Podcasts > The Tim Ferriss Show > #806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

By Tim Ferriss: Bestselling Author, Human Guinea Pig

In this episode of The Tim Ferriss Show, Rich Barton shares his entrepreneurial journey, from co-founding travel company Expedia within Microsoft to later disrupting the real estate industry with Zillow and its innovative Zestimate tool. Barton reflects on the mentors and philosophies that shaped his approach to building data-driven, consumer-focused businesses and cultivating an environment where entrepreneurial ideas can thrive.

The discussion also explores Barton's personal life, including his morning routine, family traditions, and creative pursuits. Additionally, Barton offers book recommendations within his favorite genres, praising authors who excel at weaving deeper themes into their character-driven narratives.

#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

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#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

1-Page Summary

Barton's Entrepreneurial Journey

Early Influences and Microsoft Mentorship

Rich Barton realized his passion was in building and creating rather than consulting. At Microsoft, Brad Chase mentored him in an environment that encouraged fearless innovation, setting the stage for Barton's entrepreneurial ventures.

Expedia's Origins and Early Growth

In 1994, Barton co-founded Expedia within Microsoft, securing Bill Gates' backing to create an online travel service. Barton reflects on gaining confidence to spin Expedia off publicly by 1999, aided by his wife Sarah's medical residency search.

Founding and Growing Zillow

Barton co-founded Zillow with Lloyd Frink, disrupting real estate with real-time home valuations via the provocative Zestimate tool. Though facing initial industry resistance, Zillow's popularity with consumers and legislators helped Barton navigate challenges.

Business Philosophies and Leadership

Fostering Innovation and Risk-Taking

Barton believes in hiring and protecting "intrapreneurs" who can ideate boldly without fear of failure. He also emphasizes disrupting existing business models and learning from other companies.

Building Data-Driven, Consumer Businesses

Barton prefers consumer-focused models that identify opportunities and create transparent data streams to engage audiences, as seen with features like Zestimate and Glassdoor salary disclosures.

Balancing Leadership and Delegation

Barton underscores taking real vacations to identify emerging leaders and the importance of secure leaders letting successors take charge, contrasting insecure micromanagers.

Personal Life and Interests

Morning Routine and Fitness

Barton starts early with a nutrient-packed smoothie, physical therapy, and news while prioritizing wellness through balanced exercise regimes integrating strength, cardio, and recreation.

Family and Creative Outlets

Barton cherishes family traditions like rafting trips and breakfast rituals. He's explored painting during a year in Florence and is open to future pursuits in art and writing.

Literary Tastes and Recommendations

Barton loves the escapism of character-driven magical realism fiction. He recommends works by Mark Helprin, Haruki Murakami, and Neal Stephenson for their deeper themes, also praising Amor Towles' beautiful storytelling.

1-Page Summary

Additional Materials

Clarifications

  • Intrapreneurs are individuals within a company who exhibit entrepreneurial qualities by taking risks, innovating, and driving new ideas forward. They are like "entrepreneurs within a larger organization," working to create and implement innovations for the company's benefit. Intrapreneurs are supported by the company with resources and funding to foster innovation and growth. The term "intrapreneur" was first coined in the late 1970s to describe these entrepreneurial-minded individuals within corporate settings.
  • The Zestimate tool is a feature developed by Zillow that provides estimated home values based on various factors like location, market trends, and property details. It offers users a quick and convenient way to get an approximate idea of how much a home is worth without needing a formal appraisal. Zestimate has been a key component of Zillow's platform, helping users make informed decisions about buying, selling, or renting properties. The tool has faced some criticism over accuracy issues but remains a popular and widely used feature on the Zillow website.
  • Glassdoor salary disclosures are a feature on the Glassdoor platform where employees can voluntarily share their salary information anonymously. This data provides insights into salary ranges for specific job titles and companies, helping job seekers and employees make more informed decisions about compensation. Glassdoor's salary disclosures aim to promote pay transparency and empower individuals to negotiate fair wages based on industry standards and peer data. Rich Barton's emphasis on transparent data streams aligns with the concept of Glassdoor salary disclosures, highlighting the importance of openness and information sharing in the workplace.
  • Micromanagers are individuals who excessively focus on controlling and overseeing every detail of tasks, often lacking trust in their subordinates' abilities to make decisions. This management style can hinder productivity, limit autonomy, and create a stifling work environment. Micromanagers tend to prioritize minor details over overarching goals, leading to inefficiencies and potential setbacks in achieving larger objectives.
  • Magical realism is a literary genre that blends realistic settings with magical or supernatural elements, creating a unique narrative style. It aims to convey emotions through the integration of magical elements within everyday situations. This genre often explores the coexistence of the ordinary and the extraordinary, offering a different perspective on reality. Magical realism is commonly associated with Latin American literature and has been used by authors like Gabriel García Márquez and Isabel Allende.

Counterarguments

  • While Barton's mentorship under Brad Chase at Microsoft may have encouraged fearless innovation, it's important to recognize that not all successful entrepreneurs come from such nurturing environments, and some may thrive without mentorship.
  • The success of Expedia and Zillow could be attributed to a combination of factors, including market conditions and team efforts, not solely Barton's leadership and vision.
  • The idea of spinning off a company like Expedia publicly is a complex decision that involves more than just confidence; it requires careful market analysis, financial considerations, and timing.
  • The Zestimate tool, while innovative, has been criticized for inaccuracies in home valuations, which can mislead consumers and affect real estate markets.
  • Hiring "intrapreneurs" who can ideate boldly is valuable, but it's also important to balance this with a focus on execution and operational efficiency to ensure ideas are viable and sustainable.
  • Disrupting existing business models can lead to innovation, but it can also result in unintended consequences, such as job displacement or regulatory challenges.
  • Consumer-focused models are important, but they should also be balanced with considerations for privacy, data security, and the ethical use of data.
  • Taking vacations to identify emerging leaders is a unique approach, but it may not be applicable or effective in all organizational cultures or industries.
  • Barton's morning routine and emphasis on wellness are personal choices that work for him, but they may not be universally applicable or beneficial for everyone.
  • Family traditions and creative outlets are subjective and personal; what works for Barton may not resonate with or be possible for others due to different cultural, financial, or personal circumstances.
  • Barton's literary tastes are a matter of personal preference, and while he recommends certain authors, others may find value in different genres or authors that better align with their own tastes and interests.

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#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

Barton's Professional Background and Entrepreneurial Journey

Rich Barton has made a name for himself in the tech industry as a notable entrepreneur with a strong background in strategy and a penchant for innovative business ventures.

Barton's Early Career and Mentors

After graduating from college, Rich Barton became a strategy consultant with Alliance Consulting Group, a strategic offshoot of the Boston Consulting Group, but the role clashed with his passion for building and his entrepreneurial spirit. Despite considering his experience there to be a valuable business education, it made him realize that his satisfaction came from creating as a "client" rather than consulting. His desire to be a builder led him to leave consulting behind and join Microsoft.

At Microsoft, Barton found a mentor in Brad Chase, who, as Barton's first significant boss post-college, encouraged him to take bold risks and supported him even when ventures failed. Describing a pivotal pricing error with Microsoft's MS-DOS 5, Barton recalls expecting repercussions, only to be met with Brad's forward-looking question, "What's your next big idea?" This culture of fearless innovation at Microsoft, as well as his desire to delve into consumer software, set the stage for Barton's entrepreneurial ventures.

The Creation and Success of Expedia

In 1994, Barton co-founded Expedia within Microsoft, capitalizing on the early era of the internet to create a consumer-focused online travel service. Wielding his persistent vision and persuasion skills, he secured Bill Gates' backing and Microsoft's trust to acquire substantial funding. Barton succeeded in spinning Expedia off as a publicly traded company by 1999, employing it as a human resources experiment. He not only led the company as its CEO but also established it as one of the key players in creating a new intersection of travel services and technology.

Bill Gates promised him that if the project grew large enough, Microsoft would consider spinning it off. Barton recalls requiring from Steve Ballmer a sizable budget to build Expedia into a dominant brand through television campaigns, and despite initial skepticism, he developed the company to the point where it was spun off as a public entity.

Rich Barton's wife, Sarah, provided a personal impetus for his transition within Microsoft and the creation of Expedia. Her medical residency search, and the need to potentially move for it, coincided with the launch of Windows 95, which led to Barton's internal transfer. Ultimately, her matching to the University of Washington was the family's ticket to staying in Seattle, where Barton could continue his work on Expedia. This turning point in Barton's career became the catalyst for a brand that would revolutionize travel booking. He reflects on successful efforts to recruit top talent and carry the team through challenging conversations with their spouses, always projecting confidence with their IPO plans.

Following the sale of Expedia to IAC, Barton left an indelible mark on the industry and chose to spend time abroad with family, providing space for new leadership and the brand's continuous evoluti ...

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Barton's Professional Background and Entrepreneurial Journey

Additional Materials

Clarifications

  • Brad Chase was a significant figure at Microsoft who served as Rich Barton's mentor. He encouraged Barton to take bold risks and supported him, fostering a culture of fearless innovation. Chase's mentorship played a crucial role in Barton's entrepreneurial journey, shaping his approach to business and risk-taking. His forward-looking attitude and support were instrumental in Barton's development and success at Microsoft.
  • Rich Barton's wife's medical residency search coincided with the launch of Windows 95, prompting Barton's internal transfer within Microsoft. This transfer allowed Barton to stay in Seattle, where he could continue his work on Expedia. The timing of these events was crucial as it influenced Barton's career trajectory and the subsequent creation of Expedia.
  • Rich Barton left Expedia a ...

Counterarguments

  • While Barton's leadership was instrumental in the success of Expedia, it's important to acknowledge the contributions of the entire team and the favorable market conditions that also played a role in the company's growth.
  • The success of Expedia's IPO and subsequent growth could be seen as part of a larger trend of internet companies going public during the late 1990s, rather than solely the result of Barton's efforts.
  • The creation of Zillow's Zestimate feature, while innovative, has been criticized for inaccuracies in home valuations and the potential negative impact on homeowners and buyers' perceptions of market value.
  • Zillow's disruption of the real estate industry may not be viewed positively by all, especially traditional real estate professionals who may have experienced challenges adapting to the new technology-driven market.
  • The narrative of Barton's entrepreneurial journey emphasizes his boldness and innovative problem-solving, but it may overlook the risks and potential downsides of such an approach, including the possibility of failure or the impact on ...

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#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

Barton's Business Philosophies and Management Approach

Rich Barton shares his philosophies on cultivating innovation, creating data-driven businesses, and balancing leadership and delegation, promoting a culture that is consumer-focused and empowers employees.

Cultivating Innovation and Risk-Taking

Barton Supports Safeguarding "Intrapreneurs," Granting Them Freedom for Big Swings Without Punishing Failures

Barton discusses the importance of hiring and cultivating innovators, or "intrapreneurs," and creating an environment that allows them to take bold ideas without fear of failure, as long as it doesn't indicate incompetence. He underscores the need for "intrapreneurs" to be protected from the mainstream corporate culture that could reject their disruptive ideas.

Barton Drives Innovation By Empowering Employees, Distributing Decisions, and Disrupting Own Business Models

Barton believes in learning from various business models to innovate and improve his ventures. He encourages executives on his teams to engage with other businesses to import new experiences to their primary company. For instance, Barton shares how sitting on the board of Netflix provided him with insights that benefited his other companies.

Building Data-Driven, Consumer-Facing Businesses

Barton expresses a preference for consumer-driven business models that identify opportunities and aim to resolve inefficiencies in consumer interactions. He was inspired by Google's AdWords auction-based market and believes in sharing a constant stream of data to keep consumer interest. He credits Zillow's marketing chief, Amy, for setting up a data distribution infrastructure, with the Zestimate feature serving as a key part of Zillow's provocation marketing strategy.

Emphasizing this approach, Barton shares examples from other ventures, such as Glassdoor's salary disclosure "give to get" strategy and Avvo's attorney rating system, both of which were intentionally provocative to spark attention and discussion.

Balancing Leadership and Delegation

Barton highlights the importance of work-life balance, suggesting that leaders should take real vacations to allow team members to step up, identi ...

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Barton's Business Philosophies and Management Approach

Additional Materials

Counterarguments

  • While safeguarding "intrapreneurs" can foster innovation, it may also lead to a lack of accountability if not managed properly, potentially wasting resources on unviable projects.
  • Empowering employees and distributing decisions can be beneficial, but without clear guidance and oversight, it can result in a lack of direction and coherence in the company's strategy.
  • Disrupting one's own business models is a bold move that can lead to growth, but it also carries the risk of alienating existing customers who are accustomed to the current model.
  • Learning from various business models is insightful, but it can also lead to a patchwork approach that may not integrate well with the company's core competencies or culture.
  • Consumer-driven business models are important, but focusing too heavily on consumer trends can sometimes lead to short-termism and neglect of long-term strategic planning or innovation.
  • Work-life balance is crucial, but leaders taking real vacations could lead to gaps in leadership if the team is ...

Actionables

  • You can foster a culture of innovation by starting a 'failure resume' where you document your professional risks and the lessons learned from each. This personal document serves as a reminder that taking calculated risks is a part of growth, and it can help you reflect on your experiences without fear of judgment. For example, if you pitched a new project idea that wasn't adopted, write down what you learned about the pitching process and how you can improve next time.
  • Encourage work-life balance by setting an 'out-of-office' challenge with your colleagues or friends where you collectively agree to disconnect from work during vacations or weekends. Track your progress and share experiences to hold each other accountable. For instance, you might agree not to check work emails after a certain hour or during a weekend getaway, sharing snapshots of your leisure activities as a fun way to reinforce the commitment.
  • Develop trust in your professional relationships by initiating a 'role s ...

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#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

Barton's Personal Life, Health, and Interests

Rich Barton, an admirable figure in the business world, leads a life full of diverse interests, and prioritizes his health and family amidst his hectic professional schedule. His routine, wellness practices, and personal pursuits paint a picture of a life well balanced between discipline, creativity, and family values.

Barton's Morning Routine and Nutrition

Barton's day begins at the quiet hour of 6:30 AM, earlier than his wife, allowing him the peace to focus on personal tasks. Nutritionally, he starts the day with a nutrient-packed smoothie consisting of oat milk, ice, an apple or banana, pistachios, macadamias, blueberries, Pocari Sweat electrolyte, and a prune. This healthy breakfast accompanies his morning routine of checking emails and keeping up with the news on a muted CNBC broadcast, using his iPad.

While settling into his morning, Barton employs the Hyperice Venom on his back, an essential part of his preparation for his forthcoming physical therapy sessions and exercise, ensuring his body is warmed up and poised for activity.

Barton's Routine: News, Email, and Physical Therapy

For about two hours after waking up, Barton engrosses himself in catching up on the news and inspecting his email inbox. This time is also dedicated to physical preparedness, where he stresses the need for regular bowel movements, especially as one ages. Barton's morning reflects a structured approach to starting his day, balancing work and wellness even before the family home wakes up.

Barton's Fitness and Wellness Regimen

An advocate for balanced exercise, Barton unfolds his fitness routine as a fusion of cardiovascular workouts, strength training, and recreational activities like snowboarding and tennis. Past experiences like hot yoga, marathons, and a 'weekend warrior' lifestyle led to this well-rounded approach. Cognizant of the changes age brings, such as reduced bone density and muscle mass, Barton has ramped up his physical pursuits to enhance his longevity and sustain his ability to enjoy his favorite activities. This reevaluation of priorities emphasizes Barton's commitment to health as a core pillar supporting his active lifestyle.

Barton's Family and Personal Interests

Family traditions and nurturing creative outlets stand firm in Barton's personal life. He speaks fondly of shared experiences like rafting the Grand Canyon, a time for reconnection and engagement in human interactions clear from technology. These moments fortify bonds and create memories that they treasure as a family.

His foray into creative realms such as painting on his iPad and writing showcases his pursuit of life beyond business. Barton also reflects on roles within his family, such as being a 'short order breakfast chef,' especially during a period when his younger son needed a nutritious start to his day. Memories like these have materialized into cherished collections like The Bre ...

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Barton's Personal Life, Health, and Interests

Additional Materials

Actionables

  • You can create a morning ritual that combines physical and mental preparation for the day ahead. Start by setting a consistent wake-up time and follow it with a series of activities that promote well-being, such as meditation, light stretching, or reading something inspirational. This routine can help you approach the day with a clear mind and a calm body, much like preparing for a workout or an important meeting.
  • Develop a personal symbol that represents your values and goals. Take some time to reflect on what is most important to you and design a simple logo or symbol that captures these elements. You could then use this symbol as a screensaver, print it on personal stationery, or even incorporate it into your home decor as a constant reminder of your core values and as a conversation starter with guests.
  • Integrate creativity into your weekly schedule to foster a balanced life. Choose ...

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#806: How Rich Barton Built Expedia and Zillow from $0 to $35B — Audacious Goals, Provocation Marketing, Scrabble for Naming, and Powerful Daily Rituals

Barton's Reading Recommendations and Literary Preferences

Rich Barton, best known for his operational and problem-solving skills in the business realm, divulges his love for fiction and storytelling, his preference for character-driven magical realism, and offers his personal reading recommendations.

Barton's Love of Fiction and Storytelling

Barton Prefers Character-Driven Magical Realism Fiction

Barton expresses a profound appreciation for the escapism that beautiful, character-driven magical realism fiction offers. He ponders over the genre as an excellent departure from his business work, describing the immersion into a fiction novel as a fantastic release for his "monkey brain."

Barton Enjoys Authors Mark Helprin, Haruki Murakami, and Neal Stephenson for Their Exploration of Deeper Themes

He lists renowned authors such as Mark Helprin, Haruki Murakami, and Neal Stephenson as his favorites, praising their ability to intertwine deeper themes within their narrative worlds.

Barton's Recommendations for Specific Books and Authors

Barton Recommends "Oceans and Stars" By Helprin and Works of Chiang

Barton is known to gift and recommend "The Oceans and the Stars" by Mark Helprin, an author whose talent for crafting epic tales that traverse war, romance, and exploration with magical elements he admires greatly. He also indicates a readiness to delve into the works of Ted Chiang, aligning with his own literary tastes, despite only recently becoming familiar with Chiang through a mention by Ferriss.

In addition, Barton reveals his experience with Helprin's most recent book about an admiral on an enigmatic mission aboard a new ship, which he speaks of in high regard. He also recalls that "A Winter's Tale" by Helprin, set in early 20th-century New York, is a beautiful story worthy of a revisit.

Barton Praises Amor Towles' Novels, Particu ...

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Barton's Reading Recommendations and Literary Preferences

Additional Materials

Counterarguments

  • While Barton prefers character-driven magical realism, some readers might find this genre less relatable or too abstract compared to more realistic fiction, which can offer its own form of deep engagement and escapism.
  • Appreciating authors for intertwining deeper themes is subjective; other readers might prioritize different aspects such as plot pacing, historical accuracy, or straightforward storytelling.
  • Recommending specific books like "The Oceans and the Stars" and works of Ted Chiang may not cater to everyone's tastes, as literary preferences can vary widely among readers.
  • Praising Mark Helprin's epic tales might not resonate with readers who prefer more concise narratives or those who are interested in different genres such as science fiction, non-fiction, or contemporary literature.
  • While Barton admires Amor Towles' "The Lincoln Highway" for its storytelling and structure, other readers might critique it for reasons such as pacing, character development, or simply not connecting ...

Actionables

  • Explore new genres in your reading list by adding a magical realism book each month to diversify your literary experiences and escape from daily routines. Start with lesser-known authors in the genre to broaden your perspective beyond the popular recommendations, and after finishing each book, jot down the themes and elements that resonated with you and why they provided an escape.
  • Write a short story that combines elements from your profession or daily life with magical realism to cultivate your storytelling skills and explore the nuances of blending reality with fantasy. This exercise can help you understand the craft of authors you admire and develop your own narrative voice without the pressure of a larger project.
  • Create a book club fo ...

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