
The story behind ITA's $700M sale to Google (2014) - bootload
http://mixergy.com/interviews/david-baggett-ita-software-interview/
======
dmbaggett
FYI, the transcript kind of mangles what I actually said, so if you have
questions, I'm happy to try to answer them.

~~~
chipilov
Hi David, I was wondering if you could elaborate a little more on this
thought:

"...for us to really take it to the next level and long-term defend ourselves
against competition from the Sabre-s of the world, we would need to build our
own reservation system and start hosting airlines. We would have to NOT be
just a search provider, we would have to provide the whole platform for a
major airline."

Is the sole reason for this the fact that the Sabre-s can always undercut you
by providing the search for free or is there more to it? Do you know if Google
will try to follow (or if they already have) that approach? Is it possible
that the emergence of so many new online travel sites has changed the scope of
opportunity for pure search providers?

Thanks!

~~~
dmbaggett
No, that's pretty much it. I recall a specific interaction I had with a South
American carrier that really colored my opinion of the future of our company.
We were pitching them on our search system and it was going well for a while.
But then they told us that their hosting provider had offered to lower their
distribution fees through travel agents by some material percentage if they
used their search instead of ours... and their CFO essentially made them take
the deal.

I seriously doubt the proliferation of travel sites has changed the leverage
of the parties much: you can still count on one hand the number of entities
that offer all of search, distribution, and hosting. They will remain an
oligopoly for some time to come, and will, I'm sure, continue to use that to
their advantage.

Regarding Google (or Alphabet, or whatever they are now), I have no idea. I
didn't stay on after the merger, and frankly don't ever talk to them because
every conversation I've ever had with them has been totally one-sided. (They
expect me to tell them stuff, and then won't say anything... because Google
secrets matter!)

~~~
corford
This is why I really hope NDC ([http://www.iata.org/whatwedo/airline-
distribution/ndc/pages/...](http://www.iata.org/whatwedo/airline-
distribution/ndc/pages/default.aspx)) takes off, airlines simplify their fare
rules, invest in IT talent and start self hosting.

Travel providers could then connect directly to an airline's NDC API for
scheduling, pricing and ticketing without the need for middlemen and
gatekeepers.

Distribution would finally be back under the airline's control and there would
be a lot more innovation.

~~~
skewart
NDC sounds awesome, and so do simplified fare rules. Are there any seriously
misaligned incentives that would prevent it from happening, or is it more just
general bureaucratic slowness?

~~~
corford
The NDC spec is still evolving (and suffering from a bit of mission creep).
There's also the chicken and egg problem - airlines aren't going to invest in
building in-house NDC based hosting and distribution platforms until there's
enough market demand for it. Market demand wont appear until airlines start
distributing over NDC.

I'd have thought too that the GDS providers aren't exactly thrilled by the
prospect of being easily cut out of the distribution chain... There will still
be a need for aggregators though since not all travel providers will have the
technical know-how or desire to develop their own NDC capable
platforms/software. NDC would just level the playing field a bit.

------
Buetol
The transcript was too hard to read for me, here is a better formatted
version:
[https://gist.github.com/mdamien/5edd6e0fe55fccf49035](https://gist.github.com/mdamien/5edd6e0fe55fccf49035)

~~~
roamingryan
Thanks for this alternative.

One suggested edit: Savor should be Sabre

------
GFischer
David Bagget has been commenting here occasionally, he wrote some very
interesting advice recently:

[https://news.ycombinator.com/user?id=dmbaggett](https://news.ycombinator.com/user?id=dmbaggett)

"When we made Crash Bandicoot (with a team of 7), it was already virtually
impossible to make a AAA game with 6-10 people, and that was 20 years ago. I
tell inexperienced entrepreneurs to take their honest best estimate and
multiply by 10. Or, as Mark Cerny (our producer on Crash) used to tell us,
"add one and increase the unit: 1 week = 2 months; 2 months = 3 years; 3 years
= you're doomed". For a less anecdotal version, read The Mythical Man Month.
(The factor he arrives at is 9.)"

------
kzhahou
>There’s a point in every business where you can double down on the risk, you
can exit, or you can raise money.

Doubling down on risk: does that mean grow the product and company scope using
existing funds only?

~~~
dmbaggett
To my mind, yes: you use revenues to pay for new innovations and sales. It's
riskier because you're making your numbers look much worse to future investors
in order to grow now, and you're not putting any floor on your valuation, as
you would do if you raised money now.

And, of course, when you raise money, employees can often take some money off
the table. When you fund growth entirely from revenues, there isn't really a
mechanism to let employees do that -- unless you're really rolling in cash and
can do a stock buyback or something like that.

------
gaz
Link to the audio:
[http://www.podcasts.com/business_tips_for_startups_by_proven...](http://www.podcasts.com/business_tips_for_startups_by_proven_entrepreneurs_-
_mixergy_interview/episode/the-story-behind-david-baggetts-700000000-sale-to-
google)

------
dreamcompiler
I wish the subject of Lisp had come up in the interview. It would go a long
way toward countering the negative stereotype Lisp has in many management
circles to know more about ITA being probably the greatest commercial Lisp
success story in history.

------
bootload
_" You can invest but only if you also write code."_

The article is such a great read, I read it again.

