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B 2.0 Column: Erik Blachford, CEO of IAC Travel

By - October 08, 2004


A Man Who’s Going Places
Erik Blachford controls half of the online travel market — and Barry Diller’s Net ambitions are riding on his shoulders. So why is the CEO of IAC Travel so relaxed?

By John Battelle, October 2004 Issue

Within Barry Diller’s online empire, InterActiveCorp, there’s no business more vital than IAC Travel — which makes Erik Blachford his most important lieutenant. Overseeing Expedia,, Hotwire, and other travel properties, Blachford is responsible for 37 percent of IAC’s revenue and more than two-thirds of its profits. Still, even as IAC Travel’s growth has been extraordinary — it’s now the third-largest travel agency in the world — it’s feeling the pressure from any number of competitors, including its suppliers, competing online services, and even portals and search engines. To keep growth going, Blachford is expanding into Europe and Asia and has dived into the $100 billion corporate travel market. But what he’s really dreaming of is re-creating the perfect travel agent online.

Barry Diller was once asked about IAC Travel, and he replied by saying something to the effect of “You think this is the future of travel; I think it’s the future of everything.” Does he see what you’re doing in travel as indicative of the future of the entire Internet?

InterActiveCorp, at the highest level, is just a big bet on consumers using the Internet for more stuff. If you fundamentally believe that the Internet is going to provide people with richer and better information for making decisions, then you have to make bets across a pretty wide variety of things. We’ve got high airline ticket prices, and hotel rooms are expensive, so the dollar figures involved get pretty eye-popping pretty fast, and that’s one of the reasons people like to point to the travel category.

I understand that more than 20 percent of the travel business is now booked online.

blachfordIt’s closer to 25 percent this year. It’s probably going to around 35 percent by 2006. By the time you get to 2010 or 2011, we think between one-half and three-quarters of leisure and unmanaged business travel — everything not handled by corporate travel agencies, that is — should be online.

With growth prospects like that, why did IAC take a hit in the last quarterly earnings? Why does Wall Street not give it the same earnings multiple as its peer group?

Well, you had a couple of different things going on. On the one hand, the whole category did get beaten up pretty badly. So there is something to be said for people just looking at the overall growth trends quarter over quarter in online travel and saying, “Boy, that didn’t seem quite as quick as we were expecting.”

(continued in extended entry)

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Next B 2.0 Column: Henning Kagermann

By - July 24, 2004

b2_396x73I had a great conversation with Henning, and while it’s not directly search-related, it was fun, and I thought you all might enjoy it too…

The No-People Person
SAP’s Henning Kagermann says you’ll soon run your business by remote control. Then you’ll have no one to blame but yourself.

By John Battelle, July 2004 Issue

kagermannHenning Kagermann isn’t an avid jet pilot and sailor like Oracle’s (ORCL) Larry Ellison, or a showman and provocateur like’s Marc Benioff. Now the chairman and CEO of Germany’s SAP (SAP), the world’s second-largest software firm, Kagermann, 57, used to be a physics professor. And from the way he talks, it’s as if there were still chalk dust on his shoulders. But ask him about his competitors and he becomes hyperaggressive, dismissing his peers as preening chest thumpers who have lost touch with their customers. He may have something there: In the market for software that runs business operations, SAP is larger than the next two firms put together. That’s not a theoretical equation, since one of the two, Oracle, has been trying to acquire the other, PeopleSoft (PSFT) — a deal that’s been blocked by the U.S. Department of Justice on antitrust grounds. As archrival Oracle prepared for a trial contesting the ruling, Kagermann reflected on SAP’s role in the business-software market, the company’s recent flirtations with Microsoft (MSFT), and why robots will replace offshore labor.

Oracle’s lawsuit seems unprecedented. It’s rare for a company to dispute an antitrust finding in court. What’s your view?
On the one hand, even if Oracle and PeopleSoft were combined, they would be less than half our size. So we still wouldn’t have a competitor that’s close to us. But we don’t like artificial definitions of markets. It’s not a good precedent.

So there’s a part of you that agrees with Larry Ellison.

Why focus on finance and HR applications, as they did in this case? Why not enterprise resource planning, for example?

During the trial some things came out regarding merger discussions that SAP had with Microsoft. Can you tell us more about that?

Microsoft approached us, we were listening, and then they discontinued the talks. I believe they felt it was a little too complex. That’s it, that’s all. Not a story.

Hypothetically, then, is there some logic to the idea?

[Laughter] I can sit here and say nothing for 30 minutes if I have to!

The American tech industry seems to thrive on bravado. PeopleSoft’s Craig Conway, for example, has taken you on personally, accusing you of cribbing his speech material.

Why do people even listen to this stuff?

Maybe it’s more interesting to watch rich guys take potshots at each other than to talk about software.

But enterprise software is sold on trustworthiness, not glamour. All this chest pounding, it’s only for the press; it’s not for the customer, believe me.

It seems that Tom Siebel, Marc Benioff, and Larry Ellison would disagree with you. These men are well known for being flamboyant …

Yes, but what is their success in this market? Larry claims that he will overtake SAP. But just look at the facts. Who’s gaining market share? It’s all bullshit. Just look at the figures.


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July Column: GM (GM!)

By - July 12, 2004

b2_396x73Sure, Searchbloggers may find the CTO of GM something of a stretch for this space and…well…yeah I agree. But I enjoyed meeting Tony Scott and talking about the future of cars. It’s a nice diversion from search … and yes, in fact, we did talk about search, it just didn’t make it into the piece…imagine search+GPS+geolocation+hydrogen cells+0-60 in 3.2 seconds….not quite the Fifth Element, but we’re getting there…

PS – if you want to get seriously carsick, check this out….works best after a bottle of good red…

The CTO in a GTO
Don’t like your car? In the future, says General Motors’s Tony Scott, you’ll just download a new one.

By John Battelle, July 2004 Issue

Tony Scott has a simple message for people who make hardware and software: Listen to your customers or risk losing them. As both carrot and stick, General Motors’s (GM) affable chief technology officer wields an annual IT budget of nearly $3 billion. It’s that kind of spending power that led many to credit Scott with prompting the recent détente between Sun (SUNW) and Microsoft (MSFT).

Some in Silicon Valley fear that the area is turning into the next Detroit. (Sun Microsystems CEO Scott McNealy and Microsoft CEO Steve Ballmer grew up there and saw the decline firsthand.) But turning into Detroit could be a good thing, Scott argues: Remember that the auto industry pioneered interoperability, industry standards, and — egad — warranties. The two industries are a lot closer to merging than you might think. Software and electronics already account for a third of the cost of the average car, and given GM’s billion-dollar investment in the Hy-wire, a hydrogen-powered concept car (see “GM’s Race to the Future,” October), high-tech and hot rods are only going to become more intimately entwined. How so? Read on.

I hear you’re entirely to blame for making peace between McNealy and Ballmer.

[Laughter] It’s really interesting the way urban legend evolves. We never said, “Sit down and go smoke a peace pipe.” But GM has spoken with a very loud voice to Microsoft and Sun and others about interoperability. We’ve been diligent about making our pain known in that space — it’s very costly to make incompatible technologies work well together.

Can you give me a specific example?

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Interview with A9's Manber up on B2.0

By - April 15, 2004

b2logo_238x53No need to repost it here, as my interview with Udi is up on without subscription walls (thanks 2.0!). Includes an intro which gives an overview of the service and the implications. Good for those of you who don’t want to wade through my last two posts on the subject…and gives a bit of insight into how Udi’s mind works.

UPDATE: The link apparently is now behind reg, so the column is posted in extended entry. (6/21/04)

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New 2.0 Column: Mike Ramsay, TiVo

By - March 27, 2004

I enjoyed my conversation with Mike, since this interview, TiVo has announced new advertising products along the lines of what we discussed.

When the Network Meets the Net
TiVo’s Mike Ramsay wants to plug viewers into more than cable and satellite — and bets his digital video recorder can make the connection.

By John Battelle, April 2004 Issue

TiVo (TIVO) is under siege. From Hollywood to Madison Avenue, the word itself is almost a curse. And those who aren’t muttering it are copying it. In the latter camp are most of the cable and satellite companies, which are mimicking TiVo’s groundbreaking digital video recorder — the Internet-era successor to the VCR that finds the TV programming you want, when you want it. Some 830,000 Time Warner (TWX), Comcast (CMCSK), and other cable subscribers now use cheap DVRs from Scientific-Atlanta (SFA), which has orders for hundreds of thousands more.

You’d think all of this would spook CEO Mike Ramsay. But Ramsay, a veteran of Silicon Graphics, is ready for the fight; he cheerfully mentions that TiVo has already battled Microsoft (MSFT) and won (Microsoft canceled UltimateTV, a competing DVR, in 2002). He’s bolstered TiVo’s subscriber ranks to 1.3 million with the help of DirecTV; half of them now come through the satellite-TV company. And he’s suing EchoStar, the other major satellite provider, for patent infringement.

Ramsay’s offensive plan is even more interesting. He’s trying to make friends on Madison Avenue by putting tiny video commercials, similar to movie trailers, in TiVo’s programming guide. (Fox and BMW are among the advertisers that have tried the new format.) Nielsen is adding TiVo viewers to its ratings panels. Despite the common wisdom that TiVo was toast, the little company based in Alviso, Calif., has thrived: Its stock has soared from a low of $4.50 a year ago to nearly $12 today.

In January, TiVo raised $74 million from big investors, and in February it cut prices on its entire DVR line. But Ramsay can’t outspend his cable competitors; he knows he’ll have to out-innovate them. In February he purchased secretive networking startups Strangeberry, whose engineers are working to take the DVR a step beyond, making its user-friendly interface the window into content downloaded over any wire, whether coaxial cable or high-speed Internet. Can Ramsay hook up broadcast and broadband? Expect TiVo to generate new business models, new forms of video content, new regulation, and a lot more controversy in the coming years. However it ends, we’ll be replaying this episode for years to come.

Janet Jackson’s wardrobe malfunction was the latest in a string of high-profile “TiVo moments.” So why aren’t there more TiVos in the world? Are you the next Macintosh, with Comcast as Windows?

We have been conditioned over the last five years with the Internet that if something’s hot, it gets into millions of homes overnight. But until recently TiVo’s been expensive. It’s also a brand-new idea — and history tells us it takes time for the average consumer to get used to a new idea. It’s sort of like when the PC first came out.

TiVo is a hard-to-explain thing. When you first describe TiVo, people say, “Well, all right, that’s great, but isn’t that just like a VCR?” And you go, “Well, no, actually it’s not.” Then there’s a five-minute conversation. You can’t describe TiVo in 30 seconds. You need TiVo to describe TiVo. In the past we’ve gotten a lot of mileage and effectiveness out of PR and product placement, generating word of mouth. Today there’s a whole lot more elasticity. Bring the price down, sales go up. Get the word out, do more promotions, sales go up. In February we unveiled a $50 rebate. And you’ll see more of that going forward.

To protect their advertising and pay-per-view business, won’t cable companies create “TiVo lite” — DVRs that they control, in essence?

Yes, but they are motivated by satellite — they are scared that satellite is taking business away from them. And to the extent that satellite has embraced DVRs, they have to respond.

Is the 30-second spot dead, and is TiVo responsible?
(more via link below)

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March 2.0 Column

By - March 04, 2004

While the column format would not allow a full discussion, I was thinking about blogs and social networking sofware while composing this piece. The focus is on “influencers” and marketing for this column, which by the way is the last of this kind. Next month I’m switching to an interview format (first up is Tivo’s Mike Ramsay…)

The Net of Influence
Influencers are critical to business success. But the last thing you want to do is treat them like a mass market. Instead, do the hard work of cultivating them in a personal network.

By John Battelle, March 2004 Issue

The era of carpet-bombing your brand into existence through a shock-and-awe network TV campaign is over. So what now? Marketers struggling for meaning in a post-mass-media world are turning to the concept of “influencers” — people in a position to shape others’ opinions. Get them to give your product great word of mouth, the theory goes, and your business will flourish.

Push a bit on this particular noodle, though, and it feels all wet. According to The Influentials, a 2003 book from market researchers Jon Berry and Ed Keller, you can target a cohesive set of influencers — 21 million strong — as a single group.

But the idea that one large überclass of community leaders determines the fate of all products seems utterly silly to me. So allow me to posit a different approach: For any product you’re selling, there is a unique set of roughly 150 such leaders, each of whom you can and should get to know personally.

Hard to believe? Paul Rand is developing proof. Rand, an executive at Ketchum Communications, is launching a program to identify the folks critical to a business’s success and target them with intimate and relevant programs and messaging. What Rand has found, time after time, is that the number of influencers for any given product is about 150.

This reminded me of a concept advanced in Malcolm Gladwell’s The Tipping Point. We tend to max out social networks at about 150 individuals (it has to do with group dynamics and how our brains are wired). Below that number, a group is small enough to operate on personal relationships rather than rules and hierarchy. This rings true for villages, military units, corporate divisions, and, I’d argue, communities of interest. A smart marketer will capitalize on that fact.

(more in extended entry below)

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RSS Tools

By - February 04, 2004

Since my column came out a lot of folks asking me which aggregators to use and the like. I’m not an RSS expert and to make matters worse, I use a Mac (hence I suffer PC blindness), but here’s a link to a list of RSS tools, thanks to the RSS Winterfest online conference and Socialtext.

Current Column (Finally!): Why Blogs Mean Business

By - January 28, 2004

I wrote this in November, about two months into my NetNewsWireLite conversion, so if it feels dated, well….there you have it. But I think the meme still has traction.

Why Blogs Mean Business
Today they’re lousy media experiences for mere mortals. But that’s about to change—and so is the way you gather information for your work..

By John Battelle, January/February 2004 Issue

The buzz on weblogs is becoming unbearable. Not because I think they don’t merit the attention—they do. But the mainstream discussion on the subject misses the point. Nearly everything you read says either that blogs are ill-defined harbingers of a long-foretold Internet media revolution or that they’re irrelevant, the ephemeral scribble of teenage girls.

Folks have forgotten that blogs work because people have something to say and others find what they say valuable. Our business culture works the same way—it runs on the currency of influence, authority, and relationships. People who have strong and well-informed opinions command respect and become influencers; they win deals, drive decisions, and ultimately determine the fate of companies. The thirst for high-end business information—the kind that makes people feel like influencers—has created a $15 billion professional publishing market in the United States alone.

So here’s my prediction: Blogs will soon become a staple in the information diet of every serious businessperson, not because it’s cool to read them, but because those who don’t read them will fail. In short, blogs offer an accelerated and efficient approach to acquiring and understanding the kind of information all of us need to make business decisions.
For example, Robert Scoble, a Microsoft marketer, maintains a blog where he comments on just about everything, including his views on Microsoft’s role in the industry. You can bet his views are studied by the folks who make decisions over at AOL, Google, and Yahoo—and in Redmond.
(more via link below)

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#9: Springtime in Geekland

By - December 15, 2003

Foo was fun, and it also showed that optimism was back in the geek inner circle.

The Geeks Are All Right
What happens when 200 hackers and visionaries camp out in the hills of Northern California? If you have a stake in the future of business, you’ll want to find out.

By John Battelle, December 2003 Issue

Stashed away in the rolling hills north of San Francisco, the town of Sebastopol, Calif., used to be remarkable for two things: Gravenstein apples (it was once the world’s largest producer) and the Russian River appellation (excellent zinfandels). You can now add a third important growth industry whose roots are there: Foo Camp, a new breed of geek gathering organized (somewhat) by O’Reilly & Associates, a thriving technology publishing business.

This year’s Foo Camp, held in early October, was extraordinary for many reasons, but perhaps mostly for its structure — or lack thereof. Tim O’Reilly, Foo’s founder, made sure that basics like food, showers, and meeting space were available, but then quickly turned over the weekend’s agenda to the geeks (literally — there was no agenda until Friday night, when the attendees made one up on the fly). The idea: Get 200 or so smart folks with a lot in common together in one place at one time, let them pitch tents, toss in a Wi-Fi network, and see what happens. Turns out, quite a lot. (more via link below)

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#8: Intent over Content, Fish with Feet

By -

I do believe there is a huge market to be made in adapting video to weblike channels…

Gone in 30 Seconds
The classic TV spot can’t dominate advertising much longer. Microsoft’s new MSN Video is bringing Web-based commercials to a computer monitor near you.

By John Battelle, November 2003 Issue

NOTE: This has been updated from the version published in the November 2003 issue of Business 2.0

Let’s consider a few fun stats. First, broadband has reached nearly 39 percent of all Internet-connected households and is expected to be in 79 percent in five years. Next, research firm In-Stat/MDR predicts that corporate spending on broadband content-delivery services, essential to high-quality video streaming on the Web, will almost triple by 2007. Third, the vast majority (72 percent) of work connections are high-speed. Throw in the forecast that TiVo-like devices will be in 20 percent of American homes (and certainly a higher percentage of wealthy ones) by 2007. And finally, 99 percent of homes with incomes over $100,000 have Net access, and it’s a safe bet that most of those have broadband connections.

Add it all together and here’s what it means: A massive broadband marketing opportunity is upon us — and, as a recent Yankee Group report concludes, the 30-second TV ad will soon lose top billing as our most valuable marketing vehicle. What will replace it? Web-based video advertising. (more via link below)

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