Tim has built an excellent company with quite unorthodox financial engineering decisions that have played out very well for him. Read this story to learn some out-of-the-box thinking.
Sramana Mitra: Where are you from? Where were your born, raised, and in what kind of background?
Tim Hentschel: I was from the West Coast originally, from as far as Hawaii where my family owns some hotels and also a large tour operation company. I left Hawaii when I was 13 to move to Carmel, California where I went to high school. Then, I moved east to New York where I attended Cornell University for hospitality management.
Sramana Mitra: What time frame was that? What year did you finish college?
Tim Hentschel: 2001.
Sramana Mitra: The Internet has burst. However, the Internet is in full swing. What happens next?
Tim Hentschel: The timing was, in a way, good for me because I always knew that I wanted to go into hospitality tech. I was taking classes in Computer Science at the Engineering School at Cornell while I was at the hotel school. I had a huge interest in all things technical and especially online distribution.
I didn’t go right into that field though. I went to New York City and did a stint in banking. I worked for a company called Commonwealth Associates as an analyst. I was looking at business plans all day long. I did that for six months. Then, 9/11 happened and a lot of other huge events made me rethink about the direction I was going in.
I decided I wanted to pursue the entrepreneurship path and move back to California. I teamed up with a business partner who is a Computer Science major from Northeastern. His name is John Prince. He was working for Capital One as a software engineer at that time in San Diego. We teamed up to start Hotel Planner.
Sramana Mitra: You were in the Bay Area for that?
Tim Hentschel: No, I was actually in Los Angeles. We actually incorporated the company in Los Angeles. We moved down to San Diego to open offices.
Sramana Mitra: What was the concept of Hotel Planner?
Tim Hentschel: It was a reverse auction to get group hotel inventory out to consumers. If you were looking for a wedding or a family reunion block of rooms, you can simply put in where you needed to go, how many rooms you were looking for, and what your budget is. We were using a network of Group Sales Managers who were registered with us to compete for that business.
Sramana Mitra: How did you get the business off the ground? Were you bootstrapping? What was the early situation?
Tim Hentschel: There was a lot of bootstrapping. Coming from the banking background, I think to PIPEs are very tricky because a lot of those companies were in desperate need of financing. The terms that you get when you are in desperate need are not necessarily the best terms. A lot of people talk about it in the industry as the downward spiral because you have to take the cash. The cash is at a lower valuation than where you’re currently trading. It’s just going to continue to pull your stocks further down, which of course causes you to raise more money.
Looking at all of that, I was very much wary of trying to keep our expenses as low as possible. I think we were the ultimate bootstrappers. The first couple of years, we didn’t have office space. We pretty much did the garage thing.
Sramana Mitra: You worked out of your apartment.
Tim Hentschel: Basically, and hwe ad 24/7 phone support. That 24/7 phone support was me. I put on around 60 pounds. It wasn’t the healthiest thing you could ever do but it got the job done.