One On One With Expedia's Erik BlachfordOne On One With Expedia's Erik Blachford

Imagine reporting to both Bill Gates and Barry Diller.

In that position--at least temporarily--is Expedia Inc.'s senior VP of marketing and programming, Erik Blachford. Even as Microsoft last week announced a $1.5 billion deal to swap its 70% share of the nation's No. 2 travel site for about 5% of USA Networks Inc., Blachford took a few minutes to speak with information senior editor Cheryl Rosen about Gates, .Net, and selling travel through the TV.

information: I remember the excitement five or six years ago, when Microsoft stepped into the online travel space. Until then, the two major players were Sabre and Internet Travel Network (a dot-com start-up since acquired by Sabre)--not brands that consumers knew and trusted. To a certain extent, it was Microsoft's presence that helped grow the online travel channel--and with it, online commerce as a whole. Think that was Microsoft's goal all along: to use travel, the easiest product to sell online, as a way to grow online commerce as a whole, and with it a new market for Microsoft products? Has Microsoft now just cashed in its chips and gone in search of a new channel to dominate: TV?

Blachford: The right way to think about Microsoft in '95 is the way you think of a venture capitalist that could get both financial and strategic return. It invested money in a number of different ideas that senior management thought would work. It spread its bets, and it knew that in addition to any financial return, it was also in the game in terms of having sites that would operate as showplaces for Microsoft software.

When we went to them to help fund our initiative, they were willing to fund the effort because they saw the potential of having a team work on something that could really show off what the technology could do. They did pretty well on their financial investment, too. We're still a 100% Microsoft shop, and we're locked in with all the .Net initiatives.

They know Barry Diller is a guy who gets things done, and they see another opportunity to take part in a broader vision.

information: What do you see as the advantage of this alliance, to you and to USA Networks?

Blachford: We're bringing together the consumer merchandising expertise of USA Networks and Expedia's technology to manage the super-complicated world of travel supplier inventory. Our platform works very well online, and there's no reason we can't extend that so it works just as well in new media. There's a true interactive TV play here going forward.

information: Think it's a vision that will actually come true?

Blachford: I think we'll see set-top boxes soon. All the pieces exist. There have been enough trials to show it makes sense; the travel infrastructure is extended to the point that makes sense; and people are willing to step up and make the investment. There will still be selling through phones and URLs--not everything is seamless overnight--but in general, people buying based on TV information is happening now. And I know there are people at Microsoft working on the technology to actually buy through the TV itself.

information: What's unique about the technology behind it?

Blachford: The main thing about the infrastructure is that the pricing engine sits on PCs, and is not dependent on the mainframe environment of the traditional airline distribution systems of the past. That allows us to display an enormous list of options--on average, about 400 options for every trip.

Even more exciting, it allows us to take different kinds of components and knit them together into packages that customers can design on the fly. You can take wholesale fares from airlines and room blocks from the hotels and allow consumers to do their own arranging of vacation packages from our menu.

You'll not be surprised to hear that our main technology partner (and biggest investor prior to the sale) is Microsoft. We're a 100% Microsoft shop; we use SQL databases, some NT but mostly Windows 2000. We've had 87% year-over-year growth in bookings, and that's pretty tough to scale to, but we've architected the system so we can just keep adding more servers. We're a poster child for Microsoft technology. We have spent a lot of time working with Microsoft to make sure that we're fully .Net-enabled, and working with HailStorm to participate in all the advanced messaging to support Passport.

information: What's your initial plan for working with USA Networks?

Blachford: Short term, there's an enormous opportunity for Expedia to work with USA Networks' Ticketmaster and CitySearch to expand our business and to work with some of the more media-related properties to get the word out about Expedia.com. I head up marketing, and I'm looking at the opportunities to acquire new customers. A lot of the short-term upside in this deal is simply introducing more customers to our technology, and then, down the road, to integrate into TV selling. CitySearch is a site focused on events, movies, restaurant reviews, performing arts, theme parks. We sell tickets to some of those things today through Viator, but it's not a big part of our business.

But the deeper we get into the travel business, the more it's about selling things to do at the destination. We could offer customers a package that includes a flight to Vegas, a room at the Bellagio, and tickets to Cirque du Soleil.

information: Do you forsee any immediate changes as a result of the acquisition?

Blachford: Barry Diller will become chairman of the board and USA Networks will have the majority of seats, but we're not anticipating any other management changes. Rich Barton will stay on as our CEO.

information: What do you see as the most interesting part of HailStorm?

Blachford: From our point of view, it's the ability to do notification through different channels, to be able to notify not just the traveler, but also their administrative assistant, instantaneously through MSN Messenger, cell phone, and E-mail on centralized servers. We spend a lot of time thinking about alerting customers when there's a hurricane bearing down on Miami--but it's really complicated to do that without a centralized database. We send them now via E-mail, but as we start to work more closely with the HailStorm folks, we'll be able to do more and more robust integration with MSN Messenger.

information: Think you'll be working longer hours under Barry Diller than you did under Bill Gates?

Blachford: I don't know. Could the hours get any longer?