Clearing the static Featured

7:00pm EDT November 27, 2007

Right before starting graduate school, Eric Grosse set off with a good friend on the trip of a lifetime. They started in Buenos Aires, and through a combination of cars, trucks, trains and hitchhiking, ended up in Cartagena, Columbia. He then made his way to Bogota and flew to Miami, where he bought a motorcycle and drove up the coast to business school.

“It was an amazing experience that you can only do when you’re young,” says Grosse, who would go on to co-found Hotwire Inc., an Internet travel site. “Six weeks from Buenos Aires to Cambridge, Mass. It was great.”

Little did he know at the time that the experience in getting from Point A to Point B by whatever means necessary would help him later in his business.

Started during the dot-com boom, Hotwire was rolling along, but then Sept. 11 happened.

It was around 6 in the morning when the phone shrilled in the early morning stillness with a message alerting Grosse of the horrific events that had happened in New York City and just outside of Washington, D.C., that September morning.

Travel came to a halt. No one was flying anywhere, and struggling airlines were making cutbacks and flirting with bankruptcy.

“That put us in a crisis mode that we hadn’t had to do before, so we really had to essentially create at Hotwire an emergency task force to quickly identify how this is going to impact our customers, how is this going to impact our strategy, how is this going to impact our growth plans, and how is this going to change?” Grosse says.

Grosse quickly saw the effects the attacks had on his industry. “When you’re in the business of selling empty seats as we are, you see a 20 percent reduction in domestic capacity amongst the air carriers, that’s a massive change that took place very quickly that was obviously very sudden and precipitated by that awful day,” Grosse says. “What that meant was we had to be really nimble very early in our life to get serious about developing other lines of business in addition to air.”

Despite the circumstances facing the company, Grosse wasn’t one to sit around and let things fall apart. Much like his early trip through South America, he started figuring out how he was going to get from Point A to Point B.

“We’re very focused on action,” he says. “We didn’t want to sit and let the external events dictate to us what we should do. We wanted to get in the driver’s seat and respond in a proactive way that was going to allow us to succeed.”

Creating a strategy

When Grosse was a kid, he liked to play Risk. “I thought that was the neatest game,” Grosse says. “It was about strategy. It was about matching wits with other people. As a boy, there was something exciting and sort of militaristic and Napoleonic about it all.

“It very much leant to a vivid imagination, which I had as a kid. Even though it was just a stupid map with a bunch of plastic pieces on it, it was somehow more than that.”

Risk rewards players who are opportunistic and execute a carefully laid out strategy. Maximize your forces where the opponent is weak, and you’ll win the game.

After Sept. 11, the map Grosse was looking at was suddenly real. The pieces in the game now weren’t plastic, they were people, with lives of their own and families. Every decision he made could lead to victory — or to ruin.

Like the generals of old, he called together his most trusted advisers to formulate a plan to get Hotwire through the crisis.

“I know very few people that can take the mountaintop approach to strategy where they go off by themselves and sit on a stoop next to some llama in Asia and come back and say, ‘Here’s how I’m going to reinvent the world,’” Grosse says.

“Strategy is based on having real insight into your market. The only way you get real insight into your market is to just be an outstanding listener.”

By listening to the people around him, his suppliers and his customers, Grosse determined that to get to Point B, Hotwire was going to have to diversify its offerings. It could not rely on hitching its cart to the now faltering airline industry. Instead, it was going to have to get into booking hotel rooms and car rentals to offset the airline losses.

Effective listening — the kind that can provide insight into getting out of a major jam — means giving the other person your undivided attention.

“It’s really that ability that makes people talk more,” Grosse says. “Ultimately, listening is not just listening and getting information, but it’s also the ability to get information out of people that they wouldn’t necessarily have given or won’t give to other people. People respond naturally to people that really care about them and people that really give them undivided attention.

“Listening is an active skill, whereas, oftentimes, it’s perceived as something that is passive, where you’re just sitting back and listening to someone droning on and on. Listening, when it’s done really well, is not a sit-back-in-your-chair kind of act. It’s a lean forward and put your elbows on the table and really hear what the person has to say.”

Next you have to take the information you hear and interpret it by relating it to your situation to choose the best routes to pursue.

“Typically, people fall off the rails in one of two ways,” he says. “One is they actually were good at it, but they’re just not anymore and don’t know it yet. That gets back to really listening and understanding that business isn’t static — it’s dynamic and there’s always new entrants and new ways of doing things, and you may be the king of the hill today or you may have been king of the hill five years ago, but you’re not today, and you have to wake up and smell the coffee.

“The second one is, I think people tend to focus on the obvious things of what makes people successful in a particular industry, even if that’s not necessarily who they are. I think a business has to be true to itself and leaders have to be true to themselves about what makes them really different.”

Communicating

Hotwire now had its new destination — it would diversify into other travel bookings. But that was just the start to transforming the company.

“In some respects, identifying the strategy is 10 percent of the job, and 90 percent of the job is making sure it’s clearly understood and having excellent processes to get the job done,” Grosse says. “That’s what ends up making you win or lose.

“Job No. 1 is to make the message really simple. It’s really easy to fall into the trap of complexity because most of us work in complicated businesses and complicated industries, and it’s very easy to fall into the nomenclature of the industry or tons of acronyms and three-letter words. To boil that down to something that’s simple and understandable is by far the most important thing.”

Once the message is created, use as many venues as possible to communicate it to people. E-mail, company meetings, department meetings and face-to-face meetings all work. Also walk around the halls and talk to people to see if they understand what’s going on and to just generally connect with them. Doing this creates an open environment, and people will trust you more.

At the same time it can’t be just you doing the communicating, so you have to make sure your broader management team takes communication seriously, as well.

“Part of it is meeting with them frequently and walking the walk and setting the tone,” Grosse says. “Part of it is being very clear in terms of expectations around making sure it’s in their goals and what you want them to accomplish more formally. And part of it is just making sure you have the right people in place to do that well.”

He says it’s also important to touch base with your key people on a one-on-one basis.

“Make sure you reach out and be there for them as well as communicate the important issues to them, at the very least, on a weekly basis,” Grosse says.

Keeping the team cohesive through communication is crucial to making sure the organization adjusts as the changes occur.

“Things change for us all the time,” Grosse says. “There’s a lot going on — it’s very competitive, so as a result, you want to make sure you’re on top of things because as good as you may be doing in the current week, you can’t assume that’s going to continue into the weeks and months ahead.”

Motivating and empowering

Grosse was 19 when his father passed away, and he says that is one of the biggest challenges he’s ever faced. But he didn’t overcome it alone.

“Overcoming that was looking at the positives of what I had with a wonderful person and having an amazing family and set of friends to get me over the hard parts. In a situation like that, when you have big challenges, it’s really hard to be an island. You’ve got to have people that can help and be there for you.”

Getting through any crisis, whether it’s personal or business, means reaching out for support. When Hotwire was facing dark times, Grosse had to be there for his people.

“Keeping the team focused and motivated during a very dark time tested the management team in a way we hadn’t been tested before,” Grosse says.

“This is one trait that’s underrated in business: You have to have a lot of energy around what you’re doing — when I say a lot of energy, a lot of energy as a leader and also a lot of energy as an organization.”

To tap into those energy pockets, Grosse had to find the most exciting points for people.

“Business is about people. ... It’s getting people to do more things than they thought they could do on their own,” he says. “It’s a very personal thing. ... Whether you’re selling travel or selling your millionth widget, there’s a lot of satisfaction about selling that millionth widget. You’re getting people excited about goals, and the people they’re doing it with is something that’s very powerful.”

Grosse says to rally people around goals because clarity and strategy create excitement. He also says that once you give people goals, you have to be hands-off about how they get there. Giving them the authority to make their own decisions makes them feel empowered and gets them excited. It’s also critical to help them make the best decisions possible.

“One thing that makes people comfortable and confident making decisions is doing it when they have a lot of relevant information available,” he says.

Grosse gave his people the data they need to be their own worst critic. When they can see the numbers for themselves, they can be proactive.

“That’s an important distinction to not just having a decentralized approach toward risk-taking and decisions but also to give those teams the data they need to make sure they’re going to be right most of the time,” Grosse says. “When they’re not right, they can correct it and course-correct themselves versus having to nag them about it.”

Sometimes people will still make the wrong decisions and not correct them in time, and Grosse says that failure is OK, as well.

“We’re not expecting everybody to hit the ball out of the park every time they step up to the plate,” Grosse says. “If there’s that type of ethic across the company, nobody’s going to try to do anything. At the same time, you want to make sure it’s OK to fail — as long as you learn from it and as long as that becomes part of that insight and memory bank, and you listen to your failure, and you become that much better of a hitter the next time you come up to the plate.”

Grosse and his people are indeed becoming better. While forging through the aftermath of the Sept. 11 attacks wasn’t easy, a lot of what he loves most about Hotwire came from the strategy resulting from that day.

“If we didn’t change, we wouldn’t be nearly as successful as we are today,” he says. “If we stuck to the guns of what started this business, we’d be in big trouble. I have every confidence that we’d still be around, but we wouldn’t be as relevant as we are today without embracing change.”

While Hotwire doesn’t disclose revenue numbers, Grosse says Hotwire today makes up a “significant portion” of Expedia’s $1.3 billion in other bookings, and the hotel and car bookings it focused on during the initial change are now two of its most profitable businesses instead of simply nice add-on products.

“At the end of the day, you can kind of boil it down to three things,” Grosse says. “First, have absolute crystal clarity into your market and what you can do that’s different in the market. Then second, have a real North Star, so how can you identify and communicate your strategy in an exceptionally simple way so it is just as easy to understand your strategy as it is to look up in the sky and see the star. Then lastly, is the whole idea of having an environment of energy and empowerment and direction to get that in place so as a team you can’t be stopped.”

HOW TO REACH: Hotwire Inc., (415) 343-8400 or www.hotwire.com