Insightful Video of Darren Huston Talking on Web Summit
Darren Huston remains the CEO of world’s leading group of online travel brands for long time. Read or watch the full interview of Darren Huston on web summit.
Michel-
The Internet was a radically different place when it first started than it is today. Can you describe for us the changes? Can you describe for us what’s actually happened? I think we have an opportunity to hear that from a very special guest today. And that would be terror in Houston. In the brief raucous history of the digital age where upheavals happen on almost a daily basis every year is a new day something always appears that signals the beginning of a trend or a transformation that will set off yet another round of ruthless and relentless change. 1998 was a year like that. Television and cable television companies introduced DSL and cable modems respectively.
HDTV arrived Pay Pal was founded the Apple II Mac to but in a tech company with a funny name Google was incorporated in California and a revolutionary startup that was destined to become as Derek just pointed out Google’s largest advertiser all also launched in 1098. When Priceline dot com opened its doors virtually from its groundbreaking name your own price approach to transactions to its usually successful choice of spokes CAPTAIN Priceline became pope cultural touchstone almost instantly. But unlike so many other revolutionary tech companies Priceline bubble never burst. It jointly navigated the transformations that came after 1998 and today the Priceline group is the world’s leading provider of online travel and related services operating in more than 200 countries through six primary brands booking dot com, Priceline com, Agodo dot com, kayak rental cars an open table during Euston president and CEO of the Priceline group celebrates his first year at the helm of this travel giant This past month.
A post he ascended to after serving as the CEO of booking dot com in the Netherlands. He came to Priceline from another history maker and where I got to know darn well Microsoft where he was a corporate vice president of consumer and online and before that when we actually first met the CEO of Microsoft Japan. He began his career at yet another iconic brand Starbucks where he was a senior vice president. Darren Huston is a thought leader steeped in the tradition of innovation and barrier breaking. We are fortunate to have the opportunity to chat today. Thank you dear. All right thank you. Just to kind a level set for the audience could you kind of talk about I gave some names but could you talk about the foundation of what is today the Priceline group.
Yeah so we I think a lot of people in the United States think of Priceline from the heady days of the late 1990s. And when you could name your own price for insurance gasoline groceries almost anything and it was it was reflective of a time in the Internet where there were a lot of gimmicks and I when I was at Starbucks I was running new ventures and did a deal with a company called Cosmo dot com and they would bring a tootsie roll to your house on a bicycle and expected no tips no service charge and they do in the middle of the rain and it was one of those amazing times when you. Believe this couldn’t possibly be true.
And in Seattle there was no shortage of rain and there was no shortage of rain in Seattle Exactly so.
So those are the early days and Priceline in the name price was born in those days. And frankly we lost so much money in one thousand nine in 2000. We still don’t pay taxes in the United States because we’re working off of the losses from those early years so that was the beginning of the group. But since then the group Priceline district certainly matured. It’s now much more focused on retail transactions even though we still have that opaque model. But we’ve added five other brands to the group and booking dot com in particular which is one of the best kept secrets of the Internet is Europe’s largest e-commerce company based in the Netherlands.
I mean it’s it alone is larger than almost all other online travel companies put together.
And and that was just an amazing acquisition and since then the group has acquired other companies like Kayak open table rental cars ago and and very proud of that and that’s where we stand today.
Could you describe Karen again when when when I when I opened we talked about one thousand ninety eight. As it is it is a kind of an important year a milestone year in terms of the development of the technologies in the opportunities that you now run. But could you talk a little bit about the basic foundation the business model of you know Priceline and how it’s morphed again from what was revolutionary to what is very much a standard operating procedure but again the the model of the foundation.
Yeah I think there were you know if you think let’s call it pre-2001 I saw remember meeting a lady in San Francisco who was opening up the fourth largest pet food online company of Copa topia. And I said Well how does that work and she’s like well you know I said you bring dog food and you literally put it in front of the door and say who delivers it and they’re all going where the fourth largest We just got a hundred million dollars. So that was a time when there didn’t seem to be any stupid ideas. But after the crash the survivors of the end of the day went from sort of let’s call it the Internet to gimmicks to just Trent the transactional Internet.
You know where scale matter data mattered and it was more about how do we go from a gimmicky thing to sort of a real life where people can buy things at scale and and we all know you know the winners that came out of that survived are the players not local players but more of the global players. They’ve got scale in and Priceline luckily found its way through that transition. It was only seven or eight years ago at a conference people said Priceline is the fourth horse in a three horse race. Let’s hope it makes it. And now we’re the largest online travel company in the world so we went from let’s call it a gimmick that is still a sustained business model to really becoming an open and transparent set of e-commerce brands all of which work on a global scale.
So would you say that kind of? Describes the difference in the operating model and the philosophy from where Priceline started to where Priceline group is today.
Yeah absolutely we have. If you think if we had the the best performing stock in the S&P 500 over the last 10 years that’s a statement also how low the stock got we actually did a reverse split to stay listed. Way back in those days now where we have the value of the Bay Area Hewlett-Packard our Starbucks. But it was the whole process of going from those dark days to just slowly building up that transactions and moving from a few hundred employees to now 12000 employees we have offices now in Colombo Honolulu just opened in Nairobi.
We have offices and we can see we could have done this in Honolulu we could have done this and other letters I get I got a great job for you Michael not telling you. Our hotel eat in Honolulu so. So we went from that to now something that’s very very stale and and very local at the same time.
So so dear and I think it’s fair to say and I agree with you one point no solve problems for many circumstances where the problems didn’t exist didn’t exist and that was as much of a fuel for the bust as anything in this iteration. It’s a different world and and again we’re solving problems I think that do exist now.
But what I would say I think at the beginning there was more of a transaction exactly and more of a find me the lowest price. Yes. Today I think consumers are looking for overall. Maybe I would call it experience in arms and they’re looking for specific value.
I mean certainly they’re going to be price driven we’re not in a period of time where people are being frivolous with money but you know the old Oscar Wilde quote about the cynic is the person who knows the price of everything and the value of nothing. Exactly I think today consumers are looking at value. As much as they are price.
Yeah I I couldn’t agree more it’s like we’re going through another transition from a scale transaction to end to end experience it’s about how do you use. The internet has gone from being a PC based experience to phones and tablets where people are taking the Internet everywhere with them to go from making a booking at a hotel to actually plumbing the experience from looking to booking to stand you know open tables a good example it’s it’s a it’s an app to make a reservation at a restaurant. We now have pay with open table the Lauzon to see your bill a little if you’re ordering food you order a bottle of wine a cappuccino that gets added on your phone.
At the restaurant table and you just press you pay and you walk out. So this is all of this work that’s being done to go from let’s make a bunch of transactions to now plumbing the end experience.
The reason is possible the day really is a mobile phenomenon because mobile has put the Internet in everybody’s pocket.
But across our business is becoming the fundamental key way that we’re going to compete if it’s such an interesting idea to be able to do what you just said with your check it kind of reminds me of the brilliance of of the forefathers of Las Vegas by not having actual cash but having chips because it doesn’t feel like it’s real money. It’s such an interesting perspective. If I’m entering that if you will on my phone and I’m compiling it and I’m not having that transaction where I’m actually looking at the credit card chit and signing it I’m probably going to spend more money.
Yeah exactly Now the restaurateurs have to love that. Yeah.
And the amazing thing is this and this is just the beauty of if you look at our mobile business just a fucking dot com three years ago we did a billion dollars in transactions two years ago we did three billion. Last year we did 8 billion this year will more than double again.
But it’s not just transactions is that people expect that their phone can do things.
And I give credit to the goobers and things of the world are Starbucks right. I helped actually create the Starbucks card.
It’s now carried in people’s pocket if you go to Starbucks the United States you see lineups of people half of them are paying. For their coffee off of their phone and if you look at the next generation millennial 25 percent of millennial don’t have PCs they only have their phone and they expect to be able to use their phone to do stuff like I had my nephew walk into Rembrandt square in Amsterdam and he just opens his phone and says what hotel am I going to stay at.
He just looks over their hundred twenty years as their 100 euros. Oh here a hundred fifty euro is pretty good reviews over here in 80 years and I have to share a bathroom but what the heck.
But he in his phone has already done for wages or you’re going to Hamster damn one that would probably be wildly exactly I’m just going to have to say it’s changed a lot.
OK there you go. I have Amsterdam for my college days. Yeah exactly that’s that’s that’s a moment.
Michel-
Let’s talk about that though Darren because that end to end solution so I haven’t been in a hotel yet where I can use my Smartphone to open the door but that’s coming I just saw in the paper the other day and I guess there are hotels that now have that capability. So I could be working with the Priceline group if from you know from portal to Portal I can start here and I can open the room when I get there. That’s got to be you know exciting time as you say I’m carrying it in my pocket at this point. Yeah. And it just makes life easier in terms of communicating with that hotel communicating with that airline communicating with that travel partner.
Yeah exactly you know so this is all a great dream. The work to get to the dream is really hard. So that’s what we do.
Like we’re not a horizontal tech company we’re on the ground taking friction out of the experience. We’re in the Tal in Brazil teaching people about the Internet just so they can get on to doing the booking let alone the end an experience. We’re dealing every day with the realities of restaurants and whether or not they’re able to connect the point of sale system with the thing that goes on your phone. But that’s part of what we’re doing is wiring up taking out the friction of the local experiences so we can bring these dream scenarios to life and I’m super optimistic that that the world of travel and related services Lisa we are in our vertical is going to change dramatically in the next. Let’s call it three to five years because the plumbing and the work is being done today.
Michel-
At the same challenge that retailers are facing today. Large retailers out in San Francisco during Dream force you have a couple of weeks ago where you know the size of this conference is quite extraordinary. You know it. At Dream force one hundred forty thousand people converge on the city of San Francisco. But we had a group of retailer and we were talking about the omni-channel world that they need to live in today as retailers. You’re in that world I mean everything about I mean again the foundation being travel and booking and whatnot you’re everyone’s on the move you are the omni channel. How has that changed your focus again and you have to get the plumbing right but how has it changed your focus.
Darren Huston-
Well. This may seem bit trite but you know we don’t in our business we’re the world’s leading online travel company but we don’t own airplanes we don’t own hotels we don’t own physical assets. The only assets we have our Servers and amazing people. So for us to win in the space a lot of work goes into empowering our people to create innovation that’s going to drive the next wave. And I always have to make sure that they stay super hungry as well as humble with our partners to be able to deserve the opportunity to succeed. But to me I spent so much time making sure that we have the right organizational structure. We don’t have a team that’s larger than eight people in the company. Every team is small Every team is empowered to make changes on the website we run a thousand experiments concurrently every day on our product.
And those are all built bottom up by small teams the things you read about.
But it’s so critical to the success of the company because if you know the difference between a super empowered heavily motivated employee and a bunch of average fully empowered non motivated employees the difference between winning and losing.
So today when I had a conversation last year with Justin Smith the CEO of Bloomberg and.
Michel-
His point to me was his role should be 80 percent that of being CTO and I don’t mean Chief Technology Officer I mean Chief talent officer. Yeah and I think he was so right because it’s what you just said it’s that it’s your job as CEO is obviously to be the chief executive officer but what you just articulated is so much of your success is hinged on talent how are you going about you know kind of maintaining that talent in a place where you know people leave for that next pay raise or you know just again off off center for a moment but it’s such a critical part of your job.
Darren Huston-
Well we’ve you know one thing that I we’ve made a bit of a counter bet on starting with a location like our biggest locations are Amsterdam Manchester Bangkok New York. You know we have a business in San Francisco with open table and that’s where the heart of the Internet the global Internet is where we find being in a safe place like answer damn We have a thousand employees in our headquarters and six of us drive to work. So they’re biking tramping and we we create an environment where you know they get a great meal at lunchtime.
They’ve got great working environments they they’re the ones that feed us to we want this change that change we really make sure we start with the environment and then we make sure that the people are super empowered and they’re generally young people can can be afforded the ability to make a difference.
We also recruit from Russia from Germany from Israel maybe places that the Silicon Valley folks are overlooking or it’s maybe too hard to get visas to work in the United States and I think if you can have that kind of attraction you can be the job to have in our part of the world and that’s all of our companies in a sense want to be the job they have and in the places that they work and so healthy competition.
Yeah and I’m I’m pretty proud and I were recently even booking dot com is now on the list of the top most recruited companies in the world. And and it’s a place of people looking to work where you know three four years ago we were fighting to have people even know who we were. And that’s part.
How we do it so dear and I want to switch to the marketing side.
When you and I were together back in the day previous to your joining Priceline and booking dot com we did a lot together in the advertising space. Yeah and and the mashup that’s occurring today between the chief marketing officer and the chief information officer makes for an interesting time in our in our industry on the on the on the advertising side of it. You’re I think Google’s largest advertiser today as you look at kind of marketing across all the channels. How are you tailoring your marketing messages on channel specific basis obviously a lot. Is is is based on search for you.
Yeah it’s an evolving let’s call it art and science were extremely data driven. We just make sure our Web sites convert the best in the industry and that affords us the opportunity to earn our live where direct response advertising or advertising at the core you know the direct response advertising a smaller market than brand advertising. But that’s why we’re very heavy on Google trip advisor you know various other sorts of travel demand. We’ve recently expanded into offline marketing. We now have TV ads and in various countries kayak uses TV heavily Priceline uses TV heavily and we’re trying to really wire up the data so that we can make really good business decisions about using all forms of marketing.
Google search is by far the best market place in the world.
If they’ve tailored the tools at such a fine level that we can bed with hundreds of millions of keywords and be very specific on the return we get but we would love to see TV and other forms of media become much more data driven and or Facebook or Twitter or these other these other sources and they’re working hard at making that happen and I would say that we have an endless amount of money to spend.
If we can find marketing channels that can be data driven the way that Google is there and as a final question we chatted last night about something that we did in in the US at Advertising Week on the loss of serendipity.
Yeah. And the need to maintain Syrian deputy in marketing and what you just articulated I think is exactly you know on point because you need to find that consumer at the right time when they have travel or dining or what have you in mind. And yet the opportunity to reach the consumer let me make the car analogy. If I’m a car manufacturer or an auto manufacturer I always want to find air in Houston when he was in market for a car. These are his car lease was up you know whatever it might be.
But as a marketer Syrian deputy is still so critical. Yeah to find Darren Huston when he’s not necessarily ready for a trip. But all of a sudden inspirational he’s ready for a trip and then you get him or your marketing efforts focused I mean obviously on the data and on the information but I hope you’re not losing the serendipity.
No not at all I mean you in this world you have to continuously experiment with the fringes of what you think truth is. So as long as your people feel empowered we may never have been able to make a certain type of marketing work but we have to keep trying and have enough budget being spent in experimentation because we are constantly finding new sources of demand through let’s call it random or whatever we are relatively well thought through ideas and if you don’t keep doing that you can really you can lose at the end of the day so there’s so much going on but we will we try to do is stay really close.
To the really big owners of audience in the world and become partners with them to continue to test to see if we can’t find something that will really be able to be done at scale so. And it’s really my teams that drive that versus me. They don’t listen to me Michael. If the truth is in our company they call me the hippo which is the highest paid person’s opinion it’s a Microsoft term. They’re taught not to listen to me and I think that’s a great way to have a great innovative culture is to allow your people to come up with the ideas versus relying on an old guy like me.
I have that same problem with my wife but it’s which work for 40 years here and on that note I think these chairs are booked by somebody else so I think I need to bring this Chad to an end but I appreciate you spending the time today and I thank you for for your attention as always a pleasure Michel thank you. Thanks everyone.
