Booking.com with Jetsetter & Room 77 CEO Drew Patterson

Acquired trains its lens on the “second or third best acquisition of all-time”, Priceline’s 2005 purchase of Booking.com. Our heroes are joined by friend-of-the-show and former Jetsetter & Room 77 CEO Drew Patterson to help understand how this little-known startup from The Netherlands grew into the largest travel company in the world, with nearly $8B in annual revenue. Was this deal even better than Instagram??? We debate, hotly. Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Topics covered include: The biggest startup you’ve never heard of (in the US), Booking.com http://Booking.com, and its parent company Priceline (yes, the William Shatner Priceline)Booking’s founding in Amsterdam in late 1996: by recent college graduate Geert-Jan BruinsmaSkift.com’s Definitive Oral History of Online Travel https://skift.com/history-of-online-travel/The travel industry's GDS's (“Global Distribution Systems”) https://en.wikipedia.org/wiki/Global_distribution_system and the development of Sabre https://en.wikipedia.org/wiki/Sabre_(computer_system) How Bruinsma raised the initial money for Booking: by emailing anyone he know who had an email address OTAs ("Online Travel Agencies”) and how they operate; the "merchant model" versus the “agency model"The role of search in online travel Bill Gurley on Conversion: The Most Important Internet Metric of All http://abovethecrowd.com/2013/10/02/conversion-the-most-important-internet-metric-of-all-revisited/Expedia’s early flirtation with Booking, and decision not to acquire the companyPriceline head of M&A Glenn Fogel’s vision for how powerful the agency model for OTAs could become in EuropePriceline and Glenn's 2004 acquisition of Active Hotels in the UK, followed by the 2005 acquisition of Booking for $133M and the combination of the two businesses into Booking.com http://Booking.com Booking’s incredible growth in the decade since the acquisition, from less than 20M room-nights to over 500M, and $7.8B in revenue in 2016 The Carve Out: Ben: Scott Forstall talking about the original iPhone at the Computer History Museum https://www.youtube.com/watch?v=zjR2vegUBAoDavid: The Big Sick https://www.rottentomatoes.com/m/the_big_sick/Drew: Bloomberg’s Money Stuff by Matt Levine https://www.bloomberg.com/view/topics/money-stuff

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Rosenthal?

  Drew, I think you might be our most prepared guest ever. This is great. Drew has printed out notes and pen and paper here. This is awesome.

• 0:10Speaker 01

  Yeah, I mean, I'm a big fan. You know, I just want to blow my shot here.

• 0:15David Rosenthal?

  Your shot at stardom.

• 0:28Ben Gilbert?

  Welcome back to episode 41 of Acquired, the podcast about technology acquisitions and IPOs. I'm Ben Gilbert.

• 0:36David Rosenthal?

  I'm David Rosenthal.

• 0:38Ben Gilbert?

  And we are your hosts. Today, we are covering the 2005 Booking.com acquisition by the Priceline Group. Now, this acquisition is legendary, and there are tons and tons of sort of interesting nuances to understanding the industry. So we wanted to wait until we had a guest with deep travel experience and really industry domain knowledge to make sure that we did it right. So today, our guest and listener of the show is Drew Patterson, the CEO of Jetsetter and Room77.

• 1:08David Rosenthal?

  So yeah, we are lucky to have Drew, who is a "grizzled travel industry veteran", to help us unpack this one. So Drew started his career at Starwood Hotels, where he managed distribution and pricing, and then jumped into the world of online travel at Kayak, where he was VP of Marketing from 2004 to 2009. He left to found Jetsetter, and thank you for doing that, by the way, because you guys booked Jenny and my honeymoon, so very much appreciated.

• 1:38David Rosenthal?

  And he was CEO there at Jetsetter until 2012, when he moved to the West Coast and founded another travel company that was quickly acquired by Room77. And he served as CEO there at Room77 until the beginning of this year. So thanks again, Drew, for coming on and sharing your travel industry knowledge.

• 1:56Ben Gilbert?

  Guys, great to be here. Longtime listener, first time talker. Can't wait for the show.

• 2:01David Rosenthal?

  We can't either. Let's, we are ready to dive in.

• 2:05Ben Gilbert?

  We are, we are. And listeners, if you listened to last week's episode, you may know this, but if not, we are skipping the bit about asking for reviews and letting you know about our Slack this time with an extremely important message. We are launching the annual Acquired Survey and we'll have it open for about a month. So whether you're a first time listener or a long time fan, we would love to hear your thoughts. And in fact, this is so important to us that it's actually more important than any reviews, any begging you to share with your friends, any, any of the normal stuff that we do because, you know, as you guys know, we often lament the lack of data available to podcasters and it's really important to us to learn more about who you are. Some of those reasons include, number one, we need your honest feedback about how to

• 2:49Ben Gilbert?

  make the show better. And based on some of the early responses we've already read, you guys have been fantastic at doing that. So please help us out, tell us more information. We'd like to understand who you are so we can better tailor the content and the guests to our audience. And then third, we'd like to learn more about who you are to share completely anonymously without any identifiable, identifiable information with our sponsors to really help them paint a picture of who's listening out there. So that's about, about all I have to say about that, except that we, we are sweetening the deal by saying that we will be raffling off one pair of Apple AirPods. So if you'd like to be eligible to, to win a pair of AirPods, click the link in the show notes, go to acquired.fm/survey. It'll take about five to 10 minutes and we would really, really appreciate it.

• 3:34Ben Gilbert?

  All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 3:53David Rosenthal?

  Yep, your risk surface changes every week now. A vendor turns on an AI feature, or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 4:14Ben Gilbert?

  Right, and that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap, and the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 4:35David Rosenthal?

  In half, which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 4:54Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you. So David, are you ready to take us into the history and facts?

• 5:24David Rosenthal?

  Let's do it, as always. So many people, at least here in the US, I think, aren't totally aware of Booking.com because it's very big in Europe, but not as big here yet in the States. And they probably also don't know that it's actually owned by Priceline. And if people in the US think about Priceline, they often think about William Shatner and the Priceline negotiator, which is definitely a big part of Priceline and internet history. But that's a story for another day. But today, we're going to talk about how Priceline, of which Booking is by far The majority of it is actually the largest travel company in the world.

• 6:07David Rosenthal?

  And after SAP, I think it's actually the second largest tech company that's ever been built in Europe. And has a $91 billion market cap. That's billion with a B. So just for some reference, that's equivalent to three Airbnbs. And it's bigger than Netflix. So, you know, it's not a company that a lot of people know about, but it is definitely, you know, top 10 most successful internet startups, probably of all time.

• 6:37Ben Gilbert?

  Yeah. And when I was looking at the, you know, when I said legendary earlier, I mean, that stems from when we first started doing the research for this and you just start seeing some of the, the high level stats of, you know, what a, what an enormous company this is and, and, you know, what a behemoth in the travel industry. I think to Americans and, and even some, some Americans in tech, it's, it's pretty, you know, we don't know much about this company.

• 7:00David Rosenthal?

  Yep. Well, and that's why we have Drew here today. So I'll start out with the history and facts and Drew, please feel free to hop in at any point along the way.

• 7:12David Rosenthal?

  But the company was actually founded in Amsterdam, in the Netherlands in late 1996 by Geert Jan Bruinsma. And major apologies to all of our, all of our Dutch listeners, because I'm sure I, and to Gert, because I'm sure I just butchered that. But he had just graduated from college and he, this was late 1996 and he felt, you know, kind of in his core that the internet was going to be a thing. And so he decided rather than going to work for, you know, a company like most of his classmates, he was going to become an internet entrepreneur. But there was just one problem. He didn't have an idea. So he starts casting about for an idea of what type of company he would start.

• 7:56David Rosenthal?

  And apparently according to, there's this great, great oral history of online travel that the website Skift published that we'll link to in the show notes. But according to an interview with him in this, this oral history, he was having dinner with some friends one night and they were talking about. Problems that they had and they realized that booking travel across Europe was actually a really hard thing in those days because you had to call up the hotels that you wanted to stay at on the phone. And of course, in Europe, people speak all sorts of different languages. So if you didn't speak French and you wanted to book a hotel in Paris, you were kind of out of luck. And he thinks to himself, well, I bet this is something

• 8:37David Rosenthal?

  that the internet can solve. So he goes and starts doing some, doing some research and he thinks, well, it must be other folks out there that are already attacking this problem. But it turns out that there were no major online travel companies at that point. There were, some of the hotels in the US had started having their own online booking system. So he went on the Hilton website. He actually looks at the code for Hilton.com and takes some quote unquote inspiration, according to him, from how they managed their online booking system. But he pretty quickly codes up an MVP for a multi hotel booking website.

• 9:20Ben Gilbert?

  And David, if only there were someone to aggregate these disparate one-off hotels that had their own e-commerce system.

• 9:27David Rosenthal?

  And he calls his little project bookings.nl, NL for the Netherlands. And that is how booking.com was born. And in the early days, unsurprisingly, again, it was actually mostly Americans that used the site, Americans who were traveling to Europe and looking for a way to book online. Because in those days, it was only Americans that really had access to the consumer internet. There was AOL at the time. Lots of people, in common people in the US were online, but in Europe, it was much more still of a kind of confined academia type thing. And average Europeans didn't have access to the internet in the same way. So ironic, because Booking

• 10:10David Rosenthal?

  ends up becoming such a large company on the back of European customers, but the initial customers were Americans.

• 10:16Ben Gilbert?

  Yeah, and it's really easy to forget to sort of the roots of the internet in sort of American university and defense infrastructure. Like, of course, it's not elsewhere in the world yet. Like, it was brand new and it was invented in the US. And, you know, it's kind of shocking to imagine a world where like, people are playing around with websites in the US, Amazon's being founded in the mid 90s, you know, but like, it hasn't really made it everywhere else yet.

• 10:43David Rosenthal?

  Yep. It was a different time. So, and also a different time, you know, venture capital, and in particular, venture capital in Europe, was a very, very different kind of proposition. And Gerd had a tough time getting funding. So what he decided to do, and again, he talks about this in the oral history, and I just love this, he needed funding. So he decided that he was going to email everyone who he knew who had an email address, because he figured if they had an email address, they at least knew something about the internet. That's a direct quote from him. I just love that. So he emails about 50 people, and 18 of them end up investing. And he raises about 50,000 euros to get

• 11:27David Rosenthal?

  going, hire some early employees. And they start to get off to the races. And what they evolve into, and this is where we're going to spend the bulk of this episode and want to bring Drew in here, they really become one of the first online travel agencies. So the same general model as Expedia, or Priceline, or Orbitz, or Travelocity here in the US. And there are kind of three pieces to the business that they started. One, they need to acquire the travelers. Two, they need to acquire the hotels, the supplies, the supply and demand. And then three, they need to provide some form of customer service.

• 12:09David Rosenthal?

  So, you know, Drew, how does, for our listeners who aren't as familiar with the OTA world, you know, how did all this evolve?

• 12:18Speaker 01

  You got the basics of it, right? All these businesses really are marketplaces about how they bring together supply and demand. And it's interesting to think back to where this industry was as Booking.com was starting. We were talking a little bit about who had email addresses and like it was all AOL, it was MSN, it was all these kind of dial-up services. And we forget it now, but the real things that made the first generation of OTA businesses in the US were like portal tenancy deals.

• 12:44David Rosenthal?

  Yeah.

• 12:44Speaker 01

  Do you remember these? It was like Travelocity got the deal on Yahoo and therefore Travelocity was by far and away the leader in this category. And actually, Travelocity managed to get a couple of those. I think it was AOL, it was Yahoo, I forget which the other ones were.

• 12:58David Rosenthal?

  Yeah, and of course Expedia, founded by Rich Burton up in Seattle, was part of Microsoft in the early days. So they had MSN, of course.

• 13:05Speaker 01

  Exactly. So they had that as a pretty kind of healthy locked-in source of demand.

• 13:09David Rosenthal?

  Yeah.

• 13:10Speaker 01

  And the other side, exactly as you said, was how do you start to get then a supply base that fits with that, right? Again, early days of the internet, not that different than a newspaper, right? What are all the kind of categories of interest and how do we start to fill them out, travel being one of those? And so what you saw with the first generation of these online travel agencies was they're basically just a front end to the GDS systems, the global distribution systems which were used by travel agencies to make flight reservations, to make hotel reservations and the like. And so you had this kind of big supply base that was already in place, right? Travel agents always got commissions and these GDSs provided travel agents with rates and availability, the tools to go ahead and make a reservation on a consumer. Expedia and Travelocity and the like were a front end that the average consumer could use.

• 13:55David Rosenthal?

  And that's one thing, actually, I hadn't focused as much on, but maybe, could you talk a little bit more for our listeners about this whole GDS system? Because it existed before the internet, right?

• 14:08Speaker 01

  Yeah, I mean, it goes back to, I think it was like 1973 when the first GDS was built. I mean, these were actually byproducts of the airlines. So American Airlines, Bob Crandall famously realized they needed some computer system to tie all their travel agents together. That was the genesis for Sabre, which was the very first GDS. And of course, that then served as the underpinnings for all of these online travel agencies for a long time. Wow, the parallels to the real estate industry are amazing here where you look at, you know, the MLS systems existed long before you had Zillow, but there's sort of this, David, you mentioned Rich Barton, this Barton-style data-to-the-people way where you can take these systems that should just be queryable by the general public but have been locked up by

• 14:52Speaker 01

  a professionalized industry for a long time. And it really makes you wonder like what else is out there that has, you know, private databases that are linking an industry together that really have the potential to be brought online?

• 15:04David Rosenthal?

  Yeah, and so for booking and in Europe, obviously, there's the GDS in America. Did the GDS extend to European hotels as well?

• 15:16Speaker 01

  Yes, interesting point that kind of drives at both the structure of the industry and I think part of what set Booking up for success over time. You know, if you think about like what kind of hotels were on the GDS, you know, it was a certain kind of hotel. So like, rough and tough, there are 500,000 hotels in the world. Of that population of 500,000-

• 15:32David Rosenthal?

  Which is crazy, by the way. Like, I think a lot of people in the travel industry don't realize that, like, 500,000 hotels in the world, that's a lot.

• 15:40Speaker 01

  It's a huge number, you know, at least that's what TripAdvisor would tell you they've got hotel reviews on, right? So, you know, again, that's the kind of the biggest sample

• 15:49Speaker 01

  of hotels. But the GDS only has about 75,000 hotels on it, you know, varies a little bit from GDS to GDS. But the kinds of hotels that are generally on the GDS are, well, going back to our example with Kier, you know, it's the Hiltons of the world, it's the Marriotts of the world. You know, it's the kind of hotels that get booked by travel agents, which tend to be stayed in by business travelers or folks that historically accessed travel agents. And so they were franchised and more sophisticated and had better technology. You know, it wasn't a 20-room pension outside of Rome, which is much more commonly used by the European traveler.

• 16:20David Rosenthal?

  Yeah, and that really speaks to, you know, we'll get into this throughout the episode, but- The differentiation and the value that Booking was able to build, while it was really hard in the beginning, and we'll get to, you know, they end up getting acquired by Priceline in 2005 for $133 million. I mean, nobody recognized the value here. But because they were able to build this proprietary long tail marketplace of supply, they really had something no one else could access. It reminds me in a lot of ways of, you know, the difference between Google and Yahoo, right? Like on Google, you could, you could type a query on Google and they had access to the entire long tail of the internet.

• 17:02David Rosenthal?

  Whereas Yahoo with the directory model, you know, only had the head. And so for people, you know, Drew, like you're saying, who are looking for something specific in Europe, it was Booking or nothing.

• 17:14Speaker 01

  A hundred percent, and it's a great analogy, right? And, you know, where that really becomes clear, and I guess we're kind of jumping ahead.

• 17:19David Rosenthal?

  Oh, we always jump ahead here.

• 17:21Speaker 01

  But, uh, you know, if you think of like, what's the advantage of having the tail? It's far greater relevancy, right? Like, it's the things that you actually care about. You know, and the consequence of that is conversion rate. So again, not to get too far ahead of ourselves, but the consequence of having all this kind of long tail inventory is far greater relevancy than those people who are relying on just the GDS might have enjoyed.

• 17:40David Rosenthal?

  Yeah.

• 17:40Ben Gilbert?

  Yeah, and while we're, while we're sort of on this topic of discussing, you know, the OTA is basically a marketplace. Drew, before we kind of get into the future evolution here, could you do some, uh, some sort of definitions for us of online travel agency versus travel aggregator versus meta search? Like, how do these things interact and how are they different?

• 18:00Speaker 01

  Sure, so, um, you know, the lines are a little blurry between them, but in general terms, online travel agencies take reservations. They make bookings on behalf of consumers. And so they aggregate inventory from lots of different sources, you know, generally directly from hotels, airlines, rental car companies and the like. And again, they will enable the consumer to make a reservation. Whereas meta search engines or aggregators are a layer of abstraction above that. You know, so they-

• 18:26David Rosenthal?

  So that's Kayak, that's-

• 18:27Speaker 01

  Exactly.

• 18:28David Rosenthal?

  Trivago.

• 18:28Speaker 01

  Trivago, yep. Uh, what, what TripAdvisor has increasingly done, you know, meta search where they're, uh, Google's doing today. They're pulling rates and availability from, directly from suppliers, also from, uh, from OTAs and other intermediaries. Showing you prices and letting consumers to decide what they want and then handing you off to an OTA or supplier to complete the transaction.

• 18:49David Rosenthal?

  Got it. So let's go back. We'll kind of finish out the history and facts and then there's a bunch more to dive into here. So a couple of years go by, Booking starts to sort of slowly grow its supply base and its demand base in Europe, shifting as Europeans are coming online to actual European customers. And one thing that's actually another side note that I would just want to put a pin in to come back to, on the demand side, this is really, we mentioned search engines, as search engines start to rise in prominence as kind of the front door to the internet, travel, and in particular OTAs, become one

• 19:30David Rosenthal?

  of, if not, I think, the biggest category of spend in terms of search engine advertising, because the link between searching Google or whatever search engine for a villa in Rome and an online travel agency is you're so far down the funnel, it's a perfect type of advertising for these companies.

• 19:50Speaker 01

  Yeah, travel is a really nice use case for search advertising for a couple of reasons. The two biggies are, number one, it has high purchase value, right? So the relatively large transactions. And number two, it's a very close combination between search and transaction, right? So unlike searching for a home, unlike searching for a car, all these are completed online. And so as a first case of direct response advertising, travel is a really good use case. And so again, you saw the OTAs as one of the biggest categories of spenders on Google.

• 20:20David Rosenthal?

  Yep. So Booking is growing slowly. They end up merging in the year 2000 with another group, also in the Netherlands, also called Booking, called Bookings Online. And that's when they changed the name to Booking.com. Couple of years go by, and then in 2002, Expedia actually decides that they want to enter Europe from the US. And they understand the European market's different. They need access to all this supply in Europe. And so they come over, they look at a bunch of players, and they get very, very close to acquiring the new Booking.com. They do six months of diligence. And then, right at the end, right before they're about to close the deal,

• 21:03David Rosenthal?

  the US Expedia board ends up rejecting the deal, vetoing it. And the reason that they do so, and this is the next kind of topic we want to dive into with Drew, is they're really worried about Booking's model, which is different from the US OTAs, their business model. Booking uses the "agency" model, whereas in the US, Expedia, Priceline, Travelocity and the like, use the merchant model. So Drew, can you kind of help our listeners understand what the difference is between the two? And why the US guys might have been so spooked by this?

• 21:38Speaker 01

  It's funny looking at it today because it seems so obvious. This agency model is great. But at the time, the merchant model was highly desirable and was leading to a lot of the success that the big players in the US had. So the big difference between the two, the merchant model is effectively a wholesale model. In the merchant model, the online travel agency contracts for wholesale rates with a supplier. So Expedia would go to Hilton and say, "We'll pay you $100 for this room, and we're going to market up 20%. We're going to sell it for $120."

• 22:06David Rosenthal?

  So this is the Amazon retail business analogy, where Amazon's taking inventory on the items, they're setting the price and selling it?

• 22:15Ben Gilbert?

  And the merchant actually holds, in this scenario, the OTA actually holds the inventory risk, right?

• 22:22Speaker 01

  No, this is why it's such a great model. I don't have to, as an OTA, I don't take any inventory risk. I'm just going to agree to what my net rate will be. If I don't sell the rooms, it's not my problem, it's your problem. I can market up at that point in time as much as I wanted. So again, you had instances where, one of the leading practitioners of this at the time was HRN, which went on to become Hotels.com. But there were instances where they would have, in New York City, like on sold-out nights, they would contract for a $300 rate at a Holiday Inn, and they would sell it for $900 because it was the only inventory left in the city. I was like, "These guys are bannets." I mean, brilliant entrepreneurs.

• 22:58David Rosenthal?

  So this is like, if you can make this work, this is even better business model. It has the best of being a retailer in that you get to set the price and essentially control the inventory. But all Also the best of a marketplace where you don't take any risk on the inventory.

• 23:12Speaker 01

  Exactly. And actually, it's one even better than that, which is it has a negative working capital cycle because I collect money from the consumer when I sell this and then I remit funds to the hotel 30 days after you stay. And you know, if it's a two month average booking window, I'm holding everyone's cash for 90 days.

• 23:27David Rosenthal?

  Okay, so that's the merchant model. That's what Expedia and the US guys have. Now, Booking has the agency model. What's that?

• 23:34Speaker 01

  So the agency model was a kind of traditional travel agency model. That meant that they were going to take a commission. The commission was going to be paid not by the consumer. There wasn't any of this kind of markup, but the supplier, the hotelier in most cases, would pay them a commission based on what they sold. And they would pay the commission after the booking took place, right? So if you don't show up and there's cancellation, you know, again, I don't get my commission against it. And the commission rates tended to be much lower. You know, they were, Booking.com started at 5%. Typical industry commissions were about 10%. And as you compare that to the merchant model, which was 25, 30% margins at the time.

• 24:06David Rosenthal?

  And negative working capital. Okay, so you can see why you're the Expedia board and you say, you know, this doesn't seem like the right model here. These crazy booking guys started by this college student, you know, they have no idea what they're doing.

• 24:20Speaker 01

  And to have some sympathy for them at the time, right? I mean, they were on top of the world, you know, they Travelocity had been the leading player. Expedia displaced them.

• 24:27David Rosenthal?

  Yep.

• 24:27Speaker 01

  Expedia recognized, and I think one of the, you know, the interesting things about OTAs, when you look at their economics, what drives their business, it's really the hotel business that drives their profitability. It's a much more profitable piece of business than flights. Expedia recognized that early, you know, bought a company called Travelscape, which was a, you know, one of these kind of early merchant businesses, then turned around and bought HRN, which became Hotels.com.

• 24:49David Rosenthal?

  Yep.

• 24:50Speaker 01

  Which, as it happened, was powering the hotel business on Travelocity. So this kind of master stroke, you know, they completely undermined their competitor. They got, you know, they identified what the most profitable and exciting part of the business is, and they controlled it all.

• 25:01David Rosenthal?

  This is like when, when Google bought Overture.

• 25:04Speaker 01

  Yeah.

• 25:05David Rosenthal?

  This is great.

• 25:06Speaker 01

  Exactly. And now you want me to turn around and like, you know, go buy some rinky-dink thing in Europe. That's much less attractive.

• 25:11David Rosenthal?

  So the Expedia board looks at all this and says, we've got the golden goose here. We've got the best business model. You know, people say Google's the best business model of all time. This might be even better. Why would we want to do the agency model? But in the long run, of course, it's the agency model that really wins here. What, what was it about that in the long run that ended up being better?

• 25:34Speaker 01

  So the agency model ultimately was superior, in part because it was a better consumer proposition. You know, the merchant model wasn't so great for you, the consumer, because I had to pay you upfront.

• 25:45David Rosenthal?

  Right.

• 25:45Speaker 01

  As opposed to the agency model where I could cancel if I wanted to. I had a lot more flexibility. It also wasn't so great for the supplier, you know, from the standpoint of a hotelier. I don't really like this merchant model thing where I'm paying you 30%, you know, you have more control over setting price. You're keeping cash, not me. So that wasn't great. But again, in fairness to the Expedia board, they kind of looked at the world and were like, you know, we're in a dominant position. Why do we need to move away from this? And I think what they failed to realize was just the size and magnitude of this market.

• 26:15David Rosenthal?

  Yeah.

• 26:15Speaker 01

  And the level of, you know, just the power and the potential of how quickly this was going to grow. That in combination with what we were talking earlier, the potential for AdWords, you know, a really kind of cost effective tool that would allow a business and only travel agency to scale pretty quickly. And where those things came together was, again, going back to the point we're making earlier, was the long tail. Because this, this agency model made it really easy for booking.com to clean up the long tail very cost effectively and very quickly. It was a much lighter way to approach contracting, got a lot more hotels on board quickly. You know, they didn't have to go out and negotiate for net rates with, with an individual hotel. You could just fill out Gert's form, send it back and away you go.

• 26:53David Rosenthal?

  And this is, I forgot to put it in our notes, but, but also in the, in the oral history with Gert. When he, when he started, the way he onboarded hotels is, is he sent them postcards essentially with like a form to fill out on the card if they wanted to be included in the, in the marketplace. And then they just, you know, mailed it back to them.

• 27:13Speaker 01

  Pretty amazing.

• 27:13Ben Gilbert?

  Data, it's really efficient.

• 27:15Speaker 01

  E-commerce at its best.

• 27:16David Rosenthal?

  Yeah, e-commerce at its best. Hey, MVP bootstrapping.

• 27:19Speaker 01

  Well, the dirty secret behind the, you know, the merchant model was for the, for the longest time, I mean, literally, you know, up until probably five years ago, like a huge chunk of reservations were delivered by fax machine, right? So, you know, you were, you were making reservations. Maybe it was 10 years ago, but yeah.

• 27:33David Rosenthal?

  Well, I bet a lot of these hotels, you know, might not have had internet connections. So you had, it was kind of like, you know, kind of like the early days of, of the food market and Grubhub and Seamless, you know? Those were all orders delivered by fax machine too.

• 27:46Speaker 01

  Yeah, totally.

• 27:47Ben Gilbert?

  Right, right. Internet, let alone having wifi marked on your booking.com reservation. Well, one point I want to make here before we move on is that there's an incredible similarity to the ebook market here. I mean, when we talked with Brad Stone, I don't think we discussed this on the show, since we were talking about the Uber Didi deal, but he talks so much in the Everything Store about the struggle that Amazon went through with ebook pricing and the wholesale versus the agency model there, where Amazon kind of prefers this wholesale model where they can pay a fixed price for something and then they have all the pricing control and can market up and down however they want. And they have incredibly sophisticated variable pricing to do that. But the sort of, I think it was

• 28:29Ben Gilbert?

  the European, some kind of EU book consortium that really had a lot of power in this industry and forced them to use the agency model. And it was a big concession they had to make when going to market.

• 28:40David Rosenthal?

  And I wonder, I mean, that must have been a big piece that ultimately led to the development of Marketplace within Amazon.

• 28:47Ben Gilbert?

  Gotta be.

• 28:48David Rosenthal?

  Which is, you know, why Amazon is what it is today. Power of marketplaces.

• 28:52Ben Gilbert?

  It is. And that's truly one of my favorite things about this show is like seeing the patterns between different industries. They evolve at different speeds. They evolve with different waves of technology. But at the end of the day, there's really only so many business models. And there's really only, you know, a finite number of ways that different players in an industry can interact with each other. And we kind of see the same playbook roll out over and over again.

• 29:15David Rosenthal?

  Are you, you know, making an apologist argument for venture capitalists, Ben?

• 29:21Ben Gilbert?

  You might think.

• 29:22David Rosenthal?

  We're not self-serving on acquired at all.

• 29:26Ben Gilbert?

  All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is no longer the hard part.

• 29:41David Rosenthal?

  Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 29:55Ben Gilbert?

  Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI control tower.

• 30:05David Rosenthal?

  Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

• 30:22Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 30:38David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 30:55Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 31:04David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. So, back to the history and facts. All this happens, Expedia ends up passing, leaves Booking and Gert at the altar. And then Gert makes a decision, which probably, and he talks about this, you know, made the right sense for him at the time. They just, you know, had this deal fall through. He ends up selling Booking.com, not to Priceline, but to an investor group. So a major European investor group, a consortium, comes in and

• 31:44David Rosenthal?

  acquires a majority stake in Booking. This is in 2002, 2003. And then, over the next couple of years, there's kind of one guy, sort of in the US, that starts to see what we were just talking about with the power of the agency model, and starts to wonder about the future of how long kind of the music can keep playing with the merchant model. And that guy's name is Glenn Fogel, who is now the CEO of the Priceline Group, which includes Booking, of course. But at the time, he was Priceline, which was just Priceline. The Priceline Group also includes Kayak and OpenTable now, perhaps future shows. But at the time, Glenn was the head of M&A for Priceline.

• 32:29David Rosenthal?

  And he comes over to Europe and he starts digging in and realizes this dynamic with the agency model that it really does align interests better and incentives between the travelers and the hotels. And not only that, but people in Europe also travel a lot more than they do in the US because we're workaholics here and we don't take as much vacation. So you've got kind of a better product model, a more active customer base. And he starts to argue within Priceline that they should really start acquiring some of these companies. So the first acquisition that they make, led by Glenn, is actually not Booking, but a company in the UK in Cambridge, England, called Active Hotels, which is very similar

• 33:13David Rosenthal?

  to Booking, was larger in the UK than on the continent. They acquire that in 2004 for 165 million. And then later, in the summer of 2005, they do finally acquire Booking for 133 million, as we mentioned. They merge it with Active Hotels in the UK, and they keep the Booking.com name, so the combined entity is Booking.com. And when they do that, in total, they now have 18,000 properties across all of Europe, 18,000 hotels on the system, which is way, way more than any other online travel agency in the whole world now. And so Priceline, this is kind of a masterstroke.

• 33:53David Rosenthal?

  They build, through acquisition, the largest online travel agency in the world with two, you know, sub $200 million deals. Kind of amazing.

• 34:02Ben Gilbert?

  Yeah, so question for Drew is, do you think that they needed to do the acquisitions to do this, to sort of like bring that agency model into the Priceline Group? Or could they have taken their existing supply and demand, since they already had had some scale, and really reinvent that and kind of copy that model themselves?

• 34:24Speaker 01

  I think it's tough to see, and I guess it particularly plays out when you look at the subsequent history. I think it's tough to see Priceline doing this on their own. In part, you also, I think, have to look at the context for Priceline to make this acquisition and why they're able to do it. Priceline made efforts to go to market in Europe. Again, remember, this is 2004. This is the depths of the dot com bust. Priceline had been one of the biggest success stories of Web 1.0, right? We all remember William Shatner, Delta made a billion dollars, getting warrants in Priceline, selling them at the top of the market, looked like a genius. And Priceline had moved into Name Your Own Price, dog food, name your own price, groceries, name your own price, gasoline. It was just

• 35:09Speaker 01

  like all over the place.

• 35:10David Rosenthal?

  There's a great history, or partial history, of Priceline in the internet bubble in the book E-Boys, which is about the early days of Benchmark, the venture capital firm. They were the venture investors behind Priceline. The initial Priceline, it was crazy. Drew, like you said, it evolved into travel because that was the only thing that made sense that they did. But originally, it was Name Your Own Price for anything.

• 35:34Speaker 01

  So these guys didn't look like masters of the universe at the time, right? They looked like yesterday's news, who were trying to figure out a plan B. Priceline had actually tried to go into Europe. They had hired, I heard the story once, they had hired a former marketer from Burger King to make Priceline Name Your Own Price a big deal in Europe, and totally flopped. So you can imagine Glenn sitting in Priceline, like, no, no, we need to go back to Europe, and we need to get big in travel. It wasn't like they were coming from a position of strength, where they had both the capabilities and position to do this. And I think, again, it's absolutely to Glenn's credit to recognize what they did. And again, a common position for a lot of the US companies. Travelocity tried to go into Europe, Expedia tried to go into Europe. A lot of US companies have tried to

• 36:16Speaker 01

  go into Europe and really struggled. And I think one of the reasons for that, and again, we kind of touched on it briefly earlier, it's a cultural issue. For big US companies, you know, the US was this kind of dominant formative experience. Everyone speaks the same language. You have national advertising. You know, you are building a single, you know, monolithic brand that serves across US as a market. Europe doesn't really work that way, you know. UK is a different market than France, than Germany, than Spain, than Italy, than the Dutch. You know, they all have their own languages. They all have their own domains. Like they all have their own marketing channels. You know, you have your own country managers. It's a much more complex and nuanced way to start to go to market. And so you can see why some of the US travel companies really struggled as they tried to build this on their own.

• 36:59Speaker 01

  And why from the standpoint of, you know, somebody like Glenn, the thought of like hiring some Dutch who probably speak a bunch of different languages. You know, know how to work with all these different cultures, you know, great, go let them do their thing.

• 37:08David Rosenthal?

  Yeah. Well, and do their thing they did. You know, another kind of theme that we see on this show a lot is Glenn and the Priceline Group, you know, let them alone to do their thing. And so they acquired them in 2005. They complete the merger with, you know, within Priceline of active hotels and booking.com. In 2005, they do collectively 18.7 million room nights booked. Or sorry, that was in 2006 after, after the merger. And that grows from 18.7 then over the next 10 years, such that last year at 2016, they did over half a billion room nights. So that's over 40% growth per year for 10 years.

• 37:53David Rosenthal?

  And the financials on that are just pretty staggering. I mean, Priceline, the company, the group as a whole did 10.7 billion revenue, billion dollars in revenue in 2016. And of that booking.com, which again, remember they paid a combined, you know, what is that? $290 million for active and booking. They did $7.8 billion of that. Pretty incredible.

• 38:17Speaker 01

  Yeah, yeah. Amazing they break that out, too, because I think, you know, while they're separate properties, Drew, do you know if they cross pollinate the supply between the front ends for Priceline.com and for Booking.com? No, they don't. They have their own supply teams. You know, I think one of the things that has defined Priceline's management strategy is the group has let the businesses do their thing. You know, so again, today, Priceline is kayak, go to Booking.com, you know, the core Priceline brand. And OpenTable. I think it's car rentals. And then OpenTable. They have a car rentals business, too. Yep. But each of those businesses has been largely left to, you know, fend for itself and make decisions that are right for its business. They don't really do a whole lot

• 39:00Speaker 01

  of kind of corporate level cross pollination. And especially at this point in time, you know, some more recently, they've done a little bit more, but certainly through these, you know, incredibly explosive years of growth, each of the businesses are run autonomously.

• 39:14David Rosenthal?

  Well, and that's sort of, so that kind of, you know, wraps up the history and facts here. But one, just sort of fun side note, in doing the research that Drew had wanted to ask your thoughts on, what's really crazy to me, this is such a big market. I mean, again, Priceline Group, you know, we said at the top of the show, $90 billion market cap, you know, that's three Airbnbs and more than Netflix. And it's not like Expedia is a small company either, or any of these other companies. But the industry is so small, people wise, like, it's a total cabal. And like, you know, reading the Skift oral history and, you know, all of these folks who are the major players, you know, bounce between company to company. I mean, even you, you've been at Jet Set or you've been at Room 77.

• 39:57David Rosenthal?

  It's all such a small world. Why are there not, you know, why is this not flooded with entrepreneurs?

• 40:03Speaker 01

  Gosh, I mean, I guess, great, great question. In part, I would say, there was a moment where it was flooded with a lot of entrepreneurs, right? You know, there's a lot of company formation that led to these businesses, you know. So if you look at, you know, take Expedia today, you know, Expedia is the sum of Expedia plus Travelocity plus Orbitz plus what if Travelocity was a combination of Preview Travel and Travelocity.

• 40:27David Rosenthal?

  And hot wires in there, too.

• 40:28Speaker 01

  Yeah, hot wires in the mix. So you have a ton of businesses that were built, you know, that ultimately have consolidated to a relatively limited number of platforms, two platforms, Expedia and Priceline. I guess you could look at Ctrip, you know, as a third one in Asia, you know, maybe TripAdvisor.

• 40:43Ben Gilbert?

  Yeah, and I think also the number, the amount of required connectivity between all these different entities is kind of a high technical bar to get started. And I think that these businesses, you know, kind of aggregation theory in play here are scale businesses. So that, you know, if in order to provide, a lot of people have new ideas for how to make the, you know, travel booking experience better and the trip planning experience better. And I think, you know, it's almost become a trope that like, if you go to a startup weekend, you're going to see somebody pitching a better, a better way to plan trips and do something in that space. But it seems like it's just really hard to execute as the bar has gotten higher and higher with, with these established businesses.

• 41:28Speaker 01

  Yeah, for sure. You know, I certainly see a number of entrepreneurs, you know, want to pitch ideas for better startups. You know, the question is, what does better mean in this category? And I think booking has been, you know, the illustration that better as booking defined it is higher converting. And, and, you know, one confuses, you know, consumer satisfaction with, with, you know, business model efficacy. You know, if you can find a way to get more clicks or more bookings out of a given visitor, you've got a better mousetrap. But, but, you know, that's a less sexy idea than, than helping people plan better honeymoons.

• 41:58David Rosenthal?

  Yeah. Well, well, one thing on this front on innovation and entrepreneurship in the entrepreneurialism in the travel industry, I want to come back to maybe, maybe in tech themes is of course Airbnb, which is a wholly different approach to, to this industry, but is nonetheless still the travel industry.

• 42:15Ben Gilbert?

  All right, listeners, now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 42:28David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 42:45Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 43:00David Rosenthal?

  And that's how you get features that customers love like Tabular Review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 43:24Ben Gilbert?

  And they recently launched Legora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 43:43David Rosenthal?

  And Legora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Legora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 44:13Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at legora.com/acquired and just tell them that Ben and David sent you.

• 44:38David Rosenthal?

  Do we want to jump into acquisition category?

• 44:41Ben Gilbert?

  Yeah, let's do it. So for me, I have this down as business line. For new listeners to the show, we define that as people, technology, product, business line, asset, or other, because we leave ourselves the right to do whatever the hell we want on this show.

• 44:58David Rosenthal?

  It's our show.

• 45:02Ben Gilbert?

  So in this one, you know, a lot of times we define a product as like, hey, this is a new product you can you can sell to your existing customers. Like an Apple would come out with an iPhone after coming out with an iPod. This for for for me is really something where, you know, it's a new marketplace with new supply, new demand, a new business model, and it's completely separately broken out on the balance sheet that they bought a new business here and they happened to learn a lot from it and really make it the cornerstone of the company and grow from there. But that, you know, they bought a wholly separate line of business and they kept it pretty separate.

• 45:40David Rosenthal?

  Yep. I don't have much to argue with there. I mean, literally, they reported as a separate business line on their financials. So it's kind of hard to argue with that.

• 45:48Ben Gilbert?

  I figured that's an easy one for me to jump in on.

• 45:52Ben Gilbert?

  I got nothing here.

• 45:53David Rosenthal?

  Yeah, no, no, no argument. If our resident grizzled industry veteran agrees. Moving on, what would have happened otherwise? This is interesting.

• 46:05Ben Gilbert?

  Yeah, I mean, what if what if Expedia had had pulled the trigger?

• 46:09David Rosenthal?

  Yeah.

• 46:09Ben Gilbert?

  That's sort of the obvious one, right? I don't know. Drew, Drew, what do you think about that?

• 46:14Speaker 01

  I mean, like, with deference to my friends at Expedia, I'm not sure they would have done as good a job managing this business as booking as Priceline did, rather.

• 46:22David Rosenthal?

  And the good job was just leaving it alone, right?

• 46:25Speaker 01

  Exactly. I mean, this is effectively a VC play. You know, I guess the better question is, you know, why did why was Glenn Fogel the one who sniffed out this deal? You know, where are all the great Silicon Valley?

• 46:34David Rosenthal?

  Yeah. Greatest travel industry VC investor of all time.

• 46:38Ben Gilbert?

  Yeah, it does seem who was the intermediary that they sold it to? It was like a private, private equity firm?

• 46:44David Rosenthal?

  No, I think I could be wrong on this, but I think it actually was just a group of private individuals, private investors in Europe that Gert knew.

• 46:55Ben Gilbert?

  Yeah, I mean, seems like their opportunity cost for them is the real story here.

• 47:00Speaker 01

  Yeah.

• 47:01Ben Gilbert?

  You know, why let it go? But I think this might be a good time. Drew, when we were preparing for this episode, you mentioned sort of a difference between Expedia's M&A strategy and Priceline's M&A strategy, and that Priceline sort of took these risks on early kind of subscale businesses that they saw potential in. And Expedia tends to buy more established things that have a very reasonable growth trajectory from there that they can add to their portfolio. Does it seem like I'm getting that right? And I'd love to hear your thoughts on that.

• 47:33Speaker 01

  Yeah, I think, you know, I think that definitely characterized a lot of the deals that made Priceline successful, active booking, Agoda. And again, I think we, you know, you saw the strategy we just talked about from Priceline of buying these businesses and effectively, you know, being largely a passive investor, holding them accountable for growth, giving them capital to continue to grow, but not taking too active a role in the management and integration of those businesses. You know, Expedia, by contrast, has built a single dominant scale platform. And we, you know, we should give Expedia its due here, right? I mean, it's a almost $20 billion business. They do what 350 million room nights to the, you know, 500 that booking.com did or Priceline did last year. So it is a, you know, a real formidable player in this category. But their approach has been different.

• 48:17Speaker 01

  You know, they bought, they bought Travelocity, they bought Orbitz, they bought What If in Australia, you know, and they bought these players and their strategy has largely been to say, we have a, you know, a tech platform that is incredibly mature. We put huge investments in and we now want to start to get scale out of it. And so they buy effectively these storefronts, you know, replace them with, with superior economics, superior technology, you know, see some gains in terms of productivity, both click through rate and their ability to monetize it, but have taken a much more active role in the management of the businesses.

• 48:48Ben Gilbert?

  Yep.

• 48:50Ben Gilbert?

  And then, and then another question is, you know, did Priceline need a capital infusion? I'm sorry, did booking need a capital infusion from Priceline? Or what if on their own, they just sort of continually reinvested their, their profits in the business in sort of this aggressive Amazon style way? Is there any way they could have grown to be the scale that they are today? Or would they have sort of lost out in the arms race of competition?

• 49:16Speaker 01

  You know, it sure seems to me like Booking could have done this on its own. Booking didn't need Priceline to achieve the scale that it did. And I think, again, it's a testament to Glenn's judgment and acumen in finding the company and seeing the opportunity here. But I think that's an opportunity that was available to any financial investor.

• 49:35David Rosenthal?

  Yeah. At the same time, I think this might be a good lead in to tech themes. We're always just trying to get into tech themes on this show.

• 49:43Speaker 01

  You renamed the show.

• 49:44David Rosenthal?

  Yeah, Tech Themes. I think that would be pretty boring.

• 49:49David Rosenthal?

  The, you know, this is the thing about marketplaces, though, and well, I'm just gonna.

• 49:54Speaker 01

  You'd have to have more than one tech theme.

• 49:55David Rosenthal?

  Yeah. I'm just gonna dive in. I mean, to me, this is such a wonderful illustration of everything that is both incredibly challenging and incredibly, you know, beautiful about marketplaces, which is they're a total slog to get started. I mean, thinking about those early days, bringing all this very fragmented, very disparate supply all across Europe, the supply of hotels, onto the Booking.com platform and Gert sending out postcards to everybody. You know, you can totally see why Expedia would look at that and say like, ugh, you know, that seems hard. And the business model doesn't seem as good as ours. But then the thing is, you know, once you get to a certain scale point,

• 50:39David Rosenthal?

  and I think this is the value of capital in building marketplaces, is accelerating to get to that scale point. Then it tips, right? And then it's just the defensibility. We were talking about why you haven't seen more major companies built in travel online. I mean, the defensibility is so great in Booking, like because everybody is on it, on both sides of the marketplace, there's no incentive for either side to go anywhere else because the experience isn't going to be as good.

• 51:06Ben Gilbert?

  Yep. And it really is an argument for consolidation, too. I mean, I think we've said this before, but one of the reasons why we set out to do this show is understand when M&A works and when it doesn't, so that when we're involved in the earliest stages of companies, like, we can try and figure out, how do we steer the ship if the goal is to get acquired by one of these bigger companies? Like, where can we nicely fit? And it sure seems like marketplace businesses are so well-suited. Like, whether you combine the business lines or not, you could look at Zillow and Trulia, or more recently, and here locally, Rover and Dog Vacay. I mean, when you take a lot of supply and a lot of demand, and the exact same value prop, or a very similar value prop, and you can consolidate a lot of things onto a single platform, and bring these things together, it seems like

• 51:50Ben Gilbert?

  there's, you know, you take that flywheel that's already spinning so well, and, yeah.

• 51:55David Rosenthal?

  Do you have a counterpoint, a counterpoint, though?

• 51:58Speaker 01

  Oh, I was gonna say, I mean, there, you know, I think there is certainly pressure, you know, if you talk to hoteliers, right, suppliers in this world, they're not stoked about this marketplace, right? There's no hotelier in the world who's like, OTAs are a good thing. And you could have some sympathy for them. You know, if you look at the stock chart of Hilton versus Priceline over this period of time, you can see why they might not be so excited.

• 52:19David Rosenthal?

  Well, is that, I totally get that from Hilton and Marriott's perspective, but what about the 20-room villa in, you know, Romania, who had no way of acquiring customers, otherwise?

• 52:31Ben Gilbert?

  Or the dog sitter who wasn't yet dog sitting, or the Airbnb-er who wasn't yet utilizing that spare bedroom. Maybe I'm making an argument for unlocking, you know, unlocking value that was previously unlocked due to a lack of ability to find customers in the sharing economy. And it's, you know, certainly not, not as true if you're commoditizing suppliers who are already running a business.

• 52:52Speaker 01

  It's, you know, you guys are bringing a great point, right? And, you know, another way of framing this is, you know, this discussion we're having around OTAs shows... Let's say the challenges of the business model of these kind of legacy hotel brands. Because the perspective of Marriott looks really different than the perspective even of a Marriott franchisee who actually owns their hotel. The Marriott franchisee says, I used to have to pay, and just a slight digression. The way hotel economics work by and large at the brands is you have a brand like Marriott that is a franchiser, that sells to somebody who owns real estate, the rights to call their hotel a Marriott, and then generates some demand. They'll take a commission, a franchise fee on that roughly between, call it 6% and 15% based on their business.

• 53:37Speaker 01

  But they're taking that on all the reservations that happen at that hotel, not just the ones that got generated by Marriott. And over time, those costs have gone up to the point where many hotel owners are saying, wait a minute, it costs as much money to sell through Marriott, my own quote unquote "direct" channel, as it does to go to an OTA.

• 53:53David Rosenthal?

  Right. And Marriott.com is probably not doing much for me these days.

• 53:57Speaker 01

  Exactly.

• 53:59David Rosenthal?

  Interesting. Well, so what about, I feel like this is still on the marketplace's tech theme, so I'm going to take some more airtime. Let's come back to Airbnb now. So, and HomeAway and others. To my mind, what they and Airbnb, far more successfully than anyone else, has done is taken this innovation, this marketplace innovation, and unlocked just a huge new amount of supply with it, and brought many of the advantages that we were talking about earlier in the show

• 54:38David Rosenthal?

  that were, I think, mostly enjoyed by the demand side, by consumers and the OTA model. As you were saying, even with the agency model, a lot of supply is like, eh, you know, mixed feelings at best about it. But Airbnb has brought this innovation to

• 54:58David Rosenthal?

  A whole new set of supply as well, where if I own a home that has an extra bedroom, I'm just thrilled that Airbnb gets me an extra $1,000 a month, right?

• 55:07Speaker 01

  Totally. I think that's been Airbnb's real innovation in this category. Right? There's a ton that we can find, like, it's just amazing about that business. But to me, the thing that's truly distinguishing about it is the way they created this whole new class of supply and supply that was really exciting. Like, if I go stay in New York, I'd much rather stay in a cool apartment in the East Village, you know,

• 55:26David Rosenthal?

  Than in a $900 a night restaurant and have a kitchen than getting stuck in Times Square.

• 55:30Speaker 01

  Yeah. Airbnb made all that possible in a way that wasn't true in the past.

• 55:33David Rosenthal?

  Or the $900 a night Holiday Inn.

• 55:35Speaker 01

  That's right.

• 55:36David Rosenthal?

  Jeez, brutal.

• 55:42David Rosenthal?

  I mean, that's, to me, this acquisition and this whole industry really just is such a good example and pure example of the power and dynamics of marketplaces.

• 55:54Speaker 01

  Yeah.

• 55:54David Rosenthal?

  That's what I got for tech themes.

• 55:56Speaker 01

  One of the things I was thinking about, and I wasn't, as I kind of tried to put this together and we prepared for this, was what would it take to challenge Booking.com? If you think Buildings Marketplace is about gathering enough demand to make this whole thing work, could you compete with them? Right? So again, today, Booking.com is the advantage of having done this for, what, 20 years? They today generate half a billion room nights. They spend $3.5 billion per year in marketing because somebody else could do that. Could you begin to compete with them to generate that level of demand? And I guess the potential, the person I was able to identify who looks like they're at least making a run at it is Trivago. Right? Today, Trivago is spending, I think, $800 million.

• 56:38David Rosenthal?

  They're Expedia owned, right?

• 56:40Speaker 01

  Expedia, I think, has a 40% stake in Trivago. It's got a public float and the founder's still on part of it. But yeah, it's part of the Expedia portfolio. But taking the same playbook in the sense of can we get enough demand here to make this a platform that gets some lock-in?

• 56:56David Rosenthal?

  Yep.

• 56:57Speaker 01

  But the following question being like, if you wanted to go spend $3.5 billion a year on marketing, could you do it? Could you find enough channels?

• 57:04Ben Gilbert?

  Absolutely. It's funny that this works. And yeah, this is one tech team I was thinking about too. After talking to a former Expedia marketing person, this person was mentioning that Trivago is absolutely exceptional at digital marketing and really understanding exactly when to be bidding, bidding on Google, understanding exactly how high value that traffic is, how high value that keyword is, it's super high fidelity, and instrumenting it all the way from placing the ad, all the way through the end of the transaction and continuing to track that lifetime customer value over time. And it seems like the way

• 57:45Ben Gilbert?

  that you kind of win on this is better and better digital marketing. And I think that there was actually a lot of articles back around the time of this acquisition that Booking had sort of been incredibly successful because of their mastery of being able to buy keywords on Google. And there's definitely an opportunity to do better than that now as Google's tools get more and more sophisticated for this. And I think that it goes to show that Google really does take a tax on e-commerce broadly. And with this as an enormous category, like I'd love to see travel as a revenue driver for Google. And I think one way that

• 58:26Ben Gilbert?

  Airbnb is disrupting here, and I wonder if somebody else can disrupt in the hotel world rather than just in the kind of specialized Airbnb world is, can you acquire supply, I'm sorry, can you acquire demand, so travelers, and retain them as your customers without them going back to Google and you having to reacquire them? And Google being the central source of where people go to search for travel stuff all the time.

• 58:52Speaker 01

  I think there's no doubt that Airbnb has played that role so far, right? And I think, to your point a moment ago, David, the fact that they have this unique access to supply has allowed them to take that kind of position. There's a question of can you do it in hotels, particularly given the fact that it's relatively commoditized, that hotel inventory now shows up on lots of different channels.

• 59:12David Rosenthal?

  Yep.

• 59:13Speaker 01

  But I think one other thing to understand, and it's worth thinking about the consequences for why it worked for Booking.com, is what allows them to spend at that level of scale. And the same for Trivago, right? What allows them to spend at that level of scale isn't simply the instrumentation where the fact they have three and a half billion dollars to spend, it's that they get the conversion.

• 59:31David Rosenthal?

  Yeah.

• 59:32Speaker 01

  The reason, because all these guys look at what's my ROI? And again, part of that is spend, but really the biggest driver, and also commission rate, what's my take rate around an individual transaction? But the thing that has the greatest delta, the thing that really drives performance, is when somebody came to the site, did they buy?

• 59:47David Rosenthal?

  Yep.

• 59:48Speaker 01

  Booking.com's innovation wasn't that it looked better. I mean, frankly, you look at it and it's like, gosh, why are there so many things flashing? There are things flashing because that's what gets me to buy.

• 59:55David Rosenthal?

  Yeah. Well, and this is, I feel like this is such a powerful concept. Bill Gurley actually has a whole blog post about this, about conversion, especially for marketplace businesses. It is the biggest lever that you have. I mean, we learned this lesson at Rover in that the product that you're building when you're at a marketplace company is essentially the matching of supply and demand and the consummation of that match. And so your job is to maximize the rate of consummation of that match. And if you don't realize that, you can start investing in all sorts of things that are not going to be driving your business.

• 1:00:38Speaker 01

  And I guess going back to the Expedia, why did Expedia miss this?

• 1:00:41David Rosenthal?

  Yep.

• 1:00:42Speaker 01

  In 2002, it wasn't obvious that this was a marketplace. In 2002, you had big portal tenancy deals that drove a lot of traffic. And I signed a $10 million deal with Yahoo or with AOL, saying, I'm going to get this spot, and it's going to be true for the next year. And I'm relatively indifferent, not indifferent, but had less pressure around what the performance of any individual session was.

• 1:01:02David Rosenthal?

  Right, because you were just getting that stream of clicks no matter what, and you weren't paying on a variable basis for them.

• 1:01:10Speaker 01

  Right.

• 1:01:10David Rosenthal?

  Got it. Interesting. Interesting. So one thing... Actually, Ben, were there any other tech themes you want to cover?

• 1:01:19Ben Gilbert?

  Yeah, I got I got one quick one before we move into grading.

• 1:01:22David Rosenthal?

  Do that.

• 1:01:23Ben Gilbert?

  Selfishly, like, one of the things we do at Pioneer Square Labs is is look around at other business models and try and figure out, like, can this be done in a new space? And something that I think that that I've been paying a lot of attention to recently is as as this generation shifts toward a more on-demand, less committal life, you know, this agency model makes a ton of sense. The idea that, yeah, I'll book that stuff, but like, if I don't want to go, like, I get a refund. You know, my credit card doesn't get charged until I stay in that hotel. And there's policies of 24 hours, 48 hours, whatever it's going to be, but like, you know, you're you're afforded a bunch of flexibility and you can sort of plan ahead. And then, like, if you don't want to do it, you don't want to do it. So I think a super interesting lens to think about new company creation is,

• 1:02:07Ben Gilbert?

  you know, what else can you take that people are like hamstrung into committing to right now? And allow them much more flexibility and and change the business model dynamics within the industry to allow them that. Because, you know, as as we talked about before, the best consumer experience will continue to win.

• 1:02:22David Rosenthal?

  Yep.

• 1:02:23Ben Gilbert?

  So that's all I got for tech themes.

• 1:02:25David Rosenthal?

  Well, if if we had some answers, we should, you know, we could.

• 1:02:28Speaker 01

  Same chance slightly in this case, Ben?

• 1:02:31Ben Gilbert?

  Absolutely.

• 1:02:32David Rosenthal?

  Oh, great.

• 1:02:33Speaker 01

  I don't think the best consumer experience, best consumer experience is what won here. At the very least, we need to think broadly about what best consumer experience is. Because it wasn't like the booking.com had the most attractive, best-designed website in the sense of UX. Lots of people would say it's not that attractive.

• 1:02:50David Rosenthal?

  Yep.

• 1:02:50Speaker 01

  But it was best in the sense that it delivered the most conversions.

• 1:02:53David Rosenthal?

  Yeah.

• 1:02:54Speaker 01

  Right? And and the reason it delivered the most conversions was it had the most best inventory, you know, and so.

• 1:02:59Ben Gilbert?

  Which which I'm at least to me, that's that's the consumer experience, right? Like, you're you're able to get what you want. And I think maybe a secondary thing here is probably the the lack of commitment to it. But to me, being able, being matched with the correct supply is is just a, you know, a facet of of the consumer experience. Sure. Point taken.

• 1:03:21Speaker 01

  So, you know, many levers to have at play here to.

• 1:03:25David Rosenthal?

  Well, I think it's the, it's the same, you know, it's the same thing. It's a, we're quibbling over the definition of consumer experience, but it's, you know, in the same way, like, I don't think anybody, you know, apologies to our friends at Facebook, but, and especially LinkedIn, but nobody would argue that those are like the best, most beautifully designed sites, right? But you get, as a consumer of them, you get your experience fulfilled best of what you're looking for, which is, you know, I'm looking for professional networking on LinkedIn and social networking on Facebook. It kinda, you know, what they look like is almost secondary, but it's what I get out of them.

• 1:04:02Speaker 01

  Yeah, so Drew, I'll, I, in thinking through this a little bit more, if consumer experience is the umbrella of things that enable you to win, I think you're right, that, that being matched with the correct supply is far more important than, you know, your, your requirement to commit.

• 1:04:17David Rosenthal?

  Yeah. Okay, one last one, sort of sidebar I wanted to cover before we grade it, and it might inform grading. Drew, I'm super curious, one thing we haven't really talked about on the episode thus far, we've talked about OTAs, we've talked about the various flavors of them, you've talked about Airbnb, what role does metasearch play in this world? I mean, you were at Kayak for a long time, and, and metasearch sort of takes a wholly different approach. It's a layer on top, it's not a marketplace itself. What, what is that role in the ecosystem here?

• 1:04:55Speaker 01

  Well, I think it comes down to, actually, the point that we were just talking about with Ben, which is, how do I make a decision? How do I find what I want? And, and what's the separation between that decision-making process, i.e. I want to stay at this hotel or take this flight on these dates, and the transaction process? I'm going to complete this booking. And, you know, metasearch, vertical search, you know, was, was an abstraction of, again, that decision-making process. One of the things that was really powerful about it, I think, has allowed it to grow very quickly, is it, it, you know, it limited its scope, right? At Kayak, it was like, we have the most amazing website, it's two pages long, right? It's a front door, you ask a question, and then it's a bunch of answers that you can find them when you want, and you're out. You know, like, you know, things moving through a goose was the metaphor that we talked about.

• 1:05:40Speaker 01

  You know, I think you talk about.

• 1:05:42David Rosenthal?

  We're a friendly friendly show here.

• 1:05:45Speaker 01

  You know, I know you have advertisers.

• 1:05:46David Rosenthal?

  Yeah.

• 1:05:48David Rosenthal?

  Appreciate that.

• 1:05:50Speaker 01

  Trivago did it one better, right? You look at Trivago, like it's a one-page website. You know, it's all JavaScript. You start typing in, you know, results start to render. You know, there's, there's so few things that you have to interact with. And again, the benefit of that for them is wow, how quickly can I move from a visitor to a revenue event? Yeah. All that leads to really effective monetization, really clear visibility too. Right? I mean, the point you're making Ben on, on how well Trivago does at tracking both initial monetization and the repeat visitor rate. All that is possible because, because all, you know, all those events happen within the same session.

• 1:06:24Speaker 01

  I don't know if I answered your question.

• 1:06:25David Rosenthal?

  No, no, no, that's, that's great. And so, so I guess for, for the meta search layer, it does greatly improve the customer experience. And what the meta search folks have said is we're not going to monetize at the transaction level, at the marketplace level. We're going to take essentially an advertising, you know, a customer acquisition fee from the marketplaces themselves.

• 1:06:49Speaker 01

  Yeah. So it's, you know, all the, the kind of mental model, if you will, for meta was Google. You know, we're going to be a vertical search engine. We're going to get paid on a CPC basis, you know, and we're going to get paid by the, the various marketplaces or.

• 1:07:02David Rosenthal?

  By the bookings and the Orbites and the Expedia's themselves.

• 1:07:06Speaker 01

  Yeah. Now that, that, you know, those lines have gotten blurry over time. And the big driver that, or I think one of the big drivers that, that created that was, was mobile. You know, so, um, you know, on the browser, where a desktop and browser, you had a bunch of windows are open. You could do a search, you know, you could then spawn separate windows to complete a transaction. You know, most websites had, were pretty well designed from an e-commerce standpoint. You know, you could look at, at what the conversions were from leads out of a meta search into an OTA. That broke down especially early on in mobile where folks had poorly designed mobile booking pages. And in an app, you know, that, that, that process going from one app to the next was much more convoluted.

• 1:07:44David Rosenthal?

  Yeah.

• 1:07:44Speaker 01

  And so the consequence was meta search engines started to build what they described as instant book. You know, effectively they would allow you to complete a transaction. They would use a book API. So they were calling into the OTA or the marketplace to complete the transaction, but it, it happened within their environment.

• 1:07:59David Rosenthal?

  Within the environment.

• 1:08:00Ben Gilbert?

  And now they're actually getting paid on the transaction fee then, rather than just sort of for the, the ad placement?

• 1:08:06Speaker 01

  Yeah, the reality of those transaction fees is that they've always been a little bit blurry. Like, you know, a lot of the CPC deals had some kind of performance guarantee, or, you know, you would get paid on a CPA and normalize that back to CPC. So, you know, it wasn't all that different to go from, you know, the Metasearch type agreements to the Instant Book type agreements. The thing that was harder about it, and I think Instant Book has had a relatively mixed track record. You know, if you look at TripAdvisor's stock performance, you can, you know, their financials, you can see the challenges that Instant Book has had. It has had a huge impact on TripAdvisor's monetization. You know, we played around with it at Room77, you know, Kayak has done some of it, but it has not taken that much root in among Metasearch agencies, right?

• 1:08:51Speaker 01

  Like, it has not become that dominant. And I think one of the big reasons is it's actually pretty hard to complete these transactions, right? Like, you think of sort of all the edge cases that happen when you're going to complete a booking. You know, the credit card fails, the room's no longer available, you know, all those kinds of issues. You know, the packet gets lost, like, for whatever reason, you know, it doesn't, the transaction doesn't complete.

• 1:09:10David Rosenthal?

  And it's such a considered purchase for the consumer, too, right? I mean, you're spending hundreds of dollars here.

• 1:09:15Speaker 01

  Exactly, exactly. And it's much harder to deal with those edge cases if it's, you know, somebody else's book API than if it's happening in your own environment.

• 1:09:24David Rosenthal?

  Interesting.

• 1:09:27David Rosenthal?

  Okay, I feel like we have the full picture now of the online travel industry. Should we grade it?

• 1:09:33Speaker 01

  Or at least as much as you can get in an hour.

• 1:09:35David Rosenthal?

  Yeah. Online travel industry in one hour or less.

• 1:09:39Speaker 01

  Yeah. Well, I mean, I don't think we need to spend a lot of time on grading, or at least I certainly don't. I'm not sure that there was something that was more successful that we've done, other than Next. Like, this was a company that was...

• 1:09:52David Rosenthal?

  Oh, whoa, are you going higher than Instagram?

• 1:09:54Speaker 01

  I think so.

• 1:09:56David Rosenthal?

  Wow.

• 1:09:57Speaker 01

  I know. I mean, to the, because I look at it this way, like...

• 1:10:02Ben Gilbert?

  Instagram wasn't really company saving for Facebook. Like Instagram has become an incredible boon. But would Facebook be, you know, completely irrelevant if it weren't for Instagram? I mean, Instagram helped them inform the mobile strategy and like lots more, you know, young people interact more per day on Instagram. But in the way that I think that Apple would have been totally hosed without buying Next, I think that Priceline may have been totally hosed without buying Booking. And Booking has turned into a gigantic business. Like if you look at, I mean, just comparing Priceline and Expedia. Priceline's market cap is 92 billion. Expedia's is about 22.6.

• 1:10:45Ben Gilbert?

  Over two thirds of that 92 billion comes from Booking.com. Going from $130 million acquisition to, you know, responsible for a market cap of 60 billion plus A+.

• 1:10:57David Rosenthal?

  Wow. You heard it here first. Booking.com, bigger than Instagram. I love it. Wow. I hadn't, I hadn't thought about that. We'll, we'll let Drew have the last word here, but do I think that this is better than Instagram? Yeah, I mean, you made a pretty compelling case there. And I haven't checked the latest Instagram financials. I mean, I guess, so here's my, my knee jerk reaction to that. But I think is the wrong one is I would say, well, yeah, that's true. But like, think about market size, like Instagram is everybody in the world.

• 1:11:41David Rosenthal?

  But then I'm like, wait a minute, travel is everybody in the world too. Well, you know, there are at least a huge portion of it. And it's, and it is monetizable at a vastly higher rate than, you know, social networking apps. So, yeah, wow. I, I. I don't know that I'm willing to go better than Instagram, but I'll go at least as good as Instagram. I think, I think, you know, I'm trying to think back through all of our episodes. We have so many at this point, but in the ones that are popping to mind, I think I stack rank next. I mean, as we said on that show, it literally was a trillion dollars in, you know, revenue that was created by that acquisition.

• 1:12:25David Rosenthal?

  And then, and then I think Instagram and Booking, you know, are both of a scale that, that are, you know, pretty incredible. Not a trillion dollars yet, but maybe someday.

• 1:12:35Speaker 01

  What was the purchase price on Instagram? Was it billion?

• 1:12:38David Rosenthal?

  A billion, one billion dollars.

• 1:12:39Speaker 01

  And what did you guys put as the current value of Instagram?

• 1:12:42David Rosenthal?

  Well, when we did the episode, which was about two years ago at this point, right, Ben?

• 1:12:49Speaker 01

  Yep.

• 1:12:50David Rosenthal?

  I think there was an analyst report.

• 1:12:52Speaker 01

  It was from Citibank.

• 1:12:53David Rosenthal?

  Yeah, from Citibank that valued it, what, around 35 billion dollars?

• 1:12:58Speaker 01

  Somewhere in there. I don't know why I remember the number 19 or 20, but it's, you know, that big.

• 1:13:04David Rosenthal?

  Yeah. So, so sort of on the order of that big in a timeframe of, call it, three years post acquisition. And so here we have 60 billion dollars after 10 years.

• 1:13:16David Rosenthal?

  So, all right, Drew, school us all.

• 1:13:18Speaker 01

  Well, no, I mean, I'm with Ben on this one. You know, I guess it's a little bit of, you know, home team pride, right? You call the travel industry guy, of course, I gotta tell you, this is the best deal ever.

• 1:13:27David Rosenthal?

  Better than next?

• 1:13:28Speaker 01

  Well, okay. Hopefully rational as well. Yeah, I think like it's just phenomenal, right? You know, to think that Jeff Boyd had a, you know, 100x increase in, in, in the value of Priceline stock as a CEO, like that is just breathtaking. You know, going through the numbers and looking at the level of growth that these guys have been able to achieve over, over that duration, staggering. And, and yeah, I guess one of the things that to me, you know, just is a little bit humbling. I remember talking to Jeff Boyd at one point in time, you know, I don't remember when it was, but yeah.

• 1:13:58David Rosenthal?

  And Jeff was the CEO of Priceline Group until, until, well, there was a long history, but CEO or chairman of Priceline Group until, until Glenn took over in the beginning of 2017.

• 1:14:08Speaker 01

  And they remember talking to him, what are you guys going to do next year? Talk about your plans. This is a focus right the industry, big industry kind of confab. And he's like, oh, yeah, we're gonna do what we did last year and a little bit more. That's what we're gonna go to.

• 1:14:19David Rosenthal?

  But he's gonna grow 40%.

• 1:14:21Speaker 01

  That's a pretty good plan.

• 1:14:21David Rosenthal?

  Just like last year.

• 1:14:22Speaker 01

  You should keep doing that.

• 1:14:23David Rosenthal?

  Yeah, you should keep doing that. Wow. Well, there we have it. The history of either the second or third best acquisition of all time on the internet. So

• 1:14:38David Rosenthal?

  thanks for, thanks for joining us, Drew. This has been awesome.

• 1:14:42Speaker 01

  Guys, thanks for having me. A lot of fun.

• 1:14:45David Rosenthal?

  Okay, real quick.

• 1:14:46Ben Gilbert?

  Carpe. Sweet. So one thing I watched last week that was linked on during Fireball and was really awesome to kind of leave on in the background and do some stuff around the, around the apartment was Scott Forstall appearing publicly for the first time to talk about anything related to his old gig at Apple, running the iPhone project when he was live at the Computer History Museum a few weeks ago. And there's a Facebook video that we'll, we'll link to here, but it is, it is, it starts with an hour of a super interesting panel with some of the folks that worked under Scott on the, the original iPhone project.

• 1:15:24Ben Gilbert?

  This is all sort of commemorating the 10 year anniversary and Scott just telling amazing stories of how the iPhone came to be, a lot of sort of never, never been revealed stuff, personal interactions with Steve, a time when Steve Jobs, in his words, saved his life, quite literally, from, from, he was incredibly ill and Steve and some incredible acupuncture sort of saved his life. And it's, it's really cool. Like if you're into, if you're into this podcast or you're into internet history podcast, Brian McCullough's show, you will really, really like this interview.

• 1:16:00David Rosenthal?

  It's been on my to watch list and it just sounds amazing. I mean, this is, I think this is Scott's first public appearance since.

• 1:16:10Ben Gilbert?

  Regarding technology, yeah, he, I think spoke extremely briefly when I think they won a Tony.

• 1:16:17David Rosenthal?

  Oh, that's right. That's right.

• 1:16:19Ben Gilbert?

  Broadway play.

• 1:16:19David Rosenthal?

  That's right.

• 1:16:19Ben Gilbert?

  Yeah.

• 1:16:20Speaker 01

  Yeah, but but never about about any of this.

• 1:16:23David Rosenthal?

  Since since the, you know, Apple keynote stage.

• 1:16:28Speaker 01

  And the funniest thing is it looks like he's wearing the same shirt. They like may like the dude has a style.

• 1:16:34David Rosenthal?

  Love it. Hey, you gotta you gotta have a calling card.

• 1:16:39David Rosenthal?

  Mine is so Jenny and Jenny's dad, my father in law, Gary, and also shout out to Gary, fan of the show. Went to see the big sick in movie theaters last weekend and it was great. If you haven't seen this movie yet, it is. It was both the funniest and the best, well, most well done. And, you know, most touching movie, you know, I think I've seen in many, many years. Best movie I've seen since The Force Awakens, for sure.

• 1:17:10Speaker 01

  Wow, high praise.

• 1:17:11David Rosenthal?

  It it deserves it. I think it's got like a 98 on Rotten Tomatoes or something like that. And it's great and it's and it's Kumail. Not not Yanni. Apologies if I butchered that too, but who plays the national in Silicon Valley. And it's it's the, you know, mostly true story of him and his wife and how they met and their their lives together. And it's just, it's wonderful.

• 1:17:36Ben Gilbert?

  Wow, cool.

• 1:17:40David Rosenthal?

  Judy, do you want to join in the fun?

• 1:17:42Speaker 01

  Sure, yeah, so I've been I've been into I like email newsletters, you know, Jets that are like can't can't get away. But I've been loving money stuff from Matt Levine. It's a little more kind of markets oriented than than than pure tech. But he is just incredibly funny writer and super insightful on, you know, what's going on in the markets, you know, a lot of kind of blockchain commentary. You know, what's moving on with the going on in the VIX? People are worried about not being worried enough. He's got these great segments, so definitely worth checking out.

• 1:18:11David Rosenthal?

  Cool.

• 1:18:12Ben Gilbert?

  Awesome. Will do.

• 1:18:16Ben Gilbert?

  Well, I mean, I think that's it. Drew, where can our listeners find you on the Internet?

• 1:18:23Speaker 01

  My Twitter handle is DrewPats, D R E W P A T S. That's probably the best way to track me down.

• 1:18:30Ben Gilbert?

  Great, great. Well, thank you so much. We appreciate you coming on the show. It's a pleasure and I know our listeners will appreciate some actual domain expertise and insight for a change, too.

• 1:18:41David Rosenthal?

  Rather than Ben and me speculating wildly.

• 1:18:44Speaker 01

  Well, thanks for having me, guys.

• 1:18:46Ben Gilbert?

  Yeah, yeah.

• 1:18:47David Rosenthal?

  All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

• 1:18:53Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 1:19:04David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 1:19:24Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 1:19:37David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 1:19:48Ben Gilbert?

  Listeners, if you are still listening and you are not one of those people that, like me really, that sort of turns it off at the end of a podcast, please take our survey. Pop open the show notes right now, five to 10 minutes. You just finished a podcast. You probably have a couple of minutes more of free time. You should do it. And hopefully, you, every single one of you, but it can only be one of you, will win a pair of AirPods. So thanks so much, guys, and have a great day.

• 1:20:13David Rosenthal?

  Thanks, everyone.