It isn't very unusual for a company like Hipmunk to get acquired and then to fade into oblivion in the clutches of a much larger corporation. That's the way it goes in the heartless mergers-and-acquisitions game.
SAP Concur announced it’s shutting down travel price-comparison service Hipmunk — but what SAP is leaving out in its telling is that Hipmunk’s co-founders, Adam Goldstein and Steve Huffman, made an offer to buy back the company.
SAP Concur refused the offer. It intends to shutter both the Hipmunk consumer brand and the Concur Hipmunk business travel incarnation on January 23.
A source who attended an employee meeting at Concur Hipmunk’s offices Tuesday in San Francisco to announce the shutdown confirmed that the issue was raised at the meeting, and that company officials said they were not entertaining any offers for Hipmunk’s assets.
“We carefully considered all potential avenues for Hipmunk and Concur Hipmunk and determined that it was in the best interests of our travelers, customers, our people, and SAP Concur to terminate the service and retain all of the intellectual property,” SAP Concur spokesperson Alex Vaught separately told Skift Tuesday afternoon.
Both the source at the meeting and Vaught confirmed that SAP Concur said there would be no layoffs because of the demise of the Hipmunk brand. Vaught said employees who currently work at Hipmunk would be transferring to similar positions within SAP. Hipmunk employed about 50 workers at the time of the acquisition who then transitioned to SAP Concur.
According to the source at the employee meeting, however, some sales positions focused on Hipmunk were eliminated several months ago.
“The team is bummed, and I hope Concur uses the learnings they gleaned from Hipmunk,” the source added.
It’s unclear how much Hipmunk co-founders Goldstein, who left the company around a year ago, and Huffman, co-founder and CEO of Reddit, offered to retake control of their metasearch startup.
[Update: On Wednesday, after the publication of this article, a former Hipmunk employee told Skift that the potential deal to buy Hipmunk from SAP Concur took shape Monday when current and former employees learned that the retirement of the brand would be announced Tuesday.
The group of current and former employees approached Goldstein and Huffman Monday morning about their interest in spearheading the transaction, and they presented a term sheet to SAP Concur Monday afternoon.
SAP Concur rejected the buyback offer, however, and announced publicly Tuesday that the Hipmunk consumer brand, and the business travel version of it would be retired January 23.
Since the publication of the Skift article, which broke the news about the buyback offer, and others in the press, additional Hipmunk veterans have approached their former colleagues about joining the effort to keep the brand going, according to the former employee. There also has been an outpouring of love for the brand on social media.
For example, read the following Twitter thread.
We’re saying goodbye. On Jan. 23, 2020, the Hipmunk product will be retired; the app and website will no longer be available at that time. Thank you to everyone who has been a part of our journey. For account help or more info, please visit: https://t.co/81AtCsH3ni
— The Hipmunk (@thehipmunk) January 14, 2020
Two former employees also challenged SAP Concur’s assertions that no current employees would be laid off because of the retirement of the Hipmunk brand. They said that employees have been given no direction about where they would be transferred to within SAP and have been instructed to look around the company for job openings to see where they might fit in.
“It’s a shadow layoff,” said one of the former employees.
The other former employee said he or she believes that SAP Concur’s decision to shutter Hipmunk was made quickly, and there was no consideration given to the brand’s loyalists, many of whom have expressed sadness and anger about Hipmunk’s pending demise.
Neither of the former employees offered any information about what would become of the brand if they had indeed been successful in buying it back.]
If SAP Concur doesn’t have another transaction in the works for Hipmunk — and the company likely would have announced it already if it did — then it’s only somewhat curious that officials refused to take some purchase money from the Hipmunk co-founders rather than getting nothing.
On the other hand, the amount of money the duo offered is likely almost irrelevant to SAP, which has a $170 billion market cap. And if Goldstein and Huffman would have been able to buy back the company and make something of it when SAP Concur couldn’t, then there would be some reputational damage for the German goliath.
Other than the move to bring in a talented bunch of new employees in an acquihire, and perhaps to infuse the company with a dose of innovation culture, SAP Concur’s 2016 acquisition of Hipmunk, which was primarily a consumer offering, was somewhat of a head-scratcher right from the beginning for business travel player Concur.
In the interim, Concur integrated certain Hipmunk flight and hotel search, and other technology features, such as the ability to determine how far a particular hotel might be from a business meeting, into solutions for small- to medium-size businesses. Concur tied Hipmunk into Concur Expense, its TripIt Pro itinerary management solution, and Concur TripLink, which enabled direct bookings with airlines, hotels, and car rental companies.
For smaller companies that aren’t a fit for Concur’s managed travel online booking tool, Concur Travel, the company will offer them Concur TripLink with TripIt Pro. With much overlap after the integration, it seemingly made little sense to support the metasearch business as a distinct entity.
“SAP Concur will continue our commitment to deliver integrated business travel and expense solutions for customers of all sizes — and at all stages of their travel management journey,” SAP Concur said. “We will continue to use insights gained by our employee, customers, and suppliers who have been part of the Concur Hipmunk strategy.”
Hipmunk Had an Impact
Hipmunk burst on the scene in 2010, talking smack about how it was better and could be bigger than Kayak. Hipmunk became a Silicon Valley darling — Ashton Kutcher took part in the seed round — and eventually attracted some $55 million in venture capital funding.
But Hipmunk ran into a buzzsaw along the way in the form of Google. When Google began to tilt search toward paid links and its own products to the detriment of free search results, the marketing hurdles and expenses for Hipmunk would prove to be insurmountable as it tried to gain advantage over larger online travel competitors.
Hipmunk investors are believed to have walked away with next to nothing in proceeds when Hipmunk got bought by SAP Concur in 2016.
Still, Hipmunk made its mark. Its initial innovation was a search experience that enabled consumers to look for a curated assortment of the most reasonable flights in terms of both convenience and price instead of merely spilling out endless search results. The company called the filter its Agony index.
So Hipmunk may be fading away, but several other metasearch and other online travel companies copied its playbook. For example, if you search for a plane ticket today using Google Flights, Google will first show the “best departing flights based on the trade-off between flight duration, number of stops, and other factors.
That’s a bow of sorts to Hipmuk’s Agony index.
In addition, the way Hipmunk tied hotel search and Google Calendar into calculations about the proximity of a hotel to a business meeting was likewise innovative.
UPDATE: This article has been updated with information about how the deal to buy back Hipmunk came together and subsequent developments since the publication of this article.
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Photo credit: Hipmunk co-founders Adam Goldstein (left) and Steve Huffman tired to buy back the company from Concur. Hipmunk