Thirty Minute Mentors Podcast Transcript: Interview with Kayak Co-Founder Keith Melnick

I recently interviewed Keith Melnick on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: I'm excited to have a great entrepreneur, innovator, leader and graduate of my alma mater, USC, on the show today. In 2004 Keith Melnick cofounded a travel search engine that was acquired nine years later for 2.1 billion with a B dollars. Keith is the co-founder and the former president of Kayak, a site that has changed the way we access travel and to an extent think about travel. Keith is currently the CEO of The Zebra, a disruptor to the online car insurance marketplace. Keith, thank you for joining us.

Keith: It's my pleasure. Thank you for having me, Adam.

Adam: Keith, one of the things that you've told me in the past that I found extremely interesting is the extent to which travel and living abroad and integrating yourself into different cultures has been foundational to your life and the very fabric of your being. Can you talk about that?

Keith: I'm scared you're bringing up our past conversations. I'm not sure I remember them all, but I will say, it certainly has, I mean it helps you grow a ton when you go over to a different culture. You realize so many different things about the fact that most people generally want the same things. That's fascinating with kids. That's where you really saw it and I took my three kids with me over there and you meet other kids from other cultures and you generally get the sense that they just want to be safe, they want to have fun and even when they grow up, most of the time people just want the same things. We just may not communicate as well as we should, but we're all generally trying to go the same direction.

Adam: What has your time at Kayak taught you about the differences between people and diversity and what we can learn from other cultures?

Keith: I mean Kayak was fascinating because we started it in the U S there were eight of us and it was just a us based site. I got the privilege of going over to Zurich and running Kayak international where I was in an office where, I mean there must have been 10 nationalities represented, 10 different languages, people coming from all sorts of backgrounds and again everybody had a common language. Everybody could speak English to some extent and my foreign languages were awful, but the fact that we could still all come together and create something, we almost had to recreate Kayak over there, which was very cool to do it again. Nobody knew the brand and to get it out there and get people to know us and do everything again, it's really fun. But that same thing trying to figure out how we could all work together even though there were so many different cultural backgrounds and it was eye opening as an American because I also thought a lot of the things that just work here in the U S don't work in Europe and we make generalities about Europeans as a whole.

I was doing that and then you went over and you find that Italians and marketing do Italians. It's very different than marketing to French and marketing to the British and particularly marketing to the Germans. There are so many cultural differences that you need to understand and again it all gets back to how people communicate and making sure you're communicating on the right things to people. Can you talk about that in a little bit more depth? What are some of your best tips to other executives and just people in general on how to most effectively communicate? Find a local, I mean that was the biggest thing, you know, nothing helped us more with communicating to the German market and making sure we actually had Germans that were part of our team and understood that the same thing when it went with Italians and French and you know, certainly having that local knowledge and expertise in presence that helps a ton.

Clarity and simplicity when we're all talking together helps a lot too. It got beaten into me at my time at BCG before the kayak days about clearer communication and concise. Anybody in the audience, he's been a consultant, knows that you get the, you learn to do everything in succinct bullet points and having that clarity and brevity helps a ton when you're dealing with people who speak different languages and come from different cultures too. So Keith, can you maybe start from the very beginning, talk about your upbringing, your childhood, and how it impacted your success as an entrepreneur and as a leader. Well, I think part of it was, you know, I grew up in a suburb outside of Chicago. You know, it was fairly standard growing up. I wouldn't say there was anything overly exceptional, anything like that. My dad's an accountant, worked very hard all the time, working for several companies and started his own accounting firm and it was great to see that in high school I was good in math and science.

So somebody said, Oh, you should be an engineer. Which was actually a defining moment because looking back on that, I never should have been engineering. Thank God I got my degree in mechanical engineering. Thank God I never practiced and nobody had a building fall down on them. Or a bridge fall down on them. But it taught me a lot about really understanding what I enjoyed doing. My first job out of college worked for an industrial engineering company that made industrial compressors for the oil and gas industry. Not necessarily the business I thought I would have gone into, but it was still fascinating. But I got to work on the business side of the engineering company and that's when I realized that those were the things that I really enjoyed and that's when I went back to business school and went from struggling in engineering classes to really understanding the business classes.

So having that, you know, kind of going down that path to figure out what I really wanted to do, what I really enjoyed doing, really helped me go the right direction.

Adam: What are some of the signs that you've seen in your career as a leader that would give you similar indication for other people? That it's the right time for them to make the same kind of pivot professionally?

Keith: Going from engineering to business school and into business was easy because I was just miserable. An engineer didn't want to do it, so you know general unhappiness is always a good sign that you're probably not doing the right thing. As I had taken other somewhat pivots, I left a job as a consultant at BCG which had great potential and all of that and it was kind of the same thing.

It got to be the point that I wasn't very happy there. You spend a lot of time away from your family and you, you, there's certain aspects of the consulting which are fantastic. You get to see a lot of businesses, but you don't really get to engage and become part of one. So when you start to get that inkling of, I feel like there's something I could be doing. It's not so much happiness too, but that you can commit yourself to a little bit more and when you really find yourself, you're committing to something, you do it a lot better job and then happiness comes out of it. That's great. There's also to be something to be said for taking that risk. When I left Kayak, things were going great. You know, he could have stayed there and my days the company was still growing. We were doing acquisitions.

But then to jump back to a 60 person company, that was kind of more the scary one. I took on the, okay, I'm going to take the leap and do this all over again, but this, the sign got to be a little bit of apathy in the stuff that you're doing every day. So I think if you step back and look in the mirror, you can see that there's things, you look at it and you go, I know I can be committing myself to something a little bit more.

Adam: Can you talk about your daily routine? What does it look like? I have no idea what it's going to look like when I wake up in the morning. It's true, you know?

Keith: Having been the president of Kayak, I got to deal with a lot of stuff all the time. Being the CEO of a company, you deal with everything all the time.

You know I, one day it's personnel issues, one day, external financing, one day it's product related. My calendar is all over the place too in terms of what the meetings are scheduled for. So and I don't mean to be flippant about it, but I really do have no idea what my day is going to be like. Kind of one one week to the next. I can look at my calendar for the day and know where my focus is going to be, things like that. But it goes all over the place. Are there things that are essential that you need to do in the course of your day for you to be successful? I think, well part of it is managing of that calendar. I don't actually have an admin, so I've managed my own calendar, which sometimes causes problems, particularly because I work in two different very close time zones right now and I can't tell you the times I've messed it up.

I'm so happy I got this right and didn't miss this. Thanks for being here. No, it's my pleasure. But it's managing that calendar and doing it yourself. It forces the ability to say these are things I don't need to be a part of. I, I could, I could spend $500 a week that don't exist in meetings with various people about things. So being very prudent about what you accept and what you're willing to be a part of and really saying, I need to be a part of this or I don't. And also leaving times and that that's not scheduled, whether it's for stuff that comes up on its own or you do need to take that break every now and this stop and actually think about what you're doing as opposed to always being in meetings. Um, for me that's kind of the most important part of managing my day and managing things week to week. And then when I look at what I'm going to work on and focus on it, it kind of comes more in ebbs and flows and kind of different themes that go through. I just got done focusing on some fundraising, so that's months’ worth of stuff. And I know I have to keep focusing on that a bit, kind of every week or every day there, but I can't let it consume everything otherwise. The other aspects of the business that I'm supposed to be paying attention to fall apart.

Adam: What are some of your best tips on the topic of fundraising?

Keith: Be persistent. I mean, it is the a, you have to develop a thick skin when you're fundraising to you. You, you know, and I felt, I feel great about the business and the, the current investors in the business feel great about the business and you'll go out thinking there is no way that anybody in this world would not want to invest in this business. And you get told no a lot more than you probably ever get told no and your entire life. And it's hard not to take it personal and it starts to wear on you a little bit, but you just have to kind of keep going back with it. Be confident in your story, stick with your story, and then you'll find people who believe in it. And even then you'll get them all the way along and there'll be something that spooks him talking to one of our lead investors, and it kind of dawned on me, I said, you always have a reason to say no. And he said, yep. Every investment, there's a reason you could say no to it. So your job on the other side when you're trying to raise funding is not to not give them that reason to say no, they'll always have it, but to give them more reasons to say yes and have them go along and see where you're going with it and understand the vision of what you're doing.

Adam: That's tremendous advice. Along those lines, when you're thinking about selling anything, whether you're selling your company to an investor, whether you're selling your product or service, it's all about getting to yes. What are some sales tips that you have to the audience, sales tips, marketing tips, what are ways that people can become more successful in getting themselves, getting their products, getting their services out there?

Yeah. And for me it was is something I think I'd said before and if I didn't, I meant to say it before, but a lot of it for me goes back to empathy. It's a word I've definitely heard and not just a word, but it's something I've developed as my career has gone on. And I think it's really important when you're sitting in front of somebody, whether it is you're trying to get them to invest in your business or you're trying to sell them your services. I find it even with and employees and my peers, when we're just talking about ideas and stuff, if you have empathy and can understand where they're coming from, it makes that conversation so much easier on both sides because you can really understand what's in, try to understand what's important to them so you can address either the things that you know are just going to get them excited and amplify those things or the things you know that are going to cause them issues and concerns. You can address those head on. So that empathy to me flows through everything. And that's one of the most important things whenever I'm sitting down, whether it's a board member, an investor, another CEO that I'm trying to work with or somebody else who works at the company.

Adam: What are some of your tips around branding and brand differentiation? If you could maybe give some examples from your days as president of kayak and things that you're currently doing as CEO of The Zebra.

Keith: For me, the most important one is to hire somebody who knows a lot about branding and I, I say that somewhat flippantly. I mean part of that is understanding where your strengths and your skills are. I mean, I'm not a marketer. I'm married to one, which is great and she does a good job of reminding me every now and then. I'm not a marketer, I don't need the marketing, but I do. I think a lot of it is, it goes back to some basic stuff though on really what I enjoy and what I think is successful is when we understand what our customers' needs are. We have some, we have a wonderful internal research team right now that gets out and we can really understand what our customers are looking for and what they're doing, and then try to figure out the messages to communicate to the customers, how are you going to meet those needs? To me, that's, that's when the branding, if you will, it goes along with it. You can spend lots of dollars building a brand, but if you're not actually meeting the customer's needs, it's usually wasted money.

Adam: Can you talk about the early days of Kayak, how the idea came together, how you and your team were able to transform an interesting idea into what became a two plus billion-dollar business?

Keith: Steve Hafner was the CEO of Kayak. He kind of had this PowerPoint presentation that he sold me on in the early days. And Paul English, the CTO had wonderful vision on how to bring the product to life. Um, all that being said, that eight of us sitting around in the early days, there were lots of PowerPoint presentations. I think at one point it was in my early days, Yahoo actually tried to buy us and all we had with a PowerPoint presentation. Well at the time it seemed like, boy, we should take this as though it'd be quick, easy money. I'm glad we didn't take it because we actually went out and built the product. Do you mind telling us what the offer was? I don't exactly remember it for sure, but it was much more than we should have been offered for a presentation. Well, although I guess in hindsight they would have, well they would have made a lot of money on it, so it would have been a good deal for them.

But in the early days of Kayak and it's, it's, and I think it goes on even the later days in Kayak and now the days of The Zebra, you have to be flexible. I think what I used to tell a lot of people at Kayak that were new that would come to work for me. As I said, the only thing I can tell you with certainty is whatever I tell you today is going to change next week because in a business like that, things are constantly evolving and you're getting new information and you have to be receptive to it. The flip of that, if you're in a leader in that environment, you also have to understand that there's a ton of noise out there and you have to make sure you're not zipping back and forth because of that noise and you're staying the course. So there's that fine line between understanding what's real data that you should react to and either make course adjustments to and hopefully not have to do anything too drastic versus what's noise that's going on that shouldn't actually get your attention on it because there's so much more information you can get today then you could have in the past that it can actually paralyze you and you got to avoid that.

So early days of Kayak, going back to your original question, you know, if some of the interesting stuff was just figuring out our ways through it, particularly on the technology side too. And I didn't touch the technology. Thank God the team there with amazing that did it. We originally had wrote the whole that will not, we, the development team wrote the whole site in a code base that we can actually use. And we were the first consumer facing site that use a technology called Ajax. But that was actually the second go round of it, which was transformational for the business. Um, so that's where we, we stuck with the vision but we still had to have some flexibility in the way we executed it. What were some of the key steps towards scaling the business? Well, the team is hugely important for that. I mean certainly having people in there, we ran the business really lean so you have to find a team that actually gets stuff done and has that mentality of getting stuff done.

The way I still acquainted is everybody on the team had a hundred things to do at all times. And what really made a difference was understanding of those hundred things, what were the 10 things that really were important. So there were 90 of them you could ignore and then even of those 10 that were probably two or three that you had to do really well and the other seven you could get by and just do okay. And being able to get through everything that needed to be done with a relatively small team that that's probably one of the biggest things to scale. How do you build a winning organizational culture? Boy, that's a, that's a good one. I mean, I think a lot of that is about communication. You know, it goes back to us, the question about being over in a different culture and all that.

Again, you know, you'll find that within culture and going over to a different country, people generally want the same thing or going the same direction. Usually within a company, two people are trying generally to go the same direction. When you get conflicts and you know the culture can break apart about it usually comes down to people just aren't communicating and they really want to do the right thing and they, they are all trying to push the company forward. They're just not talking about it. And a lot of times you just need to give people a platform and they can speak their piece and if they're heard then they, once they're heard, they can start to hear what's going on. The other side of things. And if you get that open communication going on, that becomes a really great culture. What are the most important things you look for in the people who you hire?

I do think it is that if I can find somebody that works really well with others, it's about how they solve problems again, how they communicate. Um, if they, if they're receptive to what other people are saying, um, and they're open about that. Um, and the ability to get stuff done, I get, you know, like I said, it's that a hundred things to do and being able to identify the 10 that really matter, it always worries me if I'm talking to somebody and the first thing they tell me is about all the people that are going to hire the post of this stuff they're going to do. Um, so that's it for me. It's somebody who can do stuff, who can solve problems, works well with other, and communicates well. What do you think companies tend to overvalue and undervalue in their hiring process?

I think in general, people sometimes can overvalue past experience. I mean, it's great to have somebody who's got expertise in what they've done. Usually if you're getting past experience from somewhere, it's going to be what they're telling you they've done before. They're of course giving you the best, a slant on it. And while I appreciate what people have done before, I'm much more interested in how they're going to do it and how they're going to do it, uh, for the company on the undervalued side, I think the phrase is overused when people talk about cultural fit, but depending on the size of the company, certainly when we were eight, but it's 60 people at The Zebra now we're, we're pushing 200. So it's still a relatively small company. Cultural fit really matters. You interact with almost everybody at all, all the time and cultural fit. What I really mean is it gets back to that empathy and humility and being able to work with the rest of the team.

I don't think that can be valued enough. You can have the best person in the world and if they can't work with anybody else there, it's going to be a disaster. What are some of the things that you tell people in your organization or have told people who have worked in your organization in the past that they could do to become better members of the team to become just better and more productive, um, at whatever it is that they're interested in doing professionally? Personally, I think listening, you'd be surprised how few people stop and listen and whether it's, it's listening to their peers and what they're really saying. I'm certainly listening to customers. One of the things I love now if The Zebra is, we have a fantastic team of insurance agents, so they're actually on the front line talking to customers. And one of the best things any of our employees can do is go sit on the phone with the agents and they get to hear what customers really want.

And anytime anybody gets off the phone at their first off, they realize how unbelievably talented our agents are. But they also come away and they have a hundred more ideas in terms of what we could be doing, what we should be doing for our customers. They're energized, they want to take other people along for it. And that, you know, when it gets back to leadership, then it motivates other people that they want to do it too. So I think really listening, not just to your peers but to are your users or customers, wherever you classify what you're actually doing, what you're doing for hugely important and that that brings people along really well. And then they get your support if they feel like you've been listened to as well. In your view, what are the defining characteristics of an effective leader? You know, I do think it's empathy and humility.

I find it, you know, and it's, it's not just leaders, it's also employees. One of the things that's used to boggle my mind, so and I'm stepping away from leaders a little bit. I'm going to defer your question, but sure. I think it's something I've seen that surprised me a lot earlier in my career and I find it over and over again is unfortunately when I've had to let a few people go here and there. And when you do the worst performers never see it coming. They're always surprised that they are, they are being let go. And I think part of it is they're not listening and part of that is they're just not cognizant of what she's doing. The flip of that is the best performers, which I think, you know, it's hard to tell somebody to do this, but to me it's an indication of somebody who has potential to be a leader early may be a leader.

They constantly think they're being fired. I can't tell you how many times I've gone to talk to some of my best employees. We have a one on one meeting and the first thing they say to me is, are you firing me? And I look around as if I'm on a camera and I think you're the last person in the world. I'm going to be fired. And the reason I realize is they're always thinking about this stuff. Not only the stuff they are doing, they're doing a good job on, they're thinking about the other stuff they should be doing or could be doing that's going to help push the business forward. And that's just the way they think about it. They think about it beyond just their existing responsibilities and what they're doing. They think broader. And that really translate in later into somebody who performs really well and usually turns into being a good leader too.

I actually think that's an amazing anecdote because we literally just hired someone within the past three months who has been an absolute superstar and he doesn't report to me. He reports to someone who reports to me and it's kind of blown my mind how I've been hearing, you know, number one, how incredible this guy has been. And in my dealings with him, I've been extremely impressed. But number two is just how insecure he is about his standing within the company. He's constantly asking, you know, am I, how, how am I doing? Am I going to get fired or am I okay? And, and, um, you know, uh, uh, the guy who was his manager is, he's always telling me like, what, what's with this guy? The guy is hitting it out of the park, but he's so worried about his job security. And it's interesting to hear your perspective on that. And I've seen it over and over again. I started setting up one on one meetings. When I do it with my best performers, I always put in the notes, you are not being fired. Yeah, please. It's like,

Just relax. We recently gave this guy a bonus and we're like, on the contrary, you're crushing it. Just keep doing what you're doing. Just be you. That's part of what makes them so good. Yeah. Yeah. I know. I love that. So going back to the question about what constitutes a great leader, what in your view differentiates a truly exceptional leader? Someone who can really move and drive organizations, move and drive people from a mediocre leader? The kind of manager who maybe checks the boxes but doesn't really get people to become their best selves. I think a truly great leader surrounds, first off, they're not afraid to surround themselves with people that's smarter than them. You know, you see time and time again that you have managers or leaders who are worried to surround themselves with somebody who is smarter, whether it's in just the way they think or specific areas. So they surround themselves with really bright, intelligent people. They're not afraid to listen to their opinions and have their own opinion changed. They're very open minded. But at the end of the day, they understand that they need to be the decision maker. You get yourself into trouble a lot as a leader if you start to make a decisions by committee and that's a recipe for disaster. So at the end of the day, you have to be the final person. People need to look to you to make that decision. But you, you, you can't do it without considering all the information. So an open-minded decision maker, I guess is the way I'd put it - I think makes for the best leaders.

Adam: How has leadership evolved from your early days as a consultant at BCG to your days as CEO of The Zebra?

Keith: Well, I mean I think in terms of that personally, it was interesting early on my career, I had the pleasure of working at American airlines when Bob Crandall was there. I mean, and talk about a guy who is infamous for being a fantastic leader, but Bob Prantil ruled with an iron fist and I think it was more acceptable to have somebody who ruled kind of with an iron fist years and years ago back in the, you know, I feel like it was before color TV and my early career and I don't think, I don't think that's embraced as much today nor do I think it should be. And I think that's where this notion of empathy comes in a lot more where we've evolved, there's more openness to it. I think also the thing that's changed a lot too, which we talked about, was that noise. You get bombarded with so much more information now than in my earlier days in BCG. We had to dig around for information and all that. Now I, you know, just being on this call with you, I've probably gotten 20 or 30 messages about what different competitors are doing, you know, different things that had come out and a lot of that stuff you just have to look at and go, so what, you just get bombarded with so much stuff that you, you just have to figure out what to ignore.

Adam: Keith, I'm going to ask you one final question, which is you've experienced a tremendous of success in your career - how can listeners develop a winning mindset?

Keith: And I think it's, it's a lot of it is attitude. I know that probably seems to trite, but you know, you go in and having a positive attitude, people want to be around with you and they want to follow you and feel confident that you're going the right direction. And in all of the success I've had, it's, you know, I've, I've certainly been a part of it, but I haven't been the sole one driving it. It's, it's about finding people that you really like to work with and other talented people in continuing to surround yourself with them. And then it all works so much better, so really it's, it's not, it's not an individual effort. It can't be.

*Note that the transcript is not 100% accurate, as it was captured through an automated transcription service and lightly edited. For the interview in its most accurate form, please listen directly at www.thirtyminutementors.com.