Barry Diller, CEO and majority owner of Interactive Corp.
(IAC), was the name on everybody’s lips at this year’s PhoCusWright Executive Conference, with the speakers list ranging from the senior executives from Orbitz, Travelocity, and Expedia, top analysts, and Barry Diller himself.
This is hardly surprising as the 61 year old, who is wildly innovative about building businesses, has been on a two-year long buying binge, and now holds the most powerful company in the upstart world of online travel and what is becoming the world’s largest e-commerce business.

Analysts are forecasting that IAC will ride the wave of Internet commerce, which is expected to soar from $78 billion in 2002 to $149 billion in 2005, according to Forrester Research
.

With an eclectic combination of businesses, ranging from the leading online travel company Expedia to the Net dating service Match.com, InterActiveCorp’s revenues are on track to surge 34% this year, to $6.2 billion - which would make it bigger than e-commerce giants Yahoo!, eBay and Amazon.com.

And with $5 billion in cash, Diller is still shopping. Earlier this year he announced a deal to buy Hotwire.com
(opaque travel site) for $665 million, meaning he now owns 3 of the top 10 most-visited travel sites. IAC’s Expedia and Hotels.com are currently the two most profitable online travel agencies.

Diller is now eyeing further acquisitions in travel and plans to expand aggressively overseas.
His goal is to make IAC into something entirely new - a powerful combination of businesses focusing solely on e-commerce. For this, Diller is positioning himself as a new kind of cyber-middleman. 

Whilst this may benefit Diller, someone on the chain always loses out and in this case the hardest hit are his own suppliers, the hoteliers, whose products Diller is distributing and profiting from. Diller’s three travel units (IAC Travel) are pressuring the hotels like never before for low room rates to pass on to bargain-hunting consumers at Expedia, Hotels.com, and Hotwire. The hotel industry have been watching Diller’s moves very closely with a view to take on this new challenge, vowing to fight back.

So what is the secret of Diller’s success? This may well lie in the fact no-one does what Barry Diller does. Whilst the company faces competition in every market, no one organisation owns the monopoly that Barry Diller does and according to Diller, he has hardly even begun.

“Everything that we do underscores the belief that this is just the beginning”. Barry Diller

ITN has captured the highlights of an intimate Q&A session between Barry Diller and Philip C Wolf, CEO and President of PhoCusWright
that took place during PhoCusWright Executive Conference.

PW: Is IAC a corporate brand?

BD: IAC is not a consumer brand. It is our corporate name and operating business.

PW: Google has to be in the radar of your vision?

BD: Google is an advertising company. We all pay them a lot of money to get consumers to our services. Search is helpful in directing demand.

PW: Should we be looking for a loyalty program across the IAC brands?

BD: 45 million people book with us each month. Over time we hope they will fit one name to the other, but our attitude is that business is growing fast and that’s the main thing.

PW: To what extent is broadband a growth driver for revenue?

BD: Broadband adoption is not that high yet. We know the difference between slow and high speed, but there is a lot ahead for adoption and we are only at the beginning. It is necessary to become more intuitive and increase access through the magic box.

PW: Do you have plans for international expansion?

BD: Definitely - We have big plans for expansion in to Europe. We will not stop with Europe, but we will only go where it’s sensible. I don’t think we’ll be going to Antartica.
We will also continue to develop our branding strategy.
PW: You seemed to have a very smooth transition, losing Richard Barton?

BD: Yes and this was a great testament to both Richard Barton and Eric Blachford - This also underlies the way the business was conceptualized.

PW: Can you tell us about your plans for your new headquarters?

BD: We are going to build an iconic building in New York City, downtown Manhattan. This is being built by Frank Gehry and it will be the IAC headquarters. We wanted to find one place where all our activities could find a common ground in a unique place.

PW: How involved does Barry Diller get with his company?

BD: There is no way you could manage everything, but I am engaged with activities that are part of the company.

PW: Will travel continue to be a dominant vertical in IAC?

BD: It is so important for IAC to get along with suppliers or there would be no product. Over time we hope the friction in our relationship with our suppliers will subside and we certainly make no mistake about whose money it is.

PW: What is your end game?

BD: We are so at the beginning that to predict an end is not a can. We want to be the largest and most profitable player in e-commerce.

PW: We have seen a lot about Hotwire’s positioning, but we don’t see a brand that does what ebay does within your portfolio. Is this something you plan to do?

BD: We do have ticketmaster, but we are not planning to go into ebay’s business.
PW: What is your view of the travel agents’ place in the market?

BD: The answer is in service. There will always be plenty of people who want to talk to and see an agent - in other words professional service. I do not believe that one business ever displaces another.

PW: When you conceived USA online, who was your main competitor? Who is your main competitor now and who will it be a few months down the line?

BD: We got into the area on a macro-basis. We have enormous competition in almost all business, but at a multi-level we have not seen it yet. If the competition does emerge, we’ll take it on.
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