When American Express Global Business Travel bought KDS last year, Dean Forbes, the boss of the corporate travel tech company says it was time to step aside.
As CEO since 2011 and vice president of sales before that, Forbes had seen the company through the development of its Neo door-to-door product - considered a step forward in integrated travel and expense booking tech.
Here he talks to Tnooz about the Amex deal and trends in corporate travel distribution.
On... how the Amex GBT deal came about?
KDS has had a long standing reseller arrangement with Amex and a technology relationship where it white-labeled some KDS products.
In the year preceding the deal a few different things happened: the launch of Neo and the excitement it generated in the market, and potential as it relates to travel management companies and hotel attach rates and driving up online adoption.
That increased its interest in the relationship becoming a bit more strategic.
Then KDS created a partnership with Carlson Wagonlit Travel, where we were building heavily influenced products for CWT. No one at Amex will say it was a concerning factor but it’s impossible to imagine it wasn’t.
The third thing was the spin off of GBT and its commitment to a heavily tech oriented road-map. It really went on a shopping spree, looking across the market at players that could play a role in the tech strategy.
It liked KDS but not the valuation and we were excited about what we were doing so they went away for a year and then came back.
The deal got done across five months which was pretty fast.
On... your own fast exit?
Everyone imagined it was agreed before the deal was done - it wasn’t. We all worked hard to build this company and then get this deal done. I felt this incredible fatigue after building and selling KDS.
I felt this incredible fatigue after building and selling KDS. It wasn’t clear to me how I was going to add value and really enjoy jumping out of bed at 6am so the most helpful thing I could do was get out of the way.
The moment the deal closed, I lost so much energy and passion. I lost a week saying to myself that I just needed to rest and sleep and then I'd get it back... but I didn't.
On... tech consolidation in corporate travel
The global distribution systems will continue to make edge acquisitions, stuff that is not core for them but complementary.
What's interesting to me - and a bit weird - is that you have this incredible chasm in business travel tech.
You have a huge swathe of small companies, between 10 and 100 people, and new entrants coming in, which is great. But, there are not many companies of 3,000, 5,000 or 7,000 people in scale and a few hundred million [dollars] in revenue.
And, then you end up in the AMEX, CWT, Sabre, Amadeus and Travelport world of 10,000, 12,000 people and many millions of dollars in revenue.
There isn’t this middle ground.
So, when you think about consolidation the only two things that can really happen is consolidation in huge companies, which is highly unlikely.
Or, these huge companies buying one of these tiny companies which a lot of the time is them not wanting to hire the talent to built the tech to help move their company into a different space.
In any other tech space you find a much more even spread of companies at different stages of the journey but not travel.
Travel tech, in my eyes, and it's probably a little bit wrong, is mostly ecommerce. It's mostly about buying goods and services online that’s most of what is happening in business travel tech.
In adjacent ecommerce you don’t have this problem, you have a much better spread of companies at different stages.
So, it's not because we’re in ecommerce, or because margins are slim but because we have such a small group of companies on which the rest of the industry, like it or not, is almost entirely beholden.
If you wanted to buy something online every day and did not want to use eBay, you could and never come into contact with eBay.
If you’re a company of scale in travel you couldn’t go a week avoiding a GDS or a TMC, it’s the way this industry has grown up, beholden to those three/four GDS and four TMCs.
We’re now addicted to those companies. Nothing will happen to change that because a small tech company cannot grow without integrating fully to a GDS.
They dictate the form, speed and price and technical architecture on which that has to be done. You can't scale independently.
They made it impossible, probably by accident, but kept it like that by design.
On... what has moved on for the benefit of business travel?
It's the whole shift in enterprise tech. If we come away from travel for a second - if a company says we are now going to use Microsoft Outlook for communication and collaboration, you have this neat demographic that says it maybe wants to use Slack and downloads it.
They love it, and before you know it that organisation is saying "we do use Microsoft, but we also use Slack".
That shift to bottom-up influence in the tech you use is the most important thing happening in business travel because it’s the most under-invested and slowest moving set of technology in the enterprise.
Having a generation in the workplace that doesn’t want to use poorly designed product - and them having the ability to resist - is brilliant.
I’m pretty sure the big players will continue to ride out these monopolies if the rest of us allow them to but the way people are using tech and product or not using crap stuff is going to drag everyone into the 21st century.
On... more flexible travel programmes with all options build in going forward?
This is the part where I haven’t really made up my mind. In the first design of Neo there were no options, you asked it the question about where you were travelling, it came back with a single option based on a bunch of things.
People hated it so we shifted away from that.
If you fast forward a few years, you have artificial intelligence now which is definitely one of the most exciting and scary emerging technologies.
What AI is going to do is understand past behaviour, leverage big data, know a bit more about you and your personal preferences and come back and tell you what you need.
We have almost gone full circle with this.
Travellers are incredibly habitual, there are a small number of trips where genuine choice is necessary, for the rest it's travelling to company HQ, it’s one hotel and if that’s full, it's the next in line.
80/90% of stuff is fairly prescribed and if not it’s pretty easy to figure out what the right answer is so I’m not sure if in this context I’m pro-choice.
On... being most proud of Neo
There were a lot of reasons for it not to get traction, and [yet] it really did. Door-to-door had been discussed but never been done.
We went to talk to Expedia about it pretty early on. They said it was a great idea and had been thinking about it for years but they didn't think they could make it work and were not sure KDS was going to make it work.
They told us to come back when we got traction.
When you have a giant, which has the resources and skills to get it done, saying it probably can’t be done and you’re able to do it, it’s incredibly rewarding.
TMCs did not like it because of the change, travel managers said it was too much of a change too soon but we motored on.
We figured out that if we could talk to people who would be using it, instead of everyone wedded to the ways things had always been done, we would win and that’s when things changed for us.
On... startups being solutions looking for a problem or a bubble waiting to burst?
It’s good for all of us that there’s buoyancy in tech and in travel tech.
This might be one of the spaces that needs that new blood and new energy more than most.
We can’t rely on the bigger companies to innovate and change things at pace so good to have smaller companies kicking away at their shins but the bigger question is can they monetise, can they scale?
On... accelerator programs and recognising that need for innovation
I think companies do recognise the need, especially the larger ones.
If I was CEO of one of those I’d be concerned about my business model and where revenue is gong to come from. There is a reason to be concerned about the longevity of some of those business models.
Having incubators is smart, I think they’re serious about it. But, the drive to really change something is what I would question.
It’s hard. If I had a $3 billion company with $2 billion of high-margin revenue coming from a stable, but aged, set of products and processes, every year with little risk, and I don’t have to invest heavily to protect it, it's hard to say I'm going to bet the next couple of years on this new unproven idea that going to be the next big thing.
One of the benefits I had at KDS is I didn’t have that $2 billion revenue stream. So, I’m empathetic as well as critical.
On... the will for change
When I arrived here people were not open to those ideas. It takes time, money, energy to set them up and manage them so I definitely think the will is there.
But, the moment comes when the incubator has a great idea and it needs to go to 1,000 customers to really be tested.
Is the CEO going to say the next generation of business travellers will really benefit from this idea so I’m going to make sure 1,000 of my customers really use it - otherwise, it won’t see the light of day.
Are they going to have the courage to force that to happen or are they going to do what usually happens?
Tiny trials with two or three customers who have other things on their plate.
The idea gets sub-optimal feedback and it becomes an endless loop and the thing never sees the light of day. That has been the enemy of innovation in our industry.
On... what else is holding the corporate travel industry back?
The way the industry is designed, the reliance and addiction to these bigger companies is something we need to change.
The content companies are our biggest hope for changing that. Booking.com, Airbnb and some of the sharing economy services, which are built for consumers but making their way into business travel, which is good.
The other thing is just the courage.
Sometimes there are great ideas but not the courage to really force them into use because you’re going to upset somebody along the chain, that’s the biggest thing holding the industry back, that readiness to take the step.
On... the trends the corporate travel community needs to be on top of
The sharing economy is really exciting because the industry has zero choice about embracing it. It's funny watching the industry debating whether it has any role to play in business travel.
It’s a complete waste of time having that discussion because it’s going to happen.
You have this generation that is going to end up in the workplace for whom a prominent method of travel has been the sharing economy so you’re not going to talk them into a programme that does not include it.
It would be like asking them to work without a computer, they don’t know any different.
AI-enabled services are interesting too and scary. It will replace a lot of jobs currently being done by humans.
And mobile but not in the sense we have been talking about for seven years, bookings and offers.
It will be about truly leveraging it for geo-localised services in the context of resolving problems for travellers as well as proactive services.
It has always puzzled me why we don’t just use mobile as a mechanism to know where the traveller is and help them because we know where they are on the journey.
Foursquare is one of the fastest growing social apps over the past 10 years, entirely designed around telling as many people where you are or where you’ve just been.
This mindset around travellers being uptight about sharing information is nonsense.
On... direct connect, Lufthansa and how it has all played out
I have a mixed view. I’m a huge fan of the courage it had to make the move.
It caused genuine issues and problems for a lot of organisations which should not be overlooked but here’s a company that recognised an issue in the model and had the conviction to say if we make this move it will be better for both us and our customers.
There’s a lot that should be applauded.
End suppliers trying to up their direct-connect game and get closer to the end user is a good thing.
In the context of corporates, there's a bunch of stuff they need such as consolidation of information so you have to make sure all of that is happening but I like the principle of the move.
Where I’m at conflict is that the need for direct connect only exists because the GDSs and TMCs, and others that have built online booking tools, have not done a good enough job over the years in terms of satisfying customers and travellers.
It bothers me that it is occurring and gathering some momentum because it is the perfect indictment of the terrible job done by the tech companies that this thing even exists.
On... what's next?
I'm involved in three things. I'm establishing a foundation of my own, it's a works and employment readiness foundation for 16 to 18-year-olds from inner cities.
It's six to 12-month work experience placements because people underestimate how difficult it is getting yourself off a chair, in a flat on an estate and into a nine-to-five job.
I'm going to be CEO of a SAAS company in the human capital management space, which is three times the size of KDS and growing fantastically well.
I’ve been surprised and lucky that a lot of folk have reached out with different ways I can help them.
I'm going to sit down and see where I can be helpful as a board member or advisor as long as it's not at conflict with Amex.