The exit of Expedia Group's CEO last week was quite a shock to watchers of the online travel sector. I have never met Mark Okerstrom, but I do know the group of businesses well.
I personally use it for all my company travel bookings.
In 2015, as CEO/chief technology officer at TourCMS, I built the first Expedia Local Expert-to-supplier reservation system for availability and booking connectivity in tours and activities, leading to Gray Line winning the Expedia Epic award in 2016.
This is my entrepreneur perspective from being close enough to the business to have seen the inside but not having any current relationship either as a technology company or product supplier.
The battleground
When you think about top-level generations of digital tech in the last 20 years, the three I consider foundational are:
Each has created a category-defining winner that has reshaped the travel industry:
- The web led to OTAs
- Mobile led to businesses such as HotelTonight
- Social led to the emergence of TripAdvisor and Airbnb
Since spinning off TripAdvisor in 2011, Expedia has not had a category winner in mobile or social.
Luckily, as with all digital tech, there are always new generations coming along. The next two I see as rocking the travel industry are:
- Autonomous vehicles - these will change ground transportation and the tours and activities segment.
- Blockchain-based distribution - this will change the flow of money and the entire role of an OTA.
Mobile and social are both over 10 years old now, so it's too late to go back and try to build a category winner.
Instead, can Expedia win one of these upcoming new generation technologies and get themselves back on track?
Will Expedia build or buy?
As an entrepreneur creating new industry-wide platforms, my perspective is that Expedia Group is a builder and not a buyer.
This approach predates Mark Okerstrom's arrival as CEO in 2017.
For example, I remember at an Expedia conference, where former-CEO Dara Khosrowshahi and Brand Expedia boss Aman Bhutani argued between themselves onstage on their buy vs. build strategy.
The sense that I got, as a digital entrepreneur in the audience, was do not expect nascent startups with bright ideas to be on Expedia Group's watch list.
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For comparison, I was at a conference in London in 2018 where Booking Holdings couldn't be clearer that it was looking to buy entrepreneurs, even those without scale.
Todd Henrich, senior vice president of corporate development for Booking Holdings, said of its buying strategy: "That could be anything for a small entrepreneurial acqui-hire team to several million dollars' worth. We're looking largely for capabilities. We don't generally look to acquire scale as we have plenty of scale on our own."
They were actively courting entrepreneurs to go and work with them.
With Expedia Group, it is all "trust the developers," and then, "trust the A/B testing and the usability tests." Both are great at optimizing a current strategy but completely fail to uncover new opportunities.
Impact on entrepreneurs
Fundamentally, entrepreneurs build services for consumers or clients. But after that, entrepreneurs build services that will create an exit at some point.
To create an exit you have to make an acquirer want to buy you. The easiest way to do this is to design your service in a shape that will fit nicely into an acquirer's business.
For example, knowing that Booking Holdings is a buyer not a builder, you would build your service to fit nicely into the brand's ecosystem so you are ready if or when they knock on the door.
When an entrepreneur knows that Expedia Group is a builder and not a buyer of young businesses, you don't build a product or service into a shape that it will find attractive.
This forces Expedia Group further down the build vs. buy approach, as they hint that there is no startup to buy that it wants. It is, in other words, self-reinforcing over time.
Why entrepreneurs?
Entrepreneurs can't fix everything. We are not a silver bullet.
However, one area we tend to be good at is winning David vs. Goliath battles. Expedia Group, although large, is competing as David vs. Google's Goliath.
Is this winnable? Yes, of course it is - you have to take the ship towards the rocks, go where Google won't dare to go.
There are plenty of spaces in the travel industry where consumers do not trust Google. For example, experience design (as opposed to experience aggregation), or travel profile-based personalization.
These are both absolutely winnable areas.
Next steps
To correct this, Expedia Group needs to attract entrepreneurs. It needs to make it clear what problems it is looking to solve and on what basis it will buy companies, rather than build internally, just how Booking Holdings did a few years ago.
Over time, entrepreneurs will return to building services that could be the right shape to sit within the Expedia Group ecosystem, giving it choices on how it acquires to be the category winner in at least one of the next two generations of foundation digital tech.
The ship will not turn immediately, but it's not too late to apply this strategy and put Expedia Group back on track at the top table.