Arnie WeissmannThe year was 1995, and I received an unexpected phone call at my Weissmann Reports office in Austin, Texas.

"My name is Rich Barton, and I work for Microsoft," a voice, presumably that of a young man, said. "I just saw your destination content on AOL, and I think it's very good. If you're free tomorrow afternoon, I'd like to come down and talk with you about licensing it."

The next afternoon, a smooth-faced, sunny young man came into my office and placed a bottle of champagne on my desk. He said flight attendants had given it to him on the way from Seattle. I didn't doubt it; he simply radiated charm.

He was, he said, compiling a CD-ROM on travel, and was looking for content. Before the day was over, we had sketched out a licensing deal.

The deal never did end up being signed, but in the succeeding months, Rich came to Austin a few more times, and we talked on the phone frequently. He was interested in everything related to the travel industry. He was a quick study, and I doubted I was his only source. Each time we spoke, his grasp of the industry seemed to have expanded far beyond what I had shared with him in our previous conversation.

At one point, he told me he was no longer working on a CD-ROM but was now in charge of creating a website that would sell travel. He explained enthusiastically that Microsoft would become the dominant seller of travel, and spoke with casual assurance that his site would put travel agents out of business.

In fact, travel was only one of several verticals Microsoft had its eye on, he said, and he felt it could dominate just about any sector of commerce it wanted to because it understood, as no one else did, the power of technology and the Internet, and it had the expertise and resources to do it better than anyone else.

When he spoke like this, Barton did seem arrogant, but his arrogance was tempered somewhat by his underlying idealism about technology. It turned out that he was mistaken about the Internet's ability to put travel agents out of business: He failed to anticipate that the power of the Internet would be widely accessible to anyone, including travel agents. But he was, generally speaking, correct about the future of commerce on the Web.

Though I was very active early on in both online services and the Web, I didn't see nearly as clearly as Rich the prominence that the Internet would one day have in our daily lives.

Fifteen years later, the company Rich founded, Expedia, sits, for the first time, atop the Travel Weekly Power List as the No. 1 seller of travel in the world. It displaced American Express, which had held that position since the survey's inception in 1992. 

Last week, I called Dara Khosrowshahi, Expedia's CEO, to tell him the news. Dara also possesses an abundance of charm and intelligence, but his demeanor leans more toward modesty than arrogance. He said the company was not "precisely, exactly" sure that it had surpassed Amex in gross travel sales in 2009, but that he was hopeful that perhaps it had. Landing atop the Power List was "a wonderful thing, a great honor," he said.

Khosrowshahi attributed Expedia's accomplishment, in part, to "a bit of the early idealism of Microsoft": the fundamental belief that if you build something using great technology to empower consumers, you'll come out on top. "The more we stay true to those roots," he said, "the better off we are."

He also pointed out that, although Expedia reached sales of $21.8 billion last year (Amex was close behind, with $21.5 billion), it is still very much in growth mode.

"We have this big, audacious internal goal to get to $40 billion, so I don't think we're anywhere near done with the task at hand," he said. "There's still room to grow in the U.S. Europe is still in its early stages. And Asia and Latin America are just getting started. We are building a global travel business, and no other travel company has ever done that before."

While he keeps an eye on current competitors, he said, "What I fear most is the unknown. We are children of the 'new platform' that was the Internet. We've seen how new platforms can build new businesses and destroy old businesses. Social media and mobile are coming on the scene very fast and have both great creative and destructive power. Whether we take advantage of them or are taken advantage of by them is a real challenge for us."

For now, Khosrowshahi will try to enjoy Expedia's new position in the pecking order, but as if to voice proof that the new Expedia is not as arrogant as the old, he expressed concern about the ability of the company to hold onto the spot in the short term.

"The question is: When business travel bounces back, will [Amex] bounce back above us again?" he asked. "We want to have a few years in No. 1. We don't want to go back to No. 2 or 3 again."

Email Arnie Weissmann at [email protected] and follow him on Twitter.
This column appeared in the June 28 issue of Travel Weekly.


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