Booking.com CEO on AI and the Future of Travel

21:14I said, I've never traded anything in my life. He said, ah, you'll be fine.

21:18Joubin Mirzadegan:Maybe that explains 2007, 2008. Who knows? Right, right. Who knows? So I, um, I said, okay. And I take the job more for a guy, pretty much a legend on Wall Street, called Barton Bix. Ended up being a head trader for him. And we're running back then about 16, Bill. Well, back then, that was a lot of money and stuff, but I hated the job. I didn't like it. I wasn't enjoyable. I said, I want to... So now it's the late 90s. I said, I want to get into... And I said, well, you know, this internet thing, really cool. And I got some technical, little technical knowledge, right? I got some investment banking knowledge.

21:54Um, so maybe I'm a lawyer, so maybe there's something here around. And a company called Priceline was looking for... had a corporate development. And I'm thinking, wow, this is great. So I decide I'm going to leave my job of being a trader. I'm going to go be a corporate development guy at Priceline. And this is now the fall of 99. I say, okay, I'll come, but I want to get my bonus for 99. That doesn't get paid until February 2000. So can I, you know, start the end of February? And they said, no problem. So, okay. So I leave being a trader at Morgan Stanley, and I go long internet. the last week of February 2000, which is a week before the Nasdaq peaked, thereby proving I should not be a trader, having just top-ticked the internet trade in 2000.

22:45And I go there, and when Priceland was the only really big internet company on the East Coast, and we went public earlier, before I joined the company in 99, in a week, it had a mark cap of over$30 billion, which again, back then, those numbers were really big numbers, very small number of revenue, but, you know, huge market cap. When I joined, it already dropped about$15 billion or so. And by the end of the year, it had gone down to a few hundred million.

23:15Joubin Mirzadegan:Think about that. 99 % decline. And everybody just thinks that even my mother at the time thought our company had gone bankrupt. And so now it's 2001. Then we start, we figure out a few things to do right. And then 9-11 happened in 2001. and travel goes down again. But we keep at it and it ends up being okay now. Now, you know, 27 years into the company, we're doing okay. And Priceline got acquired? No, no, no. No, Priceline was the acquirer. Okay. So I was head of corporate development and I'm going around. Also at the time, commuting to London because I'm running Priceline UK. We know the time to go through everything, my God.

23:58But anyway, I'm looking around because we have only one product. It's called Name Your Own Price. I don't know if you remember this product or not. So it was a... PriceSign was built not as a travel company. It was the guy who started it. His name's Jay Walker. And he had this idea of coming up with an idea that you can sell things in an opaque way, not showing everything about it. You bid for it and you are committed. You're going to buy it without knowing everything about it, but obviously a lot less than what the actual published price would be. So, for example, as an airline, which was the first big product for it, was the idea like, okay, you can bid.

24:38You've got to go from New York to L.A. Now, say how much you want, and you figure out I'm going to bid a lot less than what the published price is, and you're committed to doing it, but you don't know when you're going to take off in that day. You don't know when you're going to land that day. You may make one, two stops on the way. You obviously have no seat at all, where you're going to be at all. And you got to commit to that. So you got to have incredible flexibility in your thing, but you're going to save a lot of money. And it was actually pretty popular. A lot of people were going to save money.

25:09They would do that. So that could work for that. A hotel, it works even better. Because while you don't know which hotel you're going to get, we would say which area of the city it was, and you would say what star rating you want to go for. So, what you're really giving up is sort of like a commodity-type thing, a hotel, you know, go for a four-star center city. Eh, someone may say, it's not that big a deal. If I could save 50%, it's great, right? But they want to expand... That would be you. Yeah, well, I... That would be you. So, we had, now you name your own price for airline tickets and hotels and rental cars.

25:47He was, we're gonna build this out to name your own price for new cars, which is kind of an odd thing when you think about that one. Or name your own price for food, because we set up this separate thing, which is going to be with all sorts of supermarkets that you would be able to work out. You bid what you want online, and what your bid is, and then you go and you go pick it out and go, but, you know, so you say something like, what, like, tuna fish, but you don't know which tuna fish you're going to get. It's like, weird. Obviously, a lot of this stuff was crazy, and it wasn't good, and it all shut it all down.

26:21But when I, you know, in corporate development, And then we shit on all these ridiculous things. We're just doing, we're doing flights. We're doing hotels. We're doing rental car, which would make good sense in the U.S. at the time. Because for, you know, planes, hub and spoke, a lot of people are going to have to make a stop anyway. It's kind of a ruined day anyway. But I'm now doing this in the U.K. And of course, naming a price for an airline in Europe is a really bad idea. Think about it. You can go from London to Paris on Ryanair for, let's say, 10 pounds back then. because they're incredibly cheap.

26:54And that's direct, you know what you're gonna get. How many people say, well, I can save 50%, so I'll pay five pounds, but I may have to go to Frankfurt? No one's gonna do that. It's ridiculous. So it's stupid. The hotel thing is all around. But I'm looking around saying, we're gonna find somebody who knows how to sell hotels here. And I found a little company called Active Hotels, came out with a bunch of young startup guys in Cambridge University. And they were really smart people. And long story short, we ended up being able to buy them. And then with them, met some people, a company called Booking.com and Amsterdam, very similar thing, disclosing the price.

27:30The one big difference was it was called the agency model, where you get a commission from the hotel after the person stayed at it. Agent means that you don't, as a company, you don't get the money up front. So Booking and Active Hotels had that model, which is a lot of people like it. Who likes it? Let's say, well, the traveler likes it because they don't have to pay their credit card right away when they make the reservation. They may not be staying for three months. They're happy. The hotel likes it a lot because they get the cash right when the person checks out. The person is paying at the checkout.

28:09You only supply the credit card in the system to guarantee a reservation. Your credit card is not being charged. You actually pay the hotel when you leave the hotel. hotel gets their payment right away instead with people under the merchant model back then the hotel would get paid a month later or two months later so hotel liked it a lot but it was one thing really bad for active and booking was the fact is they weren't getting the cash until after the hotel got their money and then sent the money the commission to active or booking and when google and you're paying money to Google for performance marketing, Google would like to have their money right away.

28:52So when you're growing real fast, you have a very bad cash flow. You're spending more and more buying keywords, and you're getting more and more reservations, but your cash situation is just getting worse and worse and worse. Thereby, after having been born active and talking with the people that are booking, you know, they saw a good thing. oh, here's somebody who has some money who can help fund the growth. And of course, there wasn't a big venture community, and this is 2005 now, for that. So it ended up being great. We merged Active Hotels with Booking. And in addition, I had Priceline Europe.

29:28We put those all together into one company, and that was that. Two years later, similar went out to Asia, found a little company called Agoda, which is now the biggest pan-European travel company. They were doing the merchant model that I just talked about. And somebody said, well, why do you, you know, are bored, and so should we buy another company doing the same thing in hotels? And my thing is, well, it's different, because they're doing merchant booking. We combine the two into just one name, booking. Actually, well, booking's doing the agency model, and I don't know in Asia which one's going to go better.

30:03So we went with buying that, and then we had a go-it-and-then later on, We bought renalcars.com, a bigger company's doing rental cars. Then we buy Kayak, we buy Open Table. And it's really been great so far.

30:16Joubin Mirzadegan:When did you buy Kayak? Kayak, what, 2012 maybe? And Open Table? Uh, 2014 maybe. And when did you become the CEO? CEO of the whole thing 2017. Have you made any serious acquisitions since you've become the CEO? Oh, we tried to, well, I like to think that it's always a combined group. It's always a team effort. Fair. Every one of those things. Obviously, you had your hand in it. Every single one of those, I pretty much... Yeah, sponsored it. Right, yeah. But we tried to buy eTraveli. We have bought a number of small companies. Yeah, yeah, major. We tried, well, major. What's major nowadays? We tried to buy eTraveli, oh, God, two years ago now.

30:59More. And unfortunately, the EU Commission...

31:04Joubin Mirzadegan:Classic. ...said no. Classic. Here's the thing, though, that's really interesting about this. So we have booking.com. Yes, we have a lot of, we do a lot of business in Europe, no doubt. About 15, 1-5%, 15%. We at the time had essentially no air business in Europe at all. None. Okay. we set up a commercial agreement with e-traveli where people could get an airline ticket through our booking.com biz in a way using e-traveli as the back end and all that but tiny tiny little nothing so we have really no business to speak of into that and the eu decides that well we have a novel theory literally this is what it says in the in the uh this is a novel theory about ecosystems.

31:56And the fact is, you are a quote-unquote dominant player in selling hotels. Therefore, if you were buying this e-travelite company, it will make you more dominant because you'll be able to sell more hotels. Now, this is very different than what the rules were, what the law says. And they prevented us from buying that company. Now, it's in court right now. In fact, as of yesterday or today, They finally announced that we will hear a decision on this case in September 9th, and it's a very important case because the EU Commission deviated from their merger guidelines tremendously. And we'll see. Now, some other subsequent things since we tried to buy e-travel, there's the introduction of a law called the DMA, Digital Markets Act in Europe, very important law in Europe about the role of large digital companies.

32:55And they chose that certain companies are so big, so powerful, that they should be called gatekeepers and are subject to certain special rules. There are seven companies in the world that are considered gatekeepers. We are one of the seven. The idea that we are on the same par as Google or Meta or Amazon or any of the other six is absurd. And I say that all the time. However, the law is what the law is. And we have to obey it. And we do. And we do.

33:29Joubin Mirzadegan:What's the steel man the other side for me? Why would they make you part of the seven? Well, their belief, the way I've read it and the way I've heard it, is spoken in terms of the way they describe what are the qualifications to be in the DMA. There are certain quantitative levels. What is your market cap for a certain number of time? How many users? And basically, their belief is that we have a dominant position in selling online hotels in Europe. Now, during the whole issue of the main discussing with people in the EU, I would say, though, I said, okay, let me get this straight now. Are you telling me that you feel the only way you can get a hotel is to come online and use booking?

34:21Really? Let me ask you another question. How many times do you actually use us versus other ways to get your hotels over the last five years or so? Would you mind if we all look at each other? Let's just compare everybody's, you know, travel history and where you bought your hotels. Of course, it's absurd. But it is what it is. It is the law, and we obey it incredibly strictly. We do everything we can to make sure we are following the law because that is the law. And it's important. Look, you may disagree with the law. You may not think it's good for society. You may think it's bad, but it is the law, so you must obey it, which we do.

34:57What is your market cap? Now? Well, I like to look where it was in the summer, 180-something billion, but of course, the world, since some of the drop of some of the models and some people's mistaken belief that there's going to be more problems for people who are software-based companies, such as ourselves.

35:16Joubin Mirzadegan:How bad did you get hit? We're down about 25 % from our peak. That's nothing compared to... Some. Some are worse. So you're like 150. Well, I like to say this, too. It's also... You're trading around 150 billion, right? Oh, 125, 130, yeah. But here's the part of the thing, too. You're 130... You're 186 billion? I have to say this. We'd be better, but for the war? You know, that war is really bad for travel. When you have the Middle East in this kind of a conflict... Again, a lot of people in the US may not be aware of how important the Middle East is for travel in terms of Asia to Europe, Europe to Asia.

35:55They don't understand the incredible size of Dubai, the airport there, or Doha, and the amount of transit business just disappeared. It's horrible. Look, war's horrible. The impact on the people, terrible. Terrible, terrible. But from a business perspective, for us as a travel company, obviously, we have to also, you know, we look at what are our numbers being impacted. And it's not small.

36:22Joubin Mirzadegan:So it's the combination of the conflict and AI is gonna eat your business. The first thing was AI. You remember there was like February or something? And then, of course, the end of February, the war starts, it's like, boom, boom. Yeah, yeah, yeah, yeah, yeah. Yeah, not a good time. But we've been through it before. Look, we were the biggest player in Russia by far. And then, of course, Russia invaded Ukraine, and we immediately with, you know, pull out of our business there, that hit us mid-single-digit part, just poof, it was high-margin business there, gone. Of course, you know, pandemic wasn't so good for our business either.

36:56That had a little impact there, too, to say the least. Again, terrible for everybody who's been impacted by the pandemic, of course, but from a business perspective, I mean, we had days that we had negative revenue. It means you're refunding more than you actually have coming in.

37:13Joubin Mirzadegan:I'm just trying to get over the fact that you're a deflated$130 billion business and you are saving a couple hundred bucks on your hotel room. I'm still. No, but you have to have that attitude for everything. It's not just cost savings are really important because you only have so much money in most companies. Some companies seem to get away with it. Some companies, they can have unlimited ability to raise money to spend it. I'm a firm believer that you should always be cautious about your costs and don't spend foolishly. And spending money on luxury that you don't need. Look, people say, don't you fly private?

37:52I'm like, do we have a plane? Of course we don't have a plane. How can we have a plane? We're a travel company.

37:57Joubin Mirzadegan:You gotta eat your dog food. That's for sure. How big is, how many people are in the company now? 25 ,000. How many direct reports do you have? More than I should, 12 or 13 right now. You think it's more than you should? I think that to have real attention to everything going on, I, you know, it's probably a couple more than I should. But say, I mean, should, that should, because you want to have everybody who's in charge of each of the companies part of it. And then you have some of the core people, and I count my assistant, it's a direct report, count that, probably more than 13, I'll try a little bit more.

38:35It is something that you, I would like to spend even more time with somebody, direct reports i know they would like me to spend more time with them too what was the most surprising

38:44Joubin Mirzadegan:part of when you made the jump to ceo what was the thing that you were least expected god there's so many things and so where do you start i would say the one thing i wasn't i i just didn't think about at all was that every single thing you do is being looked at you know i walked through the building I walk through the office and stuff, and it occurred to me that you're being looked at by a lot of people that, by the way, they shouldn't because there's no reason to, but that everything you do, everything you say has to be thought of and measured and be thoughtful. You know, you're more careful about joking because when you actually speak to the person in the joke, it can be funny and good, it's fine.

39:37But if it's recorded, or somebody else hears it and it's misinterpreted, it can be very damaging to somebody that may not find it so humorous after all. So you have to be a little more cautious about that. Um, certainly I wasn't ready for some of the, um, security issues. That, uh, I didn't think about it at all.

40:02Joubin Mirzadegan:Like, in what sense? Personal security. Anything you thought was more fun or interesting as a CEO? The list is endless. So many things. You prefer it. If somebody gave me a time machine, go back in time, what would you have done different? There are probably an incredible number of things I would do differently. But choosing to take the job as CEO would not be one of them. I would still take the job. Amazing. Why amazing? Tell me, why do you find that amazing? I don't know. I think like most people talk about how it's lonely and hard and... Well, it is. You know. But so is a lot of other chops.

40:47And... I don't know about you, but I haven't had a chop yet where I wasn't hard.

40:52Joubin Mirzadegan:Yeah, that's right. I think, I don't know. I don't know if I particularly envy the types of problems that you have. Like being able to joke around, like, that sucks. Like, you can't, you know, you don't mean any harm, and you have to filter yourself. Which means, like, by default, most of the time, you can't actually be yourself. That, like, that sucks. That just sucks. Like, the security stuff, your family's security, your security, that sucks. Like, you know, you gotta deal with... Those are some of the, it's just that, like, that sucks. And so it's good to hear that you enjoy it. It's good to hear that you enjoy it.

41:28Joubin Mirzadegan:That's why I say it. But there are pluses and minus to everything in life, right? They're good and bad in everything. Every job has good and bad. And in the scheme of things, it's, you know, by the way, nobody put a gun to my head and says you have to take this job. And the same way I work at the pleasure of the board of directors at any single time, they can decide my services are no longer necessary. Thank you very much for playing the Exodus that way. Anytime they want, they can do that. And I am, they did, I'd say, okay, thank you very much. I would thank you for the honor of having served.

42:02However, it works the other way, too. At any time that I feel that, you know, not writing anymore, I need to move on, then I have to, it's my obligation to myself and to the board and the company to arrange for somebody else who I think would do the job better than I'm doing it.

42:23Joubin Mirzadegan:I don't know, I don't find this as some sort of existential crisis type thing, And I say, you know, I'm very glad to have the opportunity to help what I believe is actually a good thing. Travel is wonderful. Let me ask you a question. I'm going to ask you some memories. Tell me a few memories of yours. I'll tell you how that you really think are great memories in your life. Now, how many of them were with travel? I bet a bunch. I bet a bunch of them in your mind. and you go to anybody asking that question, sure, they'll say, maybe their wedding day, maybe, you know, the birther kids, absolutely, they'll show up, obviously, all the time.

43:04But other times, it'll be like the trip they took with their parents. There's so many... Travel is so... It brings people together. Look, our mission is to make it easier for everybody to experience the world. I really love the fact that we're hoping to contribute to that. And through technology, we're able to do it so much better. I mean, I'm an old guy. I remember what it used to be like when you did not have access to things that you have now with technology. I mean, look, I remember so well the problems of communication, of how am I going to get from here to there? Where am I going to stay?

43:40And the issue of I don't know, is this a good place or a bad place? Now we can do so many things with technology. There's so much better. And it's only going to get even better now with AI. The things that we are doing are just so fantastic. What's the last trip you took?

43:55Joubin Mirzadegan:I am going on one tomorrow. Where? To Todos Santos in Mexico. Cabo, and then... Yeah, okay. How you getting there? I'm flying, and then I'm getting in a car for a dear friend's wedding. Okay. Friend's wedding. Now, destination wedding. Can you imagine the complexity of that? Must have been incredible, right? Putting that together. Yeah. Do you think that's something where AI could solve that problem so much better and easier? And I'm even thinking, I mean, the person thinks, obviously, they probably had to hire someone to be the wedding coordinator, right? Yeah, yeah. Okay, now, what that person's doing is going around, and that person already knows who the good florist he is, who's the good band, who's the good...

44:40All that stuff. Well, that's something that AI should be able to solve much faster, much easier, much more reliably than it's done by a human, perhaps, or the human can oversee, but still, there's so much that could be made done much more efficiently and that's gonna happen all trips particularly complex trips and that's what we're building right now and we're seeing it right now we have some tools out that are just so fantastic and it's only gonna get better well it seems like from what i can tell you're not retiring anytime soon i don't have any plans yeah yeah thank you for doing this well thank you for thank you this is really fun i had no i had no idea are you hiring We're always hiring, but we didn't talk much about this.

45:25Unfortunately, we're always thinking, what are the changes in our workforce going to be due to the benefits of AI? There's a cost, a human cost to that. And the human cost is, what does it do to employment? And what are we going to have to do? What changes are we going to have to make? One thing that I've made very clear to my head of human resources, and he's just such a great person, is really kind of how are we going to be able to have every single employee be AI literate, able to use the tools, and that helps the company, but also helps them. So, their careers are more advanced than they are able to.

46:07So, if such things happen that this person's job role is no longer necessary, and we can't find another spot for that person, at least that person now has been developed so they will have a better opportunity going forward somewhere else. And that's really important for my mind

46:25Joubin Mirzadegan:to be able to make sure that we're doing what we can. But it's gonna be a very interesting question in society how we handle this very rapid change. And everybody who is, and I'm a boomer too about AI, but part of the problem is that we had to also consider that there are going to be costs. There are going to be impacts on people that we need to think, how are we going to deal with this? And how do we try and make sure that we don't do the way we've done in the past is let people just fall off the waste. I mean, look at Harvey, right? Harvey and all the other types of legal type software that's making it much more efficient.

47:07Or look at the number of investors...

47:08Joubin Mirzadegan:You need less lawyers because of Harvey. Exactly. And you'll need... Or paralegals. Wouldn't it be interesting if we went to all the big investment banks and we asked, how many analysts out of college did you hire in 2018? And how many are you planning to hire in 2028? And I'm willing to bet that that number will be significantly lower. So you have people who spend a huge amount of money to go to universities, get good degrees, and they were expecting to come out and maybe get a job at a big investment bank as a good starting career job, pays extremely well, those jobs aren't there. So you say, oh, well, they'll just go over and be tech people or something.

47:44Maybe, maybe not. So I think we'll have some significant rough waters ahead of us.

47:52Joubin Mirzadegan:Yeah. When you hear the word grit, I ask every guest, what do you think of? Uh, first thing is, of course, the book, because just by nature. Me too. I mean, how could you not? Yeah. Um, and I went, you know, I wore an undergrad Penn, and she's at Penn, so. She's a legend. Right, so of course that's what I first think of. But what I think of really, the great thing about it is, um, and I talked about this morning, and we had a town hall with our open table employees, and the question was, career advice for people. you know what could I what I give it and I said work harder than anybody else because most of your life is going to be determined by things you have zero control over most of your life however there are a couple things you can control and one thing you can control more than most obviously other impacts can you even do that but you can try to work harder than anyone else And I believe, I can't prove it, of course, but I believe that part of my ability to do okay in terms of career was due to very hard work.

49:04Not because I was that much smarter, but hard work. And just going back, we didn't talk about this stuff. Part of that came... So I was, um, unfortunately, I had a stroke when I was 17. a pretty significant left hemisphere. I was completely paralyzed right side. Lost all my language abilities. Couldn't speak, couldn't read, couldn't write. Um, and that was the end of my junior year in high school. And that was a hard time. But I really worked hard to get back, to work really hard to try and recover and do better, better. And that discipline, working hard, grit. don't let don't let the obstacles block you find a way around it over under it you have to through it so you we talk a little about working out and i try and work out every single day and a lot of days i don't want to do it but i know there's a benefit to working hard in working out because i know there are health benefits to that so i do it so i would say grit grit is that perseverance when faced with difficult problems and pushing forward and i think i think that is something that it'd be better if more people had that i think is grit no doubt

50:30Joubin Mirzadegan:that's it for now if you like the episode please leave us a review or go back into the archives where we've done more than 200 episodes with some fantastic folks this podcast is a client Perkins Production, and I'm Juven. Thanks for listening.