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Travel site Kayak buying tickets for IPO road show; take-off could be impacted by Facebook share price

Posted by Scott Kirsner  May 21, 2012 01:08 PM

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Sending your article, the travel site with its headquarters in Connecticut but most of its employees at its technology office in Concord, Mass., is preparing for its IPO road show, the series of investor presentation that precede an initial public offering. Kayak first announced its plans to go public about 18 months ago. CNBC reported last week that Kayak was hoping to raise $150 million in the offering, and sources close to the company told me on Friday that the company was hoping to kick off its road show sometime in May, hitting cities like Boston, New York, Toronto, and San Francisco. The IPO could potentially value Kayak at $1 billion.

Kayak CTO and co-founder Paul English told me that he couldn't comment on the company's IPO plans because of the "quiet period" mandated by the Securities & Exchange Commission. Interestingly, English owns a bigger percentage of Kayak than the company's CEO, Steve Hafner: 8.9 percent of the company, versus 6.9 percent for Hafner, formerly an executive at Orbitz. (And English recently also acquired the title "president," as of an SEC filing on May 8th.) General Catalyst, the Cambridge VC firm that incubated Kayak in its earliest days in 2004, owns the largest chunk of the company (30 percent). Kayak brought in $224 million in revenue last year.

Kayak's IPO has been delayed because of stock market "choppiness," says Boston investment banker Peter Falvey, but also because of the emergence of a potential new rival: Google Flights, the product of Google's 2010 acquisition of ITA Software, a Cambridge company.

Now, Kayak's IPO fortunes could hinge on the aftermath of the Facebook IPO last Friday. Falvey says that the social network's offering "has been the most anticipated IPO ever, and now its stock is trading down 11 percent from the offering price. We may all be reading too much into the Facebook tea leaves right now, but I suspect that will be deemed a negative" for other tech IPOs in the pipeline, like Kayak.

Online travel industry analyst Henry Harteveldt of Atmosphere Research Group told me today that Kayak will face stiff competition from Google Flights, Hipmunk, and other travel planning sites, "but Kayak tends to lead. They've had a great run so far" — especially on emerging platforms like smartphones and tablets — "but the question is, what will they do next to keep them ahead of some very well-funded and creative competitors?"

Harteveldt says another issue for Kayak is its reliance on the ITA Software search engine, which Google now owns. In order to approve Google's purchase of ITA, the Department of Justice required Google to continue licensing that search technology to competitors for five years. "It's incumbent on Kayak to work on finding alternative providers," Harteveldt says.

Here's the most recent amendment to Kayak's S-1 filing with the SEC.

Here's a piece I wrote last year: "At Kayak, the goal is seven days from recruit to employee."

And my first coverage of Kayak, from 2004.

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Innovation and technology news that matters, on a new website from the Boston Globe, featuring Scott Kirsner and other original reporting.

About Scott Kirsner

Scott Kirsner was part of the team that launched in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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