS Boston in Dorchester starting in 1982 after graduating high school at the lower rungs of Boston Latin, and he thought en route to night classes in college that he probably was going to become a musician.

Nearly a professional lifetime later, by 2003, English was an entrepreneur in residence at venture capital firm Greylock, and visited General Catalyst’s offices that day of the Hafner meeting to offer feedback on an investment that General Catalyst was pondering.

English, as the book explains, was introduced to Hafner and told him over lunch that he would help Hafner find a chief technology officer for Kayak until Hafner convinced English to co-found the startup with him. The book notes that Joel Cutler of General Catalyst, which had already committed $5 million to the venture, and Hafner, who was a Cutler friend and on the founding team of Orbitz out of Boston Consulting Group, had come up with the idea for Kayak.

What the book does not outline, and as recounted in Skift’s Definitive Oral History of Online Travel, is that the idea for travel metasearch, where consumers could comparison-shop for flights and hotels side-by-side without doing any bookings on the site, was not a new one. Hafner, who’d been an Orbitz executive vice president of consumer travel even before its launch in 2001, had plenty of interactions during those years with people at early metasearch leader Sidestep, which had counted Orbitz as a partner.

When Kayak debuted in 2004 there were in existence plenty of other travel metasearch sites, including FareChase, Sidestep, Mobissimo, Qixo and Agentware, among others. The point is that Cutler and Hafner didn’t come up with the metasearch concept out of the blue but saw an opportunity to execute on the idea and, with English and his tech team, take things to a whole new level. And they did.

“When he [Hafner] was at Orbitz they were a partner of ours,” Sidestep founder Brian Barth says in the Skift oral history. “So he knew the model very well. He understood very much what were were up to and how it worked.”

Also not reported in the book is the fact that around the time that General Catalyst’s Cutler and Hafner were formulating their initial plans for Kayak in 2003, Cutler was interested in acquiring Sidestep and installing Hafner as CEO, Hafner has told me in the past.

Also that meeting between Hafner and English at General Catalyst’s Cambridge offices was not as fortuitous and coincidental as the book portrays it. We hear that even before the English-Hafner luncheon get-together at Legal Sea Foods, Cutler and Larry Bohn, who had formerly been English’s boss at Interleaf and today is a managing director at General Catalyst, had talked Hafner into recruiting English as Kayak’s chief technology officer.

But Sidestep, which ironically sold itself to Kayak for $196 million in 2007, didn’t take the metasearch idea and turn it into a $2 billion company. It was Paul English and Steve Hafner, along with Cutler, who were among the people to choreograph that.

Ideas can come cheaply but executing on them and turning them into thriving companies that win consumer traction can be a totally different matter. In fact, the book chronicles how English has suffered throughout his life with hypomania, a form of bipolar disorder that can at times can be a creative advantage and also a curse. At one juncture a few years ago, English kept a running list of 158 startup company ideas that he’d conjured during endless, sleep-deprived nights.

English had even come up with an idea to create an Uber-like company called SnapCab well before Uber’s founding; English wanted Kayak to create it but Hafner, fearful of English’s tendency to get distracted, discouraged the idea, the book states.

Pertaining to our point about the diverse nature of ideas versus execution, there might have been others during those years who formulated an idea to create an on-demand car service using mobile apps, but it was Uber and others that turned the concept into reality and took it global.

It was English, Hafner and a lot of talented other folks who took Kayak from idea into the largest U.S.-based travel metasearch site and a household name.

Recruitment, Team and ‘Managed Chaos’

English, as is recounted in the book, loves recruiting employees, doing the hiring and building teams. He also had to fire a lot of people along the way.

Having a talented core of people is key to a successful business (it is not just about having a good idea), and “A Truck Full of Money” shows how English sidekicks Bill “Billo” O’Donnell and Paul Schwenk followed English from company to company over the last two decades and were instrumental in the success of Kayak, for instance. The book refers to the trio as the Three Amigos.

In fact, the book’s title refers to Schwenk thinking when he joined O’Donnell and English at the latter’s Boston Light Software in 1998: “Some day this boy [English] is going to get hit by a truck full of money and I’m going to be standing beside him.” Actually, Schwenk, who was senior vice president of engineering at Kayak and is vice president of engineering at Lola, and O’Donnell, who was chief architect at Kayak and is CTO and co-founder with English at Lola, saw their Kayak shares zoom to a value of $20 million for each guy around the time Priceline acquired the company.

English usually took care of his teams along the way during ventures that preceded Kayak.

Author Kidder describes an atmosphere at Kayak’s Concord, Massachusetts office, where English’s tech team held sway, that had employees playfully teasing usually fast-talking English and tending to ignore his email requests unless he sent them a second time. The rest of the Kayak team, under Hafner’s stewardship, congregated at headquarters in Norwalk, and later, Stamford, Connecticut.

Beyond English, the book breaks down the other amigos’ pivotal roles at Kayak. “If Billo was chief mechanic, Schwenk was Kayak’s farmer. Others knew more about how the various parts of Kayak’s technology worked, but only Billo and a few others knew more about all of it, and Schwenk knew everything else — what everything cost and where the revenues came from and who was sleeping with whom and who was working hard and who was wasting time playing video games and who was unhappy.”

English encouraged an open and creative atmosphere at Kayak among his coders and he wanted to ensure that they didn’t fall out of touch with customers. The team sat at tables in an open work space, and English encouraged the engineers to answer a red phone that customers called with problems and to respond to customers’ emails.

English encouraged Kayak’s software-writing employees to take risks, the book says, and left it to Schwenk to handle “chaos management” when online travel agency partners or others were pissed off at a new page design, for example, the book states.

What Business Plan?

The book details, in its retelling of the funding process for Blade, a Boston incubator that English and O’Donnell got off the ground, and eventually turned into Lola, an app-based travel agency, how track records, loyalties and the composition of founding teams often trump business plans and revenue.

As portrayed in the English bio, the English-O’Donnell-Schwenk trio got General Catalyst and Accel to chip in a total of $20 million in venture funding in 2013 for a 30 percent stake in Blade, which at the time had no businesses to incubate and absolutely no revenue to show.

Blade, at the time, was actually just an idea.

English — who drove O’Donnell and Schwenk crazy with his obsessive idea to turn Blade’s Boston offices into a veritable nightclub and tech-community gathering spot during the evenings — conceived of Blade as recruiting Paypal- and Amazon-killing startups, taking a 25-50 percent equity stake in them, and later sending them on their way when they got their Series A rounds.

The attraction for eventual investors Accel and General Catalyst (Greylock turned down the idea) is that English had a lot of pull in the Boston startup community through his ties to the Massachusetts Institute of Technology, where he lectured, and otherwise. The venture capital firms wanted first crack on providing the Series A rounds to the startups.

The problem was that the Three Amigos decided that no representatives of the VC firms would be put on the Blade board and English wouldn’t commit contractually to giving the firms first dibs at funding the startups.

So the VC firms were basically getting in on the ground floor for startups coming out of Boston with the hope that they would build the relationships through Blade to be the startups’ best friends when Series A rounds became appropriate.

English basically winked at the VC firms, telling them he wouldn’t put it in writing but he hoped they would enjoy very fruitful relationships with Blade’s startups.

Outside Blade’s pitch meeting at General Catalyst in 2013, according to the book, Cutler said: “This is so unconventional. I doubt there are three people in the world we’d do this with. But Silicon Valley would leap at it. To have Paul English covering the Boston market.”

The other issue that became apparent with Blade later is that it didn’t produce any game-changing startups in travel or outside of it, and Blade eventually morphed into Lola, the app-based travel agency.

A Fine Line Between Genius and Catastrophe

Like JetBlue founder David Neeleman, who suffered from ADHD, English’s battles with hypomania, replete with protracted efforts to settle on an effective medicine to deal with it, could produce periods of brilliance and also months of dejection and distraction.

General Catalyst’s Cutler, who turned an initial $5 million investment in Kayak into a seminal payday, summed up in the book the double-edged nature of his dozen-years’ collaboration with English.

“Paul’s brilliant,” Cutler says in the book. “There’s the dark side and there’s the bright side. Paul, when he’s focused and on, it’s magic. Then there’s the opposite side of genius. He comes and goes. At every major milestone of Kayak he would work maniacally and then disappear. Paul is a remarkably special person, a genius, forward thinking exhausting, exhausted focused, unfocused, so complex. He’s smart enough to know he needs Billo and Schwenk. I always thought of Paul as an artist, this tortured guy who needed to get himself in a frenzy to be able to paint a picture. He’s just a picture of complexity.”

In addition to Kayak and several other businesses, that picture of complexity, as embodied in English, over the years created and abandoned an online platform to attract players of Xiangqi, a version of Chinese chess; a Road Wars app to encourage safe driving and deter the 70 moving violations he accrued over the years, and the nonprofit American Gun League, designed to combat the National Rifle Association and encourage sane gun laws after the Newtown, Connecticut shooting of school kids, that never really got off the ground.

Along the way, English became very wealthy and he has used it for philanthropy, handing out dry socks and otherwise assisting the homeless in his native Boston, and contributing millions of dollars to build clinics, hospitals and schools in Haiti through Partners in Health, and an organization he founded, Summits Education.

English’s latest startup project, Lola, conceived as a next-generation mobile travel agency, is very much a work in progress. Like just about every startup, Lola’s future is a question mark but what’s absolutely straightforward is that this is not about the money for the three serial entrepreneurs, the Three Amigos, who love building teams of coders and businesses.