Founder & Executive Chair, CarGurus
What I found so refreshing about Tuck and why I think it is such a special place is its size. You know everyone in your class and you build very close bonds.
Langley Steinert T’91 tells a story about giving a talk at his kids’ school about TripAdvisor, the travel review and referral company he co-founded in 2000 and sold four years later for $210 million.
“I told them how the company worked and about being an entrepreneur,” Steinert recalls, “and this seventh grader in the back of the room blurts out, ‘So did you make a lot of money?’
“I started to laugh, because I’ve done well but that’s not the reason I do it. I do it because I love it,” says Steinert, who followed his TripAdvisor debut with an even bigger entrepreneurial encore, founding CarGurus in 2006 and building it into the second-largest and fastest-growing car-shopping site in the United States.
Steinert no longer speaks at middle-school career days but from time to time he gives talks about entrepreneurship at Dartmouth and Tuck, and there he delivers the same wisdom he shared with that precocious seventh-grader.
“I tell college and business school students, if you’re starting a company because you want to be the next Mark Zuckerberg and make a ton of money, you’re going to fail,” says Steinert, who is a long-time and dedicated supporter of entrepreneurship education at both Dartmouth and Tuck. “My number one rule is do it because you’re passionate about it, not for the money.”
Steinert learned that lesson early on, going straight from Georgetown University to a leveraged buyout shop on Wall Street. It was 1985, the height of an era novelist Tom Wolfe would chronicle in his satirical masterpiece The Bonfire of the Vanities. As a young investment banker, Steinert toiled in the industry’s metaphorical boiler room, feeding reams of analysis into an insatiable profit engine. He lasted three and a half years.
My number one rule is do it because you’re passionate about it, not for the money.
“I had less than zero work-life balance. In my first year I worked—and I’m not joking—seven days a week until one in the morning,” says Steinert, who plotted an escape route through Tuck to the burgeoning software industry. He was immediately taken with Tuck’s collegial atmosphere and culture of mutual support.
“What I found so refreshing about Tuck and why I think it is such a special place is its size. You know everyone in your class and you build very close bonds,” says Steinert, whose classmates impressed him with their diversity of background and business experience.
“To my right was a guy who was a submarine captain from the Naval Academy, and to my left was a woman who had been a very senior person in the NOLS [National Outdoor Leadership School] program out in Wyoming,” Steinert says. “It was a very interesting, eclectic class. Coming from an investment banking world where it tends to be a little more homogeneous, it was really refreshing to get into a classroom and hear all these different perspectives.”
By his own admission, Steinert, too, was a bit out of the mainstream. “I’d say 98 percent of my classmates not only had a job lined up when they graduated, but a really well-paying job at Goldman Sachs, or McKinsey, or Frito-Lay,” he says. “But when I graduated, I didn’t have a job.”
Plenty of companies would have leaped at the chance to hire someone with Steinert’s mix of education and experience, but he was determined to go into software, and only two companies at that time could provide the learning experience he sought—Microsoft in Seattle and Lotus in Boston. Steinert, who grew up in Manchester, MA, wanted to stay close to home. Lotus didn’t have the head count for a full-time MBA, so Steinert started there as a consultant.
“I took a part-time job at meager pay without benefits, because I really wanted to learn the industry,” says Steinert, who credits those hellish years on Wall Street for the determination, and the financial security, to stick to his guns.
“It was not fun and I didn’t enjoy it, but I learned how to be really good at modeling and spreadsheet analysis and to stay up all night if I have to—I think I worked 48 hours straight on one deal.” He was also well compensated, and the bonuses he socked away allowed him to finish Tuck with no debt and a modest nest egg. That gave him the freedom to take risks, he says. “So my time in investment banking did have its rewards.”
Between his first and second years at Tuck, Steinert interned with a software company, and the CEO there told him to resist the urge to start a company right away, and instead spend a few years making mistakes on somebody else’s dime. Steinert spent three years learning the software ropes as a product manager at Lotus, and four more at early-stage startups in Boston. He was one of the first executives at Papyrus, which produced NASCAR Racing, the best-selling CD-ROM game in America, and later joined Viaweb as the fifth employee. The founders were four Harvard PhDs who created a product that allowed small merchants to open an online store using nothing but a web browser—a revolutionary idea in 1998, when Yahoo purchased the company for $49 million.
Steinert found himself at a crossroads. “I didn’t know what I wanted to do with my life at that point, so I did a year and a half as a partner at a venture capital firm in Cambridge, and that’s how I came to know Steve Kaufer.” The duo founded TripAdvisor with $4 million in 2000 and sold it to Expedia/IAC four years later for $210 million.
TripAdvisor’s original strategy was to market a deep database of travel information to online booking firms like Expedia and Travelocity. It didn’t take. Next, Steinert and Kaufer hired editors to comb the Internet for great travel articles to link to. Again, crickets. Finally, as an afterthought, they added a feature that allowed travelers to leave their own reviews. Almost overnight, the website came alive. The next step was to monetize referrals by charging advertisers for each click-through. That combination—consumer-generated content coupled with advertising revenues and per-click commissions—revolutionized online business, not just in the travel space but a host of other industries as well.
Steinert launched CarGurus from the same playbook. Here it’s worth noting that the guy who turned the American car market on its head is not an automobile enthusiast. Steinert was simply looking for an opportunity outside the travel space because he’d signed “a big fat non-compete.” The product and business model changed many times before Steinert found the winning combination. CarGurus uses algorithms and deep-data analytics to take the mystery out of purchasing a car. If you’re wondering whether $62,000 is a good price for a 2017 Land Rover Discovery HSE Td6 with less than 4,000 miles on the clock, CarGurus will assure you it’s a great deal—more than $5,000 under market—and provide a link to contact the dealer. This data-rich approach has made CarGurus wildly popular with consumers and advertisers alike. From a cold start 11 years ago, the company has become the second-largest car buying site in the United States, with a dealer network of more than 40,000 dealers, more than 5.4 million car listings, and 28.6 million monthly unique users. It’s the fastest-growing business in the space, and has recently expanded into Canada, the U.K., and Germany.
In entrepreneurship, you live it 7-24. Ironically there’s no day off because you’re constantly thinking about it, but it’s something I love thinking about. I love what I do.
The big takeaway for other entrepreneurs, Steinert says, is to be flexible in your original business plan and product approach. “Both in the case of TripAdvisor and CarGurus, our first year and a half we were pursuing the wrong product plan and the wrong revenue model and so in both cases we had to pretty much scrap what we had been doing,” he says. “A lot of entrepreneurs aren’t willing to do that.”
A related lesson, which goes counter to startup culture, is to not raise more money than you need. TripAdvisor launched with $4 million, and Steinert started CarGurus with $5 million. “When we started TripAdvisor one of the running jokes was that Steve wouldn’t let us buy a laser printer for the longest time,” Steinert says.
That economy allowed the founders the time they needed to find and implement a winning strategy. Steinert took that philosophy to CarGurus, which for the first three years consisted of Steinert and six developers in a Harvard Square townhouse.
“The benefit of that is twofold. Number one, when we did screw up as most startups do, we could live to see another day. And the related benefit is that we were able to retain in both cases a ton of equity in the hands of the employees and the founders,” says Steinert, who kept a controlling interest in CarGurus when he took it public in October 2017. Share prices spiked 72 percent in the first day of trading, and CarGurus now has a market capitalization of about $3.9 billion.
So to answer that bold seventh-grader’s question, yes. Langley Steinert has made a lot of money. But more importantly, he has retained control of his company and balance in his life. An avid cyclist, he can step out his front door and ride 60 miles at a clip, and he never misses his teenagers’ sporting events. “It’s one of the highlights of my life, and if my kids have a lacrosse game ’m out of here,” he says. That flexibility is a far cry from the Wall Street grind he experienced as a young man, but Steinert is quick to note that he pays back the time.
“In entrepreneurship, you live it 7-24. Ironically there’s no day off because you’re constantly thinking about it, but it’s something I love thinking about,” Steinert says, coming back to his first rule of entrepreneurship: follow your passion. “I love the intellectual curiosity, I love working with software developers and I love creating new and interesting products,” he says. “I love what I do.”
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