I’m just wrapping up several weeks of attending conferences across both coasts. Of the ones I have been to recently, the Nantucket Conference has been my favorite. A great group of people and a small enough gathering that you can actually get to know many/most of them. My thanks to Scott Kirsner who organizes the conference and was kind enough to invite me to speak this year.
One of the sessions at the conference was an interview with Paul English, founder and CTO of Kayak. The interview was conducted by Larry Bohn of General Catalyst (Larry also happens to be an investor in my startup, HubSpot and sits on our board of directors). In case you are one of the few people that hasn’t heard of Kayak yet, it’s the most popular travel search site on the web (and one of the top 1,000 most popular sites on the web). Kayak is great Boston-area success story. One quick point on that: In Dec 2007, with just 39 employees, Kayak raised $230 million (at a much higher than that valuation) to acquire their largest competitor, SideStep. Paul is on my list of “best entrepreneurs I’ve met”. Lots to learn from him.
The following are some notes I pulled from the interview. I encourage you to listen to the entire session (high quality audio, and lasts about 45 minutes). Just hit "play" on the widget below. Or, if you’d prefer, you can read the entire transcript at the bottom of this post.
Or, you can download the MP3 directly
1. “I've started four or five companies now, based on how you count. There is one I am trying to forget.” Most serial entrepreneurs that I know don’t have a 100% “hit rate”. Just about everyone has had at least one venture that didn’t quite turn out the way they had hoped. I like that Paul’s able
2. Like me, Paul also started a company with his brother. I have to remember to chat with him about that over a beer someday. [Note to self: Write article titled “Starting Something With A Sibling: Understanding The Tradeoffs”.
3. Like many of my favorite software entrepreneurs, Paul’s a programmer by training. Interesting side note: In my recent travels and interactions with entrepreneurs, I’m finding that an increasing number of founders have a design/UI/UX background.
4. When asked “Why do you start companies”, Paul has one of the best answers I’ve ever heard: I start companies because it gives me an opportunity to create teams.
5. “Our priorities are always team first, customer second and profit third.”
6. The difference between an A team and an A+ team is the difference between a million in revenue and a billion in revenue.
7. Sometimes people Paul is interviewing say “I’ve heard a lot of great things about you.”. Paul: “Trust me, after a few months, you’ll learn that the reason you’re here is not me, but the people around you”
8. Paul English on recruiting (I’m paraphrasing this from a meeting I had with him and some pieces from this interview): When someone mentions the name of a person that they’ve worked with that they think is exceptional, a little clock starts ticking in my head. My world goes to black and white, and this clock is in color. From when the clock starts, I give myself seven days to track them down, back channel, get them in for two series of interviews that are intense and focused, and make an offer and have them accept it. That's seven days from when I hear the person's name. [`
9. At least one of the co-founders needs to be passionate about recruiting because that absolutely makes all the difference in the world.
10. When Paul started Kayak, one thing that was very important to him was building something that his friends could use. Before Kaya, when people asked "What do you do?", his response was "I work in an operations research group at data general, and we're studying advanced processes for doing disc drive manufacturing." Clearly, unlikely to be fascinating to most people. With Kayak he wanted it to be different. I have had almost precisely this experience. For my current startup, I wanted to work on something that when random strangers asked me what I did, I wanted a decent chance that the answer would be relevant to them.
11. “I had sold two companies. I didn't want to sell a company again. So my venture guys would sometimes say, "You know, explore it." And I'd have the meeting knowing in my mind that there is no way I am going to sell this company.”
12. When Paul was hiring his early team, he refused to hire people from the travel industry. He didn’t want travel people, he wanted consumer product people.
13. One of Paul’s investors said, “You’ll name this company Kayak over my dead body.” Paul: “Thanks for the input.”
14. The Red Phone: Paul found the most obnoxious, loud-ringing red phone he could find and plugged it in right in the engineering office. About 30% of the time, when a Kayak web visitor saw a support phone number on the website, it was the number of that phone. The idea was to build a culture that was centered around the customer.
15. “I guess this is the first time I'm talking about this. But I'm at the beginning of a new project, which will be my next 10 year project. I'll be at Kayak, of course, pushing it, pushing it, but I'm starting a new project that has an audacious goal of creating free low-bandwidth Internet for the whole continent of Africa. [This super-cool.]
16. In an uncharacteristic moment, I actually asked Paul a question in the session about how his advice around recruiting as a company grows from 5 to 50 to 500 people. He had two points: First, make sure you identify the stars. He does this by asking people on his team who the brightest people they’ve worked with is. Then, make sure that they know how much emphasis you put on the team and go after them — aggressively.
17. If you visit Kayak.com and hit the feedback button, you will get a response via email. Kayak responds, individually, to every email. That’s impressive. What is crazy-impressive is that the email response comes from either Paul or someone on the engineering team. He gets flack for using a $150k/engineer to answer support emails when the rest of the world is outsourcing it for $8/hour or something. Why does he do this? Because, when engineers respond to support issues, when the same issues arise time and time again, they are more likely to stop what they are doing and go fix the problem so that they don’t have to answer that same question again. And, because it sends a message to the entire team that they take these issues very seriously.
Full Transcript of Paul English Interview[applause 0:00:00]
Larry Bohn: [0:05] So let me begin this way. Paul and I have known each other for, I calculated, 23 years.
Paul English: [0:14] That sounds right. 1989.
Larry:[0:16] 1989. And we're sort of neighbors. And we've known each other through many different lives and journeys, the most recent of which is my firm, General Catalyst, is an early investor in Paul's company, KAYAK. [0:33] So we'll let other things come out during the dialogue, but I thought it would be great to get Paul here to talk about what he does, what his passions are, what his philosophy of building companies. I think many of you follow his blog or have heard him quoted about everything from customer service to how to manage development teams, as well as a lot of his interests in terms of helping out in the third world.[0:59] So I have a bunch of questions that I probably won't get to ask, but we'll start, and then we'll open up to questions later from anyone in the audience. So first thing, why don't you give just a quick personal bio of how you got to where you are today in your professional life?
Paul:[1:16] It's all due to Larry; everything I learned working for Larry. So, I'm a Boston boy. Those of you who are not Bostonians will tell from my speech dysfunction. I have to speak very clearly so I don't sound too - to kind of hide the Boston accent a little bit. [1:36] I am a software engineer by training. I went to school UMass Boston. And I've started four or five companies now, based on how you count. This one I am trying to forget. Actually, it was in Boulder, Colorado and I lost a lot of money.[1:51] But prior to starting KAYAK, I can tell you a little bit about it. My brother Ed and I had started a company called InterMute to get rid of spyware. We ended up selling that to Trend Micro. I also created a small company in Arlington called Boston Light Software named after the lighthouse. And we built eCommerce software for small businesses. We ended up selling that to Intuit, where I became VP of Technology and was at Intuit for about three and a half years.
[2:18] That was a really, really fun job. I learned a lot about customer service and focus, and also helped lead the creation of the Intuit Innovation Lab - how you do innovation at a big company, and the Intuit Developer Network - how to build open platforms on top of a wide set of applications which might not have been built for a platform.
[2:38] So, programmer by training, and have always had hunger to start new things.
Larry: [2:46] Great. So, you left out your first job with Interleaf.
Paul:[2:51] Interleaf, that's right. Interleaf was a fantastic job. You know, my first job, actually, was working - OK, the first job that was legal was working for Mini-Mart. I was a 16 year old stock boy or something. I remember one time crushing the giant box in the box-pressing machine. And the pharmacist who ran that store came to me and screamed at me a stream of obscenities and said, "You're an idiot! You'll never do anything in life! I can't believe you can't even use a compacting machine." Think about that. But that was my first job. [laughter][3:29] When I went to Mass, I didn't apply to college. I wasn't going to go to school. Last minute, I did end up going to school. And I had a series of jobs, everything from working for the Air Force doing data acquisition and control systems, doing some operations research for Data General, doing medical device software for Humanetics and Braintree, and doing video game development for my brother Ed English for one of his companies.
[3:53] But my first real, real job after I actually had a degree was working for this guy. And I must say it was a lot of fun. I have a list that I keep of things I've learned in management over the last 20 years. And probably three of those 15 things in that list are things I learned from Larry, the most important of which, I think, is how to defuse tension, diffuse tense situations.
[4:18] And we had a number of staff meetings - Larry had an extraordinary staff that I felt very lucky to be a member of. It was a really special team. And that helped bond, in me, the need to form good teams. But also, he was very good, when there was fighting between the team or whatever, he had some very good techniques for just making that stuff go away. And it's lessons that I've continued to use to this day.
Larry: [4:41] Well, one of the reasons that I wanted to bring that up is that when you first came to Interleaf, I think you were right out UMass, and within like nine months you took over the development organization, because you were just a tremendous technical talent. [4:56] But then, what's interesting is that team that you started and you really built has followed you through several companies. And so some of what I think you've done in just a spectacular way has been to lead that development team. So I wanted you to talk a little bit about your philosophy. How do you develop high quality teams? Especially, you talk a lot about how you recruit people. You know, what your philosophy is around competence and performance. And I think that would be really useful for people to hear.
Paul:[5:27] Sometimes I give talks at local universities about starting companies. And I remember once one of the students asked me, "Why do you start companies?" And my first thought was, actually, "I want something to do when my kids are in school." But I really look at starting companies as an opportunity to create a team. And for me, at KAYAK, I've always been very clear that our priorities are team first, customer second. And I think for a company that is so explicit about customer second, we have more intense customer focus than any tech company I've seen yet. I mean we can talk a little bit about that, and then profit third. [6:05] And I really feel very strongly to the core that focusing that way is what happens. On the team first, there's recruiting, there's hiring, there's firing, and there's leading. In each of those areas, I try to apply what I've learned from people I thought were good leaders, whether it was at Intuit or Interleaf, or any other company.[6:28] Part of the recruiting thing, forming a good team, is you do want to start with a nucleus of people who have worked together and have a proven formula. And you want to do anything to get that team together. And also, you want to do anything to get your team as strong as you can.
[6:44] The difference between an A player or an A+ player is the difference between a million in revenue or a billion in revenue. It's really extraordinary how much just putting that little extra effort into recruiting and the dividends that can pay back to you.
[6:58] When we formed KAYAK - and I think Larry was modest when he said that General Catalyst was an investor in KAYAK. I look at General Catalyst as the creator of KAYAK. Larry was the one who introduced me and my co-founder, Steve Hafner. Joel Cutler is our director. And we really started the company within General Catalyst.
[7:16] But when we started that, there were two guys in particular I wanted to join my team, a guy named Paul Schwenk, who is currently Senior Vice President of Engineering for KAYAK, and then a guy named Bill O'Donnell who is...I think the title I've given him is Ultra Vice President of Code.
[7:32] When I wanted Paul and Bill to work with me again, I called them and said, "I'm starting another company. I want you guys to come join us." And I think at the time they were each working - they were still at Intuit. I had left more than a year...
Larry: [7:45] But they had followed you there.
Paul:[7:46] They had followed me to Intuit, yeah. So we worked on and off together for 20 years. But when I tried to pull them out of Intuit, I had taken a year off to help care for my dad and do some other things. I remember one of the questions... [7:59] So these guys are making three and four hundred thousand dollars a year as programmers at Intuit; very, very gifted guys. And they said, "Well, what's the company?" I said, "It's a travel search engine." "Do you have funding?" "Well, sort of. You know, we're about to get funding." "How much will you pay us?" I said, "100K." I'm sure their wives were really excited about this.[laughter 0:08:19]
Paul: [8:19] And then they said, "Well, where will the company be located?" I said, "I really don't care. You can put it in your backyard." And unfortunately, they said, "Maynard." I was like, "Shit!" [laughter 0:08:29]
Paul: [8:29] I hope I'm not offending anyone here, but... [laughter 0:08:34]
Paul:[8:32] It wasn't my favorite commute. But I really wanted these guys. And my belief is, in recruiting, if you do whatever it takes to get this extraordinary team together, that team will build the next team. I think a lot about energy. At times I've recruited at KAYAK, I've brought people in and I've found people on buses or trains or whatever and I detect talent, I'll aggressively recruit and I'll bring them in, and they'll meet my team. [9:00] Sometimes they'll see they've heard good things about me or they liked an interview with me, and I'll ways just say to them, "Trust me, you'll be here a few months and you will realize the reason you are here is not for me. It's for these other people that will be around you."[9:10] And I just take it really seriously, the commitment to just do whatever it takes to make that team strong. I have, even at Intuit, one of the things I did was I led recruiting for them. I instituted something that, at least during my time there, was a seven day rule.
[9:24] The first time you hear someone's name - so if Larry had mentioned to me there is a VP of Marketing he used to know and he thinks the guy is in Australia. He's not quite sure, but the guy was unbelievable. As soon as he mentions this guy's name, it's like a clock starts ticking and that goes into color and my world goes black and white. I have seven days to track him down, back channel, get him in for two series of interviews that are intense and focused, and make an offer and have him accept it. That's seven days when I hear the person's name.
[9:51] And I think having that speed, you might think that makes me sloppy. I think it's actually quite the reverse. When you force yourself to do something fast, the only way you can execute fast is if you have process.
[10:03] And a lot of forming great teams, to me, is just, how hungry are you? How aggressive are you? And my advice to other entrepreneurs when you are starting new ventures, if you look yourself in the mirror, you know that, really, it's not like the thing you are most hungry for in the middle of the day, you will read your emails instead of look at that resume. You have to find a co-founder that I would say is 50/50 split with you, that that's what they care about, because it just makes absolutely all the difference in the world.
Larry: [10:29] So, maybe talk a little bit about starting KAYAK, founding KAYAK. And especially, you know, you were not a consumer Internet guy. You weren't at travel guy. And yet, you built, arguably, the best and biggest online travel company in the world, and one that's competing now with Google and others. So how'd you do it? How'd you build a team? What's the culture like? And, you know, what could you share about that?
Paul:[10:57] Sure. It's a fun company. There are some unusual things about it. One of them is my co-founder and I. My co-founder's name is Steve Hafner. He is one of the founders of Orbitz, and he left Orbitz in December of '03, which is when I met him. [11:10] I was introduced to Steve - I was actually working with Bill Kaiser as an EI over at Greylock. But I was over at General Catalyst one day looking at a mobile company for John Simon, I believe. And then on my way out, Larry and Joel Cutler introduced me to this guy Steve Hafner and said he is starting a travel company. He's leaving Orbitz, would I give him some advice?[11:32] So Steve and I went downstairs to Legal Sea Foods in Harvard Square, had a couple drinks. And I think within 45 minutes we agreed to do it as co-founders. We each were going to throw a bunch of money in. And I think part of that was both of us, my co-founder and I, are risk takers, and both of us, I think, have a very good read on other people.
[11:53] And Steve and I are similar in many ways, but we are also very different in actual technical skill set. But we both detected a level of aggression or commitment in the other one, and we both felt that, "Wow, if you put two co-founders together that are this aggressive..."
[12:11] I might not sound aggressive now, because I just arrived on a redeye from San Francisco, so I am a little bit tired. But, we thought that starting with a team that our job was just to state a plan and say, "We're going to get there. We're going to build the biggest travel company in the world," when we just had six slides of PowerPoint. And then somehow getting people to believe us that we were going to do that, and recruiting people to help execute that plan.
[12:37] So I think it starts with belief.
Larry: [12:38] Yep. So, one of the things I remember that I think was tremendous was when we first talked about you coming into KAYAK, you were thrilled at the idea of building software that your friends could use. Because up to then, I think most of the stuff you built, even though, at Intuit, people were...
Paul: [12:58] Intuit was really eye-opening for me. Before then, when I would tell people - "What do you do?" "I work in an operations research group at data general, and we're studying advanced processes for doing disc drive manufacturing." [laughter 0:13:12]
Paul: [13:13] It didn't go over well.
Larry: [13:15] Right. So I remember you being, like, thrilled, like, "I'm going to build something fabulous that my friends can use, and it's going to be really exciting." And I think that was a big motivation when you were recruiting some of the members of the team.
Paul: [13:24] It was.
Larry: [13:25] Talk a little bit about how the company was founded. Certain journalists in Boston reported that you stole the idea. Talk a little bit about the beginning and then how it developed, the acquisition and things like that. I think that's a great story about a Boston company.
Paul:[13:45] So, we were not the first to do travel as a search engine. If you think about the creation of online travel industry with the formation of companies like Travelocity and Expedia, and then followed by Orbitz, and Priceline, etc, those guys are all merchants, where they show you a limited set of inventory. [14:04] If you look for a hotel in New York tonight, Expedia won't show you every hotel in New York. They only show you the ones that they rep. KAYAK will show you ever hotel because we are a search engine. We weren't the first guys out there to be a pure search engine. Saying, "Gee, this Google thing seems to be working. Can we build one of those but just for travel?" There were FairChase, SideStep; a couple companies before us that did different approaches to what we ended up taking.[14:30] SideStep was interesting. They had a downloadable toolbar that if you searched Expedia, they would pop up a window in the side showing you other rates if you could search other sites. They were a couple years ahead of us. They were much bigger than us in revenue on our second or third year, but we ended up acquiring them. They tried to acquire us a couple times.
[14:52] I had sold two companies. I didn't want to sell a company again. So my venture guys would sometimes say, "You know, explore it." And I'd have the meeting knowing in my mind that there is no way I am going to sell this company.
[laughter 0:15:01]
[15:01] But each time, we would negotiate and valuations would come up, and there would be always a mis-set expectation about what the other company was worth, because if you do a stock deal, it's more percentage, but then it's this game of what you are each worth.
[15:16] And in each of these meetings over the years when there were bigger companies than us who were interested in what we had built and our team, et cetera, if we had disagreements, I would just say, "That's all right. Let's just talk again in a year." And I just had this belief that our valuation grew quicker than the other party.
[15:33] In the case of SideStep, it did. In December of '07, we had 39 employees and we raised $230 million at a very high valuation to acquire what was our biggest competitor, SideStep, in California. And that was a very good deal for us for getting their customer base. And it's just one important milestone. It's fun to take out your big competitor.
Larry: [15:57] Paul is a very competitive person, and I remember, at the beginning, when SideStep was a couple years ahead, it was a West Coast company funded by good venture people. How did you win? You ended up blowing by SideStep, and you ended up buying them and really taking advantage of them. How did you do it?
Paul: [16:18] And I did love the East Coast acquires West? [applause 0:16:23]
Paul:[16:25] We could spend an hour just on that topic. And I know there's some powerful people in the room here. I hope all you guys are encouraging all your companies to say, "Don't give up. At least don't give up early. Push something bigger." [16:38] I really want to create extraordinary East Coast companies and change the culture here, and there's a lot of work to be done with that. I think if you compare us to SideStep, they were good guys, but, I don't know.[16:53] Not to be harsh, but the simplest way to say this to compare the two companies, it had nothing to do with strategy. It had to do with the team. We had one project manager. They had seven. And we just recruited a different level of talent than they did.
[17:11] And you go down the line, finance, sales, marketing, whatever, I think people would say, when they would go to a KAYAK meeting, or they go to a SideStep meeting and then they go visit KAYAK, they'd leave. We usually get good feedback when people leave meeting with our team. Everything from people saying things like, I'm vibrating from that meeting, or there's some electricity, or whatever. And I think we out-executed so many people, because we out-hired, is the simplest thing.
[17:37] Second of that, the way our team organizes around customers is different than what I've seen in other tech companies.
Larry Bohn: [17:41] Yeah, talk about that, and talk about - because I really do, I started as you build a much better product. And talk about how you build a great product, and how you got feedback about that product, and how you still do.
Paul:[17:55] Yeah, so travel is something that I love. I've never worked in the travel industry. In fact, when hiring the tech team at KAYAK, when we were mostly the first five years - we're six years old now - the first five years, it's a bit of an oversimplification, but I would say there were only two types who worked at KAYAK. You were either a programmer, or you were a business development manager, and two-thirds of them were programmers. [18:16] We're growing now on the marketing side and the finance side, but, in general, when I hired the tech team, one of my requirements was I refused to hire someone who has ever worked in travel before. And my board didn't like this. We recruited a good board. Part of this, is the aggression we had in recruiting, but we recruited Terry Jones, the original founder of Travelocity, was, became, our Chairman. Greg Slyngstad, the original creator of Microsoft Expedia, became a Director and investor. So this amazing travel portfolio on our board, but I refused to hire travel people.And what would happen is, at our board meetings, I would present, this is the product plan. The board would sit back, you seem like a really nice guy, you seem really smart, but I can't believe you don't know what a passenger type code is [Larry laughs 0: [18:46] 18:54] . It's not possible to fly a plane, from here to here, without doing this. And they kept saying that I would be proposing stupid things, and they kept begging me to hire someone who had actually worked in travel before. And I would do what - are we allowed to swear here?
Larry: [19:09] Yeah, absolutely. You're among friends.
Paul: [laughs 0:19:11] [19:11] I would do what later became know as a grin fuck, where... [laughter 0:19:14]
Larry: [19:14] Which he does a lot to his investors.
Paul: [19:17] Yeah.
Larry: [19:17] Totally.
Paul: [19:18] The most famous one is when our board told us - we incorporated as Travel Search Company as a placeholder and we told the board we were going to call the company KAYAK - one of the investors said, "You'll name this company KAYAK over my dead body." And I said, thanks for the input.
Larry: [19:33] Right. [laughter 0:19:33]
Paul:[19:34] But we tend to, you know, on the hiring thing, I didn't want travel people. I wanted consumer people. And I wanted people that were committed to the best team ever. I wanted people committed to intense focus on customer. [19:48] We don't have enough time here now, but there's eight key processes that we use at KAYAK right now, for how customers get engaged with engineers. I'm about to add the ninth, which is going to be live web chat over Skype. If you just randomly hit our feedback page, you'll connect live in our engineering team.[20:04] But another one, that is we've become a little bit known for, is we have this red phone in our office. And I took some time to try to find the most obnoxious phone I could, with a really loud ringer, and it's directly wired into our engineering office.
[20:19] And when you click the help button on KAYAK, you see this phone number, it shows up every now and then. We have two million people a day coming to the website. The phone number shows up, right now, about 30 percent of the time. But I can dial that up and down.
[20:30] And when the phone rings, it rings very loudly. And the engineers used to complain to me that this is so annoying, this phone. I was like, if it's too loud and it interrupts you, it's very simple what to do. Number one, if you actually pick up the receiver, and lift it off the phone, it stops ringing.
[laughter 0:20:47]
Paul:[20:49] The second thing is, if you then hold it, and there's a human on the other end of the line, do whatever it takes to make them happy, like really happy. And when you're done, you can hang up the phone, you can unplug it, walk down to the other end of the hall and plug it in down there. And we had a little bit of a hot potato. [laughter 0:21:07][21:06] But if you visit us, my office, we're across from Pepperazzi, on Route two in Concord now, getting a little bit closer to where I live in Arlington, from my original home in Maynard. But if you visit us, you'll see that when the phone rings, I will literally jump over desks to answer it.
[21:22] And I think there are two reasons. One, I love talking to customers. And two, I'm trying to set the tone for the company, that we're a company that executes in real time. And by executing in real time, it means time is defined by customers and what's going on with them right now.
Larry: [21:36] So, KAYAK's a big company now. It's a couple hundred million dollars. It's very profitable. It's very high profile. It's probably the top consumer Internet company in the area and it gets noticed. So there are some big players coming into this space.
Paul: [21:53] Sure.
Larry: [21:55] So talk a little bit about how you compete at that level. How do you build a really significant company? What do you worry about as the company gets bigger? Things like that.
Paul:[22:07] Yeah, I'm excited about change and having people take notice. We're a big company in terms of reach. So last month we had 60 million customer sessions on the site. That's pretty good for a startup. [22:20] And these are people who come to KAYAK with the intention of buying something which is going to cost hundreds of thousands of dollars. So it's good traffic. We're a small company in that we're only 100 people.[22:30] Expedia's a few times bigger than us in traffic, but they are 100 times bigger than us in employees. So, revenue per employee is a very important thing for me. And I have some secret recipes about how you can create companies with $1,000,000 or $2,000,000 or $3,000,000 revenue per employee. It has to do with the type of people you hire and how you align them.
[22:49] But we have been successful. We're continuing to grow very rapidly. Travel is eight percent of the U.S. GDP, but it's almost half of eCommerce. The reason it scales disproportionally high is that travel is something; it's very easy to buy online. You don't need a FedEx truck to show up. And it's also high-ticket items.
[23:10] Because we've been so profitable with the model we've built and we're growing so fast, we're getting attention. Google is entering more and more into our space. There's all kinds of rumors circulating about them maybe even doing an acquisition of another local Boston travel company. It's a company in Cambridge called ITA Software, which is one of the technologies we actually use in our backend.
[23:31] Now, when people ask me if I am afraid of Google, my first response is - and I'm getting excited right now just thinking about this is, "Bring it on!"
[laughter 0:23:40]
Paul: [23:40] And I know how dangerous that is. I know there's probably some idiot at MapQuest that said, "Bring it on!" And they didn't see what happened to them when Google just vanished them from the earth. [laughter 0:23:53]
Paul:[23:53] And I have a friend who worked on the Google Maps team and she told me what they actually did. It was astonishing, the force that Google brought to that space and the massive innovation. But, in general, I like being competitive. I think it motivates a good team and I think it ultimately leads to good products for customers. [24:12] Will Google be successful in travel? I don't know. Let's take a look at some other things Google's working on right now. So you guys all know Twitter and Facebook. How are you liking that Google Buzz and Wave thing? Is everyone going to use that every day?[laughter 0:24:26]
Paul: [24:27] Google's not successful in everything they do. I don't mean to dis them. I think it's a phenomenal, transformational company. I think it's one of the most, maybe the most, tech company created to date. But if they come with a direct KAYAK competitor, I swear to God it's going to get me excited more than scared. And we have a lot of cool stuff coming out.
Larry: [24:48] Great. So, maybe shift topics a little bit because you do KAYAK during the day and then, at night, you do a million other things. And the million other things, I think, is fascinating; from philanthropy to technology. Why don't you talk a little bit about the thing you're passionate about outside of KAYAK?
Paul: [25:06] Sure. Yeah. So, work related outside of KAYAK. And the other thing - so Scott, who I feel bad, invited me to this conference here, a few times and I kept turning him down. In general, I don't do industry things. I don't read business books. I don't go to travel conferences. I don't go to industry events, because I love my work. I love my team. I love my customers. But, when I'm outside work, I want to be with my kids or with my girlfriend or reading or traveling or whatever.
Larry: [25:30] Our biking, biking. Yeah.
Paul: [25:32] Or biking with Larry, trying to get ready for Pan-Mass if he doesn't kick my ass like he did last year. [laughter 0:25:37]
Paul:[25:39] But there are some things I do, outside of my nine - 5, that are very important to me in areas relating to global health. So, I've been doing some work with Paul Farmer for about 10 years now. I met him through a mutual friend, a guy named Tom White who is 90 years old this year. [25:55] And I have projects now in six countries that I have different levels of involvement in, starting in Haiti, but then in Rwanda, Burundi. In fact, as soon as I leave this, I gotta get to New York for a board meeting for Village Health Works which is a Burundian based clinic we're building.[26:13] So I have products in different levels of involvement. So, Haiti, Rwanda, Burundi, Uganda, Malawi, Zambia. I guess those are the big six, and then smaller ones elsewhere.
[26:26] One of the things I'm learning recently, as you build medical clinics in new areas, there's three things you need to do in terms of infrastructure in the following order. One is get clean water. There's a lot of cool innovation happening there in cost reduction and quality improvement. And it's dramatic in terms of how much it transforms a village when clean water gets put it. I cannot overstate how much you can change an economy, education, everything by clean water.
[26:56] The second thing you want is clean power. And a lot of power innovation is actually happening in developing countries because it's their only option, is to find new ways to get power. There's some very interesting research and partnerships being done at MIT in different developing country areas.
[27:14] And the third thing you want is clean Tel-Co. I've seen what happens to a clinic, a remote clinic, when they doctors - more likely, there's not enough doctors and nurses, but the community health workers, when they have access to email or Skype, it changes thing in a big way.
[27:31] And I've realized in each of these projects I'm involved in, in different capacities, the Internet thing kept coming up. And so recently - I guess this is the first time I'm talking about this. But I'm at the beginning of a new project, which will be my next 10 year project. I'll be at KAYAK, of course, pushing it, pushing it, but I'm starting a new project that has an audacious goal of creating free low-bandwidth Internet for the whole continent of Africa.
[28:04] And the reason someone would try to do something that crazy is if you see, firsthand, how education, healthcare, and economic development is transformed when information flows freely, the challenge is how to do it and how to do it that big.
[28:22] And the reason I like to think that big is, you know, we all measure the size of our life, and we each want to get a lot of stuff done. And I want to get a lot done. And so, rather than taking about half a dozen countries and villages, it's like, "Let's think much bigger."
[28:40] And when you think bigger, it forces you to innovate in ways in which you wouldn't have thought about if you were just worried about doing something in Cange in rural Haiti. And so I've started a project now. I have two Sloan students working for me fulltime for the summer. And I have some other collaboration at MIT and elsewhere in different countries in Africa. And if anyone here does African IT and you want to get in touch with me about this project and you want to help, my email address is paul {at} kayak {dotcom} .
Larry: [29:08] Great. We have a couple minutes left. Maybe open up to any questions from people in the audience for Paul. Any topic at all.
Man 1: [29:19] Paul, so the Google [indecipherable 0:29:22] . It would seem to me that Google has failed in areas that are not search related, but actually has done, as you indicated, with mapping [indecipherable 0:29:35] search and they've done quite well. So I'm wondering how your investors are reacting to that information.
Paul:[29:46] Yeah. We've seen Google coming for a long time. KAYAK is six years old. For six years, I've told my team, "Google is six months away." I've been saying that for six years, and I'm still saying it. It might be less than that. [30:04] Google has already started encroaching on our space. The Google Maps product, which is a great product, now has the ability to - they're testing showing some hotel availability and pricing. They have this one box solution, if you type in Boston, Miami, you count the dates and kick off searches from there to KAYAK and other sites. Clearly, that could easily be integrated.[30:27] It's true that Google, if you look at the 30 verticals where Google exists, I think they lead in maybe two of the 30, two or three, search and Gmail. I love Gmail. It's not the number one email service provider yet, but I do love that.
[30:43] But a lot of it - they do have search products which are not the best right now. I think Amazon is a better search for product than is Froogle or Google Products. But when they come after some travel, you'll see that there are a lot of different things we're going to be doing that are things that Google can't do and won't do as well as KAYAK is going to do.
[31:02] There are some things that we are doing with Facebook that Google can't do and won't do. There are some things we're doing with Apple that Google can't do and won't do. There are some things dealing with travel that we are going to have a different spin on it than the way people at Google think about consumer software.
[31:15] And I'm sure I'm going to get some bruises in this fight, but we're looking forward to it. I think travel is too important for someone to just not have a trusted, "This is my travel app. This is the thing that I trust will get the unbiased, every hotel in the world, every flight, every rent-a-car, cruise." And I think having an independent brand for travel makes sense as long as we can keep innovating, and as long as each month our product gets simpler and faster. And, you know, I'm signed up to do it. We'll see what happens.
Larry: [31:48] And your investors are filing behind you.
Paul: [31:49] Yes. [laughter 0:31:50]
Man 2: [31:53] I have a two part question. One is, we spent three weeks in Africa recently, and the availability of healthcare professionals is dismal in Africa in general. One question is: Do you see a solution around that space? And the second question has to do with your philosophy around managing your board of directors and that comment from your board member. Is he dead? [laughter 0:32:20]
Larry: [32:23] He's not on the board! [laughs 0:32:24]
Paul:[32:27] Yeah, he's a bigger guy than me, too. So on the first one, the healthcare, Paul Farmer says there should be no such thing as healthcare volunteers. There should be healthcare workers. [32:43] And so Partners in Health, starting in Haiti, they created a program called A Company at Tour, which is taking someone who is a former patient, maybe dying of AIDS, and once they get in for treatment, you bring them back and make them strong and healthy so they can now care for the kids and whatnot. In most cases, A Company at Tour hires women, women being better providers, and more responsible, in many cases.[33:10] And what Paul's team has done is take these former patients and say, "OK. You are in good shape now. You've put on 30 pounds. This is what you looked like before. You can now take care of your kids. You're strong. Here is the deal. You now work for us, but it is under the following conditions. We are going to pay you. So we'll pay you maybe $10 a month," which in undeveloped countries, that's an awesome salary.
[33:40] "Number two is we are going to put you through rigorous training and testing and certification. This is not a volunteer organization. This is something that is intense. When you finish our training program, we're going to put you in charge of four, or five, or six homes, and your job is to do whatever it takes to keep people alive and healthy."
[33:57] And the thing that's amazing about this is you go into an area where it's very, you know, economically depressed, where there's no - these things feed on each other - where's there no economy. There's not good education, there's not good healthcare. When you start building healthy members of population who are then given the tools and the finances, which doesn't cost that much, to then help keep everyone else in good shape, there are a lot of good things that happen.
[34:28] Fertility goes down. There's this myth from the Western World that, "Gee, these people are so screwed because they have too many babies." That's not accurate. There's a lot you can do when these health workers become trained and take care of them even if you don't have doctors there's a lot you can do with a village taking care of itself.
[34:46] And Paul Flower has proven again, and again, in the countries he's been in. So I like that model. There are other models, but I like that one. On the second question, the person who relates to that quote is a good friend of mind, David Fialco. He works with Larry at General Catalyst. Like I said, he's a little bigger than me, so I hope he didn't take me too seriously.
Larry: [35:04] If you took literally everything he said he'd be dead 100 times.
Paul: [35:09] But Fialco and I became very good friends. We started off with a little pretentiousness in the relationship but he's an amazing guy.
Larry: [35:21] Talk a little bit more about your board. I mean, you've got Mike Moritz there. You sometimes complain to me about your board. Be honest.
Paul:[35:28] No. We have a great board. We had a board meeting yesterday in San Fran. So in addition to Terry Jones, the founder of Travelocity, as our chairman, he's a great industry guy. Greg Slyngstad, creative expediter is a director and investor. Incredibly product guy. He was the first program manager for Word for the first Sun releases. Even though he gave Larry and me some pain. [35:49] We looked at Word and said, "That little toy, that's not going to hurt us. We are real desktop publishing." So Greg is the guy who kind of kicked both of our asses. Michael Moritz from Sequoia.[35:59] Michael is arguably the most well known venture capitalist in the world. He's been on Google's board, Yahoo's board, et cetera, et cetera. I spent the whole day with him yesterday. The thing that most impressed me with Michael is confidence, he's concise, just always about what can you do to raise the stakes.
[36:23] And I have so many great stories of things I've learned from him at my time at KAYAK. We also have Harry Nelis from Excel UK. We we were created within General Catalyst series A, and Mike Coffin and I.
[36:35] Series B was Michael Moritz at Sequoia. Series C was Harry Nelis at Accel. The reason I took money out of Accel UK, the theory was if I took European money it would help me with recruiting in Europe. Hasn't worked out exactly the way I wanted. But Harry's a very good guy. An ex-Goldman guy. Don't hold that against him.
[36:51] And then Michael Moritz at our series D again when we did the acquisition of Side Step. So it's a pretty amazing board.
Larry: [36:57] And Joe.
Paul: [36:59] And of course, Joel Cutler. Who I view actually as the creator of KAYAK is Joel Cutler. Joel's the one that put Steve and I together. Joel has deep roots in travel. And if you don't know him, you want to get to know him. He's completely insane. And I love him to death. He's great.
Larry: [37:18] Any other - back there, Scott.
Scott: [37:21] I was just curious, do you much thinking about for AV testing around how do you actually get transactions to happen? What have you learned about kind of what moves the needle with someone who's s just a KAYAK researcher versus a real devoted KAYAK buyer?
Paul:[37:36] Yes. We have a whole experiments platform. A couple of years ago I hired a guy named Giorgos Zacharia at MIT as our chief scientist. I think Giorgos has five of the 25 MIT degrees I've hired in the last couple of years. [37:53] One of his jobs at KAYAK is to run the whole analytics platform, so that at any moment we are running multiple versions of KAYAK. If you run KAYAK on one computer and the next one, side to side, they can look radically different. Some of our experiments are short-lived. We run them just for a day or half a day. Some of them will go on for more than three months. There's a lot we learn from that machine. It's a machine learning platform as well.[38:15] And we absolutely are one of these companies that fights about what color blue should that blue be. And how many pixels should the lettering be between this line and that line. And part of it is we have a particular aesthetic which I have to admit, I don't think I've said this before, but our original plan was to be the anti-Expedia.
[38:35] So Expedia was the big guy in the space. So we said, "OK we are going to go in this crowded space, there's hundreds of venture backed companies, let's pick the biggest guy and lets do what they're not doing." And Expedia had this very - I'll try to be kind - lush look. And so we took this Craigslist approach.
[38:51] Or Tufty, Simplicity. And we have a certain design that lives within a few of us. But we test it like crazy. And we do evolve it. Every Thursday a new release of KAYAK goes out. On the iPhone, Android, and Blackberry, we release new versions of those software probably every three weeks. And interestingly, those are taking a different look than the website. We are actually taking a more beautiful look on mobile than we do on the website. Any other questions?
Larry: [39:24] Dharmesh.
Dharesh: [39:26] I'm really inspired by the seven day maniacal, go after someone that [indecipherable 0:39:29] . Any advice as the organization grows in terms with recruiting entrepreneurial talent, because that five employees is easier to do than a 50 versus 500, how do you get those entrepreneurial types and recruit them? What did you do? What are your tactics?
Paul:[39:43] Yeah. I mean the first thing is identifying them. And how badly do you want those people. So if you ask any KAYAK employee, "How often does Paul ask you who's the smartest person you ever knew? Who's the fastest person?" Whatever. They are annoyed. Because I ask them the same question. I find 20 ways to ask the same question. If people are with me for 20 years, I keep asking the same question. [40:03] I'm hoping they'll ask me one of these times but it they haven't yet. So part of it is a hunger just to find these people. And there's a woman I just hired. Her name is Iolanthe Chronus.[40:14] I hired her as program manager for all of mobile for KAYAK. She's 23 years old. It's been an incredible responsibility we are putting on her shoulders. And when I first heard about Iolanthe or Lanthe, there was another young programmer that we had, and I asked her who's the sharpest person you've ever met.
[40:30] He said, "Lanthe." No. He actually didn't give me her name. He said, "There's a woman at MIT." I said well who is she? He goes, "I'm not going to tell you her name." I said, "Why won't you tell me her name?" And instantly like the clock already started ticking, and it took me actually a couple days to get her name. He said, "I don't want to tell you her name because I'm hoping that she might start her own company and I might go join her."
[40:55] And this guy Pete, I love him too. So I'm like, OK, now there's two reasons why I need Lanthe. I don't want to lose Pete.
[41:02] Anyway I finally conned him into getting me a meeting with her. And she had already been in the final stages of accepting a job in California. But, I got her to join KAYAK. And part of it was the aggression the whole team put on. Someone actually interviewed her about what it was like to interview at KAYAK. And she said it was breathtaking because she walked in and she felt like, "Wow, this team not only interviewed her but that team had a mission, which was to get her to join the team."
[41:29] She walked away feeling, "Holy shit." This team is highly competent and they are really, really aggressively going after her. So she turned down the West Coast and stayed with us. I think bringing on young leaders and leaders that have worked in different spaces and think differently, that have different ways of doing risks, is always healthy to reinvent themselves. I hope we are always going to be doing that.
Larry: [41:53] Great. Well, I think we are out of time.
Bill: [41:57] One more question?
Larry: [41:58] Time for one more question. Bill.
Bill: [42:00] Well, it's actually something we had discussed before about the [indecipherable 0:42:04] because I think it's such a groovy thing. But you have an insanely small team. And when you have an insanely small team and really insanely by revenue per employee, that can fuel - and most people don't even believe it's possible to do what you do.
Paul:[42:22] Yeah. And people don't believe that we answer every email. We had two million people on the website today. Try, go to KAYAK, hit the feedback button, send an email. You'll get a personal reply from me or one of the engineers. Like, the math doesn't work. How do you do that? I don't have any support people. And people will say why would you pay an engineer a buck fifty instead of paying someone in Tucson $8.00 an hour. [42:41] And the reason I answer every single email that comes in. I personally read every email. And myself and the engineers answer every email. Is that it's a bit of a tautology, if we take support seriously rather than deflecting you to an IVR or to our frequently asked questions that we take everyone personally.[43:00] What's going to happen is the second or third time we get the same question we are going to say I am so sick of answering that question. I better stop what I am doing and go back and rewrite that UI so I never get that question again. And we are really, really serious about it. So I think that's been one of our secrets is that we answer every call.
Larry: [43:21] Terrific. Thank you for coming. [applause 0:43:24]
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A lot to think about and digest. I encourage you to read/listen to the whole thing if you have time.
Any particular points resonate with you? Are you inspired to go buy a loud-ringing red phone for your startup?