Barton, Richard N.

(1968-)
Expedia, Inc.

Overview

Richard Barton is one of Microsoft's golden boys who created the idea for what was to become Expedia and then was offered the opportunity to spin off from Microsoft and run with it on his own. He made the most of that opportunity: Expedia users may book vacation and golf packages as well as airline flights, make hotel reservations, and secure car rentals from one online Web site. In addition to the United States, Expedia has Web sites in Canada, Germany, Italy, the Netherlands, and the United Kingdom. The company produces the "Expedia Radio Show" and publishes Expedia Travels magazine. Microsoft still owned 70 percent of Expedia in 2001 but had agreed to sell its stake to USA Networks in 2002.

Personal Life

Born in 1968, Barton admits to being a "closet geek" as a youngster. He once told an Advertising Age interviewer that he was one of the first kids in the neighborhood to own a Radio Shack TRS 80—an early personal computer (PC). He graduated from Stanford University in 1989 with a degree in industrial engineering. He is an avid outdoorsman and fly fisherman.

Barton told Fortune's Nina Munk that "Work is not work. It's a hobby that you get paid for." He personifies the X–generation's "gold–collar" workers who believe they should be working in jobs that are fun and which provide self–satisfaction more than pay the rent. He runs his business by making sure that his employees love travel and share his philosophy. Barton also serves as a director of Atom, Inc.

Career Details

After graduating from Stanford, Barton worked for two years with Boston–based Alliance Consulting Group as a strategy consultant. Alliance is an information technologies consulting and education company. It also specializes in turning larger companies into e–businesses. Some of the company's previous clients have included Disney, Coca–Cola, and Visa. In an Advertising Age interview, Barton referred to his two years at Alliance as a "business boot camp," eliminating the need for him to go to business school.

Apparently feeling unfulfilled, Barton next tried to incorporate his love of the outdoors into his employment. He interviewed with Patagonia, the outdoor clothing maker, and the fly fishing gear retailer, Orvis Co. Ultimately, he chose instead to go with Microsoft in Redmond, Washington, eventually being placed in various product management positions involving Windows and MS–DOS. These included projects on Windows 95, Windows 3.1, MS–DOS 6, and MS–DOS 5 operating systems.

When Microsoft named Barton a unit manager for its growing travel business, things began to heat up. He originally was assigned to develop a line of CD–ROM travel guides for Microsoft. But the same intuition that made him get a Radio Shack PC before anyone else also made him become enthusiastic about an online travel agency service. Instead of CD–ROM viewing, Barton envisioned a bigger opportunity with interactive travel arrangements through e–commerce. He correctly presumed that people would be more interested in having some input and control in their travel arrangements. During his first review on the CD–ROM product with CEO Bill Gates in 1994, Barton suggested to move online.

True, Microsoft and Barton did not invent the concept of online travel arrangements. Sabre Group's EasySabre had been selling tickets on Prodigy since the 1980s. (Expedia would later compete with Sabre Group's online Travelocity, as well as the America Online–Preview Travel Web site.) Barton believed that the Microsoft name and reach would help beat out rivals and build trust in targeting consumers. Gates was receptive, and Barton began working out the details of his new brainchild.

In 1996, Microsoft announced plans to launch its new Expedia travel service online. It spent $1 million on advertising for the new service and teamed up with other travel–related partners to help get the site off the ground. It arranged for joint promotions with Doubletree Hotels, National car rental, and American, Continental, and Northwest airlines. The coordinated advertising was needed: at that time, there were already some 2,000 sites on the Internet promoting individual brands, destinations, and booking services. American Express and Preview Travel were planning online and mass media campaigns of their own. But Barton and his team retained the advertising firm of Anderson & Lembke in San Francisco to create a campaign that offered a free vacation, courtesy of Expedia, Doubletree, and National, to kick off the new web site. Expedia offered bonus miles on Continental, American, and Northwest to those who booked flights through the website. From the start, Expedia began to create website links to other "content sites" for travelers such as weather services, theater and museum sites, city news, and traveling–consumer favorites such as the bookseller Amazon.com and 1–800–FLOWERS.

By 1997, Barton had been promoted to general manager of Microsoft's traveler business unit, which included the Expedia group. Expedia was holding its own, with about two million Web visitors a month, and the site had sales of more than $4 million a week. But it was not yet making money. Barton came up with more ideas. The Microsoft name had provided the name–recognition security to draw customers, but it was the software behind Expedia that he was relying on to move ahead from there. "Brand is very important," Barton said in a 1998 Advertising Age article. "But the very greatest brands in the world are built on the best products in the world. You can't have one without the other." He believed he had the very best product in Expedia. He envisioned Expedia becoming an on–demand, interactive, multimedia experience similar to an online TV. He was merely waiting for bandwidth and technology to take Expedia to the next level.

Chronology: Richard N. Barton

1968: Born.

1989: Graduated from Stanford University.

1991: Joined Microsoft.

1994: Created Expedia

1996: Expedia.com website was launched.

1999: Expedia became an independent, publicly traded entity.

1999: Became Expedia's first president, director, and CEO.

2001: Expedia sold to USA Networks Inc.

That opportunity came the following year. In late 1999, Microsoft scheduled its first public offering (IPO) as its own company, independent of Microsoft. A letter dated October 25, 1999, and signed by Greg Maffei, President of Expedia Inc., offered Barton the position of chief executive officer (CEO) of the new company, conditioned upon the execution of the IPO, among other things. The letter further went on to state that if an IPO did not take place by June 30, 2000, the offer of employment was void. However, the letter continued, "Microsoft informs us that, in that event, in lieu of becoming employed by Expedia, Inc., you will have the opportunity to continue your employment with Microsoft Corporation." The IPO occurred as planned and Barton became Expedia's first president, CEO, and director in late 1999. Barton had realized his dream to have his own business.

Since the spin–off from Microsoft, Barton worked toward supremacy in the online travel agency business. According to Internet research and rankings firm, Gomez Advisors, in the third quarter of Expedia's first fiscal year, Barton had brought the company into the number one spot overall, also taking the first spot in business travel, the bargain travel profiles, and the "ease–of–use" category.

Initially, Expedia suffered the same redundancy as the traditional travel agencies: it had focused mainly on selling airline tickets for its "bread and butter" income. As airlines continued to reduce commissions to sellers and agencies, Expedia, along with the others, began to suffer revenue shortcomings. But once again, Barton was ahead of the pack. Expedia began to shift its focus on more profitable lodging and vacation package transactions. "Don't just travel, travel right," became Expedia's motto.

In March 2000, Barton was able to secure the acquisition of Las Vegas–based Travelscape.com and Seattle–based VacationSpot.com for $177 million—two other Internet sites that could pull consumers away from Expedia. Expedia then developed new services for consumers such as hotel price matches, flight price matches, and a fare calendar that allows users to see when airlines are offering the best rates or deals. All this led to a glowing report from Gomez Advisers in mid–2000, noting "these cool new features produce positive, easy–to–use results."

The purchase of the two other web sites and the development of its own unique product of synchronized travel arrangements and packages helped Expedia to tap into the growing worldwide lodging market by providing bookings for more than 65,000 lodging properties in 240 cities. VacationSpot had the properties that Expedia wanted on its web site, and Travelscape had the best prices, plus a desirable cruise product. Expedia also started to shift its business from airline ticket sales to cruise and vacation packages. By mid–2000, the sale of airline tickets represented less than 30 percent of company revenues.

Further, in February 2000, Expedia opened its golf travel section in conjunction with TheGolfer.com, an online tee–time booking service. The new product offered reservations at more than 11,000 golf courses and provided golf destination information, golf news, and special golf vacation package deals. The Course of the Week feature provided photographs and course details of its subject golf course, and Golf Travel Deals linked customers to a variety of golf products and supplies, schools and clinics, and complete golf getaways. There was also a community "chat" area for golfers to exchange vacation stories and tips, along with Expedia.com's acclaimed Airport Survival Guide. Last but not least, Expedia launched into the communications networks to reach new customers not otherwise visiting its website. Expedia Radio, offered in 90 markets and on the Web, was distributed through CBS and reached 2.5 million viewers. In the fall of 2000, the company launched its own magazine, Expedia Travels, in conjunction with Ziff Davis Publishing, originally published bi–monthly but with plans to publish monthly in fall 2001.

In October 2000, Barton was a guest speaker on the Mark Holland Show on the IT Radio Network. He told listeners that he saw himself as an "intrapreneur," starting up a little start–up inside a big company. The main difference, according to Barton, was not the amount of autonomy but, instead, the line of command. Barton told his audience that he now reports to the general public. "You're my new bosses," he stated, "[now] I have thousands of new bosses to answer to and these new bosses are very demanding." Barton and Holland both agreed that it was a "customer economy" in the Web World, and that in order to be successful, employees needed to respect and love their customers, who were only "one click away" from going to a competitor. Barton also said that a prerequisite for employment at Expedia was a love of travel, which was "not a hard task luckily."

Anecdotally, Barton also told Holland and his listeners that his young age (32 at the time) gave him an advantage, because he was raised "in a very technology engineering oriented environment," which helped him to appreciate how technology could change a business. But, he admitted, it also gave him a lack of experience. He agreed that Bill Gates had a "tremendous influence" on his management style and the way he thinks about business. Gate's optimistic outlook and ability to foresee how technology could change people and industries—long before the change occurred—was something that Barton relished. He also told listeners that working for Steve Balmer at Microsoft taught him how to motivate and lead large groups of people. By taking the best from both of these leaders, Barton was able to take his group at Microsoft's Expedia to the top and then spin off on its own.

In July 2001, USA Networks Inc. agreed to acquire Microsoft's stock interest in Expedia. USA Networks, which owns the Home Shopping Network (HSN), planned to combine Internet (Expedia) with cable TV (HSN) for retail travel sales. USA projected that within two years it would have 20 million subscribers to its cable channel—many of whom would be directed to its Expedia web site. Expedia's fiscal year sales ending in June 2001 were $222 million, representing a one–year sales growth of 64.7 percent.

Social and Economic Impact

Barton is the quintessential X–generation business leader. He does not try to capitalize on existing markets but rather tries to foresee the future trends of a sometimes finicky public and develop a new market to accommodate that need. Most of all, he wants to have fun doing it, which is a motivator for both him and his staff. A background expertise in state–of–the–art technology, coupled with the ability to gauge the pulse of would–be travelers, has changed not only Barton's career, but also the way consumers arrange and purchase their travel plans. Everyone has benefited, but mostly consumers (Barton's "new bosses"), who can often save money and time by visiting Expedia.com online.

Sources of Information

Contact at: Expedia, Inc.
13810 SE Eastgate Way, Ste. 400
Bellevue, WA 98005
Business Phone: (425) 564&–7200
URL: http://www.expedia.com

Bibliography

"30 Seconds or Less." Computer Reseller News, 31 July 2000.

Anderson, Karen. "Life After Microsoft." Travel Agent, 15 May 2000.

"Employment Agreement Between Expedia and R. Barton." Available at http://techdeals.biz.findlaw.com/agreements/expedia/expediaemployagt.html.

"Expedia, Inc. Capsule." Available at http://www.hoovers.com/co/capsule/8/0,2163,61378,00.html.001.

"Expedia Posts Better–than–expected Q1 Results." News Bytes News Network, 22 October 2001.

Ferguson, Kevin. "Expedia–Travelscape Deal Makes Finding Dream Vacation Easier." Las Vegas Business Press, 12 June 2000.

Johnson, Bradley. Z. "Microsoft Expedia." Advertising Age, 26 June 1998.

"Management Biography." Available at http://investor.expedia.com/iredge.

Munk, Nina. "The New Organization Man." Fortune, 16 March 1998.

"Richard Barton, President and CEO—Expedia.com." IT Radio Network, 12 October 2000. Available at http://www.itradionetwork.com/scripts/bartonr.html.

Schaal, Dennis. "Cable Firm to Buy Expedia." Travel Weekly, 19 July 2001.

Torres, Giselle. "Allied Consulting Group." Caribbean Business, 23 October 1997.

Underwood, Elaine. "Microsoft Loads Up Big Cybersplash in Travel." Brandweek, 21 October 1996.

Waltner, Charles. "Richard Barton." Advertising Age, 14 July 1997.