Booking's FareHarbor Kept the Bootstrapping Myth Going While Discreetly Raising Outside Money

Lawrence Hester, co-founder and CEO of tour-booking software company FareHarbor, which became part of Booking Holdings in 2018, is fond of recalling the company's humble beginnings in Hawaii. After taking over the operations of North Shore Catamaran in the 50th U.S. state, brothers Lawrence and Zachary Hester launched FareHarbor there in February 2013. Talking about the decision to go with a bootstrapping strategy, which generally means raising money from friends and family only, Lawrence Hester wrote a LinkedIn post two-and-a-half years later describing how he had slept on his brother's girlfriend's couch to be frugal in the company's early days. "FareHarbor is like many other bootstrapped companies," Lawrence Hester wrote in that post in August 2015. "We put everything into our business." And, in an appearance at a travel industry conference in November 2017, Hester kept the narrative going. The FareHarbor CEO said he "slept on the floor for a whole year" when the startup set up headquarters in Denver, and Hester even described how the startup's salespeople were forced to use makeshift materials to create semi-private areas in the office to make phone calls during that period. So it's all true that FareHarbor started out as a family-run business and managed to scale its operations until early 2016 by apparently taking money mostly from friends and family. But the problem is that by early 2017, FareHarbor had raised around $11 million in funding — including around $7.5 million from investors — yet kept the myth going, and misled people to give them the impression that the company had taken no outside money because it was growing organically and really didn't have to go fundraising. However, largely because of an amended lawsuit filed in March against FareHarbor by a limited liability company with ties to tour operator and FareHarbor client Roberts Hawaii, we now know to the contrary that: By the end of September 2016, FareHarbor had taken i