Editor's Note: Learn from a panel of experts and entrepreneurs who have successfully financed their own ventures and are helping others do it at the Thought Leaders Live 2013 event May 29, in Long Beach, Calif. Event and ticket information can be found here.
J.R. Johnson was waiting out a three-year noncompete agreement after he sold his travel website, VirtualTourist, to Expedia in 2008. He couldn't build a new business in the travel sector, but that didn't stop him from watching the evolution of user-generated travel sites like a kid with his nose pressed to a candy shop window.
When the noncompete expired in the summer of 2011, the online travel sector had been dogged with reports of fraudulent reviews on large, user-generated sites. Johnson examined his own travel preferences and realized that he relied on his friends' recommendations more than those from websites or guidebooks. Social media made sharing those recommendations easier than ever. Trippy was born.
On Trippy, web-based and mobile applications allow users to prompt Facebook friends to weigh in with recommendations for lodging, restaurants and attractions. Your friends know you best, Johnson reasons, so they're less likely to refer a vegetarian to a lavish steakhouse. Once an itinerary is planned, users can book their trips through the site, which gets a cut of the bookings. Itineraries can be copied so other friends can use them. The interface also allows users to easily upload photos--a nice way to share the trip with those who helped plan it.
Johnson's previous success in the space--bootstrapping VirtualTourist to annual revenue of $18 million before selling it to Expedia for an undisclosed amount--made it easy for him to line up other people's money to launch Trippy.
But in addition to funding, he wanted know-how. First, he approached Tim Ferriss, author of the bestselling book The 4-Hour Workweek, to be an advisor. Ferriss wanted in--and also wanted to be part of the seed investing team. So Johnson and his team began looking in different industries, such as fashion, music and business, to find well-traveled investors who were also savvy in social media.
In November, Trippy announced a $1.75 million funding round led by Sequoia Capital and True Ventures (with participation from SV Angel) as well as angel investors Ferriss, singer Jason Mraz, Randi Zuckerberg (sister of Facebook's Mark Zuckerberg), former Groupon president Rob Solomon, LegalZoom co-founder Brian Lee and celebrity stylist Rachel Zoe.
Johnson ended up being in the enviable position of having to turn down investors. "It was really, really hard, because I've become friends with a lot of these people over the years and basically had to tell them, 'Sorry. You're not going to be in this round.' It bummed me out more than I thought it would," he says.
The money will be used to build the mobile app to function more like the website, providing easy access to information from friends and data on destinations. Sequoia partner Alfred Lin thinks Trippy may have cracked the code for a fresh way to capture its share of the travel market.
"There is so much information out there, it gets overwhelming. Using the social graph to help you know a city much better than you would if you went by the popular tourist-trap sort of data is just a good idea," Lin says. "[Trippy is] just getting started. We're excited about the possibilities for this company."