Kayak.com Founding Story

This is my story of how Kayak.com was founded in 2004.

I had left Intuit and was trying to figure out what to do next. One of my former advisors, Larry Bohn, invited me to General Catalyst to look at a company they were evaluating. This was at the end of 2003.

When I was leaving GC, Joel Cutler saw me, and asked me if I would meet Steve Hafner.

Steve was one of the founders of Orbitz, where I think he ran marketing, business development and commercial operations.

Steve and I then went down to Legal Seafoods in Harvard Square, where we had a few gin and tonics for lunch.

Steve pitched me the idea. It was very simple. A search engine for travel. Steve told me that 70% of people on Orbitz left the Orbitz website when they found what they wanted, and booked directly with the airline or hotel. So he wanted to make a new website which worked exactly like this.

At one point, we coined an internal mission statement "search with us, book with them".

Steve offered me the CTO role (perhaps with 4% stake?), but I said I wanted to start my own company again, as I had successfully sold my last company and loved the experience. He asked what it would take to do this with him, and I said I would do it if we were 50/50 partners. He put his hand across the table and we shook on it. That was under an hour after meeting each other. This impulsivity would come to help us a lot over the years. We were also both very quick reads on people, which helped us with recruiting.

We went back upstairs to GC. Joel asked how it went. Steve said I now have a cofounder, and we're each putting in $1m to seed it tomorrow (somehow he neglected to mention this to me at our lunch), and now that there are two founders, the valuation should be higher. We had a good laugh at that.

Research

I knew that Expedia was the market leader, so I went home that night and spent half an hour on their website. I thought to myself, this won't be hard, their website is seizure inducing. We can build something simpler.

Recruiting

Steve recruited Keith Melnick to join as VP of Business Development. I recruited Bill O'Donnell (chief architect), Paul Schwenk (VP Engineering), Jim Giza (VP Technology) and Jeff Rago (UI engineer extraordinaire).

When I pitched billo that I wanted him to come work with us, he had a few questions:

  • What is the company? A search engine for travel. Billo's initial reply was "They already made Orbitz and Travelocity, what's the point?"
  • How much will you pay me? $100k. (He was probably making several times that at Intuit.) Plus notable equity as chief architect.
  • Where will the company be located? I knew I needed billo on the team, and that my $100k salary offer was not compelling, so I said "anywhere you want it to be".

Once we got the tech guys to sign up, we incorporated the company. Initially as "Travel Search Company, Inc" as we didn't know what we wanted to call it. We knew we wanted a brandable name, and we wanted to take the proper time to come up with the right name. (More on this below.)

Code Name

When we wrote down Travel Search Company, Inc on the incorporation document, I said we needed a code name, since I thought we should start in stealth mode. I choose "Runway Nine". I don't know where that came from. That phrase -- and R9 -- still lives today in the Kayak codebase.

Offices

Steve rented a cool office in Norwalk CT for the commercial team. For the early years, Steve would come to Boston once a week or I would go to Norwalk (or NYC as I preferred).

I let billo pick the first office for the tech team - he chose the old DEC mill in Maynard. (I was like, "shit".) We lasted there a year until we ran out of space. We then moved a bit east to Concord, and Kayak still has a Concord office to this day.

Doing a startup based in Concord MA was a challenge, especially when we tried to recruit new college grads who did not have cars. But somehow we made it work.

At one point, we bought a tricked out Chrysler 300M and we hired a driver to shuttle people between the two offices. The CT license plate was "4SHIZLE".

Company Name

We hired a brand agency in NYC, Wolf Ollins, to help us come up with a name. The woman who ran the process was Carol Costello. She is the best brand strategist that I know, and we've since gotten to work together on other projects.

We ended up with five name finalists - lola, kayak (2nd choice), rice (simple and ubiquitous), cake (who doesn't love cake), and hive (probably a dumb name). We tried to buy the domain lola.com but it was too expensive, so we settled with our second choice, Kayak.com. It cost us $30k in 2004.

When Steve and I went back to the board and said we're going to name the company Kayak, David Fialkow at GC said, and I quote, "you'll name this company kayak over my dead body - that is a terrible name". Being the good entrepreneurs that we were, and knowing the role of VC, we said "thanks for the input". The rest is history.

Google

At one point, when we were a few years old and growing rapidly, I got a tech pioneer award at the World Economic Forum in Davos. One night at the Accel after party, maybe 2am, Harry Nelis said to me "Do you want to meet the Google founders?" and I said "Not really" (I didn't want them to focus on us), and he said "This is Larry", pointing to a guy next to him.

Larry saw my badge (so geeky, parties with badges) and said "cool website". I said something like, "you don't use Kayak, you own your own plane" and rather than eliciting a laugh out of him, he quietly said "I use Kayak for hotels". Larry then tried to get me to tell him about our ad engine. I demurred, and tried to change the subject.

The most memorable thing about the Larry conversion was that three times he asked me to send him an email, and he told me his email was larry@google.com. That struck me. Given that we had Paul Schwenk as VP of Engineering at Kayak, I initially didn't want to claim paul@kayak.com, since there were two of us. But Larry caused me to change my mind, so I changed my email from pme@kayak.com to paul@kayak.com the next day.

At another point that night, I was introduced to Marissa Mayer. She gave me her sales pitch for what Kayak should build for our hotel product. I didn't like her ideas, and thought they were too geeky, and would only work for 1% of travelers. At one point she said "fine, we'll build it ourselves" and then she turned on her heels and walked away from me.

ITA Software

ITA Software was another Boston / Cambridge startup working on travel. Their founder, Jeremy Wertheimer, actually was an intern for my team at Interleaf when Jeremy was completing his PhD at MIT. The guys at ITA built an incredibly fast search engine for flights, and we ended up licensing it from them to build Kayak.

A few times over the years, when Kayak was getting more and more press, I heard grumblings from engineers at ITA who felt that ITA had built the hard core technology, and Kayak was just a thin layer on top of their engine. When I heard this, it made me smile, because all I ever cared about was UI.

Years later when ITA sold to Google for $700m, I announced to Steve that my new minimum price for Kayak was $1.4B. We'd show those MIT engineers what mattered! :)

See other founder stories.

paulenglish.com 20-Oct-2020