More Bootstrapping: VirtualTourist.com Co-Founder J.R. Johnson (Part 6)

SM: When you hired people, did they have equity in the company?

JJ: Yes, that was one way to entice people to join us.

SM: What was the revenue level at which you sold the company, and how did the sale take place? Did you start shopping the company or did buyers come to you?

JJ: We were constantly approached by a lot of different people. We just never wanted to sell the business. VirtualTourist was the number two trip advisor when it came to user-generated content. It was big. We were doing 5-6 million unique users a month. We were well known within the space. We never did any PR, so we were not well known outside of the space, but within the space everybody knew us.

When we finally decided we wanted to sell it, I did interview some investment bankers. I ended up hiring a group out of San Francisco called Union Square Advisors, which is a new startup investment bank. They knew the space really well. I really liked them, we just hit it off. From there we talked to everyone on the Street and shopped the company. We gave 15 different presentations, talked to everybody, and the best fit the whole way around was with Expedia, so that is who we chose.

SM: Could you give me a bit of comparison with TripAdvisor? What year did they come about, and how did you feel about TripAdvisor versus your business?

JJ: They started after us, actually, but I believe they launched in late 2000. They had some VC money and they focused on hotels. It was a smart focus because hotels are obviously the largest ticket item people spend money on when they are traveling. It is obviously easier to monetize that traffic. They have now become a hotel buying guide.

SM: It sounds like that is where you ended up. They got your business.

JJ: We always saw them as a competitor, so it was a little odd, but that is the nice thing about going through that process and talking to everybody out there. I wanted to make sure I was putting the company in the hands of someone who was going to take care of it and grow it. They knew how to grow this type of business, and they are already doing it. It really makes me happy and feel good knowing that the VirtualTourist team is still working for VirtualTourist, which includes my mom and my brother. They are now working it under Expedia. Dena is still the GM at OneTime. They are not laying anyone off; they are hiring even more people. It has been a really good acquisition to date.

SM: What about you, are you still involved?

JJ: I am not. That was part of the deal. When we started the company we all thought we were going to run it for 20 or 30 years. It was cash flow positive and we had a lot of fun. It was at the end of 2007, when I really wanted to focus on my next venture and I could not get my head out of VirtualTourist, that we decided it would be best to just sell VirtualTourist. That would enable me to focus on my next venture.

SM: So you intentionally negotiated yourself out of the deal?

JJ: We had the team in place to run the day-to-day, so the business was in good enough shape that I felt comfortable doing that.

SM: What happens next?

JJ: I have already invested a few million dollars into my next venture, where I have 18 people on the team. It is called Lunch.com. We are currently building it, and at some point I may take in some VC funding. We had a nice run last time and were able to avoid it on the first deal that we did. I am not sure if I will deal with professional money guys going forward or not. I might start talking to some guys in the next six months or so. It is nice to have some financial ability to hire a great team and pay them what they deserve. Six weeks out and I am already knee-deep into the next venture without a vacation!

SM: Is your Lunch.com venture still stealth?

JJ: There is a splash page where you can sign up for an invite. Right now it is a private invite. It won’t be ready for a full launch for a couple of months.

SM: This has been a great story, good luck with Lunch.com

This segment is part 6 in the series : More Bootstrapping: VirtualTourist.com Co-Founder J.R. Johnson
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