Hurdle Dot Biz
Technology Today. Business Tomorrow.
Expedia’s hotel brands (Hotwire and TripAdvisor): same company, exactly opposite strategies
Mar 29th
Today it was announced that Expedia‘s Hotwire brand is building out its international footprint, and planning to expand into Europe, in particular the UK and Ireland. What does this mean for the Expedia group’s hotel strategy, and is this an implicit bet against social search for online travel?
Hotwire’s model
Hotwire offers hotels to consumers using the “opaque” approach, which means that consumers can search for hotels by location, date, availability, star rating, and even read reviews, but only at the point of booking does the consumer get to know the name of the actual hotel.
TripAdvisor’s model
TripAdvisor, another company in the Expedia Inc (which obviously also has its own hotels service) stable along with Hotwire, clearly takes the exact opposite strategy, in that it provides reviews and information on actual hotels, but then makes money by referring those customers to other booking sites (such as expedia or hotels.com etc).
What exactly is Expedia trying to achieve?
My view on this is that Expedia is taking a pure portfolio approach to the booking process, and doesn’t really mind which one wins, if in fact one has to. More likely they will coexist happily, catering to either different customers or the same customers in different situations.
However, an interesting similarity is that in both cases, the CEOs of each division think they are appealing to the same customer need, which is based on “trust”. The Hotwire CEO mentions in the Tnooz article that:
The time is right to use the opaque deals model, he claims, because more consumers are looking for cheap, shorter breaks and hotels, but more importantly because of a rating system deployed to establish “trust” with the consumers that its deals are worth buying.
While TripAdvisor CEO Steve Kaufer has also talked about the importance of trust in travel bookings:
In order to get trust (the gold dust of the Internet), a site need “honest brokers” (people that give trust), and a “social network” (the group that you can trust).
The future of trust in online travel
I think it will be very interesting to see how both these businesses develop over the coming years. Certainly in the last couple of years, there has been a strong move towards the importance of your own social networks, and how you can leverage those relationships to make better decisions online. Neither TripAdvisor nor Hotwire leverage personal relationships at all at the moment, but clearly the TripAdvisor model is better equipped to incorporate it going forward. Given that Hotwire is getting rolled out internationally, I wonder if that means that Expedia is implicitly betting against social search in travel…
(Mostly) drinking the Hubspot Kool-Aid
Mar 25th
I recently had the pleasure of attending a seminar at MIT Sloan led by Brian Halligan and Dharmesh Shah from Hubspot, and although it has taken me almost my entire Sloan career before I have figured out what it is that Hubspot does (I also read the book over spring break), now that I do get it, I am thinking it is certainly the right approach to marketing for small businesses. However, it will be interesting to see where they go from here, and how they use that pile of cash they just raised.
What does Hubspot do?
Brian and Dharmesh call what they do at Hubspot “Inbound Marketing”, which is precisely the term that baffled me for most of my Sloan career: people would bandy it about as it if was perfectly clear what it meant. Inbound marketing is based on the principle that nowadays, people don’t respond to interruptive marketing (e.g. television advertisements etc, aka outbound marketing), having got better at filtering them out. Therefore to successfully engage potential customers, you need to be easily findable when people decide that they might need your product or service.
Therefore, their argument is that having a huge online presence (particularly blogging – “creating remarkable content”), and making sure that Google puts you at the top of the results (Search engine optimization) is way more important and valuable than spending tons of money on an advertising campaign.
Personal brand = small-business brand?
During our first Sloan semester, Bill Aulet could not have said more times that we needed to cultivate our own “personal brands”. And while it has taken me a while to determine what that means, one of the important ways I manage this is to make sure that when someone Googles me (say when I apply for a job) to have something a) come up on the first page, and b) that it is something that I would want them to find (e.g. a thoughtful blog post rather than drunk Facebook pictures – and no, the irony is not lost on me that I am saying this in a blog post!).
Essentially this is the same philosophy that Hubspot is based on, and their products offer you software to track your “findability” over time. Do I have any idea if the software is worth it? No (and clearly some people have an issue with it!). But does the theory that it is based on make sense, particularly for small businesses? In my opinion, absolutely.
The future for Hubspot?
I think the principle of getting yourself found on the internet is exactly the right thing to be focusing on when doing marketing in a small business. What I am struggling with a bit more is how this is going to apply to larger businesses further up the food chain.
It is clear to me that a small business is going to get a better return on money spent doing this sort of thing than putting an ad in the local paper (and thankfully, the Hubspot approach is actual measurable, which helps). However, if you are trying to convince Pepsi that they should stop spending $Xbn on television advertising and focus on SEO, I think that is a harder sell.
I will watch with interest as Hubspot continues to grow (which I’m sure it will), and am curious to see whether it drives that growth through continued focus on small businesses, or tries to move up the ladder and attacks Madison Avenue head on.
Is Cloud the Precursor to a Perfect Storm?
Mar 11th
For years, experts have proclaimed that global climate change will ultimately generate storms of greater and greater magnitude. The perfect storm if you will. I am beginning to wonder if the trends towards multi-tenant cloud computing is also a force that will be the cause of a forthcoming global economic catastrophe.
Yesterday, an 8.9 magnitude earthquake struck off the coast of Japan and in the wake of damage caused by the quake and its resulting tsunami, many cloud and voice services were knocked offline (as reported by Venturebeat). Amazon has recently built a data center in Tokyo along with a host of others providing shared technology service providers. While global redundancy and distributed computing are purported benefits of the cloud model, what happens when these fail (like all technology is prone to do)? Was the old model better where there was inherently a distribution of global economic risk since every company had their own individually hosted data centers? What happens if a large cloud provider goes offline and brings with it thousands of other business’s critical or semi-critical applications? Could this be a worse perfect storm than any resulting from global climate change?
Until a significant outage strikes a shared service cloud provider (a la the Skype debacle this winter), the thought of a local disaster wreaking simultaneous damage across thousands of global businesses won’t slow the cloud freight train one bit. Once something does go awry, it will be very interesting to see how the IT community responds.
The Fortune 500 and the Exploratory Cloud Opportunity
Mar 10th
As a student at MIT over the past 2 years, I have noticed two refreshing outcomes of taking a step back, listening, reading, and thinking about business with an open mind: (1) a reintroduction to the experimental method (which I seem to have forgotten about since my high school science classes), and (2) a systematic review of risk & reward. It’s easy to forget that experimentation and thoughtful risk-taking have led to many of the disruptive forces we’ve seen drive business forward over the last decade – Google, Netflix, Craigslist, just to name a few.
In February of 2010 I wrote a post titled “Are Incentive Structures Aligned for Enterprise Cloud Adoption” in which I reflected on some of the bureaucratic and old-style political constructs that keep large, lethargic companies from moving as quickly as the technology that’s available in the marketplace. Today, as I reflect on a pile of research I am conducting for the MIT Center for Information Systems Research on cloud technologies, I feel more strongly than ever that making experimentation a strategic priority is the only way large companies are going to keep from missing potential opportunities.
Forrester, in its July 2010 article The Evolution Of Cloud Computing Market, highlights one of the counter-forces to cloud adoption as”Cloud Washing” – the notion that seemingly every vendor labels their product as “Cloud” but rarely do the vendors’ definitions conform to anything remotely standard. This phenomenon causes confusion and ultimately skepticism in the eyes of potential customers. While I agree with Forrester’s point, I also believe that an over-proliferation of “types” of clouds contribute to the confusion in the marketplace. Recently I rolled my eyes as I read a report IBM released in which they outlined eight different types of clouds – in my opinion, this was just more “Cloud Washing.” However, within the quagmire of cloud types IBM proposed, I found a gem – and that was the definition of an “exploratory cloud.”
Exploratory cloud — This delivery model represents an organization’s initial foray into cloud computing, in which the primary objective is to develop cloud delivery skills and experience. The goals in implementing an exploratory cloud—similar to a proof of concept—are to develop consumer and provider competencies and create awareness of unique cloud architectural and management system requirements.
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This type of cloud would likely be chosen to process compute-intensive, non-mission-critical workloads.
When talking about adopting cloud technologies for “mission critical apps” there is rightly a furious debate weighing the significant risks with significant rewards. The financial benefits, scalability potential, and operational efficiencies of the cloud are certainly counter-balanced by valid concerns over risk, security, and governance. The risks today may outweigh the rewards and keep some companies in the Fortune 500 from mass adopting cloud technologies, but there is NO excuse for organizations to shy away from adopting “exploratory clouds”. McKinsey highlights a host of “barriers to cloud adoption” that IT respondents weighted relatively evenly. These barriers will be overcome ONLY with hands-on internal experience (not through reading documentation, sales glossies, or blogs). These experiences will help well-prepared companies capitalize on the shift to the cloud when the right opportunity presents itself. Companies that don’t begin experimenting today will one day miss an opportunity that their competitor will likely be prepared to capitalize on.