Steve Hafner on 20 years at Kayak: "The innovation isn't over yet"

It's been 20 years since Steve Hafner and Paul English co-founded Kayak, and two decades later it's hard to say which is more remarkable: How much travel has changed since 2004 - or that Hafner is still championing innovation as the company's one and only CEO.

In a far-ranging conversation from the cabin of his boat in Miami Beach, Hafner spoke of how an itinerant childhood shaped his worldview; his excitement for the potential of artificial intelligence and bringing the same insights and innovation to business travel as Kayak did for consumers; the keys to preserving a startup culture even at a company that would be old enough to vote; and why not even a travel executive as talented as his friend and former partner has succeeded in creating a "Kayak killer."

If there's one takeaway from the 18-minute conversation, it's this: Hafner isn't done. Asked what he hopes the next 20 years brings, for himself and for Kayak, he said, "I'm hopeful that they bring as much innovation as the first 20, if not more so."

Watch the full conversation below or scroll down to read an edited version of the exchange with time stamps or listen to the audio-only version in PhocusWire's In Phocus podcast.

We’re speaking as Kayak marks 20 years of business. Thinking about how much travel has changed over those two decades makes it seem even longer — and Kayak is responsible for a lot of that change. As you like to say, innovation is in Kayak’s DNA. So tell us, with all that’s different about travel today, what stands out the most to you, both for good and for bad?

(0:58) I can feel those 20 years. Twenty years is a long time, but yeah, Kayak was founded to be innovative, to be the upstart in the category. And it's been a really fun ride, and the innovation isn't over yet.

We've seen the first migration from offline bookings to online websites and then from online websites to mobile apps ... and now we've got this new technology called AI. I think we're one of the first sites to jump on that, and I think it's going to be an incredibly transformative technology for the category.

I think there’s even more cool stuff coming in terms of speaking to intelligent agents to do everything you want to do and, hopefully, being able to get [through] the airport with facial recognition, etcetera, and not having to scrounge for paper or boarding passes, even if it’s on your cell phone. There’s a lot more stuff to come.

Twenty years is a long time, but ... it's been a really fun ride, and the innovation isn't over yet.

Steve Hafner - Kayak

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I don’t think it’s a stretch to say you were fated to be in travel. I mean, you were born in Peru and lived in more countries as a child than most Americans see in a lifetime. I’ve heard you talk about how the world would be a better place if more people could live in different countries. Can you elaborate on that?

(2:34) At the time I was growing up, I didn’t appreciate that moving around a lot was actually going to shape my career and my worldview, but it did.

And now I think a lot more folks would benefit from seeing the world because there's a lot of different ways to ... problem solve in the world, and no country and no part of any country’s got a great handle or monopoly on good ideas. So when you move around a lot it makes you a better person, and it makes you a better world citizen. And I think it makes you more empathetic and more open to other ways of doing this.

So ending up in travel, for me, was great because not only did I like to use the product a lot, so I had solutions for some of the friction points I saw, but also it helps me feel good about helping people get around to other places and expand the worldviews.

We were speaking of innovation being in Kayak’s DNA. I know you take pride in Kayak quickly adapting to new technologies. What’s the source for that ethos?

(3:49) I think everyone at Kayak — we've got about 970 people here at the company now — fundamentally, we're ... all very curious people. We're all dissatisfied with the status quo, and we're all eager to take a look at new technologies and new developments and say, ‘How can we configure them to make Kayak services better?’ A lot of people say that's a startup culture. I'm not so sure because we're not a startup anymore. I think it's some companies have that esprit de corps and those kinds of insights and curious people, and others don't. And we've been blessed to have them.

In regards to some of those innovations, in March Kayak unveiled an image recognition tool that can offer price comparisons from a screenshot of a flight itinerary from any site. It’s a cool tool. I’m wondering: How are consumers responding?

(5:02) They're using it. I mean, it's early days, right? But it used to be that to use a travel site, you'd have to go to the travel site, interact with the search form, submit a query and then get the results back. Now with AI you can actually use your phone ... and if you can just take a snapshot of a travel site results [page] or even write down an itinerary on a piece of paper and take a picture of that, send it to Kayak and we'll give you results. And not only that, but you can set up fare alerts right from the response we get.

More and more, what cell phones are enabling and what AI is enabling is people being able to do stuff asynchronously, meaning you don't have to ... go to a travel agency and see a person to make a booking. Then we moved it offline. Then you had to go to a website. Now you can actually use photographs. It’s awesome. I think the next step is using voice. ... With AI, I think that feedback loop is going to make it so much better, so you can actually just talk and get a result set back.

Kayak for Business is another recent innovation. You talked with us about that some at the Phocuswright Conference in November when you shared that Tripadvisor was among your new clients. What’s the latest on Kayak for Business?

(6:46) Look, we've been at the consumer side at Kayak for 20 years. We've been at the business side now for only three years. And the same insights and innovation we brought to the consumer side, we're bringing to the business side, and we're doing that in partnership with two other great companies. One is Blockskye, who is a technology vendor, and the other is PwC ...

And what we've designed there is a product that goes direct to the airlines and to certain OTAs for supply, for fare improvements, doesn't require credit cards or credit card fees, doesn't require expense reports for the users of that and is agnostic in terms of who touches the ticket and does the customer service. ... So it's been a fun ride so far. We're only three years in, so we’ve got a ways to go.

Because you’re so big on innovation, I’m curious: How would you characterize Kayak’s use of generative AI for your internal operations today versus a year ago? And what’s your prediction for the future regarding generative AI in travel?

(8:44) I think it's going to be a game changer in terms of [eliminating] the mundane work that so many of us do. Our marketing team, for example, is using GenAI to write press releases, to write copy, to generate images and videos. Our SEO team is doing the same. When we’re doing content snippets for hotels, we can use AI to write relevant summaries for that. …

I think all that work is going to make the quality of the output from the folks that we have at Kayak much, much better. I don’t think it’s going to replace jobs, at least at Kayak, because we don’t have a big customer service team. If you are on [a] customer service team, you better get good at using AI because you want to be more efficient, so you don’t get replaced.

The [metasearch] category is healthy. One player, Google, attracting the lion’s share of growth. ... But that doesn’t mean Kayak is not healthy. ... We've always wanted to be the best, and we still are the best.

Steve Hafner - Kayak

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Between Google and loyalty programs and social media, it’s been tough for metasearch sites to hold on to their former share of advertising revenue. What do you see as the future for metasearch?

(10:39) Yeah, it’s why I get this question a lot, like metasearch has peaked or something like that. It hasn’t at all. Consumers have this inherent desire to cross shop and travel. Why? Because prices are different, based on where you go, and selections different. So you're not going to trust American Airlines to show you the lowest Delta fare. You know you're not going to trust Booking.com to show you all the non-hotel accommodations throughout there. You want to cross shop, and metasearch sites enable you to do that very easily.

The category is very healthy. One player, Google, attracting the lion’s share of growth, and that’s because they have a really good product. And they’re also higher up the food chain. … But that doesn’t mean Kayak is not healthy. We actually have never intended to be the biggest [metasearch] site. We've always wanted to be the best, and we still are the best. … We like to say you snack on Google for travel prices, and you book via Kayak because you get better results. And I think that's true.

If you were launching a startup today, what would it be for? What is most “ripe for disruption” in travel?

(12:38) Oh, gosh! There’s so many places of friction still in the travel ecosystem. … I still think there’s room for new airlines, for new hotel chains. To use new technology, new means of customer acquisition. I’d start there.

I think the two most revolutionary companies in the last 15 years have been Airbnb and Uber in the travel space. … It just [takes] a perfect alchemy to be successful. You have to have a great idea. You have to have a great team. You have to be very well financed, and you have to be lucky. If you don't have all four of those things, it's going to be difficult.

I still think [at] Kayak we have all four of those things. So I'm going to stick with Kayak versus starting up another company and going after something else. But hats off to those entrepreneurs who are brave enough to go do so.

I mentioned The Phocuswright Conference. That’s when we first heard about the “Kayak killer.” When your Kayak co-founder Paul English joked on stage while talking up his latest venture, Deets, an app that provides recommendations based on reviews from a user’s friends. So I’ve got to ask, what’s your review of the Deets beta? You know, I am going to need a headline for this story. …

(14:27) You know I love Paul English, and he's got a knack for generating headlines. I'm hopeful that his Deets enterprise is a success. I don't think it's any threat of being a Kayak killer. If Google couldn't kill us, Paul, English’s Deets isn't going to either.

Kayak founders Steve Hafner and Paul English at The Phocuswright Conference in November.

We started the conversation talking about your 20 years at Kayak. It seems appropriate to end on that note. I won’t ask if you have any regrets – we all do – but if you could change something, what would it be?

(15:10) Gosh. We had so many opportunities along the way to expand more aggressively than we did. … I wish we had gambled a little bit more. I also wish that Google hadn't outbid us for ITA Software because we were so close to buying them. But we lost that one. It would have been a different world if we've been able to pull that caper off.

No Google Flights, right?

(15:51) Oh, there would have been 'Google Flights: Powered by Kayak'!

Now let’s flip that question around: What are you most proud of over that time?

(16:07) I'm most proud of building a successful company and having a lot of fun along the way and working with talented people. Not everybody gets to experience that success. Again, it comes down to those four factors: a great idea, great team, well financed and then luck. And the last one is actually the hardest one to secure because you’ve got no control over it. So we’ve been very fortunate to build a great company. … A lot of our employees have gotten wealthy in the process, and that’s very fulfilling too.

Finally, what’s next – for you and for Kayak? What are the next 20 years going to bring?

(16:51) I'm hopeful that they bring as much innovation as the first 20, if not more so. I hope the company stays curious and dissatisfied and innovative. I hope our team stays small and talented as well. I hope the [profit and loss statement] is great, and I hope we get lucky. But most importantly, I just want everyone to enjoy the ride, because the first 20 years were just amazing.”