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Interview with Josh Lippiner, Founder of LowFares.com




My interview today is with Josh Lippiner, founder of LowFares.com (www.lowfares.com), a Redondo Beach-based online web site focused on comparison shopping in the travel industry. I spoke with Josh about the company's re-launch, and some of his experiences as an entrepreneur.

BK: What's LowFares, and why did you decide to relaunch the company?

JL: Lowfares is a very simple concept - since the average travel shopper searches three sites before making a purchase, why not simplify the process for them and let them check them all at one time from one place? That's the new Lowfares - the user enters their search once, we recommend different travel sites based on their search, they pick three and then we display the results in side-by-side windows for easy comparison. It saves a ton of time and money.

I relaunched Lowfares as a MARKETING COMPANY after deciding that the job of Lowfares should be to attract and qualify travel shoppers and help them make an educated decision on purchasing travel online, not sell the ticket ourselves. This is an extremely competitive space and since I didn't want to compete with the 800 Lb gorillas, I felt there was a bigger opportunity in PROMOTING them instead of competing. This has proven to be considerably more lucrative for Lowfares and a more pleasant experience for our visitors.

BK: What's the story behind LowFares -- I see you've gone through many iterations looking for the right angle on the site?

JL: Lowfares used to be just another online travel site, like Priceline or Orbitz, however I relied on a third-party to actually close the deal. We spent a ton of time and money driving qualified shoppers to Lowfares and then to the backend travel site to book, only to watch a fraction of them convert and thus earn us little revenue. I decided to conduct some new market research and usability tests with consumers and found the following "pain points" when shopping online for travel:

1. Difficulty finding the best price
2. The number of sites people have to search to find the best price
3. The amount of time it takes them to search each site for the best price

I also learned that the average consumer shops three sites, on average, before making a travel purchase. Using this information, we developed a model that addressed the top three pain points, which allowed us to convert from an online travel agency to an online marketing company. This industry (both the Internet and travel) are constantly changing and instead of focusing on "new and cool technology" we decided to sit down with consumers and ask them what we could do to help.

BK: What's your own background, and how did you end up starting LowFares.com?

JL: In 1998 I co-founded an online satisfaction monitoring company in NYC called cPulse. We measured customer satisfaction for 18% of the Fortune 1000, which provided unique insight into online consumer's wants and needs. So many sites are built without talking to the consumer and once they launch, the only feedback garnered is from email. Amazing when you consider the hundreds of thousands spent on development. Anyway, in 2001 I sold my share in the company to Gartner Inc, the data company, and started looking around. On a trip to the Bahamas I met the then owner of Lowfares.com. After three days of r*m and cokes, we reached an agreement and I purchased the company from him. I spent a few months conducting consumer research and launched Lowfares in 2001 as an online travel agency.

BK: Tell me a bit about how you bootstrapped the company -- how did that work, and did you ever look for external funding?

JL: The issue of funding has been *interesting*. Since taking over the company in 2001, Lowfares has been profitable. At first, profit amounted to less than $3,000, which hardly allowed for growth of any kind. For three years 25% of every dollar earned went into a savings fund for future growth. I never really sought outside funding because, until this reliance, I was never really confident about the business model. I kept the company going by learning to code, create advertisements, optimize search engine placements and most importantly, track every single metric possible. I remain the only true full-time employee of Lowfares.com. At one point I did obtain a $75,000 loan from BOA when we started on this new model but once it took off I paid off that loan. Bootstrapping has forced me to become a specialist in far more areas then I probably should!

BK: As an entrepreneur, what has been the most important lesson you've learned over the past few years developing your business?

JL: I think I am learning now - how to shift from a single-employee business that was bootstrapped and uncertain to a business that could benefit from business development, sales, marketing and tech employees. There is so much opportunity now that we have hit on our niche, including expansion into Europe and the emerging Asian markets, that I need to learn how to finally "let go" and seek the outside help that I have spent four years doing without, even if that means cutting into current profit or yes, possibly seeking outside funding. Once I learn how to do that, I really believe my business will grow exponentially.

BK: Did you find it difficult to work out a profitable partnership with the travel sites, as it seems they are increasingly cutting out the middle men in travel transactions?

JL: I wouldn't say that it was any more difficult to form partnerships with the travel sites then any other B2B sale. It took a lot of cold calling and research to find either the point person at the site or the agency that repped the site that was authorized to make the deal. Once I found that individual, I needed to convince them of the resources being allocated to making this work for them and, more importantly, the flexibility we would have to help them reach a positive ROI. I think that was the key to a mutually profitable partnership - being willing to strike deals and implement last-minute sponsor requests just to make them happy and keep them part of the program as we grow.

BK: With the many travel comparison sites out there (and many others moving into the area), how do you intend to differentiate LowFares.com from other travel comparison engines?

JL: By focusing on one thing and one thing only. I am a big fan of focus and the KISS rule (keep it simple stupid). A lot of sites go crazy offering features and information that 99% of users don't have a use for and will never try. They do it because they think if they don't they are missing out on a potential audience. With Lowfares we are focused on one thing and one thing only - making it super simple to directly compare prices from relevant travel merchants. We have had requests for everything from "our own fares" to "custom vacation packages" and have turned them down. We want the user to treat Lowfares as the "first stop on their trip" and to do that we have to make sure that they never confuse us with an Expedia, Orbitz or any of the hundreds acting as online travel agencies.

BK: Finally, what's next for LowFares.com?

JL: Expansion in every sense of the word. We just launched our affiliate program, which is one of the only customized CPC-travel affiliate programs around. We are targeting any website, be it travel, hobby, news, destination, etc, whose site visitors could benefit from having the ability to comparison shop for travel. I performed a study to find out how many people visiting a newspaper website would be interested in being able to comparison shop for travel from their travel section and found over 60% of visitors would welcome that feature. There are a ton of sites like that out there and our affiliate program lets them share in the revenue earned.

We are also looking at International markets, such as Asia and India, for our services. Three of the top 20 destinations for the Thanksgiving holiday were in India, which presents an opportunity for niche and target marketing. Also, after speaking with our users we learned that the majority don't know which airlines fly to certain countries or which sites specialize in booking hotels overseas. Helping the global traveler find the best resource for their travel plans represents an interesting next step for Lowfares.

BK: Thanks!


 

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