How I Built This with Guy Raz - Viator: Rod Cuthbert

Episode Date: October 14, 2024

Clicking a button to book vacation tours might feel normal today, but Rod Cuthbert helped create that future through his company, Viator. Founded in the early days of the internet boom, Viator emerged almost by accident from a failed partnership with another company. As online booking grew, Rod correctly predicted that travel agents would become outmoded, and began working with local providers to help travelers book anything from skip-the-line tours of the Sistine Chapel to cooking lessons in a Thai kitchen. Viator was purchased in 2014 by Tripadvisor for $200 million–and remains a top virtual destination for anyone headed to a real one.This episode was produced by Devan Schwartz with music composed by Ramtin Arablouei. This episode was edited by Neva Grant, with research by Olivia Rockeman. Our audio engineers were Robert Rodriguez and Gilly Moon.You can follow HIBT on Twitter & Instagram and sign up for Guy's free newsletter at guyraz.com.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. slash host. In a surreal set of circumstances, a couple of weeks after we took control of the business, somebody broke into it overnight. and stole the servers that ran their operations.

So we had bought this business, we'd paid millions of dollars for it. It was doing tremendously well. We were very excited. It literally disappeared overnight. It was just gone. There was nothing there. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I'm Guy Raz, and on the show today, how Rod Cuthbert made it easier for tourists to book day trips, cooking lessons, and hot air balloon rides by creating Viator, a multi-million dollar travel brand. Over the summer, I took my family to Italy. One morning, we went to a website where you can book experiences, and we signed up for a pasta-making class at someone's house. A few hours later, we drove up an old, dusty road outside a tuesday road outside a time. Tuscan village, only to be greeted by a menacing-looking dude covered literally from the neck down in tattoos. One of the tattoos was of a Glock 17 dripping with blood. Another one read Thug Life. Needless to say, I was not excited. In fact, I looked to my wife wondering, how in the hell are we going to get out of here? But as they say, never judge a book by its cover. Because four hours later, when we finished making fresh pasta and amazing bolognaise sauce and a delicious tiramisu,

me and chef Dante were hugging our goodbyes and exchanging numbers and promising to visit each other again. It was truly one of the highlights of our visit to Italy. And it happened easily and seamlessly because of modern technology. Back when I visited Italy as a student in the 1990s, those things only happened if you were lucky. Now, there are dozens, maybe hundreds of different companies that offer up these experiences in places around the world. It could be a bicycle tour through the Dutch countryside, a helicopter ride over Las Vegas, or a flamenco show at someone's house in southern Spain. And one of the biggest, and really the first company to offer these things up was Viator.

Now, today, Viator is part of the TripAdvisor family. They acquired it in 2014. And it's estimated that Viator now accounts for up to 40% of TripAdvisor's revenue. So, to say the least, it's a pretty successful brand. But it wasn't always that way. In fact, it took many, many years for Viator to actually make sense to consumers. It was built by a team out of Australia. led by Rod Cuthbert back in the late 1990s.

Now, before that time, it was really hard to pre-book tours and experiences and even get tickets until you actually arrived at your destination. And so Viator, leaping on the nascent World Wide Web, saw an opportunity to change that. But by 2005, Viator was running into serious cash flow problems and almost went under. Rod Cuthbert spent months trying to raise money in some of the time. Telecon Valley, but a chance meeting with one investor would prove to be a lifeline, which we will get to. Now, before Rod started working on what would become Viator, he was a web designer for travel agencies in Australia. He actually grew up in Tasmania, the island off the southern coast of the country, and for as long as he could remember, he knew he wasn't going to stay.

And more importantly, he knew he wanted to see the world. It's probably true to say that some people paint the story of their life on a really small canvas. They're happy to stay close to home. And others just need a bigger canvas. They want to explore. And I always wanted to explore. So it just made sense to me to get on a plane and leave at the earliest possible opportunity. I think you were around 17 when you really basically packed up and left.

And that was essentially the last time, I think it was 1975, that was the last time that you lived in Tasmania. Correct. I've always had brothers and my mom until recently and so many cousins and friends. So many reasons to go back. But I haven't lived there since 75. I guess you were a high school dropout. I don't mean this is in a disparaging way, like to tar you with this brush. But you dropped out of high school, right? I did. We were coming up to the end of year exams in year 12, what you would call the senior year of high school, I guess. And my dad died towards the end of the year. And I sort of, I have to admit, in looking back, I kind of used that as an excuse to just not finish all the exams. I just didn't see that they were going to be important to whatever it was I was going to do next. I wasn't going to go to university. I'd made that decision. So I didn't complete my year 12 exams.

And after Christmas, I packed a bag and got on a plane and there I was in Melbourne. So what did you do? I mean, when you get there, you're 17. I mean, did you go wait tables? Like, how did you earn a living? Tables comes into it. I didn't wait tables. I coached table tennis.

So you were like a serious table tennis player? I was a serious table tennis player. I was in the Tasmanian junior team, and I had aspirations to do more. And those aspirations lasted about three weeks. As I spent more and more time competing with the locals in Melbourne, I realized I was never going to make the cut. They were just way better. They were just, well, they went way better. Yeah, they were.

They were way better. Well, I've seen a really good thing. I mean, like, you've got to put that spin on it, and you've got to put that spin on it, and you've got to like, you know, twist the paddle. And I mean, it's, it's no joke. I mean, if I played you, Guy, we could play all day. You may not win a point. Yeah, I know. That's just the reality. And that, that's what would happen. You come to my party. We'd all be playing ping pong and you'd ruin the party because you'd crush everybody. I wouldn't ruin your party, guy. I'd play left-handed. How's that? Okay. Okay. All right. Very generous of you. Okay. But basically, I guess the ping-pong thing

fizzles out and then the next thing you do is apply for a job doing, I guess, something in computers. How did you get into that? So I wrote in application of a job that I saw in the paper for a computer operations role. And my qualification was that my dad did this job and I occasionally went in there. I got an interview. I got the job and there I was. computer operator. In the time of mainframes, there was no PCs. At this time, there wasn't even mini computers. It was just like huge rooms with raised floors and lots of air conditioning

and disc drives and line printers. It's a very different world. Yeah. And from what I understand, I mean, this kind of launches the next kind of 10 years of your life working, I think primarily eventually in sales, right? And, you know, because this is the beginnings of the what would become the sort of the PC boom, the personal computer boom. And you would go on to work for DEC Digital Equipment Corporation, which was a huge PC maker back in the day. And I think you ended up staying there for several years, right? As a sales rep? Yeah. In 84, I think 83, Deck released their personal computer. And my job at the time was to find dealers in Melbourne to sell their personal computer. It's called the Rainbow. IBM and Apple had released their machines and

the market was a buzz with this new thing, PCs. And I just couldn't find enough dealers to sell this thing. They're just, you know, we were not going to be able to get this product to market. So I approached a couple of my buddies at the office at deck and said, you know, we should do this ourselves. You know, let's find some money, beg, borrow or steal, go to the bank, let's open a location of our own. So that's what we did. We started a business. Selling PCs, like a shop. Yeah, selling PCs. We quickly got an Apple dealership as well and an IBM dealership. And Guy, honestly, all we had to do was open the door, turn on the lights, and open the phone. Because in those day. It was a shop open to the public. It was just a, anybody could go in.

Yep, anybody could go in. And we did sell to some home users, but typically they were architects or engineers or schools or commercial operations, accountancy firms, etc., etc. Because PCs were not cheap in 1983. This was a significant investment. Yeah, anywhere between $5,000 and $10,000 for sort of basic setup. And you haven't got a printer yet, so you need to spend some more money. people were excited. Yeah. You know, whilst a lot of people were ignoring it, there were many people who were just so excited.

They saw the potential. All right. So you're doing this for a while. And I guess you eventually, after a few years, you guys sell the business. Yeah. And then after doing a few other jobs and computers, you wind up taking a job with a company called On Australia. And this is important because this will eventually lead you to what you would go want to create. But this was from what I understand it, was like the Australian arm of Microsoft's

MSN network, right? Yeah. So at the time that that sort of web explosion was happening, Microsoft decided to launch this network in Australia. For various reasons, they called it on Australia. I got a job there, and I was there for a few months, and I was probably pretty bad at it. Maybe. Maybe. I didn't like my boss. I don't know. Maybe I was out of my depth, which is, that's probably the right reason. But in any event, they decided to fire me. It happened that the day before, a guy had come in, his name was Peter Fox and he'd come in to talk about things that he wanted to do. He was interviewed for a job, or he was? No, he was a content creator. Okay. He had a

background in television and production. Yep. And he had a bunch of ideas, none of them very well formed, but I liked him. And I thought, oh, we could do something with this guy. Well, it turned out we didn't do anything with him because I got fired the following day. So I'm sitting at home thinking what am I going to do, and I thought, you know, I'm going to go see that guy that I met and talk to him about doing things, but not on the Microsoft network.

Let's do him on the web. And tell me what was his idea. that you heard that was so interesting to you? To be honest, all these ideas were pretty dumb at the time. But he was a really good guy. I just thought he and I could work together and we would find a niche. It just seemed so obvious that the web was going to be important. And then what do you do?

Do you call him and say, hey, Peter, you remember I met you yesterday at on Australia? I just got fired. Yeah. So he had this background in television. production, but he didn't understand software. He didn't understand, you know, tech. So I went in and saw him, we had coffee, and we agreed pretty much on the spot to, we each put some money in, I think $30,000 each on Australia had given me a terrific payout. They were generous. They gave me six month salary when they fired me. So I had the capacity to take some of that and put it into

this new venture, we had no idea what we would do just that we would build websites. Okay, so, so basically you were going to make websites for companies. So you were going to be like a web served designer for other companies. That was the idea. Exactly. And we at that time were happy to build a good small business. That's how we started. All right.

So you guys call this Fox Interactive after Peter Fox, your partner? Yeah, it seemed like a logical name. And because it was a service business building websites, it didn't seem really important that we have a snazzy name that people remember. It's just like, okay, let's go with that. Okay, so you guys start this business. And from what I've read, you basically developed like a specialty pretty early on where you would build websites for travel companies. And I think this was around like 1995. And I guess a lot of companies started moving away from printed brochures.

right? Yes, it was a major cost to them producing these physical brochures. So the idea of moving their brochure production onto the web where they had complete instantaneous control, if they wanted to change price, if, for example, one of the hotels that they were using in Hawaii backed out or for some reason they couldn't put their customers in there anymore, they wanted to take that off, they could do it instantaneously in the brochure, it's there till next year. Yeah. So it was very attractive to travel companies to move on to the web.

Right. So they would show us their brochure and they would leave it in our hands. And at that time, pretty much no matter what we did, you know, it looked better than what they had before, which was nothing. Right. And in the back of our minds, we saw that bigger things were going to happen in travel. You know, transactions were going to start happening. You know, travel really lends it.

to sale on the web because there are no physical goods. There's lots of product description and images required. It's just the perfect thing to sell online. So we had that in the back of our minds. We just didn't know how we would get there. So this is what you're doing. This is what Fox Interactive does. And I guess around 1997, you made a hire that would turn out to be fortuitous,

a woman named Jill Hazel. And she had worked for Sabre, which is a huge, huge, it was, I think it still is, a big travel technology company, because I remember, I used to work for a company and all the internal travel was done through the Sabre interface that we had to use. You couldn't go to Expedia or any. He had to use Sabre. And you guys hired somebody from Sabre to come work for you. Was this person based in the U.S. or in Australia? In Australia, Sabre had a very big operation in Australia. Half of all the travel agents, I think there were 4,000. agency locations in Australia at the time. So probably 2,000 of them used Sabre, which meant that if there were four actual agents in each agency, there was probably 8,000 agents every day booking flights and hotels, you know, dozens of flights and hotels every day. And every booking, Sable were picking up, you know, five or ten dollars in fees. SABO was an amazing business.

So you get, you hire this woman, Jill. And I guess, and she comes to work with you and I guess pretty soon after she arrives she says hey I hear Sabra is looking for a contractor to work on a project for them tell me what you found out

yeah Sabre were not you know they were not silly they knew that the web was going to really impact their business so they couldn't move airline or hotel booking over to the web quickly, but they landed upon the idea of what they called ground content. In other words, sightseeing, tours, attractions, the Eiffel Tower, tickets, that sort of thing.

They knew that there was a lot of that out there and there was no way for travel agents to easily book it. So they wanted somebody to build a web solution that they could then market to their travel agents and that would be their first step into the agency locations. And it was a good idea. So tell me what you and Peter started to think. I mean, did you think, hey, let's pitch them on working with them? Yeah, we, Jill made contact with them and said, look, we've got a lot of experience at Fox Interactive on building websites for travel companies. We know exactly what is required. She really sold us.

There was no particular reason why Sabre, based in Dallas, Texas, should contract with a company in Sydney, Australia. There were plenty of people in the Northern Hemisphere that could do this, but they sent some of their people down to meet with us to talk about the contract. And lo and behold, we won it. And, you know, the winning of it was, it was kind of easy. in a way. At the time, I lived at Bondi Beach. I don't know if you've been to Sydney, but Bondi Beach is sort of iconic. It's very famous. Yeah. And it was early in the year, and it was one of those after work, we went out to dinner and dinner finished at about 8.30. And the sun sets like nine or something like that. So the sun was very low in the sky. This doesn't sound like a business

story, does it? But it is. We went for a walk from one end of Bondi Beach to the other, the two women that had come out from Sabre. And they took their shoes off and were just walking in the shallows. It was really beautiful. It was clear to me that they developed an emotional attachment to Sydney. They really loved it. It's a world away from Dallas. Great. And we got the contract. And whether Whether they gave us the contract because they really wanted to come back to Sydney because they really loved it or because they thought we were the best, I don't know. So the idea, what they wanted you to build, it was sort of a way to help travelers pre-book tours when they go on vacation, more or less? A way for travel agents who have got, so, you know, Guy Raz goes into an agency and says, hey, we're going to.

to go to Paris, what can we do? And they say, well, let's book your flight and let's book your hotel. And now, you know what? You really should see the Eiffel Tower. There's a terrific restaurant up on top. Let's book you a ticket for that. And Jules Verne at the top. I want to go there, Michelin 2 star. You may also want to go and see the Moulon Rouge, the cabaret. Yeah. I don't know if I don't know about that. I don't know. Okay. All right. Sure. Okay. All right. Let's get those booked. So that's what they wanted. By the way, I did go to the Moulin Rouge once. Somebody took me there as a one as a student, a friend's parent. This is in the mid-90s. And not worth it. So I'm just saying, just not worth it. Don't waste your time. All right, keep going. That is a very personal choice, guy.

Keep going. Just wanted to do a public service announcement for our listeners. exactly. So basically a travel agent, this is crazy, because they were so critical to travel at the time, and not no shade to travel agents, they're still critical, but you know, you don't need them as much. But then, really, they were just booking your flights and your hotels. Yeah, they weren't able to book the on-ground activities that you often would want to do when you get there. But there was also another more fundamental reason why they weren't doing it. And that is, that the operators, say the Moulon Rouge or the Eiffel Tower, etc. You know, if they get a single booking from a travel agent, is he ever going to pay them? Right. The client has paid the agent. Has the agent paid the operator?

That was the key question. The operators would have to follow up and follow up. And it was difficult in those days for an operator in Paris, for example, or Rome or wherever to follow up with an agent in, you know, Sydney or. San Francisco or wherever. I'm saying, where's my money? Exactly. The difficulty was just going to be building a system that was easy for travel agents to navigate and find what they wanted, get the booking to the operator and get everybody paid and happy. Okay, so you guys are building this thing and you actually finish the project.

And from what I understand, you and Peter, you fly to Dallas. This is where Sabre is based to present. this completed project to show them the project. This is in 1997. You arrive to Sabre headquarters. What happens? Sabre was a large corporation. And like many large corporations, occasionally they do layoffs. The CFO says we're top heavy or whatever. We pulled into the car park and we immediately realized that the something odd happening. There are security guards in the lobby of the building, and there are people standing around the lobby with cardboard boxes, and they're crying. And it took us a few minutes. Nobody wanted to talk to us, really. It was a very emotional time. I mean, it was traumatic for the people involved. It was shocking for us. You realize pretty soon after you get there that all these

people are being let go. Did you see people walking out with cardboard boxes, you know, the contents of their desks? Yeah, that's what was happening. Multiple hundreds of people were let go in this particular layoff. It turned out that the people that we were dealing with, they weren't let go, but their division or their group was disbanded. They had simply dropped the idea of this project. It wasn't going to go anywhere. Wait, so wait, hold on. How did you find out, you're coming there to present the project that they hired you to do. And how did you find out that they don't want it anymore? We knew the names of various executives up the line and we just kept calling the switchboard until we got through to one of them who told us, well, have you heard of collateral damage? That project of yours, that's a project of yours. collateral damage. We don't want it. We don't need it. You are welcome to do whatever you wish

with it. When we come back in just a moment, how collateral damage turns into a $200 million company. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1997, and something slightly surreal has just happened to Rod Cuthbert. The travel company that hired him to help launch an online booking service has just said, nope, forget it. We're in the middle of layoffs, and we can't do this project anymore. By the way, were they going to pay you for it? Yeah, they had paid.

Do you remember how much they paid you? It was around 100 grand. All right, so they're like, and we're going to pay you for it. We're dropping it. Oh, and by the way, if you guys want it, you guys can have it. It's yours. You can keep it. You can do whatever we want with it.

It was kind of an unbelievable situation to be in. We were developers. We weren't operators. Yeah. And they said to us, if you want, you can go out and do this thing yourself. It's entirely up to you. So you basically had developed this technology to enable travel agents to book experiences for tourists. And now it was yours because you had done it on.

On behalf of Saber, they own the IP. And you got it for free. You didn't have to pay for it. Correct. I mean, a gift that falls into your lap. But I'm curious. I mean, initially, were you, was that your response? Were you guys like, oh, my God, this is amazing?

Or were you more like, huh, this isn't good? Because now this relationship's over with Sabre. Although the idea of selling tours and activities on the web wasn't ours, it was absolutely Saber's idea. We very quickly warmed to it. We could tell that there was a terrific opportunity in this business. The one difference was we didn't like the idea of selling the travel agents because we thought that travel agents were going to disappear. And on that point, we were absolutely right.

Yeah. So you decide that you guys wanted to make this a standalone website, basically, because it wasn't going to be a back-end, a back-end product for some. else. This was going to be the product. Yeah. We decided we'd build a consumer website. So we conceived of an online travel agency that was very focused just on tours, activities, sightseeing, experiences. All right. And you named it? Well, we didn't have a name. So it took us all of about 48 hours, I think, to work through that. But it was important that we have a name because Fox Interactive media. That wasn't going to work.

That wasn't going to work, yeah. I'm not sure why we hit upon the idea of looking for the name of a saint, but we did. We thought it would be good to explore the name of all the Catholic saints. That's a strange thing to admit. Who's the patron saint of travel again? Is it Christopher? I think it's in Christopher. Yeah, Christopher, right?

You could call it St. Christopher. Yeah, that doesn't ring well. We went to the State Library of New South Wales, which was near our office. And they had a book called The Book of Saints, published in 1921. And according to the lady behind the counter, nobody had ever looked in it. It had never been checked out. It was dusty. We opened it up.

We looked through the list. And there's Viator, which is the Latin word for traveller. and we knew Aviator. Aviator is an air traveler. We quickly check the domain name. The domain is available for like 25 bucks. Viator. Viatur. Wow.

Probably Latin speakers would have said we are tour, but Viator sort of, you know, it's easy off the tongue. We thought people would remember it. So we went for it. So, all right, so this becomes the name. But did you have enough capital to actually launch a business and, you know, to actually have the infrastructure behind this website to turn it into a business? We had just prior to this occurring, we had raised a couple of million dollars from a Sydney-based venture capital firm who agreed with us that there was a lot of potential in the web. the partner, John Murray, like us, wasn't sure exactly what we were going to do, but he was

confident that there was enough depth in this marketplace that something was going to pop. So he took a risk with a couple of million dollars. Got it. Okay. So you've got this brand. And tell me how you start. I mean, essentially, I think you launched this in early 98 or maybe late 97 to, To any fanfare, I mean, I remember Expedia, but I don't remember Viator entering the world.

So how did you get attention for it initially? Well, the travel industry has conferences. And there was a conference called Focus Right, that had popped up to focus on the online travel space. And we went along, and Rich Barton, who I know you've spoken to. Yep. creator of Expedia and Zillow? Yeah. So Rich Barton gave a talk about where they were going to go with the Expedia product,

what that was going to look like when it was fully formed. And one of the things he said was, we don't just want to be able to sell you a flight to Fiji, for instance, and a hotel in Fiji. We want to sell you surfing lessons in Fiji as well. We want to sell you the Eiffel Tower ticket. He was saying this in 1998. Yeah, and I approached him after his speech, and I said, what are your plans for doing that?

Because, you know, we can maybe help you. And, you know, we didn't have surfing lessons in Fiji. I can tell you, but I was confident we could get them. Yeah. And he said, okay, we'll give you guys a chance. So our first bookings actually came not from viator.com, but through a white label that we did with Expedia. Wow. And that quickly grew to many other white label sites who sort of underwrote the business with the early bookings whilst we were figuring out how to attract customers directly to our own sites.

So people could go to those sites, Expedia, Travelocity, et cetera, but really you guys, Viator was powering the bookings. Yeah, we ended up with hundreds and hundreds of affiliate partners to, would have a link on their site that said, you know, book tours and activities with us. And if you clicked on that link, you'd go over to a white label site, which had their logo, but it was really the Vietor site. But they drove the traffic to it. I want to just digress for a moment and ask about Australia as a place from which to launch this. And the reason why I raise this is because Australia is a small country. I think the population is smaller than California's.

But it has a massive penetration. Like there's a huge, like travel is a huge part of the culture, right? Like a majority of Australians have passports, for example, compared to the to Americans who I think still less fewer than 50%. Australians travel. They go, they are, they spend a lot of money on travel. It is, it is part of the Australian psyche to travel. It was terrible being in, in lockdown during COVID for us. There was a lot of revenge travel afterwards.

But yes, international travel is sort of core to the Australian being. And it was easy for us to find people to join our company who had worked for companies like Qantas or Lonely Planet, for example. You know, international brands are well known. And at the time, I mean, essentially, you know, you were sort of like Airbnb before Airbnb, right? You essentially, you were a platform for people to offer experiences, I guess. Yeah, when we started, you know, there were group tours and double-decker hop-on, hop-off tours and museum tours. But there was no, for instance, chocolate lover walking tour of Paris. Cooking class, croissant making in someone's apartment.

Right, or a bike tour of Gaudi architecture in Barcelona or a, or a, you know, Sunday morning Harlem gospel walking tour. These things all emerged over the following years, and they emerged because, to a large extent, they knew, people knew that they could put that product on Viator and we would bring it to the marketplace. And you guys would get a commission, what, 15, 20%, so like 25%. Yeah, 25% was pretty normal.

an average per person price on, you know, a walking tour or a cooking class or whatever it was might be 100 bucks and we would buy that from the supplier for 75 bucks. All right. So you really start kind of in the background, white label. How was, I mean, how was the growth of the business? Because from what I've read, it was relatively slow. And in the first, let's say, five, to seven years, I mean, I think you got, I read that by 2005, you got around about $30 million in gross bookings, which obviously isn't your profit. But you were having financial problems, right? What was going on? Tell me what was going on. Well, in a venture-backed business, you're always hiring for the next growth phase.

So you're not focused on profitability. You're focused on how many customers can we attract because of the business. is going to be a lifetime value associated with that customer. And you, in the back of your mind, you know that you're likely to have to go back to the marketplace for another round of funding. It's a tightrope that you walk and you can, it's easy to make mistakes. You know, projects that don't generate revenue quite quickly enough, you know, can mess your cash flow up.

And meantime, I mean, you have. I had originally done sort of this white label thing for Expedia, but from what I understand, Expedia pretty soon after just kind of started their own thing, similar offering, right? Yeah, and that didn't bother us. That's sort of standard. We knew that from the start, that they would sort of pick the eyes out of what works. So they see, for example, that, you know, a particular tour in Rome is really selling well, so they send one of their people in and they contract that directly.

And that was fine because we were constantly by this stage introducing new things. And we also had new white label partners who were picking up that volume plus our own direct business. So they played their role. Yeah. Tell me about September 11th because September 11th was both the biggest disruption to the travel industry up until COVID, of course, 20 years later. But it was also what I didn't realize, it completely transformed. formed the industry in ways that would benefit businesses like yours. What happened?

Well, I was in the U.S. at the time, so I have a direct personal experience of what happened. I was in New Orleans with a colleague from the company, 9-11 happens. All flights in the U.S. all travel is stopped. there are no planes in the air. Everybody who has a booking is on the phone to the airline, to the hotel, to the car rental company. Clearly their phone systems melt down. It's just impossible to get through to anybody.

They can't staff up quickly enough. They can't add enough phone lines. It's just complete mayhem. Some of those companies had invested and had sort of fledgling websites. and were able to direct their customers to go to the websites, to find information, connect with them, change their booking, whatever it was. So people who hadn't previously attempted to do anything related to travel on the internet found themselves going to American Airlines or Delta or Marriott or Hilton or whatever.

And they liked it. They like what they found. They like not having to be on hold and listen to that music for 40 minutes. My God, yeah. And certainly the companies realized this is scalable. You know, we can handle millions of interactions with customers in an hour, whereas on the phone lines, we can handle, you know, at the most thousands of internet interactions in an hour. So for the online travel industry, there was this strange perverse effect of 9-11,

which is that it literally put a rocket under the industry. Okay, so but still, the idea of booking experience, so I mean, people start to migrate to the web, and I mean, it was slow. It was still like this was a kind of a niche crowd still at this point. Indeed it was. We were definitely early. I mean, I'm glad that we started the company

and were doing what we did when we did. Right. But there were some underlying things that were happening at a societal level that helped us. And one of those things was that, if you think back, you can probably remember this, that people started talking about the importance of experiences over material things.

You know, it became less of he who dies with the most toys, wins, and more of, you know, what have you done? You know, when you went to Barcelona, what did you do there? Did you come back with a T-shirt and a snow globe? Or did you do a bike tour of Gaudi architecture? Did you see the Sagrada Familiar? Did you learn anything? And we played a fairly key role in this,

which was changing the nature of the way sightseeing tours operated. We've talked about the fact that it used to be, you know, a bus with 30 or 40 people and a woman, a guide anyway, with an umbrella flag on the top and you would follow them. And it just was the case that a lot of people looked down their nose at that and said, I just don't want to do that. That's not me. I'm not going to be part of a group of 40 people. So we had a product manager. Her name was Dominique Xman, a young Australian. woman who was managing our key European locations.

And she was in Rome talking to one of the tour operators we worked with there about the Vatican Museum, which is one of the most, perhaps the most important tourist attraction in Rome. And I don't know if you've ever been there, but you can stand for four or five hours in a line Yes, you can. Waiting to get in. Yes, you can. And, you know, Dominique said to herself, you know, these guys, a lot of these guys, you know, they come here on an easy jet flight or Orion Air flight, they're here for two or three days. And they're spending four hours in the Italian sun waiting to get in there.

That doesn't make any sense. So with the tour operator, they approached the Vatican, the church, and said, what if we did this thing that we'll call skip the line? What if we charge these guys three times as much, but you let them straight in? And the Vatican, they're commercial, the church. They saw the value in three times the revenue per person. And they were quick to let us experiment. So we came up with this idea of skip the line tours. Yeah, smaller groups with a guide, instant access.

And this started with the Vatican Museum and the Sistine Chapel? Yeah, it did. So Dom said, okay, this works. Let's go to the Coliseum, see if they'll buy it. Wow. They were into it straight away. And Eiffel Tower, you know, everywhere, major attractions. Yeah.

And it's amazing, right? It's a great innovation to skip the line idea. Exactly. We actually took it further. I think it was the Vatican's idea. you know, we've got the guards in here 24 hours. If you'd like to bring groups in outside of normal hours, of course, we'll need to charge more.

So you get these sort of pricing tiers, which is, you know, where it's just your group. Like literally you are the only eight people in the Sistine Chapel. Well, you might pay $600 for that. Yeah. But believe me, there are many, many people that will pay it. Yeah, and listen, hey, you're right. So did that kind of move the needle for you? Did you start to see, you know, an explosion of bookings at that point or still not quite yet? It definitely moved the needle. It wasn't an explosion, but our other product managers saw what was happening. And so we took the idea of small group tours, skip the line tours, basically premium touring.

and we propagated that around the world. And what that meant was, the most important thing was, the people who had previously looked down their nose at the concept of a sightseeing tour. We're now saying, hold on, I could do this. And it's not sightseeing like my grandmother knew sightseeing. It's sort of modern. It's cool.

It's fun. Okay. You've got an innovative product. innovative offerings, but you're really too early still. And I'm not blaming you. I'm just blaming the forces of the world, right? Like, because from what I read, even though you did about 100,000 bookings in 2005, you guys were close to the end. You were like, well, I can't think of the cliche for some reason. My brain isn't working. But you were near death from what I gather in 2005. Is that, is that right? Well, that's an emotional term guy near death.

But I mean, you were running out of cash. You were running out of money. No, it's a very accurate term, actually. What, what startup companies tend to say is you've got a short runway. You had a short runway. You were walking a plank off of a pirate ship. Yeah. So what you do is you go out and you raise some more money. Maybe you've done a series A and a series A and a series B, so it's time for a series C. So let's put a pitch deck together. Yep. And let's make a list of venture firms that have looked at travel and invested in travel before and let's go, let's go pitch to them. Just to be clear, could you do this in Australia? Could you, was there, money in Australia to do this? No. The venture capital market in Australia was still quite

nascent. You had to go to the U.S. to get the money, basically. Yeah. And so, This is around 2005, and I guess you hire this guy, Barry Seidenberg? Well, Barry is also a lady's name. Oh, I'm sorry. Barry's a woman. Yeah. Oh, forgive me. Okay.

Barry had been the VP of Marketing at Preview Travel, which along with Expedia was the first ever, the first two online travel agencies. And that was very successful business. And she was based in California? Yep, in San Francisco. So it was perfect. She had a team of people that she could bring in, but we needed to raise some money. So we put a pitch tech together and we hired a car and headed for Sand Hill Road.

When we come back in just a moment, Rod eventually wins over one investor with a story that kind of sounds like the setup to a joke. Danish Prince walks. into an Australian bar. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's 2005, and even though Viator's growing, it's having serious cash flow problems. So Rod flies out to Palo Alto and starts doing meetings with venture capitalists. We saw, I think, 15 to 20 firms, and it didn't go well. We had lovely meetings with them, but the meetings always went the same way where it would end by the partner saying,

I've really enjoyed meeting you guys, love what you're doing, let me talk to my partners, and I'll come back to you next week. So nobody was saying to you in the meetings, hey, this idea just sucks, or this isn't for us, or we don't really see this panning out. Generally speaking, they were, diplomatic, they just thought it was too early to do what we were doing. And they were right about that in many ways. How much were you looking for at that point? Between five and ten million

dollars, you know, five with, you know, follow on would be great. You know, great companies who visit 50 or 100 venture capital firms before somebody finally says yes. Sure. So we knew those stories and we knew we really only needed one investor to believe in us. We just couldn't find that investor. But you were pretty confident you would. Well, we grew less confident as the weeks went on. And then a friend in the industry mentioned that he had heard of a relatively new investor at Carlisle Ventures, part of the Carlisle Group, and we went and did our pitch. I think he was about the 20th person. You were certainly the last person we spoke to.

And the meeting ended exactly like all the other meetings ended, which is that, you know, I've really enjoyed this. I like what you guys are doing. I'm going to talk to my partners and we'll talk again. It didn't sound any different to the previous meetings until we went to leave. We stood up and I picked up his business card. Right. And his name was clearly Nordic.

His name is Alan Tiggerson. So I asked him, I said, are you Danish? And he said, yep. And I said, well, I'm Tasmanian. And he looked at me quizzically, but I could tell he sort of knew what I meant by that. And what I meant was Prince Frederick, the crown prince of Denmark, had a couple of years before married a commoner, a young woman from Tasmania by the name of Mary Dornish. Now Queen Mary of Denmark. She is indeed Queen Mary of Denmark and she's born two sons and a daughter.

She's more popular than Prince Frederick, I think most Danes would tell you. But they had met during the Sydney Olympics. The Danes are great sailors. Their sport was over. They were out at a pub in Sydney, a pub called the Slip-in one evening. Mary was there with a girlfriend. They met these Danes who they had no idea that he was royalty. She did not know he was the crown prince.

No. It's like a Disney movie. It is completely a Disney movie. And I can tell you that most Australians and certainly most Tasmanians absolutely love this story. We're so proud of her. And I said to Alan, I said, do you want me to tell you about it? And I think Dane's, you know, largely a monarchist. They love their royal family, perhaps a little more than the Brits do.

And he sat down and we spent 15 or 20 minutes with me telling him, you know, in detail what it happened and how it had played out. And it's a wonderful story, as you said, a fairy tale. But the important thing is that we spent more time. with him and I think that turned out to be really important. Venture capitalists will often talk about the fact that they invest in people as much as they do in ideas. So you were just kind of shooting the breeze with him after the meeting was over talking about the queen of or the princess of Denmark and your Tasmanian connection. Indeed. Wow. Mary saved us, man. That is a that is a Hail Mary. Exactly. I mean and and a very very loose. connection. Yeah. He asked if I knew Mary and I said, no, but my cousins went to the same school. It's Tasmania. It's small. Now, I didn't mention that they had gone to that school 25 years before Mary, but I felt that that was a sin of a mission that I would be forgiven for

in the long run. Okay, so you have this chat with them. You leave and then... He does call the following... The following week or day or... And he says, okay, I'm in? Well, they never say that. Yeah. They say, come back and meet the rest of the team. Yeah.

So how much do they... Okay, so they invest. And did you guys raise the $5 or $6 million you were looking for? Yeah, they put in $6 million straight away. They put in $6 million, okay. Yeah, and John Murray down in Sydney put in some additional funds. So we were sort of off to the races. And they were really terrific to work with.

We really had a great relationship. Alan was very involved in the business. In fact, soon after making the investment, he, on the Great Vine, I don't know how, because we didn't know about it, he told us that there was a company that was kind of like our business called Look Tours. It was an online travel agency focusing on tours and activities, but only in the Las Vegas area. And they did really good business. They were almost as big as us at the time and just from, wow, Los Vegas.

So, you know, tours of the Hoover Dam and the Grand Canyon and all the shows, the Blue Man Group and Cirque de Soleil, all that sort of stuff. They had a real lock on that business. It was a single owner and he wanted to sell and Alan introduced us and helped us negotiate and we bought that business. straight. It turned out to be a really important sort of rocket for us. It was a great business, but in a surreal set of circumstances, a couple of weeks after we took control of the business, somebody broke into it overnight and stole the servers that ran their operations. In those days, pre-cloud, there was no Amazon or Google Cloud, many companies ran their web business. And, businesses on hardware that they had literally in there.

In the building. Correct. And that's what Looktours did. Sadly, they kept all of the backups in a box that was sitting on top of the servers. And when these servers were stolen in the middle of the night, the backups of all of the code and customer records, et cetera, et cetera, were stolen as well. So we had bought this. We'd paid millions of dollars for it.

It literally disappeared overnight. It was just gone. If you went to tours on the web, there was nothing there. So, okay, so this company kind of collapses. It disappears. Disappears. Which was a shock. And what on earth do you do in that situation?

So, Alan actually from Carlisle, he flew out there as well. I was, I think I was in Paris at the time. I flew back. you know, the staff are in shock, what do they do? So Alan was really good. He said, don't, don't focus on doing a post-mortem here. Just get the business back up and going. They managed to, over the next few days,

rebuild the website from, you know, using the Wayback machine. And I don't know, a whole bunch of methods that they came up with on the spot. They got the site back up and going in about four or five days. It was, though, quite surreal. It turns out that the US Secret Service have responsibility for financial crimes that involve credit card details. They couldn't figure anything out. There was phone taps, analysis of hard drives. There was all sorts of things were going on.

But they never figured out who had decided they wanted to. kill our business. A mystery remains. Wow. All right. So now, I mean, but in terms of other growth opportunities, I mean, how are you acquiring users? Because we were the first and there wasn't any competition, we were able to buy advertising and also get organic traffic relatively easily. But conversely, not having competitors was not great. When you've got competitors, they bring customers into the market as well, and those customers look at their website and then a percentage of them will say,

well, who else does this? What are the competitors that I can look at? So if there's other people out there who are also doing marketing, that's good for you as well. there was nobody out there who was marketing tours and activities. There were people selling it, like Expedia and Travelocity and others, were selling tours, but they weren't marketing. They were marketing hotels and flights. Yeah.

We were the only one doing the marketing. All right. You are ostensibly the CEO, but 2010, your time, Adviator, comes to an end. What was going on? that's you know the board meetings became very different after carlyle came on board it was less about the sort of big picture strategy and it was more about spreadsheets and more about gross margin and things that weren't really my sort of core expertise i was less comfortable and i was not really adding a great deal of value because by this time the direct of the company, what we did, was completely set in stone. So my ability to add value was, you know, it had sort of run its course. You know, the company becomes almost like your family so you don't want to leave it. But I also realized that, you know, Barry did a much better

job of this growth phase than I did. And we got on really well together. And I was very happy to leave the business in her hand. I wasn't really happy to leave. but I got comfortable with it. All right. So you are out of the picture, but you did retain some equity because you had basically founded the company. Yeah, I retained enough equity to have a great deal of interest in the company's future. Yeah, because up until that point, you probably paid a salary and it was pretty decent, but you had not, it did not make you rich. Yeah, it's a really interesting point, though.

I remember talking about this to my mom. when she was alive. She died in 2013 just before we sold the business. And whenever we talked about the company, I would say something like, you know, well, we'll probably get an exit in the next couple of years.

And she's like, exit, exit, what's this exit business? You know, you've got a couple hundred employees and you're paying them salaries and you've got all these happy customers and presumably the people who are running the tours

they're happy with you because you're paying them. Isn't that what? what a business is all about? And it's like, you know, that's a really good point, right? Yeah. That we'd achieve tremendous success without an exit. But still, you have to have the exit. And there would be an exit, of course, which we'll get to in a moment.

But first I want to ask you about what you did after you left Viator, which is, I think, around 2012. Because I guess you became the CEO of another travel company called Rome to Rio. Yeah. And you were there for several years. How long were you there for? Maybe seven or eight years? 12 till 18. Yeah.

So about six years. And you were running them. You were the CEO of that business. Yeah, it was really... And it's based in Australia? Yeah, based in Melbourne. Two software developers who were at Microsoft in Seattle. They were senior developers, really smart guys, and they came up with this idea for a journey planner, essentially.

that would tell you how to get from any place on the planet to any other place using any form of transport. That's a very hard problem technically. And people just loved it. Anyway, I met them when they were working on the sort of first beta, and that's what they were good at, but they didn't know how to raise money or sort of start the company. So I helped them do that.

We raised money very quickly and we found ourselves in office and we got it launched. When I think about, well, about four years after you left, Viator was acquired by TripAdvisor, is now owned by TripAdvisor. We've had, Steve Kalfour was on the show, the founder of TripAdvisor. First of all, you had met him, I think 20 years before, you know, at some conference. And he took, you found out about his idea, this idea that he, He's going to make a website based on customer reviews, right? Yeah, I had met Steve, I think the year before,

and then there he was again the following year at the Focus Right conference, and he told me that they were going to pivot to a new model, which was based around user reviews of hotels and restaurants. And I looked at him, I said, man, you're a smoking dope. That is the dumbest idea. Who cares? Who cares what Joe Blow thinks of the, Marriott in New York. It's like, I want to read a professional reviewer. And he smiled and said,

I think it's going to, I think it's going to work. Well, how wrong could I have been? Yeah, he was on to something. But for a long time, he wasn't. I mean, for a long time, they struggled. Yeah, they did. It's been, it's been a really interesting business to, to watch. And they certainly had the eyeballs to make the Viator acquisition work. This is four years after you're out of, out of the business anyway, they acquired Viator for reportedly for $200 million. Yeah. And you were, I mean, I think it's a pretty good outcome, but I guess that some people in the industry who had similar kinds of businesses like Viator were not happy about that because they thought

a Vyator sold for too little, that it was worth more. Yeah, and it's easy with hindsight to look back and say 200 million. Wow, that's really low. And, you know, I spoke to Alan just the other day and John, and we all agreed it would have been great if we'd held on to Viator for just a few more years, tossed another $20 million into the bucket and turned it into a billion dollar exit. But at the time, everybody made money. I think Carlisle made eight or nine times their investment. Wow. Nice.

It was life-changing for me. It was life-changing for many people. No question about it. So it is, I mean, it's part of TripAdvisor now, still under the Viator, you know, sort of name and stuff. But what's your sense? I mean, I just as kind of an outsider, I think it's a pretty good service. I know that you're not, obviously, not involved, but what do you make of it? I mean, do you think that it's still true to the original vision of what you had for it?

I think it is today. In fact, it's a tremendously successful business today. They'll do, I think, over $4 billion in gross revenue in 2024. Wow. And it is largely true to what we built when we started. It hasn't deviated very much. And, I mean, do you ever use it? Do you ever have any reason to use it?

Yeah. I use it all the time. Wow. Let me share with you one of the things that I learned from researching what academics were talking about. Because there are a number of academics who study at the intersection of sort of travel and happiness. Why does travel make people happy? The travellers who are happiest, it turns out, are the ones who plan ahead and book things in advance. When you book a tour or a resort or whatever it is in advance, the sky is always blue, the sea is always green. Yeah.

The drinks come on time. The tour guide is really interesting. Everything goes really well in your anticipation of that event. You go and stay at the resort and you take the tour, etc. Things are probably, you know, the weather might be terrible. The guide may be difficult to understand. Whatever it is, it's not perfect like you imagined it. But later on, when you remember your experience, those two things, those two memories,

the ones you had in the anticipation phase and the ones who had, the ones that you had when you actually were experiencing your vacation, they get mixed up and you tend to gravitate towards the rosy of your vacation if you planned it in advance. People who do things at the drop of a hat who decide, you know, on a Friday afternoon, let's fly to Manhattan for the weekend, and then they book their activities in the lobby of the hotel. till the next day, they don't get the value of that.

So I'm always encouraging people to plan ahead, book in advance, because your mind will play this excellent trick on you, where the really positive anticipation memories will eventually take over from the actual reality, which may not have been 100%, but hey, that's life. Yeah. And, I mean, when you think about just the journey that you've made from Tasum, to, you know, founding a pretty significant tech company. I mean, it's a company that a lot of people know, millions of used, as you say,

we'll do $4 billion in revenue this year. It's a quite impressive story. And so I wonder how much of where you got to you attribute to the grind and the work and how much you think just has to do with luck or timing or just good fortune. Well, I know plenty of people who work really, really hard, and I'd never claim to be a hard worker. I don't really have any specific skill that I can work hard at. But things did, I guess, work out pretty well,

and I do often think, you know, how did that happen? I guess luckily or coincidentally, serendipity, whatever you want to call it, I took a risk at the right time. what is luck you know it's you've got to get out there in the world I get frustrated with companies that are inward looking

that think that the answers are back at head office or you know their team's going to be able to figure everything out I'm always telling people to go out and sort of interface with the world go to conferences go talk to your clients

go talk to potential clients just be out there don't stay home and if you're out there there, I guess luck can find you. That's Rod Cuthbert, founder of Viator. By the way, Rod now sits on the tourism board for his home state of Tasmania, Australia. And a travel tip from Rod, if you're overseas and want to learn about the inner workings of a place, do what his wife does.

My wife likes to go to the supermarket and spend ages looking at all the varieties of cheese. Yeah. And surprisingly, a lot of people like doing that. I always do. Always go to supermarkets. I got so obsessed with pistachio Nutella in Italy. I was just buying it wherever I saw it. And I was like, man, I need more of this in my life. Come to Tasmania and we'll eat Vegamite together. Oh, I like Marmite. So I think I'd be open to that. Vegamite is a step up from Marmite guy. I'm sure some people in the UK would take issue with that. But I'm with you. I'm open to it.

All right. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyraise.com. This episode was produced by Devin Schwartz with music composed by Rumtine Arablui. It was edited by Neva Grant with research help from Olivia Rockman. Our audio engineers were Robert Rodriguez and Gilly Moon.

Our production staff also includes Carrie Thompson, Alex Chung, John Isabella, Chris Messini, Carla Estevez, Catherine Seifer, Sam Paulson, Jacey Howard, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.