5 ms·

The story behind ITA's $700M sale to Google (2014)

98 points by bootload 11y ago

bootload 11y ago
"You can invest but only if you also write code." The article is such a great read, I read it again.
Buetol 11y ago
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 11y ago
  Thanks for this alternative. One suggested edit: Savor should be Sabre
- vermontdevil 11y ago
  Thanks for the link! Transcripts are great!
gaz 11y ago
Link to the audio: http://www.podcasts.com/business_tips_for_startups_by_proven_entrepreneurs_-_mixergy_interview/episode/the-story-behind-david-baggetts-700000000-sale-to-google http://www.podcasts.com/business_tips_for_startups_by_proven...
GFischer 11y ago
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.)"
dmbaggett 11y ago
FYI, the transcript kind of mangles what I actually said, so if you have questions, I'm happy to try to answer them.
- chipilov 11y ago
  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 11y ago
    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 11y ago
kzhahou 11y ago
>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 11y ago
  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.
dreamcompiler 11y ago
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.

98 points by bootload 11y ago

"You can invest but only if you also write code." The article is such a great read, I read it again.

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 11y ago
Thanks for this alternative. One suggested edit: Savor should be Sabre
vermontdevil 11y ago
Thanks for the link! Transcripts are great!

gaz 11y ago

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

GFischer 11y ago

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.)"

dmbaggett 11y ago

FYI, the transcript kind of mangles what I actually said, so if you have questions, I'm happy to try to answer them.

chipilov 11y ago
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 11y ago
  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 11y ago

kzhahou 11y ago

>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 11y ago
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.

dreamcompiler 11y ago

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.