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Here’s what we learned from the Trivago IPO

  • Hotel-booking site Trivago went public in late 2016 and its shares are now traded on Nasdaq.
  • CFO Axel Hefer says there are a few things he wishes they'd done differently in their IPO.
  • He would've aimed for a shorter timeline.
  • He would've spent more time educating journalists and the public about the company.
Trivago CFO Axel Hefer
Source: Trivago
Trivago CFO Axel Hefer

Simply put, going public is an intense journey outfitted with adrenaline, little sleep and too much coffee.

As a German company that is now publicly traded on Nasdaq, Trivago has had a unique road map to get to where we are now.

Going public without losing your authenticity is an interesting process. Before our decision to proceed with an IPO, we were certain, as a company, that we were going to operate our way. What we learned was invaluable, but there's nothing you can do to prepare yourself for such a process. If we could go back and do it again, there are things we did right — and a few things we would've done differently.

Here's the advice I would give other companies that are considering an IPO.

Find what works for you

We decided to join Expedia five years ago as a chance to have negotiating power and be able to become an independent unit. We needed to prepare for a U.S. listing, but even we weren't aware of the complexity and legality that was required of us. It came down to remaining committed, dedicated and focused — even through the more difficult steps of the process.

"I would have personally aimed for a shorter timeline. If you're preparing an IPO for an entire year, that means you're working day and night for 365 days."

We're happy that we listed in the U.S. compared to in Europe. The U.S. is a different level as it's covering a number of other companies in similar categories and they understand the business. For us personally, there weren't many companies in Europe that are listed at our size or industry. We had to find a structure related to governance, and this differs from company to company.

We had to ask ourselves questions like, "Do we take today's entity and list it?" "Do we convert it to an AG and list that?" and "Do we start another structure with a U.S.-style board of directors?" Our answers to all of these questions encouraged us to create a Dutch N.V as a holding company. While this doesn't work for everyone, it was in our best interest to.

Don't adapt to the status quo

It's important to not adapt too much to the status quo just because your company is public. Many publicly-traded companies rely on an old-guard way of doing things, but it's ok to be different and more authentic. We've found it to be worth it.

After filing all our paperwork with the SEC, we had to sell shares and find people who wanted to buy them. We spent two weeks testing the waters (with less boats and more beer) on a road show. The point was to meet with key investors for early feedback; they asked informative questions and provided constructive comment. Instead of stuffy board meetings (a far cry from our founding mission), we went against the grain and held our meetings in relaxed environments. One analyst said to me, "We've never actually seen this. It feels like we're sitting in a living room having drinks together."

Instead of holding analysts and investors at arm's length, we showed them what our company's culture was all about by welcoming them the same way we welcome everyone who visits.

We also applied this method to our earnings meetings once we went public. Earnings calls aren't the most exciting chats. We discussed it for quite some time and ultimately decided this isn't right for our company. In lieu, we decided to prepare presentations that rid of us of monotone tableside readings; they made calls more interactive and increased their spontaneity. It made sense to be different and rely on processes that were more authentic to Trivago.

Remain agile

A lot of larger players in the industry are weighed down by bureaucratic barriers and are finding it difficult to adapt to change. For this harmful reason, companies need to stress culture and continuously challenge what they do to make sure they're able to move swiftly when it comes to decision-making.

This resonates well with investors and is imperative in such an increasingly competitive environment. Even if you feel your company is doing this well, make sure you keep it this way and even strive to do it better. Always aim for ultimate buoyancy.

Don't waste time

Looking back upon our process, I would have personally aimed for a shorter timeline. If you're preparing an IPO for an entire year, that means you're working day and night for 365 days. If you allot yourself too much time, you will negotiate and renegotiate (then renegotiate) and delay the entire process. Get the most out of your time and money by giving yourself a set timeframe.

The state of current affairs also factors heavily into timing. We weren't sure who the next U.S. president was going to be when filing. Instead, we kept our head down and focused less on the valuation and treated an IPO as simply another step for the company.

Educate the press

The period after filing is very quiet compared to the process, and companies are bound to privacy. Since we couldn't speak to the press as to why our profits were sinking, it was difficult to read headlines about our company claiming, "Trivago had $60 million in losses."

If I could repeat this process over again, I would have spent more time educating journalists and the public on what to expect and why. While not detrimental, it's better to have the press on your side.

Commentary by Axel Hefer, the chief financial officer and managing director for finance, legal and international at hotel-booking site Trivago. Hefer has been with the company since early 2016. Prior to joining Trivago, he was CFO and COO of Home24, an online home furniture and decor company, and was managing director of One Equity Partners, the private-equity division of J.P. Morgan Chase.

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