Langley Steinert, a co-founder of
TripAdvisor, is taking a different
route with CarGurus, which uses
proprietary algorithms to better
match car buyers with car dealers.
Following last year’s IPO, the Boston
area-based company is valued at
more than $3.5 billion.
By Bill Saporito
You made a successful exit
at TripAdvisor. What did you
envision when you started
CarGurus?
When I sold TripAdvisor, I wanted
to start another company, but
I wanted to start with a few
investors I knew. So there were
no VCs; there was no institutional money. It was essentially
me, my partner from TripAdvisor,
and a couple of friends and
family. We raised $4.5 million—
from a handful of people, really.
The idea was to build a big,
profitable business and just
dividend the money to everyone,
and that’ll be great. In many
ways, thankfully, this became
bigger than I’d envisioned.
What went “wrong”?
I was being a little naive to
think I could just dividend
the money to the shareholders, because there’s this
thing called employees—
they don’t like working for
monarchs. To attract great
employees, you have to give
them equity. And once you
start giving people equity,
you have to provide a
liquidity path for them.
What’s the idea behind CarGurus?
At CarGurus, the original idea was to create the TripAdvisor
of cars, a site where people could read reviews from other
users about their experience with car XYZ. So we allowed
user reviews, and we actually had a wiki model where
people could edit articles about certain cars. And at the
end of it all, it didn’t work. I mean, we had some traffic, not
a lot of traffic. We weren’t generating much revenue, and
we certainly weren’t, at least by my measurements, gonna
be able to build anything of any substance. So I think we
were about a year and a half into it, and I huddled with the
six developers we had at that point and said, “Guys, this
isn’t working. We’ve gotta try something else.”
How were you able to
chuck the business plan
yet stay solvent?
At both TripAdvisor and
CarGurus, we kept our
burn rate low, so we had
the luxury to change
course and the cash to
survive it. I always tell
people, “Keep your burn
rate low.” Be flexible
with your business plan,
because there’s a very high
probability your original
plan is not gonna work. We
looked at Kayak and said,
“Well, they’re doing flight
search. And they’re doing
this thing where it helps
people find the best deals
for flights. Why don’t we
try that for cars?” That’s
how it all took off.
At what point did you
decide on an IPO?
I did very well financially
when we sold TripAdvisor,
so if it had been solely
my decision, CarGurus
probably wouldn’t have
gone public. I went to
the board and said, “I’m
willing to do this for the
sake of the employees,
but there are a couple
of conditions.” We did
put a dual class voting
structure in place. So, for
the foreseeable future,
I have and will maintain
the majority voting protocol so we can think
long term. And I coached
everyone in the company
to pretty much ignore
the stock price. I don’t
care about the stock
price. What I care about
is, what does the company look like in 2020?
