Hopper is very good at predicting the price of airfares. Millions of people use its mobile application for advice on the best time to fly and exactly when to buy their tickets.
What Hopper wasn’t so good at, however, was predicting the market for its services. The Boston startup spent seven years and raised $22 million building a complex tool to suggest vacation ideas based on customers’ wishes, but shelved the idea in 2014 in favor of a simpler approach after testing showed little user interest.
That shift helped Hopper find its way, and its mobile airfare shopping product now boasts 3 million monthly unique users, who collectively buy $500 million worth of plane tickets a year. The company gets a cut of the sales.
Yet Hopper executives never forgot their original idea. They revisited and adapted some of the principles, and recently rolled out tools to recommend itineraries that might cost travelers less money, or destinations that unexpectedly match their interests.
For example, Hopper will suggest cheap destinations based on a user’s geographic interests, sending notifications of emerging deals to their phones.
“Our users told us, ‘Hey, you know this thing about being flexible and inspiring me, we really want it. You guys were right,’ ” founder Frederic Lalonde said.
Last week, Hopper also announced it has added a hotel-booking service, beginning in New York City.
Lalonde and his colleagues are taking on a dilemma that confronts many businesses: when to abandon an idea, and when to keep picking at it.
Phillip H. Kim, an associate professor at Babson College who focuses on entrepreneurship, said experience usually helps founders overcome any emotional attachment they have to their big ideas.
“It’s their baby. They came up with the original idea, and now they’re faced with the question of whether they need to move on,” he said. “When you have experience making those kinds of decisions, understanding what the marketplace is telling you, then you’ll have the confidence you need.”
Lalonde, it turns out, did have some experience. He had founded another travel tech company that was acquired by Expedia Inc., where he then worked as a vice president for several years. He founded Hopper a decade ago with the idea of a computer model that would compile potential destinations, lodging options, and activities for customers who typed in a few simple keywords.
It took a long time to build, with initially disappointing results. But during the exercise, Hopper learned its computer technology could predict the best time for airfares for particular destinations, and that idea had some promise. The turning point was a New York Times story in April 2014 that highlighted reports Hopper had published on timing airfare bookings. Soon after the piece was published, the Hopper website received more than one million visits.
Lalonde hadn’t realized the fare prediction product could make money. He decided almost immediately to come up with a new plan for Hopper. That meant telling investors he was changing course, breaking the news to employees who had been working so long on it, and even letting some of them go.
Hopper also made the decision to go mobile-only, which meant scaling back on a website that had just begun to gain traction. There was also the challenge of building out a more sophisticated version of the fare prediction application.
The company re-emerged in 2015 with a product focused on airfares alone. Hopper now regularly cracks the list of top 10 travel apps on mobile devices. It raised about $46 million in late 2016, its largest investment to date, and now has 100 employees, up from 20 several years ago.
The private company does not disclose detailed financial data, but Lalonde said Hopper has turned a profit some months even as it focuses on growth.
Maggie Moran, head of product at Hopper since 2013, said the new search product has been animated by a broad goal: “Make trip planning suck less.”
So what’s the next step toward that goal? Lalonde said Hopper would be foolish not to try to get into the lodging game.
“The question that we have that really matters is not whether we’re going to make money or not,” Lalonde said. “The question that we’re really wondering is, can we win? Can we change the way eight billion people travel?”