Vacation rental comparison-shopping site, Tripping.com, which has raised some $52 million in venture capital funding, is teetering after laying off most of its staff last Friday amidst an ongoing and protracted conflict with its board, Skift has learned.
A sale is in the works for perhaps pennies on the dollar, according to two sources close to the company. There is no guarantee that a transaction would actually go through.
Some 15 employees at nine-year-old Tripping were laid off last week, the majority of the company. Remaining on the payroll at the San Francisco-based company is a skeletal team, including founders Jeff Manheimer and Jen O’Neal, CEO and chairman, respectively, as well as the chief financial officer, the chief technology officer, the chief strategy officer, and perhaps a handful of others.
[UPDATE: After publishing this story earlier this evening, former Tripping board member Dave Maney, who left the board in August, said the startup ran into trouble when it couldn’t raise a new funding round. The goal was an “up round,” or a higher valuation than the $200 million valuation at the previous round in December 2016. He pinned much of the company’s troubles on board member Matt Krna, managing partner of lead investor Princeville Global, who allegedly pushed Tripping to burn a massive amount of cash on marketing to buy traffic when the quality of the Tripping product wasn’t up to the challenge.
Maney said Tripping founders O’Neal, who brought Maney onto the board, and Manheimer, sold their shares in August, and are no longer actively involved with the company.
Maney said a sale of Tripping to rival HomeToGo of Germany may be in the works, and that Princeville Global may be involved in a new funding round for HomeToGo, as well. In May, Princeville Global led a $55 million Series E funding round for Hamburg, Germany-based cruise agency Dreamlines, whose co-founder Nils Regge is also a co-founder of Tripping rival HomeToGo.
See more of this update near the end of this story below.]
After raising $35 million in a series C funding round led by Princeville Global in December 2016, Tripping had a restructuring in late April or early May when 15 employees were laid off. The 15 or so that lost their jobs last week were in addition to that earlier round.
One of the sources close to the company painted a picture of an intransigent management team, namely O’Neal and Manheimer, who control the company, that faced off in an “ugly” conflict with the board over the past 18 months. Board members include Andrew Ogawa, managing partner of Quest Venture Partners, Matt Krna, managing partner of Princeville Glogal, and Fritz Demopoulos, founder of Queen’s Road Capital.
The source alleged that O’Neal and Manheimer thought that Tripping’s first-mover advantage in vacation rental metasearch would do much to win the day, and that there was a gross lack of execution in terms of product, user experience, and integrating suppliers.
Skift repeatedly reached out to O’Neal, Manheimer, and board members for official comment, but received none.
One source said that Tripping tried to do everything all at once in terms of global expansion, and also pushing for direct-booking capabilities in addition to metasearch, but made little progress as chief competitor HomeToGo, based in Berlin, lapped Tripping in performance.
“They didn’t have market leadership anywhere, and the product was terrible,” the source said, adding that the board pushed for changes, but the founders refused to budge.
Skift learned of two people that the board approached as possible CEO candidates to replace Manheimer, who himself succeeded O’Neal as CEO in December, but neither candidate was interested in the post.
The source chalked up Tripping’s plight, including its excessive cash burn, to inefficient traffic-acquisition spending, incompetent management, and a flawed strategy.
The problem isn’t that the concept of vacation rental metasearch is too difficult or doomed, but with the Tripping-specific strategy and execution, the source said.
“The company was salvageable a year ago,” the source said, as the board pushed without results to bring in new leadership and a different product team.
In 2017, Tripping, which enables hosts to list their properties on multiple sites, ranging from Airbnb to VRBO, spent more than $600,000 on national television advertising just in the United States, according to iSpot.tv, but its TV advertising went dark in 2018.
On its website, Tripping claimed to have access to 12 million properties in 190 countries.
A source told Skift several weeks ago that Tripping had put itself up for sale through bankers, but Tripping declined to comment on what it termed rumors and speculation at the time.
Now sources are saying that a transaction is rumored, but at a bargain basement price in what looks like an asset sale, including the URL. Any number of competitors might show some interest, although one source said the backend technology would not be an attractive asset.
Said the source: “Jen and Jeff thought the board would continue to throw good money after bad, even as the company was running out of money.”
[Update Continued: Former Tripping board member Dave Maney said when he joined the board for 10 months starting in late 2017, it was clear that the product needed improvements. But he said the founders “fatal error” was when they accepted the highest valuation possible — $200 million — and they allegedly brought in an ill-suited group of investors, including Princeville Global and Adams Street Partners.
Maney alternately termed his 10 months on the board as a “wild ride” and “a shit show.” He alleged that Krna of Princeville Global came onto the board “and began to throw his weight around and act as if he were chairman of the board.”
He added that the “board was driven by one guy who believed Tripping ought to be buying massive market share with massive marketing expenditure.” The company tried to raise funding at a higher valuation this year, but couldn’t as Tripping’s performance didn’t match the higher valuation at it was burning cash. “The engine was flaming off cash,” Maney said.
Maney argued that lots of factors are at play when a company fails, but in Tripping’s case it largely rested on “entrepreneurial founder inexperience and investor arrogance.”
Another source close to the company came to the defense of the founders. “It’s absurd to suggest the management team is at fault. Princeville and other investors seem determined to throttle a very promising company, to the detriment of other shareholders. It’s so frustrating, you can’t imagine. Jen and Jeff had built something really special with Tripping, and were in a great position to take the company to the next level.”]