In a catch-up over local coffee with Yeoh Siew Hoon, Dara Khosrowshahi, president and CEO of Expedia Inc, recalls his early stepping-back-in-leadership moments, and why it’s important to know where you are going, not just what you are doing. Plus, his thoughts on the confluence of the 3Ms and the long game it is playing in Asia.
Dara Khosrowshahi, president and CEO of Expedia Inc, remembers a stepping-back-in-leadership moment early on in his career leading the world’s largest travel company.
He had just joined Expedia (August 2005) and met the founders who kept talking about how they wanted to change the world, a sentiment he said he didn’t get, coming as he did from a finance background.
Local kopi talk with Dara Khosrowshahi and Singapore-based global head Greg Schulze at YY Kafei Dian.
“I was 18 months into the job and I was very focused on the ground, making decisions. I remember a young product manager – Jenne Pierce – coming to me and saying, ‘Dara, I really like you but all you are doing is telling us what to do. So when you are not in the room, we don’t know what to do. Why don’t you tell us where to go?’”
That moment made him realise he needed to get out of the minutiae of the day and think of the bigger picture.
And although he does get the bit now about “changing the world”, Khosrowshahi is of course mindful of the fact that “this is still a business. We have to serve shareholders but it is not just any business. Travel itself is a wonderful product to be marketing. You still have to deliver cash flow but that cash allows us to do some good.”
Another stepping-back-in-leadership moment came when he had to step in to run Expedia.com which had hit the wall. “I had to learn more about it and assumed direct responsibility. The team that came together and turned around Expedia.com has now taken on bigger roles in the company. Having Expedia.com join the other brands as growth brands was a big moment in our company’s history.”
Khosrowshahi has proven his longevity – 12 years – in a company that has grown to $72b worth of travel gross bookings last year and his target is to become the first to reach $100b.
Still a game of inches and still a long game
He hasn’t wavered from his belief that online travel is a “game of inches” and you have to play the long game. “We are a company which seeks continued improvement in our business – a foot and a yard but we will take an inch. We are relentless about searching for a product that’s a little better than yesterday to build a business that can move mountains.”
Asia, where the company is staking its future on, is clearly a long game. It’s been in the region for 10 years but it wasn’t until it sealed its joint venture partnership with AirAsia six years ago that it had its eyes opened to the real opportunity in the region.
At a press conference to announce the opening of its first Innovation Lab in Asia – its third in the world after Seattle and London, Khosrowshahi said, “It is said you have to know what good is in order to be good at something. Before we got involved with AirAsia, we had set growth rates and we thought we were doing well. Then Tony (Fernandes, CEO, AirAsia) said, ‘that’s not good, Asian markets are different, you can get growth rates that are better than that.’”
Today, both Expedia Australia and Expedia Japan are billion dollar businesses for the brand which is seeing healthy growth rates across the region, thanks to the investments being made in-market.
“Over a long period of time, compounding takes over. Asia is at the size now that the compounding nature of our growth will make it a significant part of the business.”
Asked if there were intentions to buy back the remaining 25% of the business from the joint venture, he said, “We’d love to have AirAsia as shareholders forever if that’s okay with Tony.”
“Some companies succeed despite their governments”
In Singapore, he met government officials for the first time to show off the Innovation Lab. “Their focus on making Singapore a hub for technology and data, their active desire to listen to business partners left me quite optimistic about our business here. Some companies succeed despite their governments and it’s good to have a tail wind supporting your growth.”
Which of course led us to the subject of the new President in the White House and I asked him if the election of Donald Trump was another stepping-back-in-leadership moment for him. “I think it’s a step back in many ways – good or bad remains to be seen.”
At the end of his fourth quarter earnings call in February, he told investors and analysts, “”Hopefully we will all be alive to see the end of next year.” An immigrant of Iran, he also thanked the company’s global employee base for the improved performance in 2016.
“The confluence of the 3Ms will create something exciting”
For now, he’d rather focus on more positive things like what he calls the convergence of the three Ms – Mobile, Messaging and Machine Learning – the confluence of which he believes will create something exciting in travel.
“Mobile gives you context with location, Messaging gives you communication and identity and Machine Learning gets you all these data – it will allow contextual communication with consumers on an individual basis.
“Now we can go back to where we came from – the travel agent who knew us, our family.”
He said Expedia was actively working on all parts of the equation. “What we do is break problems apart, the magic of the 3Ms coming together has not happened yet but we will see them come together.”
While it is seeing some traction from core customers on voice, he said functionality is still very limited and there’s a small team of engineers working on it to expand that.
He sees Artificial Intelligence as having more practical applications than the eye-catching headline arguments over whether evil robots will take over Planet Earth. “Taking repetitive tasks where you can recognise patterns based on big data – such as customer service – that’s immediate and we want to work on the little stuff that can be powered by AI to make our business materially better.”
Organic growth for now but it will remain opportunistic in two areas
Expedia Inc’s business has certainly been made materially better through acquisitions and while he said the next two years will see more organic growth, there are two areas the company will remain opportunistic about.
One, strong local brands which can take advantage of Expedia’s technology – he cites Wotif in Australia which is growing in the corporate travel space. “Egencia is now the sixth largest corporate travel company in the world and we’ve just opened an office in Singapore. The consumerisation of enterprise is about to happen.”
Two, new sectors – for example, acquisitions such as Trivago in meta-search and HomeAway in vacation rentals.
With the appetite for acquisitions growing among travel brands – the day we met, there was yet another piece of news about AccorHotels buying another company – I asked him what advice he would give organisations which are acquiring fast and furiously.
“You have to be very clear as to whether you are going to integrate into the core entity or whether the acquisition is going to be independent. Too many companies fall in between and it’s a tough environment for entrepreneurs to build businesses.”
“Creation in Asia, localisation everywhere else”
He’s excited about the innovation coming from Asia especially in the area of messaging platforms. “I think as an American company, if we are thinking of these factors on a part-time basis, we are not going to be part of the innovation.
“This is why we are placing the Innovation Lab here – to engage more actively in the innovation we are seeing in Asia.
With the Asia leadership team: “In the past, it was creation in the US, localization here. Now it’s creation here, localization everywhere else.”
He’s also excited about the team in Asia. On his visit, he joined a Royal Caribbean cruise to Penang with 500 of his team members and there were rumours of a pool party in which even the CEO got a dunking.
“What excites me most about is our teams – they are so psyched, so energetic. Every time I come here and meet them, I get jazzed up about the market,” adding, “It’s a feeling that lasts for three weeks.”
I asked him why he was so specific about “three weeks”. “Well, you get back to normal life, comfort doesn’t result in brilliance. It’s a reason why the young tortured artists create the greatest types of art. I am just an old rocker in the US, a tortured executive.”
So back to the beginning about “changing the world” – I asked him if being in travel has made him a nicer person.
“I think I’ve always been nice, I grew up in a family where respect and being respectful are good values. Travel has made me more open, more curious and appreciative of how others live.”
Is there a quality he’d like to improve about himself? “Other than my hair, I do think I can sometimes be more structured and consistent in my messaging, my operations. I throw my team for a loop and it can cause wasted reaction time.”
As to whether his vision of where the company wants to go and if it has changed from that first stepping-back-in-leadership moment, he said, “Go global. Focus on outside the USA and Asia is part of that.”
And it will continue to pursue its multi-product strategy. “We are unique in that we are both global and integrated on a multi-product basis. We are just getting started, the best is yet to come.”
So here’s to the next 10 years of playing the long game in Asia.
