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Hipmunk bought by Concur after betting search could take the agony out of travel
Hipmunk bet a friendlier, multi-factor travel search could beat Kayak-era portals; after a 2016 down-round, SAP-owned Concur acquired it in September 2016.
Hipmunk
What the business is
Hipmunk is a consumer travel-search portal comparing flights and hotels, which was first to add factors beyond price — number of stops, hotel location and similar details — to how results were searched and sorted.
Starting capital：Around $55M raised since its 2010 founding, including a $5.75M round in April 2016 after an attempted raise at a down round.
How it started
Hipmunk was founded in 2010 by Adam Goldstein and Steve Huffman, co-founder of Reddit (which Huffman had returned to as CEO by 2016), and it was a Y Combinator S10 startup per the acquisition coverage. Goldstein later described the founding vision as taking the agony out of travel and travel planning, going after the travel-search market with a Kayak-style portal and a friendlier interface.
What happened
Hipmunk carved out a place as a travel search portal, but scale stayed elusive. It had raised around $55 million since 2010, yet its last valuation of about $96 million dated to 2014, and TechCrunch reported that by April 2016 it was trying to raise money in a down round before taking a small $5.75 million round that month. The wider market was consolidating: Kayak was acquired by Priceline in 2012 for $1.8 billion, and Concur itself had been bought by SAP in 2014 for $8.3 billion, subsequently acquiring startups such as TripIt to augment its travel and expense platform.
How it ended up
On 2016-09-13 Concur announced it was acquiring Hipmunk to add better search to its travel and expense management platform. Terms were undisclosed and the deal was expected to close in 2016. Concur's president said Hipmunk would keep delighting consumers while informing the innovation agenda for corporate clients, and Goldstein said the combination could serve frequent travelers in both leisure and business travel.
Background
Hipmunk was founded in 2010 by Adam Goldstein and Steve Huffman, the Reddit co-founder who by 2016 had returned to Reddit as CEO, and it went through Y Combinator's S10 batch per the coverage. Its stated vision, in Goldstein's words at the 2016 acquisition, was to take the agony out of travel and travel planning, and it carved out a place as a Kayak-style travel search portal with a catchy interface.
Its product edge was search and sort: Hipmunk was first to broaden the factors used to rank results, weighing details like the number of stops and hotel location alongside price. But the business stayed small relative to the giants consolidating around it — Kayak was bought by Priceline in 2012 for $1.8 billion, and Concur had itself been acquired by SAP in 2014 for $8.3 billion. Hipmunk had raised around $55 million since 2010, yet its last valuation of about $96 million dated to 2014, and in April 2016 TechCrunch reported it tried a down-round raise, taking a small $5.75 million round.
On 2016-09-13 Concur announced it was buying Hipmunk to bring search into its corporate travel and expense platform, with the deal expected to close in 2016 on undisclosed terms. Concur's president said Hipmunk would continue to delight consumers while informing the innovation agenda for corporate clients, and Goldstein framed the combination as serving frequent travelers in both leisure and business travel.
What has to be true
- Hipmunk's bet was product-led: rank travel results by what makes trips painful, and travelers would choose the clearer tradeoffs.
- Better UX could not escape platform economics — search portals consolidated into Priceline's Kayak and SAP's Concur while Hipmunk stayed a consumer brand raising small rounds.
- The April 2016 down-round attempt and the small $5.75M round that followed showed the growth problem before Concur's offer arrived.
- For Concur, the purchase was search talent and UX for its weak native search, at a price that reflected Hipmunk's 2014-era valuation.
What can be applied
A better consumer interface wins users, not markets: when travel platforms consolidate, a search brand's remaining value is the search function inside someone else's bigger travel product.
Aftermath
As of 2016-09-13, the date this entry's sources cover, Hipmunk was being absorbed by Concur: the acquisition was announced that day on undisclosed terms with closing expected in 2016, and Concur planned to integrate Hipmunk into its travel and expense platform. The sources record no later milestones for Hipmunk as an independent company.
Sources
- Concur buys Hipmunk to add search to its travel and expense management platform
- Hipmunk (YC S10) Acquired by Concur — Hacker News discussion
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