Cool Startups to Watch in 2011: Hipmunk De-Agonizes Flight Search

Last Updated Jan 16, 2011 7:17 PM EST

Does the world really need another travel website? After all, don't the big guys like Expedia and Travelocity have the market all wrapped up? That's what I thought, until Reddit co-founder Alexis Ohanian told me that I should take a good look at the new company he's working on with his former Reddit partner, Steve Huffman. Hipmunk, which is branded with a goofy little chipmunk wearing aviator goggles, claims to take the agony out of the flight search process by displaying your options in an extremely user-friendly way (see screen shot, below). And you know what? It delivers on the promise. Search for a flight on Hipmunk and the site filters out the crappy flights and sorts the remainder according to "agony," which is determined by cost, duration, number of stops, etc. Better yet, all the information is presented on one page in a way that won't hurt your brain. So how did Huffman, 27, and his co-founder, Adam Goldstein, 22, manage to create a successful startup in an industry that already seems overcrowded? I recently spoke to Goldstein to find out. Here's how he and Huffman got started.
  • Identify the pain. "When I was at MIT, I was active on the debate team and we traveled all over the country to compete," says Goldstein. "I was always the guy who ended up booking travel. It always took me a long time to find the right trip. I decided to find a better way to understand the tradeoffs when searching for flights and a better way to display it." Bottom line: if a product or services irritates you, chances are it irritates others as well. Instead of living with the pain, find the cure.
  • Find the right partner. Make no mistake, Goldstein and Huffman are two are geeky wiz kids who have already been around the start up block. Goldstein, who wrote AppleScript: The Missing Manual when he was just 16 and started BookTour.com with Wired's Chris Anderson, knew Huffman and called him up to tell him that he was interested in working on a startup that simplified flight searches. Huffman, who sold Reddit to Condé Nast in 2006, was intrigued and the two got cracking. "Steve and I are both engineers," says Goldstein. "One of us would try something, and the other would say 'this sucks for these reasons.' We'd go back and forth until we found something that was useful for both of us." The result: a better product than either of them could have created on their own.
  • Get the right funding. Given their track records, Huffman and Goldstein probably could have landed funding from any number of eager venture capitalist. Instead, they signed on with an old friend - Paul Graham, who co-founded YCombinator, the elite mentoring and investing organization for young startups. Both Goldstein and Huffman had known Graham from their previous ventures; Reddit was also a YCombinator graduate. Hipmunk emerged from YCombinator's summer session last year and landed $1 million in angel funding from "super angel" Ron Conway , FriendFeed creator Paul Buchheit, WordPress founder Matt Mullenweg, and Ashton Kutcher (that's right, Kutcher regularly invests in startups). But it was their relationship with Graham that was most helpful when the two were trying to establish initial relationships with travel sites. "We'd call them up and they'd ask 'how are you different from the ten other startups that call us every day saying they want to be the next Kayak?' And we'd say 'one of our investors is Paul Graham.'" So it's what you know and who you know.
  • Start small; get bigger. Initially, Hipmunk partnered with travel site Orbitz; users searched for flights on Hipmunk and were then directed to Orbitz to purchase them. Now that Hipmunk has a track record, it has landed a direct relationship with ITA Software, which powers sites like Orbitz, Kayak, Hotwire, Bing. ITA was also recently acquired by Google. The ITA relationship will accelerate Hipmunk's ability to offer faster and more comprehensive flight searches.
Hipmunk, based in San Francisco, is up to seven employees and has "a few hundred thousand" users a month, says Goldstein. "We're not spending any money marketing - it's all press and word of mouth." So far, so good. What to watch for: Goldstein says he wants Hipmunk to be "the best travel site there is," so the company is almost certain to add hotel and rental car searches in the near future. And while the co-founders say they aren't looking for more money right, we wouldn't be a bit surprised to see another capital infusion within the next several months. We'll also be keeping on eye on Google's acquisition of ITA, which may be challenged by the Justice Department, and its potential impact on Hipmunk.

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