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Expedia And Zillow Founder Rich Barton On Risk And Success

After Rich Barton created Expedia in 1996 with Lloyd Frink, the two went on to create the online real estate database Zillow.

After Rich Barton created Expedia in 1996 with Lloyd Frink, the two went on to create the online real estate database Zillow.

Rich Barton is definitely a disrupter. In his late 20s, he caused major upset in the travel industry by launching Expedia.com, which has now become one of the world’s most popular travel sites.

Then there was Zillow.com, a real estate website that Barton helped to create, which has virtually become a necessity for any consumer looking for information about the housing market. Last month, 80 million people went to Zillow.

Barton also co-founded Glassdoor.com, which offers job hunters actual reviews of potential employers, along with pay data and job listings. That business is growing globally.

In April 2014, Barton was named one of 11 members of the Presidential Ambassadors for Global Entrepreneurship.

Nearly 20 years after Expedia first took off, Barton discussed his work and the evolving online marketplace with Here & Now’s Jeremy Hobson.

We also asked him about his favorite app (Uber), his first computer game (Adventure) and his favorite people to follow on Twitter (@bgurley, @BorowitzReport and @levie).

Interview Highlights: Rich Barton

On the idea that links his three companies

“In my start-ups, the common theme is what I call ‘power to the people,’ and I say that with my right fist raised in the air. I think that we, as humans, love to be in control. We love to know everything, and we love to make decisions for ourselves. And something that’s been so magic about the connected PC and now the smartphone connected to the Internet is that we, as consumers, can access information that heretofore had been kept from us and used against us. And so I started Expedia back in 1996, 1995, with the idea that booking travel and planning travel was just way too hard the old way, over the telephone, and that the PC, connected to the online services back then, should be a way to empower people to take control.”

On how his companies make a profit

“With commerce models for start-ups, it’s very easy. If you’re selling something, you can make a margin off of what you’re selling, and so Expedia is now a multi-billion dollar company, makes a ton of its money off of selling airline tickets and hotel rooms and the like. But in a model like Zillow — Zillow is the same idea. I co-founded Zillow and I ran that for a long time, I’m executive chairman there now. With Zillow, we gave power to the people by letting regular consumers see all the information about every home in the country, including a ‘Zestimate’ — an estimated market valuation that is updated every day on every rooftop. Now, that’s a different model, because we’re not actually selling houses, right? How do we make money off of that? Well, almost 80 million people came to Zillow last month, making it probably the largest real estate site in the world, and what we do is sell very targeted, relevant advertising to professionals in the industry to reach out and help a percentage of the users that come to our site.”

On if he’s concerned about hurting “the little guy”

“I am a big believer that technology is a fantastic driver of progress and new opportunity, and as new opportunity is created, as new homes are built, as new models are created, old ones do get dismantled and disrupted. But I believe that what companies like Zillow and Expedia, and Glassdoor is another start-up of mine in the job space, what they have done is created new opportunities for new professionals to make new businesses for themselves. So it is not a job replacement kind of thing that’s happening here, it’s simply a change that’s underway.”

“I think as an entrepreneur and an optimistic, forward-thinking guy, I, by nature, am one that’s optimistic, and so I don’t linger on the negatives. Of course, I recognize that change can be disruptive, but what I’ve always tried to do is to help the existing professionals who are being disrupted by technology to get on the bandwagon with the new technology.”

Guest

Transcript

JEREMY HOBSON, HOST:

Well, Apple is holding its annual Worldwide Developers Conference in San Francisco today, still one of the biggest events of the year in the world of technology 31 years after the first conference. Back then Rich Barton was still in high school. Today he's right up there with the titans of Silicon Valley.

He's founded or help found three companies - all of which have upended industries. He founded the travel site Expedia back in the '90s. It's now a multibillion dollar company. He also cofounded the real estate site Zillow and the career site Glassdoor, which offers job hunters reviews of potential employers. Rich Barton joins us from KUOW in Seattle where he lives. Rich, welcome to HERE AND NOW.

RICH BARTON: Thanks a lot for having me on, Jeremy.

HOBSON: Well, what idea brings these three companies together?

BARTON: So in my startups the common theme is what I call power to the people. And I say that with my right fist raised in the air. I think that we as humans love to be in control. We love to know everything, and we love to make decisions for ourselves.

And something that's been so magic about the connected PC and now the smartphone connected to the Internet is that we as consumers can access information that heretofore had been kept from us and used against us. And so I started Expedia back in 1996, 1995 with the idea that booking travel and planning travel was just way too hard the old way over the telephone and that the PC connected to the online services back then should be a way to empower people to take control.

HOBSON: Well, and it's hard for us to even to think about now what life was like before sites like Expedia existed. How did you go from what existed before, which was nothing, to being able to search and find flights and hotels and all these things on sites like Expedia and, I guess, Travelocity and Orbitz as well.

BARTON: Yeah. You know, Jeremy, if you remember from back then, when you were talking to that travel agent on the telephone, you could actually hear that click, click, click of the keyboard in the background, right?

HOBSON: Yeah.

BARTON: You know, me, when I heard that, I wanted to kind of jump through the telephone and turn the screen my way and do it myself. And so in starting Expedia, what we built was a direct connection to that same database that the industry used. And we simply put a beautiful app on top of that via the web and allowed consumers to do it for themselves - and voila.

You know, it wasn't quite that simple. But in a pretty short period of time, Expedia became a major player in travel. And it is now the largest seller of travel in the whole world.

HOBSON: And how do you make money on that?

BARTON: Well, with commerce models for startups, it's very easy. If you're selling something, you can make a margin off of what your selling. And so Expedia is now a multibillion dollar company, makes a ton of its money off of selling airline tickets and hotel rooms and the like. But in a model like Zillow - Zillow is that - the same idea. I cofounded Zillow, and I ran that for a long time. I'm executive chairman there now. With Zillow we gave power to the people by letting regular consumers see all of the information about every home in the country including a zestimate, an estimated market evaluation, that is updated every day on every rooftop. Now, that's a different model 'cause we're not actually selling houses, right?

HOBSON: Right.

BARTON: How do we make money off of that? Well, almost 80 million people came to Zillow last month making it probably the largest real estate site in the world. And what we do is we sell very targeted, relevant advertising to professionals in the industry to reach out and help a percentage of the users that come to our site.

HOBSON: So you have people calling up real estate agents and saying, would you like to put your face and your phone number next to the search results for this zip code and in exchange you will pay us a certain amount of money?

BARTON: That's exactly right. And so when a consumer - if you're - if Jeremy is shopping for a home in Brookline, you will have a real estate agent's face and name - might appear next to your shopping on the map or on the list - and say, if you have any questions and you want to know about the neighborhood, give me a buzz or send me an email. And that's what we get paid for. That's one of the prime business models for Zillow, which is now - Zillow's a public company now as well, and is become, you know, quite a sizable company.

HOBSON: And it has also become a huge repository of data. Has it become a market moving company? In other words, because of the information that's on Zillow, could prices of homes end up going up or down?

BARTON: You know, I think that only to the extent that transparency makes markets more efficient and more liquid, perhaps. Are we a factor in the market, in it of itself? I don't think that a zestimate is going to affect things one way or another that much on an individual transaction. However, the beauty of Zillow is that it makes all of the comparable sales information and all the home history and details available to everyone. So it just - it levels the playing field.

HOBSON: Do you believe, based on Zillow, that we're in the middle of another housing bubble in which home prices are inflated once again?

BARTON: I wouldn't say we are in a housing bubble. We've seen a pretty rapid rise in the median zestimate over the last year - a little bit more rapid recovery than anyone really anticipated. But we're still well within the realm of reasonable and normal house prices. It's not like it was several years ago when things got ahead of themselves.

HOBSON: And one of the things that surprised me about Zillow is that you didn't do particularly badly when the housing market collapsed.

BARTON: You know, we were in such rapid growth mode as a startup that we didn't really notice the big housing downturn. In fact, in a way, it made consumers and the industry ready for some new ideas and some fresh ideas in the industry. So it may actually have helped Zillow get off the ground in a way. We kind of built our ship and hoisted our sails in a down market and then the wind started blowing. And now it's really pushed us ahead.

HOBSON: But it has pulled a lot of others back and so have your other companies as they have reshaped traditional industries. We're speaking with Rich Barton. He founded Expedia when he was in his 20s. It's now one of the world's largest travel websites. He also cofounded the real estate site Zillow and the career site Glassdoor. All of those companies have changed industries.

And, Rich Barton, let's talk about Expedia for a second. Right after 9/11 when the hotel industry had just collapsed in the United States, you went out and started calling hotels and said let us sell your hotel rooms for you.

BARTON: That's right. I mean, it took a little bit of a downturn, a reasonable downturn that happened in the post-9/11 era for the industry to fully embrace new distribution channels that maybe they were a little scared of. So the industry before that had been a little wary of these upstart Internet companies.

But when business got bad, they actually turned to the most effective new sources for driving heads into beds and butts into seats, as they like to say. And so, it actually, I think, helped Expedia quite a bit in a critical kind of adolescent growth phase.

HOBSON: What you're saying is all very upbeat and positive. There are, of course, a lot of people whose careers have been upended by your companies. Do you take that criticism to heart or what do you think about that?

BARTON: You know, I'm a big believer in progress. I am a big believer that technology is a fantastic driver of progress and new opportunity. And as new opportunity is created, as new homes are built, as new models are created, old ones do get dismantled and disrupted.

And I - but I believe that what companies like Zillow and Expedia and Glassdoor, is another start-up of mine in the job space, what they have done is created new opportunities for new professionals to make new businesses for themselves. So it is not a job replacement kind of thing that's happening here. It's simply a change that's underway.

HOBSON: But do you feel bad for the people who have lost their jobs as a result?

BARTON: You know, I think as an entrepreneur and an optimistic forward-looking guy, you know - I, by nature, am one that's optimistic, and so I don't linger on the negatives. Of course, I recognize that change can be disruptive.

But what I've always tried to do is to help the existing professionals who are being disrupted by technology to get on the bandwagon with the new technology because the ones who use - take for instance realtors today. Realtors today who understand how their customers, the house hunters, how their customers are using sites like Zillow and the Internet in the home shopping process, those realtors do better. The ones who know how to use these new systems to drive business, they're doing really well in growing their businesses. The ones who aren't paying attention or don't care about the new technologies, may be being left behind.

HOBSON: What is your biggest failure would you say over the course of your long career in which you've had at least three huge successes?

BARTON: Oh, that's a - you know, again as an entrepreneur, we forget our failures, otherwise we would never continue to do what we do. I have to say. But I remember some pretty good failures.

I worked at Microsoft long, long ago, and I was kind of a disruptive, entrepreneurial thinker back then when I was early in my career. And I was product manager for MS DOS 5. It was a really killer, killer operating system upgrade that broke the 640K barrier. There are 10 listeners that are chuckling right now out loud.

Anyway, it was an interesting software product, operating system upgrade. And I thought, well, why should we rely on software retailers like Egghead Software alone to sell the software? Why shouldn't we put this in Barnes & Noble?

And so I went out and there was a really popular book called "DOS For Dummies" - this kicked off the whole "Dummies" series years ago.

HOBSON: Yeah.

BARTON: And I went to the guy who published "DOS For Dummies" and I said, hey, let's do a bundle where I put software in your book and we sell it through Barnes & Noble. And we're all going to do really well. And needless to say, that was a miserable failure.

I luckily did not get fired. I learned that Microsoft was a fantastic place to work and encouraged risk-taking because my boss, at the time, said, well, that was a great big swing. It didn't work out, but you learned a lot, didn't you?

HOBSON: It's interesting you bring up risk-taking because I was wondering, once you have become successful in any of these companies, do you take fewer risks?

BARTON: I think it's a natural tendency as we get older, as we get successful or, you know, just as we mature - maybe it's as we have kids - we become more risk averse. I think you're right. When you have revenues to protect, you become protective. If you don't have any revenues to protect, you can be more aggressive.

And so one of the things that I really try to work with my companies and my kind of role as coach, is to not settle in to this defensive mode of thinking. And, in fact, if you want to have a growing and vibrant organization and you want to have big, new opportunities opening in front of you instead of, kind of, the tunnel-narrowing the deeper you get into it, then you have to really be aggressively thinking about not only replacing yourself, but getting into new businesses.

HOBSON: OK, I want to do a quick lightning round before I let you go

BARTON: OK.

HOBSON: And just ask you some short questions here - short answers. What is your favorite app that has nothing to do with a company that you own?

BARTON: I find myself using Uber at least once a day now.

HOBSON: Car sharing. Ride sharing.

BARTON: Ride sharing. It's my own personal driver. I really, really love Uber to the point where I'm may be giving up my car.

HOBSON: Are you an iPhone or a Droid user or something else?

BARTON: My primary smartphone is an iPhone, but I have a Nexus 5 - one of those new Google phones as well. I need to be familiar with everything. And I tell you, that new Nexus 5 phone with KitKat operating system is pretty darn good.

HOBSON: OK, and since you've been in the business going all the way back to the '90s, what was the first computer game that you ever played?

BARTON: "Adventure," I think. It was a text-based game on my Commodore 64 - maybe it was my TRS-80, my RadioShack TRS-80. It was a - I don't know if you ever were a gamer. But this is one of those, turn left, see a goblin in the cave, you know, cast the magic potion. I love that game - "Adventure."

HOBSON: What do you think the next big disruption is going be? The next big thing that's like Zillow or like Expedia - something that really just changes an industry?

BARTON: You know, I think the things that - the catalysts for disruption tend to be new technology and communication platforms. And I think the one that is driving so much change right now is the smartphone. I'll give you a stat. In the last three months, probably 300 million smartphones were activated around the world. We'll do maybe 1.5 billion new smartphone activations in 2014.

This is - these numbers dwarf the number of desktop PCs. In fact, the last quarter of smartphone activations is bigger than the whole of the World Wide Web - the whole of the Internet when I shipped Expedia back in 1996. The audience sizes are staggering, and we're going to see a lot of great fun revolution, power-to-the-people stuff in the future.

HOBSON: Rich Barton, founder of Expedia and cofounder of Zillow and Glassdoor. Thanks so much for joining us.

BARTON: Thank you, Jeremy. Transcript provided by NPR, Copyright NPR.


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Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

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