Q&A

You plant a flag, you say, “This is the di­rec­tion that we’re head­ing”, and then you have to al­low cre­ativ­ity to take over. – Ex­pe­dia's Dana Khos­row­shahi on em­pow­er­ing employees

The Australian - The Deal - - News - In­ter­view by: He­len Trinca

Ex­pe­dia’s Dara Khos­row­shahi says fail­ure made him a bet­ter CEO

DARA Khos­row­shahi is pres­i­dent and chief ex­ec­u­tive of Ex­pe­dia, the on­line travel-book­ing com­pany. In Sydney re­cently, the 46-year-old Ira­nian-Amer­i­can talked about how he learnt to be a bet­ter CEO and why fail­ure is use­ful.

How do you get cre­ativ­ity and en­tre­pre­neur­ial spirit into a big com­pany such as Ex­pe­dia with 18,000 employees?

As com­pa­nies get big you slow down, so we’re ac­tively break­ing up the com­pany as we grow. The var­i­ous brands that we run are or­gan­ised as very sep­a­rate in­de­pen­dent busi­ness units. They have pres­i­dents. They make their own mar­ket­ing de­ci­sions. They have their own tech­nol­ogy teams. They con­trol their own fate with­out hav­ing to come to the [top level] for ap­proval. They understand gen­eral rules of thumb and then they go out and really run their busi­ness. And I think with that em­pow­er­ment comes the abil­ity to take risk, the abil­ity to take shots.

As CEO did you have to ad­just your style to ac­com­mo­date that democ­racy?

You do have to give up con­trol. One of the early lessons I had when I was first a CEO, this young prod­uct man­ager came to my room and said, ‘You know, can I give you a bit of un­so­licited ad­vice – I think it would help if you stopped telling us what to do, but you start telling us where to go. If you tell us where to go we’ll fig­ure out what to do to get there.’ So there is a dif­fer­ent kind of be­hav­iour – you plant a flag, ‘You say this is the di­rec­tion that we’re head­ing’, and then you have to al­low cre­ativ­ity to take over. You have to em­power your employees to make their own choices and trust that they will make the right choices. Some­times they make mis­takes but, more of­ten than not, those mis­takes al­low you to learn and that learn­ing al­lows you to get smarter and ex­e­cute bet­ter.

How long did it take to be­come the kind of boss you are now?

I think I had a rough first two years of the job and then I re­alised that I had to let go.

Do you miss the more cre­ative el­e­ment of your work that you can’t get as a boss?

We’re mov­ing so fast and tak­ing so many shots, I feel all of us have the op­por­tu­nity to be cre­ative.

You have talked about the value of fail­ure. What do you mean?

Fail­ure is a part of our ev­ery­day life and for us it comes down to math. We ship about 120 to 150 tests per month, and it turns out that a third of the time you’re right, a third of the time the re­sult is neu­tral and a third of the time it fails. So two thirds of the time the stuff that we’re cod­ing doesn’t work. So when two thirds of what you’re ship­ping is fail­ing you, as an or­gan­i­sa­tion, get fa­mil­iar with it. Fail­ure can teach you some­thing and as long as you’re mov­ing very, very quickly you’re go­ing to start pil­ing up the wins. Speed gives you the lux­ury to be able to fail.

Is there a lot of pres­sure on peo­ple to per­form in a com­pany like yours?

We’re pretty proud of our en­vi­ron­ment and the ten­ure of our employees has im­proved very sig­nif­i­cantly. I think it’s a great place to work for a couple of rea­sons. One is, noth­ing against shoes, but we’re not sell­ing shoes. We’re mar­ket­ing travel! Like this is the best prod­uct in the uni­verse to mar­ket. Google is a really tough player to go against in the tal­ent mar­ket but we’re able to tell en­gi­neers, lis­ten we’re a big com­pany where if you ship some­thing, mil­lions of con­sumers in the world are go­ing to see it, but we’re small enough so you can make a dif­fer­ence. You can go join one of th­ese gi­ant com­pa­nies and you’ll be sur­rounded by smart peo­ple but no one’s ever go­ing to see what you do. You come to Ex­pe­dia, you can ship some­thing, you can make a dif­fer­ence with this com­pany.

Does it worry you that you are seen as an old tech com­pany?

It used to worry me but I think some of the stuff that we’re ship­ping is su­per cool. I put our tech­nol­o­gists up against any­body and I think we’re go­ing to sur­prise the world.

How im­por­tant to your suc­cess was your back­ground as an im­mi­grant?

We were a very suc­cess­ful fam­ily (but) we lost ev­ery­thing when we came to the US and that does drive a cer­tain am­bi­tion. My fa­ther ba­si­cally took ev­ery­thing that he had and he used it to pay for my and my brother’s school. When you see the sac­ri­fices your par­ents make, you want to do well for them. I think the sec­ond point is to be grate­ful and not take things for granted. I think a lot of Amer­i­cans don’t understand what an un­be­liev­ably great coun­try they live in.

Who are your role mod­els?

One role model for me is the chair­man of our com­pany, Barry Diller. One of the things that I really ad­mire about Barry is that his ego is based on get­ting to the right an­swer, not to be right. He thrives on the process of get­ting to the right an­swer. He doesn’t thrive on just be­ing right.

You grad­u­ated from Brown Univer­sity in engi­neer­ing? What ad­vice would you give to an en­gi­neer com­ing out of Brown to­day?

Sur­round your­self with peo­ple who you think are su­per smart and who you like. I think it’s really im­por­tant to come to work and work with peo­ple you like. The sec­ond piece of ad­vice is not to plan their lives too ag­gres­sively. I see peo­ple say­ing: I need to have a pro­mo­tion in three years or I need to make a cer­tain amount of money in five years. The best thing you can do is work for some­one su­per smart be­cause the world may change in­cred­i­bly fast in three or five years but smart peo­ple al­ways stay smart.

Should school kids learn cod­ing?

I was an en­gi­neer by train­ing and I think engi­neer­ing and cod­ing teach you to break down prob­lems. Cod­ing can cre­ate very com­plex be­hav­iours but you have to build those com­plex be­hav­iours through very sim­ple steps and the skill of tak­ing a com­plex prob­lem, break­ing it down into its com­po­nent parts, so that you can start analysing that prob­lem and act­ing on it or un­der­stand­ing that prob­lem, is quite fun­da­men­tal and a really im­por­tant busi­ness skill. Cod­ing teaches you that. Engi­neer­ing teaches you that.

What do you think the ho­tel mar­ket will look like in 10 years?

In a shar­ing econ­omy, the def­i­ni­tion of what you call a ho­tel will change and the ex­pe­ri­ence hote­liers de­liver to cus­tomers really has to change and be­come much more en­abled by tech­nol­ogy. I think there’s this at­ti­tude that there’s ei­ther tech­nol­ogy or there’s ser­vice. I think the win­ners will be those who re­alise it’s tech­nol­ogy and ser­vice.

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