Sramana Mitra: What did you do with that? What was the next milestone after you got that money?
Tim Hentschel: We just used it for growth. We eventually bought our own office space in San Diego and started hiring some people.
Sramana Mitra: Why would you buy office space?
Tim Hentschel: There was a real estate bubble going on at that time. Everybody wanted to buy office space. Looking back, it’s not that bad a deal. We owned quite a bit of space in downtown San Diego. It’s a good long-term investment. Now, it serves as a great collateral for us. We own eight different places in downtown San Diego.
Sramana Mitra: You built a real estate business, almost.
Tim Hentschel: Not anymore. All of our space is now leased. Like I said, it does help as collateral, which is something that you need when you’re funding from a debt side.
Sramana Mitra: It sounds like you did a lot of debt funding after this round with friends and family.
Tim Hentschel: It is just because of the massive scale of our business and its seasonality. It’s just part of being able to manage a growing business that has a lot of seasonality.
Sramana Mitra: Let’s go back to 2005. You raised some capital from friends and family. Then you bought your first property. What happens next?
Tim Hentschel: We just kept growing. We got up to 20 employees in downtown San Diego. We got our first major online travel affiliate. Priceline started using us for group travel. Around 2009, we actually decided to expand and open up East Coast offices. We opened up our headquarters in Palm Beach, Florida. Florida was our second biggest market after California. We really felt that we could have a stronger relationship with Priceline which is based in the East Coast. We did that.
Sramana Mitra: How was revenue tracking at this point?
Tim Hentschel: It was growing around 20% to 50% year over year for top line. We were profitable by year three. We had about 20% to 30% profit from then on.
Sramana Mitra: Other than the friends and family round, there has been no other financing?
Tim Hentschel: Correct. In 2013, we actually acquired Meetings.com and we also bought out all of our minority shareholders. With the equity that we bought back, we issued those shares to our COO, Bruce Rosenberg who’s former Vice President of e-Commerce for Hilton Corporation. He’s been important for us to help grow the company. He came on as an equity partner. We also did an employee equity pool, so all of our employees also have equity in the company now. We’re completely employee-owned now.