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But, 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. Yeah, I mean, a big fan, you know, I just want to pull my shot here. You shot it started. Welcome back to episode 41 of Acquired, the podcast about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenpill. And we are your hosts. Today, we are covering the 2005 booking.com acquisition by the price line 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 JetCetter and Room77. So yeah, we are lucky to have Drew who is a quote grizzled travel industry veteran to help us impact 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 JetCetter and thank you for doing that, by the way, because you guys booked Jenny and my honeymoon. So very much appreciated. And he was CEO there at JetCetter 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. Guys, great to be here. Long time listener, first time talker. Don't wait for the show. We can't either. Well, we are ready to dive in. We are. We are. If you listen 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 of the normal stuff that we do because 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 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 identity, any identifiable information with our sponsors to really help them paint a picture of who's listening out there. So that's about all I have to say about that except that 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 win a pair of AirPods, click the link in the show notes, go to acquire.fm slash survey, it'll take about five to ten minutes and we would really, really appreciate it. Our presenting sponsor for this episode is not a sponsor, but another podcast that we love and want to recommend called the founders podcast. We have seen dozens of tweets that say something like my favorite podcast is acquired and founders. So we knew there's a natural fit. We know the host of founders well, David Senra. Hi, David. Hey, Ben. Hey, David. Thank you for joining us. Thank you for having me. I like how they group us together and then they say it's like the best curriculum for founders and executives. And really, as we use your show for research a lot, I listened to your episode of the story of Akyo Marina before we did our Sony episodes, this incredible primer. You know, he's actually a good example of why people listen to founders and to acquired because all of his great entrepreneurs and investors, they had deep historical knowledge about the work that came before them. So like the founder of Sony, who did he influence? Steve Jobs talked about him over and over again if you do the research to him. But I think this is one of the reasons why people love both of our shows and there's such good compliments. On acquired, we focus on company histories. You tell the histories of the individual people. You're the people version of acquired and where the company version of founders. Listeners, the other fun thing to note is David will hit a topic from a bunch of different angles. So I just listened to an episode on Edwin Land from a biography that David did. David, it was the third, fourth time you've done Polaroid. I've read five biographies of Edwin Land and I think I've made eight episodes of them because in my opinion, the greatest entrepreneur to ever do it, my favorite entrepreneur personally is Steve Jobs. And if you go back and listen to like a 20 year old Steve Jobs, he's talking about Edwin Land's my hero. So the reason I did that is because I want to find out like I have my heroes. Who are their heroes? And the beauty of this is the people may die, but the ideas never do. And so Edwin Land had passed away way before the apex of Apple, but Steve was still able to use those ideas. And now he's gone and we can use those ideas. And so I think what requires doing what a founder trying to do as well is find the best ideas in history and push them down to generations. Make sure they're not lost history. I love that. Well listeners, go check out the founders podcast after this episode. You can search for it in any podcast player. Lots of companies that David covers that we have yet to dive into here on acquired. So for more indulgence on companies and founders, go check it out. So David, are you ready to take us into the history and facts? And 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 price line. And if people in the US think about price line, they often think about William Schattener and the price line negotiator, which is definitely a big part of price line and internet history. But that's a story for another day. But today we're going to talk about how price line of which booking is by far the majority of it is actually the largest travel company in the world. 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 Airbnb's and it's bigger than Netflix. So it's not a company that a lot of people know about, but it is definitely top 10 most successful internet startups probably of all time. Yeah. And what I was looking at when I said legendary earlier, that stems from when we first started doing the research for this and you just start seeing some of the high level stats of, what an enormous company this is and what a behemoth in the travel industry. I think to Americans and even some Americans in tech, it's pretty, we don't know much about this company. 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. But the company was actually founded in Amsterdam in the Netherlands in late 1996 by Gert Jan Brunzma and major apologies to all of our Dutch listeners because I'm sure I and Antigurt 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. And apparently according to, there's this great, great oral history of online travel that the website skipped 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 day and they were talking about problems that they had and they realized that the 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 know, you were kind of out of luck. And he thinks to himself, well, I bet this is something 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 manage their online booking system. But he pretty quickly codes up an MVP for a multi hotel booking website. And if David, you know, if only there were someone to aggregate these disparate one off hotels that had their own email. And he calls his little project bookings.nl and l for the. And that is how bookings.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 a well 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 ends up becoming such a large company on the back of European customers. But the initial customers were Americans. Yeah. It's really easy to forget to sort of the roots of the internet in sort of American university and defense infrastructure. Of course, it's not elsewhere in the world yet. It was brand new and it was invented in the US. It's kind of shocking to imagine a world where people are playing around with websites in the US, Amazon's being founded in the mid 90s. But it hasn't really made it everywhere else yet. Yeah. It was a different time. So and also a different time, venture capital. And in particular, venture capital in Europe was a very, very different kind of proposition. And Gert had had a tough time getting funding. So what he decided to do, and he again, he talks about this neural 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, 50,000 euros to get 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 Jew in here, they really become one of the first online travel agencies. So the same general model as Expedia or Brice Line or bits or travel osteo here in the US. And there are kind of three pieces to the business that they start. 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. So for our listeners who aren't as familiar with the OTA world, how did all this evolve? You got the basics of it, right? All these businesses really are marketplaces about how they bring together a supply and demand. And it's interesting to think back to where this industry was, is booking.com with starting. We were talking a little bit about who had email addresses. And it was all AOL, it was MSN, it was all these kind of dial-up services. We forget it now, but the real things that made the first generation of OTA businesses in the US were like portal tenancy deals. You do remember these? It was like, travelosity got the deal on Yahoo, and therefore travelosity was by far and away the leader in this category. But actually, travelosity managed to get a couple of those. I think it was AOL, it was Yahoo. I forget which the other ones were. And of course Expedia, you know, founded by Rich Bard and up in Seattle was part of Microsoft in the early days. So they had MSN, of course. So they had that as a pretty healthy locked in source of demand. And the other side, as you said, was how do you start to get a supply base that fits with that? Again, early days, the internet, not that different than a newspaper, right? What are all the 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 to front into 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? You know, travel agents always got commissions and these GDSs provided travel agents with rates and availability, the tools to go ahead and make reservation on a consumer. Expedian travelosity and the like were front end that the average consumer could use. 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? 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 a genesis for Saber, which was the very first GDS. And of course, that then serve as the underpinnings for all of these only travel agencies for a long time. Well, the parallels to the real estate industry are amazing here where you look at the MLS systems existed long before you had Zillow, but there's sort of this, David, you mentioned Rich Barton, this, you know, Barton style data to the people way where you can take these systems that, you know, should just be courierable by the general public, but have been locked up by 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 industry together that really have the potential to be brought online? Yeah. And so for booking and in Europe, obviously there's the GDS in America. Did the GDS extend to European hotels as well? Yeah. So an interesting point that kind of drives at the, but 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, you know, 500,000 hotels in the world of that population of 500. 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. It's a huge number, you know, or at least that, you know, that's what TripAdvisor would tell you they've got hotel reviews on, right? So, you know, again, that's that's the kind of the biggest sample of hotels. So the GDS only has about 75,000 hotels on it, you know, various little bit from GDS to GDS. But the kinds of hotels that are generally on the GDS are going back to our example of Curet, you know, it's the Hilton's of the world. It's a Mary out to the world. Yeah. 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 access travel agents. And so they were franchised and more sophisticated and had better technology. You know, it wasn't a 20 room pensions outside of Rome, which is much more commonly used by the European traveler. Yeah. And that really speaks to, you know, what 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 price line 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 type a query on Google and they had access to the entire long tail of the internet. Whereas Yahoo with the directory model, you know, only had the head. And so for people, you know, Julie, like you're saying, who are looking for something specific in Europe who was booking or nothing. 100%. I think that's a great analogy, right? And, you know, where that really becomes clear. And I guess we're kind of jumping head. We always jump ahead here. But, 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, 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 inventories is far greater relevancy than those people who are relying on just the GDS might have enjoyed. Yeah. Yeah. And while we're sort of on this topic of discussing, you know, that the OTA is basically a marketplace drew before we kind of get into the future evolution here. Could you do 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? Sure. So, 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 a consumer to make a reservation. Whereas meta search engines or aggregators are a layer of abstraction above that, you know, so they check that. Exactly. Trabago. Yeah. What TripAdvisor has increasingly done, you know, meta search where their Google is doing today. They're pulling rates and availability from directly from suppliers also from OTAs and other media and sales. Yeah. So, let's go back. We'll kind of finish out the history in fact. 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, you know, its supply base and its demand base in Europe, including 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 opinion 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 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 so far down the funnel, it's a perfect type of advertising for these companies. 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, you know, they're relatively large transactions. And number two, it's a very close combination between search and transaction. Right. So, unlike searching for a home, online searching for a car, you know, all these are completed online. And so, as a first case of direct response advertising, travel is a really good use case. Yeah. And so, again, you saw the OTAs as the, you know, one of the biggest categories of spenders on Google. 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. A 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 markets 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, 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 it through, is they're really worried about booking's model, which is different from the US OTAs. They're business model. Booking uses the, quote, agency model, which, whereas in the US, you know, Expedia price line, travel, OST, and the like, use the merchant model. So, Drew, can you, you know, 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? Yeah, 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 success that, you know, 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 only travel agency contracts for wholesale rates with a supplier. You know, so Expedia would go to Hilton and say, we'll pay you $100 for this room, and we're going to mark it up 20%. We're going to sell it for $120. So this is the Amazon retail business analogy, where Amazon's taking inventory on the items. They're, you know, setting the price and selling it. And the merchant actually holds, in this scenario, the OTA actually holds the inventory risk, right? No, this is why it's such a great model. Sorry. I don't have to, you know, 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, not my problem, it's your problem. Oh, wow. I can mark it up at that point in time as much as I wanted. You know, so again, you had instances where, you know, one of the leading practitioners of this at the time was HRN, which went on to become Hotels.com. Yep. But there were instances where, you know, they would have in New York City, like on sold out nights, they would contract for a $300 rate at a holiday end. They would sell it for $900 because it was the only inventory left in the city. That's like, these guys are bandits. I mean, you know, a billion entrepreneurs. But so this is like, if you can make this work, this is even better business model that, like, it has the best of being a retailer in that you get to set the price and essentially control the inventory, but also the best of a marketplace where you don't take any risk on the inventory. Exactly. And actually, one even better than that, which is it has a negative work in 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. Oh, you know, if it's a two month average booking window, I'm holding everyone's cash for 90 days. Okay. So that's the merger model. That's what Expedia and the US guys have. Now, booking has the agency model. What's that? So the agency model was a kind of traditional travel agency model. That meant that they were going to take a commission. That commission was going to be paid not by the consumer. There wasn't any 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 at this cancellation, again, I don't get my commission against it. And the commission rates tended to be much lower. 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. And negative work in capital. And they were like, capital cycle. Exactly. Exactly. So you can see why you're the Expedia board. And you say, you know, this doesn't seem like the right model here. He's a crazy booking guy, started by this college student. You know, they have no idea what they're doing. And to have some sympathy for them at the time, right? I mean, they were on top of the world. You know, they travel off. So he had been the leading player Expedia displace them. Yep. Expedia recognized. And I think one of the, you know, the interesting things about OTA is 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, you know, one of these kind of early merchant businesses, then turned around and bought HRM, which became Hotels.com, which as it happened was powering the hotel business on travelosity. So this kind of masterstroke, you know, they completely undermine their competitor. They got, you know, they identified with the most profitable and exciting part of the businesses and they controlled it all. This is like when, when Google buy overture. Yeah. Exactly. Exactly. Exactly. And now you want me to turn around and like, you know, go buy some rinky things in Europe. So much less attractive. 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 was it about that in the long run that ended up being better? So the agency model ultimately was superior. In part because there's a better consumer proposition, you know, merchant model wasn't so great for you, the consumer, because I had to pay you up front 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 percent, you know, you have more control over setting price. You're keeping cash, not me. So, you know, that wasn't great. But again, you know, in fairness to the Expedia board, they kind of looked at the world. And we're 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. Yeah. And the level, 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 ad works, you know, a really kind of cost effective tool that would allow 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. Is 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 the contracting, got a lot more hotels on board quickly. You know, they didn't have to go out and negotiate for net rates with an individual hotel. You could just fill out Gert's form, send it back in a way you go. And this is, I forgot to put it in our notes, but also in the oral history with Gert. When he started, the way he onboarded hotels is he sent them postcards, essentially, with a form to fill out on the card if they wanted to be included in the marketplace. And then they just, you know, mailed it back to them. He talked about data. It's really a free. He commerce at his best. Yeah, he commerce at his best. MVP, bootstrapping. Well, the journey secret behind the merchant model was for the longest time, literally, up until probably five years ago, like a huge chunk of reservations were delivered by Faxx machine. Right. So you were making reservation, it made me with 10 years ago. Yeah, you know, a lot of these hotels might not have had internet connections. So you had to, it was kind of like, you know, kind of like the early days of the food market in Grubhub and seamless, you know, those were all orders delivered by Faxx machine too. Yeah, totally. Right. Internet, let alone having Wi-Fi mark done your booking dot com reservation. 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, we, when we talked with Brad Stone, I don't think we discussed, discussed this on the show since we were talking about the Uber DD 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 mark it up and down however they want and they have incredibly sophisticated variable pricing to do that. But the sort of, I think it was 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. And I want to, I mean, that must have been a big piece that ultimately led to the development of marketplace within, within Amazon. Gotta be. Which is, you know, why Amazon is what it is today, power of marketplaces. It is. And that's truly one of my favorite things about the, about the show is like seeing the patterns between different industries, they evolve at different speeds, they evolve, you know, 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. Are you, you know, making an apologist argument for venture capitalist spin? You might think. You're not self-serving on acquired at all. So back to the history and facts. All this happens. Expedia ends up passing, leaves booking and, and Gert at the altar. And then Gert makes, makes a decision, which probably need 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 price line, but to an investor group. So a major European investor group, a consortium, you know, comes in and 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 then he has his name is Glen Fogel, who is now the CEO of the price line group, which includes booking, of course. But at the time, he was price line, which was just price line. The price line group also includes kayak and open table now, perhaps future shows. But at the time, Glen was the head of M&A for price line. 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. We don't take as much vacation. And so you've got kind of a better product model, a more active customer base. And he starts to argue within price line that they should really start acquiring some of these companies. So the first acquisition that they make, led by Glen, is actually not booking, but a company in the UK in Cambridge, England called active hotels, which was very similar 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 price line, this is kind of a master's trope. They build through acquisition the largest online travel agency in the world with two sub-$200 million deals. Kind of amazing. 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 price line group, or could they have taken their existing supply and demand since they already had some scale and really reinvent that and kind of copy that model themselves? I think it's tough to see, I guess it particularly plays out when you look at sort of subsequent history. I think it's tough to see price line doing this on their own. In part, you also, I think have to look at the context for price line to make this acquisition and why they're able to do it. Price line made efforts to go to market in Europe. Again, remember, this is 2004. This is kind of the depths of the.com bust. Price line had been one of the biggest success stories of Web 1.0. We all remember William Chattano, you know, Delta made a billion dollars, you know, participating getting warrants in price line, selling them at the top of the market, you know, looked like a genius. And price line, you know, price line had moved into name your own price. Dog food, name your own price. Grosses, grosses, name your own price. Yeah, ghastly. I mean, it was just like all over the place. There's a great history or partial history of price line, you know, 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 price line. You know, the initial price line, like it was crazy. Drew, like you said, I mean, it wasn't involved into travel because that was the only thing that made sense that they did. But originally it was name your own price for anything. So these guys didn't look like masters of the universe at the time, right? I mean, they looked like, you know, yesterday's news, who were trying to figure out a plan B, you know, price line had actually tried to go into Europe. You know, they had hired, I heard the story once that, you know, they had hired like former marketer from Burger King to, you know, make price line name your own price, a big deal in Europe and like totally flopped, right? So you can imagine, you know, Glenn's sitting in price line, but like, no, no, we need to go back to Europe and we need to get big and travel. You know, 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, you know, it's absolutely to cleanse credit to recognize what they did. And, you know, get it. Come a position for a lot of the US companies, you know, travelosity tried to go into Europe, it's speedy tried to go into Europe. A lot of US companies have tried to go into Europe. And really struggled. And I think one of the reasons for that, and again, we can't touch on it briefly earlier, it's a cultural issue. You know, 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 the US as a market. Europe doesn't really work that way. You know, UK is a different market than France, the Germany, Spain, then Italy, then the Dutch. And so, you know, you know, you have your own country managers, it's a much more complex and nuanced way to start a better market. And so you can see why some of the US travel companies really struggled as they tried to build this on their own. And why, from the standpoint of somebody like Klen, the thought of like hiring some Dutch who properly 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. 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 Pryce Line 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 Pryce Line of Active hotels and booking.com. In 2005, they do collectively 18.7 million room nights booked. Or sorry, that was in 2006 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. And the financial zone that are just pretty staggering. I mean, Pryce Line, 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 to $290 million for Active and booking? They did $7.8 billion of that. Pretty incredible. Yeah. Yeah. Amazing to 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 Pryce Line.com and for booking.com? No, they don't. They have their own subitems. You know, I think one of the things that is to find Pryce Line's management strategy is the group has let the businesses do their thing. You know, so again, today Pryce Line is kayak, go to booking.com, you know, the core Pryce Line brand and open tables. And then open tables. And then open tables. They have a car rental business too. Yep. But each of those businesses has been largely left to, you know, Fenford's self and make decisions that are right for their business. They don't really do a whole lot of kind of company, you know, corporate level cross-pollination. And especially at this point in time. So more recently, they've done a little bit more of it. Certainly through these incredibly explosive years of growth, each of the businesses are run autonomously. Well, and that sort of, so that kind of wraps up the history and facts here. But one, it's 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, Pryce Line group, you know, when we said at the top of the show, $90 billion market cap, you know, that's three Airbnb's 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've been a jet-setter, you've been a room 77. It's all such a small world. Why are they're not, you know, why is this not flooded with entrepreneurs? Gosh, I mean, I guess 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 it, you know, take Expedia today, you know, Expedia is the sum of Expedia plus travelosity plus orbits plus what if travelosity was a combination of preview travel and travelosity. How are there two? How are you? How are you? 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. And I guess you go look at C-Trip, you know, as a third one in Asia, you know, maybe TripAdvisor. Yeah. 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 and play here, are scale businesses so that, you know, in order to provide a lot of people have new ideas for how to make the 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 way to plan trips and do something in that space. It seems like it's just really hard to execute as the bar has gotten higher and higher with these established businesses. Yeah, for sure. You know, I've certainly seen 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 to find it is higher converting. And, you know, one confuses consumer satisfaction with, you know, business model efficacy. You know, if you can find a way to get more clicks and more bookings out of a given visitor, you've got a better mouse trap. But, you know, that's the less sexy idea than helping people plan better honeymoon. Yeah. Well, one thing on this front on innovation and entrepreneurship and 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 this industry, but is nonetheless still the travel industry. But first, with that teaser, do you want to jump into acquisition category? 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 the show. So in this one, you know, a lot of times we define a product. Like, hey, this is a new product you can sell to your existing customers. Like an Apple would come out with an iPhone after coming out with an iPod. This 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 of the balance sheet that they bought a new business here. And they happen to learn a lot from it and really make it the cornerstone of the company and grow from there. But, you know, they bought a holy separate line of business and they kept it pretty separate. Yep. I don't know much to argue with there. I mean, literally they reported it as a separate business line and they're financial. So it's going to hard argue with that. I think that's an easy one for me to jump in on. I got nothing here. Yeah. No, no, no argument. If our resident grizzled industry veteran agrees, moving on, what would have happened otherwise? This is interesting. Yeah. I mean, what if Expedia had pulled the trigger? Yeah. That's sort of the obvious one, right? I don't know. Drew, what do you think about that? I mean, you're like, with the difference to my friends at Expedia, I'm not sure they would have done this good job managing this business as as booking debt as price line did rather. And the good job was just leaving it alone, right? Exactly. I mean, this is effectively a VC play. You know, I guess the better question is, you know, why did why was Glen Fogel the one who snipped out this deal? You know, where were all the great Silicon Valley? Yeah. The best travel industry VC of investor of all time. Yeah. It does seem. Who was the intermediary that they sold it to? Was like a private equity firm? No, I think I could be wrong in this, but I think it actually was just a group of private individuals, private investors in Europe that got new. Yeah. I mean, it seems like their opportunity cost for them is the real story here. Why? 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 price lines M&A strategy and that price line sort of took these risks on early kind of subscale businesses that they saw potential and an 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? Now, I'd love to hear your thoughts on that. Yeah. I think that definitely characterized a lot of the deals that made price line successful active booking a go to. And again, I think you saw the strategy we just talked about from price line, buying these businesses and effectively, 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. Expedia by contrast has built a single dominant scale platform. And we should give Expedia its due here, right? It's almost $20 billion business. They do what, $350 million in roommates to the $500 that booking.com price line did last year. So it is a real formidable player in the category. But their approach has been different. They bought travelosity. They bought orbits. They bought what if in Australia. 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, replace them with superior economic, superior technology, see some gains in terms of productivity, both click the rate and their ability to monetize it. But it has taken a much more active role in the management of the businesses. Yep. And then another question is, what, you know, did price line need a capital infusion? Arm started booking need a capital infusion from price line or what if on their own, they just sort of continually reinvested their profits in the business and 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? You know, it sure seems to me like like booking could have done this on its own. Banking didn't need price line to achieve the scale that it did and I think again, it's testament to, you know, Glenn's judgment and acumen and finding the company and seeing the opportunity here. But I think that's an opportunity that was available to any financial investor. 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. You rename the show? Yeah. Tech themes. I think that would be pretty boring. The, you know, this is the thing about marketplaces though. Well, I'll just, I'm just going to have more than one tech theme. Yeah. I'm just going to 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 there are total slog to get started. I mean, thinking about those early days, bringing all this very fragmented, very disparate supply all across Europe, 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, 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, and I think this is the value of capital in building marketplaces is accelerating to get to that scale point. And then it tips, right? And then it's just the defensibility we're 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. 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 look at Zillow and Trulia or more recently and here locally Rover and dog VK. 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 there's, you know, you take that flywheel that's already spinning so well and yeah. Do you had a counterpoint though? Oh, I was going to say, I mean, 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. Yeah. Right. There's no hotelier in the world is like OTAs were a good thing. Yeah, it's good to have some sympathy for them. You know, if you look the stock chart of, you know, Hilton versus Priceline over this period of time, you can see why they might not be so excited. Well, well, is it, I totally get that from Hilton and Mary, that's perspective. But what about the 20 room villa in, you know, Romania who had no way of acquiring customers otherwise? Or the dog sitter who wasn't yet dog sitting or the, you know, Airbnb and beer 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 as true if you're commoditizing suppliers who are already running a business. It's, you know, you guys are bringing a great point, right? And 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. Right. And the perspective of Marriott looks really different than the perspective, even of a Marriott franchisee who actually owns their hotel. Yeah. The Marriott franchisee says, I used to have to pay and just to slight digression, you know, the way hotel economics work by and large at the brands is, you know, you have a brand like Marriott that is a franchiser, you know, that sells to somebody owns real estate, the rights to call their hotel a Marriott. Yep. And then generates some demand. You know, they'll take a commission, a franchise fee on that roughly, you know, between six and 15% based on their business, 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. Right. And Marriott.com is probably not doing much for me these days. Exactly. Interesting. Well, so what about, I feel like this is still on the marketplaces tech theme. So I'm going to take some more air time. Let's come back to Airbnb now. So and then homeway and another's 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 that were I think mostly enjoyed by the demand side by consumers and the OTA model. As you're saying, you know, even with the agency model, a lot of supply is like, you know, mixed feelings at best about it. But Airbnb has brought this innovation to 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 thousand dollars a month, right? Totally. You know, I think that's been Airbnb's real innovation in this category, right? There's a time 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 supply and supply that was really exciting. Like if I go to stay in New York, I'd much rather stay in a cool apartment in these village, you know, the $900 night. You know, restaurant and have a kitchen, you know, then getting stuck in Times Square. Yeah. Airbnb made all that possible in a way that wasn't true in the past. Or the $900 night holiday in. That's right. Jesus. Brutal. Um, uh, I mean, that's, to me, this acquisition and this whole industry really just, it's such a good example and pure example of, of, you know, the power and dynamics of marketplaces. Yeah. That's what I got for tech themes. What, one of the things I was thinking about, um, and I wasn't, you know, as, as I kind of tried to put this together as we prepared for this, um, was what would it take to, to challenge booking dot com, you know, if you think, you know, building smart places about gathering enough demand, uh, to make this whole thing work, could you compete with them? Right. So, you know, again, today booking dot com is the advantage of having done this for what about 20 years, you know, they, today generate half a billion ruminates, uh, they spend $3.5 billion per year in marketing because somebody else could do that, you know, uh, could, could you begin to compete with them to, to generate that level of demand, uh, you know, and I guess the, you know, potential, the person I was able to identify who looks like they're at least making a run at it is Travago. Right. Today Travago is spending $800, I think $800 million. They're expedient owned, right? Expedient is a, uh, I think has a 40% stake in Travago. It's got a public float in the, uh, the founder's still on part of it. But yeah, it's part of the Expedia portfolio. Um, by taking the same playbook in, in the sense of, can we get enough demand here to make this, you know, a platform that gets them lock in? Yep. But the following question, yeah, and not good. You know, if you wanted to go spend $3.5 billion a year on marketing, could you do it? You know, could you find enough? Yeah, absolutely. It's funny that this works. And yeah, this is one tech team. I was thinking about two. Um, after talking to a, a former, um, Expedia marketing person, um, this person was mentioning that, uh, the Travago is at, like, absolutely exceptional at, uh, at digital marketing and really understanding exactly when to be bidding, um, uh, bidding on Google, understanding exactly, you know, how high value that traffic is, how high value that keyword is, it's super high fidelity and instrumenting it all the way from, you know, placing the ad all the way through the, the, the end of the, um, the transaction and continuing to track that lifetime, uh, lifetime customer value over time. And it seems like the way that you kind of win on this is better and better digital marketing. And I think the, um, there was actually a lot of articles back around the time of this acquisition that, um, booking had, had sort of been incredibly successful because of their mastery of being able to buy keywords on Google. And we're, we're, we're, 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, um, you know, the, the, it, it goes to show that, uh, Google really does take a tax on, on e-commerce broadly. And with this is an enormous category, like, I, I'd love to see travel ever as a revenue driver for Google. And I think one, one, um, one way that Airbnb is disrupting here and I wonder if somebody else can disrupt, um, in the, in the hotel, uh, world rather than just in the, in the, 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 re-acquire them and Google being the central source of where people go to, to search for travel stuff all the time. Yeah, I think there's no doubt that Airbnb has played that role so far, right? And I think, you know, to your point, uh, a moment ago, David, you know, the fact that they have this unique access to supply has allowed them to take that, that kind of position. Um, there's a question of can you do it in hotels, particularly given the fact that you know, it's, it's relatively commoditized. That hotel inventory now shows up on lots of different channels. Yep. But I think one other thing to understand, um, and, and it's worth getting in, you know, thinking about the consequences for why it worked for booking.com is what allows them to spend at that level of scale. I need the same for Travago, right? What allows them to spend at that level of scale isn't simply the instrumentation where the fact, you know, they have three and a half billion dollars to spend. It's that they get the conversion. Yeah. Right. The reason, because all these guys look at what's my ROI, you know, and, and again, part of that is spend, but, but really the biggest driver, and also a 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? Yep. You know, 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? The things flashing because like, that's what gets me to buy. Yeah. Well, and this is, um, I feel like this is such a, a powerful concept, uh, Bill Gurley actually has a whole blog post about this about conversion, especially from marketplace businesses. It is the biggest lever that you have. I mean, we learn this lesson, you know, at Rover, uh, in that, um, the product that you're building when you're at a marketplace company is, is essentially, you know, the matching of supply and demand and the consummation of that match. And so your job is to, is to maximize the rate of consummation of that match. Um, and, and if, if you don't realize that you can start investing in all sorts of things that are, you know, not going to be driving your business, yeah. And I guess going back to the expedix, why did expedience this? Yeah. In 2002, it wasn't obvious that this was a marketplace. Uh, in 2002, you had big portal tendency deals that drove a lot of traffic, you know, and I signed, you know, a $10 million deal with Yahoo or with AOL saying, I'm going to get, you know, this spot, uh, and it's going to be true for the next year. And I'm relatively indifferent, not indifferent, but, but had less pressure around what the performance of any individual session was. Right, because you were just getting that stream of clicks, no matter what. Uh, and you weren't paying on a, uh, variable basis for that. Right. Interesting. Interesting. So, so one thing, um, uh, actually been with any other tech themes you want to cover? Yeah. I got, I got one quick one before we move into grading. Uh, so, um, selfishly, like one of the things we do at Pioneer Square Labs is look around another 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, uh, this generation shifts toward a more on demand, less committed 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. I'm, you know, my credit card doesn't get charged until I stay in that hotel. And there's policies of 24 hour, 48 hours, whatever it's going to be, but like, you know, you're, 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, a super interesting, um, lens to think about new company creation is, 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. Yep. So that's all I got for tech teams. Well, if, uh, if we had some answers, we should, you know, we could say, okay, say, I'm just slightly in this case, uh, Ben, absolutely. Oh, I don't think the best consumer experience, best consumer experience is what won here. The very least we need to think broadly about what best consumer experience is, um, because it wasn't like the booking.com had the most attractive, best designed website in the sense of UX. Um, lots of people would say it's not that attractive. Yep. But it was best in the sense that it delivered the most conversions. Yeah. And the reason it delivered the most conversions was it had the most best inventory, you know, and so, um, which, which I, I, at least to me, that's, that's the consumer experience, right? Like you're, you're able to get what you want. Um, and I think maybe a secondary thing here is probably the, the, the lack of commitment to it. But, um, to me, being able, being matched with the correct supply is just a, um, you know, a facet of, of the consumer experience. Sure. I think so, so, you know, many levers to, to have it play here to, um, well, I think it's the, it's the same, um, you know, it's the same thing. It's a, uh, we're, we're quibbling over the definition of consumer experience, but it's, you know, in the same way, like, I don't think anybody, uh, you know, apologies to our friends at Facebook, but, uh, and especially LinkedIn, but nobody would argue that those are like the best, most beautifully designed sites, right? So, 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. Um, it kind of, you know, what they look like is almost secondary, um, but it's what I get out of them. Yeah. So, so Drew, I, uh, I, uh, in thinking through this a little bit more, if, if consumer experience is the umbrella of, of things that enable you to win, um, I, I think you're right that, being matched with the correct supply is far more important than, you know, your, your requirement to commit. Yeah. Uh, okay. One last one, uh, sort of sidebar, I wanted to cover before we grade it, um, and in my informed grading, uh, 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, um, you've talked about Airbnb. What role does meta search play in this world? I mean, you were at Chi-Eck for a long time, um, and, and meta search sort of takes a, a wholly different approach. It's a layer on top. It's not a marketplace itself. Um, what, what is that role in the ecosystem here? Well, I think it comes down to, um, actually, the point we're just talking about with Ben, which is, how do I make a decision? How do I find what I want? 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. Um, and, you know, meta search, vertical search, you know, was an abstraction of, again, that decision making process. One of the things that was really powerful about it, I think, is allowed it to grow very quickly is it, um, it, you know, limited its scope, right? At Chi-Eck, 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, you can find them when you want, and you're out, you know, like, you know, things moving through goose was the metaphor, uh, what they were talking about. Uh, you know, I, I think you talk about, um, got your family friendly, friendly show here. You know, I know you have advertisers. Yeah. Appreciate that. Uh, you know, you, you know, Trivago did it one better, right? You look at Trivago, it's 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, 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. And all that leads to, uh, to really effective monetization, really clear visibility, too, right? I mean, the, the point you're making, Ben, on, uh, on how well Trivago does it tracking both initial monetization and the repeat, all that is possible. Uh, because it, because all, you know, all those events happen within the same session. Mm hmm. I don't know if I answered your question. Yeah. No, no, no, that's, that's great. And, uh, so, so I guess for, for the MetaSertz layer, um, it does greatly improve the customer experience. And what the MetaSertz 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, uh, from the marketplaces themselves. Yeah. So, you know, all the, the, the kind of mental model, if you will, for Meta was Google. Yeah. We're going to be a vertical sort of change in. We're going to get paid on a CPC basis, you know, and, um, we're going to get paid by the, the various marketplaces or by the bookings and the, uh, orbitses and the, uh, speedy as themselves. Yeah. Now, that, that, you know, those lines have gotten blurry over time. I mean, 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, or, or, you know, desktop in the 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, uh, we're pretty well designed from an e-commerce standpoint. Uh, you know, you could look at, uh, with conversions where from leads out of a MetaSertz into a no TA. That broke down, especially early on in mobile where, um, folks had poorly designed mobile booking pages. Um, and in an app, you know, that, that, that process going from one app to an ex is one for un-beluded. Yeah. And so the consequence was MetaSertz engines started to build what they described as instant book, you know, effectively. Uh, they would allow you to complete a transaction. They would use a book API. Uh, so they were calling into the OTA or the marketplace to complete the transaction, but it, it happened within their environment within the environment. And now they're actually getting paid on the transaction fee then rather than just sort of for the, the ad placement. Yeah. The, the, the reality of those, the, 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, you know, normalize that back to CPC. So, you know, the, it wasn't all that different to go from, you know, the, the MetaSertz type, uh, agreements to, 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 the trip advisors stock performance, you can, you know, the financials, you can see the challenges that instant book has had. Um, it has had a huge impact on, on, on trip advisors monetization. Um, you know, we played around with it at room 77, you know, kayak has done some of it. Um, but it has not, not taken that much root in, you know, in, in among MetaSertz agencies, right? Like it has, it has not become that dominant. And I think one of the big reasons is, um, 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. Uh, you know, all those kinds of issue, you know, but the packing gets lost like for whatever reason, you know, it doesn't, the transaction doesn't complete. And it's considering that your environment, for the consumer too, right? I mean, you're spending hundreds of dollars here. Exactly. Exactly. And, and, and it's much harder to, to deal with those edge cases. If it's, you know, somebody else's book API, then, then if it's happening in your own environment, interesting. Um, um, okay, I feel like we have the full picture now of the online travel industry. Should we grade it? Or, or at least as much as you can get in an hour. Yeah. Online travel industry in one hour or less. Yeah. Well, I mean, I, I don't think we need to spend a lot of time on grading early. I certainly don't. Um, 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, um, was, whoa, are you going higher than Instagram? How do you think so? Wow. I know. I mean, I, to the, because I look at it this way, like Instagram wasn't really company saving for Facebook. Like Instagram has become an incredible boon. Um, but would Facebook be, you know, completely irrelevant for 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. And in the way that, um, I think that Apple would have been totally host without buying next, uh, I think that priceline may have been totally host without buying booking and booking has turned into a gigantic business. Like if you look at, I mean, just comparing priceline and, and Expedia, um, pricelines market cap is 92 billion. Expedia is about 22.6, um, over two thirds of that 92 billion comes from booking.com, going from $130 million acquisition to, um, you know, responsible for market cap of, of 60 billion plus, uh, a plus. Wow. You heard it here first. Booking.com bigger than Instagram. I love it. Um, wow. I hadn't, uh, I hadn't thought about that. We'll, we'll let you have the last word here, but, um, do I think that this is better than Instagram? Um, yeah, I mean, you made a pretty compelling case there. Uh, 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. 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, um, social networking apps. Um, so yeah, wow. Um, I, I, I, uh, 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, uh, you know, uh, I'm trying to think back through all of our episodes. We have so many at this point. Um, 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, in, you know, revenue that was created by that acquisition. Um, and then, uh, and then I think it's the gram and booking, you know, or both, uh, of a scale that, um, that are, are, you know, pretty incredible. Not a trillion dollars yet, but, um, maybe someday. What, what was the purchase price on Instagram? Was it billion? A billion, one billion dollars. I mean, what did you guys put as the current value of Instagram? Well, when we did the episode, which was about two years ago at this point, right, Ben? Um, uh, I think there was an analyst report from the city bank, yeah, from city bank to value to what around 35 billion dollars somewhere in there. I don't know why I remember the number 19 or 20, but it's, you know, that big, that, that that's right. 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. Uh, so all right. Drew, school is all. Well, no, I mean, I, you know, I'm with Ben on this one. Uh, 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 say this is the best deal ever. Better than next. Uh, okay. And I, I, I, I, hopefully rational as well. Uh, yeah, I think like it's just phenomenal, right? Um, you know, to think that Jeff Boyd had a, you know, 100 X increase in, in, in the value of price line stock as the CEO, like that is just breathtaking. Uh, 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, uh, it is a little bit humbling. I remember talking to Jeff Boyd at one point in time. And I don't remember when it was, but yeah. And Jeff was the CEO of price line group until, until, uh, well, there was a long history, but CEO or chairman of price line group until, until Glenn took over in the beginning of 2017. And, and remember talking to him, what are you guys going to do next year? I was just talking about your plans. This is a, you know, focus right in the industry, you know, big industry kind of confound. And he's like, ah, yeah, we're going to do what we did last year and a little bit more. That's what we're going to go to. But things going to grow 40%. That's pretty good. Plants like last year. Yeah. You should keep doing that. Um, wow. Uh, well, there we have it. Um, the history of either the second or third best acquisition of all time on the internet. So, uh, thanks for, uh, thanks for joining us. Drew, this has been awesome. Guys, thank you for having me. A lot of fun. Um, yeah. Okay. Real quick. Carlos. Sweet. So, uh, one thing I watched last week, uh, that was linked on daring fireball and was really awesome to kind of leave on in the background and do some stuff around the, around the apartment was, uh, Scott Forrestal appearing publicly for the first time to talk about, um, anything related to his old gig at Apple, um, running the, uh, the iPhone project, um, when he was live at the computer history museum a few weeks ago. And, uh, there's a, 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, um, folks that worked under Scott on the original iPhone project. This is all sort of commemorating the tenure anniversary. And Scott just telling amazing stories of, um, how the iPhone came to be. A lot of sort of never, never been revealed stuff, uh, personal interactions with Steve, a time when Steve jobs in his words, uh, saved his life quite literally from, from, uh, he was incredibly ill and, um, um, Steve and some incredible acupuncture sort of saved his life. And, uh, it's, it's really cool. Like if you're into, um, if you're into this podcast or you're into, uh, internet history podcast, Brian McCullough's show, you will really, really like this interview. I, it's been on my to watch list and, um, yeah, it just sounds amazing. I mean, this is, I think this is Scott's first public appearance since, uh, regarding technology. Yeah. He, um, I think spoke extremely briefly when I think they won a Tony, he, he, he, he, that's right. This is a Broadway play. That's right. Yeah. Yeah. Um, since, since the, uh, you know, Apple keynote stage, um, and the funniest thing is it looks like he's wearing the same shirt. They like make fun of that. Like the dude has a style. Love it. Hey, you gotta, you gotta have a calling card. Yep. Um, mine is, uh, so Jenny and, uh, and Jennings dad, my father and my Gary and also shout out to Gary, fan of the show, um, went to see the big sick in movie theaters last weekend and, uh, it was great. If you haven't seen this movie yet, uh, it is, uh, 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, um, in many, many years, best movie I've seen since the Force Awakens for sure. Uh, hi, praise. It, uh, it deserves it. Uh, I think it's got like a 98 on Rod and Tomatoes or something like that. Um, and, uh, it's great. And it's, and it's Camille, uh, not, not Gianni, um, apologies if I broodchered that too, uh, but, uh, who, who plays the Nash on Silicon Valley and it's, uh, it's the, you know, mostly true story of him and his wife and how they met and their, uh, their lives together and it's just, it's wonderful. Wow. Cool. Um, Judy, do you, do you want to join in the fun? Sure. Yeah. So I've been, uh, I've been into, uh, like, uh, email newsletters, you know, Jetsett better like, can't, can't, can't get away. But, uh, I've been loving, uh, money stuff from Matt Levine. It's a little more kind of markets oriented than, than, than pure tech. Uh, but he is just an incredibly funny writer, uh, and, and super insightful on, uh, you know, what's going on in the markets, you know, a lot of kind of blockchain commentary. Um, yeah, what's moving on with it going on the VIX. People are worried about not being worried enough. Uh, he said these, uh, great, great segments. So definitely we're checking out. Cool. Awesome. We'll do. Well, uh, I mean, I think that's it. Drew, where can our listeners, uh, find you on the internet? Uh, my Twitter handle is Drew Pats, D-R-E-W-P-A-T-S. Uh, I'll probably get the best way to track me down. Great. Great. Well, thank you so much. We appreciate you coming on the show. It's a pleasure. Absolutely. And I know our listeners will appreciate, um, some, some actual domain expertise and insight for a change too. Rather than, than me speculating wild. Well, thanks for having me, guys. Yeah, yeah. Listeners, if you are still listening and you are not one of those people that, uh, like me, you really, that, 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 ten minutes. You just finished a podcast. You probably have a couple minutes more of free time. You should do it. And, uh, and hopefully you, every single one of you, but it can only be one of you will win a pair of AirPods. So, um, thanks so much, guys, and, uh, and have a great day. Thanks, everyone.