Hacker News Reader

Comment by misterbwong | Hacker News Reader

If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye.

Come here and the top discussion thread is about how little Priceline does, how they're "just middlemen", and that they don't add any value.

It's clear that HN (and techies as a whole, I assume) highly discounts the value of users, marketing, brand, and distribution.

Really is fascinating how different perspectives can be.

View on HN

In my experience in tech (only a few years, I came from finance, and before that construction, weirdly) people are super cynical and often believe that they know more about _any_ business because they can write some code or something similar. I have never been around more people who consistently think they know better than everyone else. This was a surprising thing for me because I assumed engineers would be more curious and thusly more humble. It's actually a really unappealing part of my experience in the industry that often makes me wonder how long I'll last in it.

yes, indeed all the techies are the same and consistently think they know better. Keep labeling people, MR. Finance-Constructor, it's the sure way to the success.

I'm not sure that's what I said at all but I'm sorry if that is what was communicated. It was not my intention.

Seasoned programmers who have worked on software across several industries are probably pretty good at understanding and translating day to day business tasks into automated code. To do that you almost have to understand a business inside and out. That's their job. If more people were humble, less would get done

That make's plenty of sense but I have a hard time believing that so many of the commenters here have the experience you just described. I know it is certainly not true of the people I interact with offline on a regular basis.

Also, I'm not sure I really buy the argument that because you can automate some "day to day business tasks" means you know better about how a business should be run. Automating a process that already exists is not the same as deciding which processes need to exist and which don't. Certainly, there are people who can both but I'd be lying if I said any significant number of engineers I know could really do both.

Humble is opposite to arrogant, not to decisive or knowledgeable.

See also: Dunning-Kruger effect.

Honestly, I've seen so many truly awful managers that I'd trust that the engineers "know better about how a business should be run"... from an operational standpoint.

However, there's the magical "sales" and "public relations" side which those same awful (operationally) managers usually excel at.

When those managers have a strong CIO or operations guy by their side they're a killing team, but I've seen cases where they get sweet-talked by an atrocious ignorant CIO (and they can't see it because they're not knowledgeable themselves).

I've also seen strong, well rounded CEOs... and many were engineers transitioned to management roles (with MBAs, etc).

No - it is just about age. HN readers are younger thus they think they know more. Old people will just say: "I don't know about that" [1]

[1] https://www.youtube.com/watch?v=YvT_gqs5ETk

I would've thought it's more that HN'ers tend to have first or second hand experience tech boom/busts, and each subsequent sky-high validation brings back memories and feelings that are hard to ignore

HN commenters, the more visible ones, are not that young (by young I presume you mean anywhere in the 20s).

https://news.ycombinator.com/leaders

I think the median age in the top 10, for example, is around 40.

I work with quite a few "old people" who will happily explain everything to you in the most definitive manner possible.

This reminded me of a chunk from an [interview with Linus Torvalds](http://spectrum.ieee.org/computing/software/linux-at-25-qa-w...)

Stephen Cass: You’re a much more experienced programmer now versus 25 years ago. What’s one thing you know now that you wish your younger self knew?

Linus Torvalds: Actually, I credit the fact that I didn’t know what the hell I was setting myself up for for a lot of the success of Linux. If I had known what I know today when I started, I would never have had the chutzpah to start writing my own operating system: You need a certain amount of naïveté to think that you can do it. I really think that was needed for the project to get started and to succeed. The lack of understanding about the eventual scope of the project helped, but so did getting into it without a lot of preconceived notions of where it should go.

the other side of the same coin is fresh perspective and unbiased application of engineering approach to any problem which results in disruption when it works. Sometimes it doesn't work, e.g. Theranos and others. Money made when it works keeps everybody as believers in that "church of disruption".

What? Wasn't Theranos a scam from the start?

This is true of many groups: bankers, consultants, doctors, PhDs, and journalists.

Or maybe, it is true of people who choose to comment.

People who believe they don't know much about a subject may choose to remain silent on the matter.

Well, the "techies" often have better insights about the technical parts of a product and tend to prefer code over business-politics.

Code is pure, while business tends to get nasty and diabolical at times. Also, "code" self-proves its value, "business" simply doesn't.

Let's not forget the people who started this whole personal-computer revolution were hippies, geeks, techies, and nerds who cared about the "code" and how this could make "peoples' lives" better.

Yeah I agree. There's also a general proclivity to discount boring, but effective solutions to problems.

I'm writing a hotel property management system right now for a hotel chain. In its first year, it will move more money than most startups will make in their lifetimes. Somehow, that isn't "cool", though.

See: craigslist

You know, a bishop is stronger than a pawn, but a bishop never can became a queen, while a pawn has a slim but real chance.

Hence be the boring bishops and exciting pawns paradox.

Really it's booking.com is worth ~$95B and the rest of those brands combined are worth ~$5B (OpenTable just got written down from an accounting perspective).

There is a huge general misunderstanding in the profitability of directing hotel bookings vs flight bookings or other types of travel consumables. Rate parity and high commission rates mean that directing hotel rooms is hugely profitable and Expedia (hotels.com, trivago, expedia) and Priceline (booking.com) operate as a duopoly in most markets. They are both marketing machines that turn brand + paid traffic into highly profitable room nights.

To corroborate your statement, i worked at Booking ~4 years ago, and the internal rumours were that Booking represented ~85% of the PCLN value.

I'm sure it fluctuated since, and from friends still working there, i would guess upwards.

To further corroborate, I'm working in hotel software at the moment and these sites drive a _ton_ of traffic. 10-15% commissions on every booking they process.

booking.com is such a piece of shit in so many ways: strip-mall aesthetics, horrible data quality (firsthand knowledge here), huge commissions for hotels, and yet, it's a fantastic business.

Probably a good lesson or two here.

Usability on booking.com is decent, search, filters and map view are useful. Things have been getting better elsewhere, so it probably doesn't stand out as much as it did years ago.

Either way, if prices are roughly the same on most sites, I'll go for something that just lets me get the job done. I couldn't care less about aesthetics and commissions if other places can't give me a much better discount while also not getting me angry using their site.

I wonder how much the domain name played in their favor. I recon expedia is older and I'm surprised how far behind they're valuation is to priceline. (Or maybe I'm reading valuation wrong).

>If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye.

...is that because you don't think non-HNer's don't have an appreciation for how much something like Walmart is worth (~$250B)? Or because you think they believe that $100B is a reasonable valuation?

>Really is fascinating how different perspectives can be.

My personal experience is that "most people" wouldn't recognize that Kayak, Booking, CheapFlights, and OpenTable were businesses / websites, let alone use them.

You know people that would not recognize any of those brands?

Plenty.

Yes, beside Booking.com I never heard of any of them. They may be a thing in the US, outside not really.

I had only heard of kayak out of the lot.

FWIW I've heard of one of those (Kayak), plus Priceline - and I only used Priceline a few times in college (they turned me off of using these tools).

Do they advertise on TV? If they do, then there's a decent chance my parents (in their 60s) know about them, otherwise it's very unlikely.

I only know Booking (never used it personally, but my relatives do; well... did, I think they stopped for ethical reasons: the 'middlemen' thing), I've never heard of any of the others and I have no idea about what they provide.

I recently met an older dude who hadn't heard of Craigslist!

There are all kinds of people who have never heard of Craigslist within the United States. There are also plenty of children under 18 who have never heard of Craigslist. Despite its popularity and relative staying power, Craigslist belongs/belonged to a specific sub-generation.

"just middlemen" == abstracting away complexity

All you have to do is reword it in programmer talk and HN gets it.

HN might also be aware of the market caps of the airlines Priceline books for:

Delta: 34.4B

Southwest: 30.2B

American: 22.1B

United: 18.7B

Are we incorrectly discounting marketing, brand, etc when we notice that the top booking service is valued triple the top actual provider? That the value they add might not actually be triple the value of the actual flight?

Flights are only part of the picture - hotels, car rentals, et al. Anything, basically, to do with travel.

Margins on flights are slim.

Hotel bookings are the real meat.

This is a common misconception based on Priceline's history. The vast, vast majority of Priceline's value is Booking.com, which does hotel bookings. The margins on flight bookings are razor thin and probably only add value by enabling travelers to add hotels to their flights.

In fairness, it also comes from the fact that booking is especially huge in Europe. So it is hard for a very US based audience like HN to realize how big they are. It is like Whatsapp. 60 billion messages a day, but it doesn't look that big from the US.

They are priced almost 50 times their earnings do they really have that much room to grow in the next several years?

I have serious doubts they have any room to grow. Seems like their entire business model depends on retaining monopoly pricing power in industries with very few barriers to entry.

> retaining monopoly pricing power in industries with very few barriers to entry.

Few barriers to entry, really?? Sorry, but this sounds a bit like an inexperienced developer saying "Hey, I could build most of Facebook's functionality in 2 weeks." Booking.com is THE largest spender of advertising on Google. They have giant teams that A/B test the living shite out of every pixel on their screens, and huge teams of data scientists squeezing out every last bit of optimization on their site. It's a huge barrier to entry. This answer from Quora's CEO explains it well: https://www.quora.com/What-are-some-important-internet-compa...

> how they're "just middlemen"

As are Uber/AirBnb and internet advertising giants Google and Facebook.

> If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye.

Really? I think most people would be shocked.

> It's clear that HN (and techies as a whole, I assume) highly discounts the value of users, marketing, brand, and distribution.

That isn't what give pcln "value". The value is just a reflection of the boom stock market and a handful of hedge funds/etc bidding up the price of the stock.

Once the recession starts and a few of the hedge funds decide to cash out, the "value" could shrink considerably.

I don't need 99% of software written in the world. Then I know 80% of everything is crap. Try to sell me something I will be polite but some people are not.

I am tech guy but when I think of above I know I need salesman so he sell stuff that I build. Also you cannot scale sales infinitely so having middleman and getting 5% and not having middleman and getting 0 is win situation.

Reply on news.ycombinator.com