Breaking: Kayak Raises $196 Million, Buys Rival SideStep
Discount travel site Kayak has acquired rival SideStep for $200 million. This story was set to be announced tomorrow but word is leaking all over the place after Sidestep CEO Rob Solomon told his company employees the news at an all hands meeting …
Context & Ripple Effects
SideStep had spent 2007 buying distribution where travelers were heading — it picked up the Facebook application Extended Info back in June — while Kayak was building itself into one of the leading independent fare-search engines. With this deal, announced after SideStep CEO Rob Solomon told employees at an all-hands meeting ahead of schedule, the two largest independents in travel metasearch collapse into one company.
First-order effects
- The $196 million raise maps almost exactly onto the reported $200 million price for SideStep — Kayak's new capital is going to acquiring a direct competitor rather than organic expansion.
- SideStep's team and technology move under Kayak's control immediately, with Solomon's staff learning of the sale before any public statement.
Second-order effects
- The remaining standalone fare-search and metasearch sites now compete against a single, better-capitalized Kayak, raising the pressure on them to fundraise or merge themselves.
- Investors who wrote the $196 million check have effectively endorsed roll-up logic in travel search, making similar consolidation plays easier to finance across the sector.
Third-order effects
- If the pattern holds, online travel search trends toward a small set of well-funded aggregators absorbing independents — the same trajectory SideStep signaled by chasing social-network distribution earlier in 2007 rather than competing head-on alone.
The trend: Travel metasearch in the late 2000s is consolidating through venture-backed acquisitions, with Kayak's purchase of SideStep eliminating the category's leading independent rivalry.