Internet mogul Barry Diller hand-picked Dara Khosrowshahi to run Expedia at a pivotal time in the company's history. The online-travel booking site...

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Internet mogul Barry Diller hand-picked Dara Khosrowshahi to run Expedia at a pivotal time in the company’s history.


The online-travel booking site — born within the walls of Microsoft, spun off and eventually acquired by Diller’s InterActiveCorp (IAC) — is about to become a publicly traded company again.


IAC decided in December to split in two its collection of Internet businesses and run a travel unit under the Expedia brand name. While Expedia.com remains its largest travel business, the newly formed unit includes Hotels.com, Hotwire.com and Classic Custom Vacations.


Khosrowshahi, whose family emigrated from Iran to Tarrytown, N.Y., when he was 9, has a bio-electrical engineering degree from Brown University in 1991. He worked as an investment banker at New York-based Allen & Co. for seven years before joining IAC as vice president of strategic planning.


Diller, in a phone interview, said Khosrowshahi is the reason IAC got into the travel business. “He discovered, in the early days, 1-800-Hotels,” he said. “We took an interest in it and it was a spectacular success.”


Diller said the standalone company gives it “a purity and a purposefulness that will be quite clear to everyone inside and outside the company.


“Everything we have learned since we made this statement … has made us believe it’s exactly the right course to take,” he said. “It keeps getting reinforced.”


Khosrowshahi’s charge: to transform Expedia from an efficient processor of transactions into an emotional brand.


The Seattle Times sat down with Khosrowshahi in advance of the company’s second debut on the markets. Here are edited excerpts of the conversation.


Q: What’s the first trip you took on a plane?


A: I think that my family flew from Iran where I was born — from Tehran — to the south of France.


Q: Was it a vacation? Did you move?


A: Vacation. When we grew up, our family and kind of gaggle of cousins would go to the south of France for the summers. And we just had a grand time.


Q: What did your parents do?


A: My family owned a bunch of pharmaceutical manufacturing plants and other consumer-goods manufacturing plants. We would license Western goods and manufacture them in Iran and distribute them throughout the Middle East. We were a licensee of Tide. … Just a bunch of consumer goods like that. … Do you have Tang in the states? In Iran, you had 18 different flavors of Tang. Because refrigeration was so [sparse], Tang was a big deal.


Q: When did you move to the states?


A: 1978. The revolution happened. The whole family immigrated to the United States.


Q: How old were you at the time?


A: I think I was around 9 years old.


Q: That must have been quite a turning point. Were you excited, scared?


A: I think all of the above. We actually left for the south of France for summer.


I don’t think anybody at the time expected the revolution to turn out as it turned out. People thought we would just go to the south of France and let all of this kind of all blow over. And I like to say I’m on a permanent vacation since we haven’t gone back.


When things did change, we went from the south of France to the U.S. to Tarrytown, New York, to live with my uncle, who took us in. And we went from there.


For us, it was strange, but my family protected us from everything. We thought the U.S. was cool because there were 35 channels of cable and that’s like every Middle Easterner’s fantasy.


Q: What did you want to be when you grow up?


A: I think I wanted to be a doctor. In Iran, the engineering and medical professions are worshipped. My father very much wanted me to be a doctor. I was certainly eager to please as a young man — as a kid, I should say.


Q: You graduated from Brown University. What did you decide to do?


A: It was a choice between a paint factory in Indianapolis — a management training program to maybe run the paint factory one day — or go to New York City and become an investment banker. It wasn’t a very difficult decision.


Q: Did you like investment banking?


A: I loved it. It was a company called Allen and Co. — a first, first rate firm. I was there from ’91 through ’98.


Q: Where did you go from there?


A: From Allen & Co, I came to what was the Home Shopping Network at the time.


Q: How did you get hired by the Home Shopping Network?


A: Actually, during my banking years, I met Barry Diller on a deal. I actually met him first when he was at QVC. There was a hostile tender offer for Paramount. I worked for him on that deal. After that — those were kind of the go-go transactional days — I consistently worked on his deals.


When Home Shopping Network bought the USA Network and the SciFi channel, the company became USA Networks. That was when Barry asked me to join him and Victor Kaufman [IAC’s vice chairman] and run the strategy in a mergers-and-acquisitions role.


Q: What did you do?


A: I was in charge of strategy for the company — what businesses we should get into, what companies we should acquire. We were not in any Internet businesses.


Q: How big was IAC into the Internet then?


A: We were interested in the Internet and the first business where we really saw kind of a glimmer of potential was Ticketmaster. Ticketmaster launched a Ticketmaster.com site and all of a sudden transactions started flowing. That made us think about what other types of transactional businesses were out there.


That actually was one of the things that led me to start thinking about travel: a transaction, buying a ticket for a concert, is actually very similar to buying a ticket for travel. You make a reservation. You’re getting a seat.


Q: So much has been written about Barry Diller. What did he teach you from a business perspective?


A: He just has an insatiable curiosity. He has a great nose for getting to the guts of an issue — very, very quickly. He’s like a homing missile to the weakest part of any logical argument that you have. He gets to the point very quickly and he pushes.


He does something called management by audit. When he’s dealing with his managers he doesn’t get into every thing. But he’ll pick one issue and he’ll dive very deep into that issue. If you have your act together, you’re fine. But if you don’t, then he’ll push you on everything else. He has a reputation for being tough, which he is. But he’s very fair. He’s a very, very honorable person.


Q: Is there one instance where you didn’t have your act together?


A: The great thing about Barry is he doesn’t need to be right. He rewards active, passionate debate. And we certainly have had a lot of that through the years. What’s great about having a boss like him is he looks forward to it.


Q: Where did you learn the art of active, passionate debate?


A: Barry doesn’t want yes men around him.


Q: But did you come into IAC knowing that?


A: No. But honestly you get launched into an environment and there are some people who thrive and some people who don’t like it. I like it. I thrive in that environment.


Q: Does Expedia have that type of culture?


A: No. You have to tone it down a bit. (Laughs.) I think the Expedia culture is one of debate, deliberation. It’s not just quite as in-your-face as New York. But people push, people prod. It’s just a little more polite, and that’s fine.


Q: What do you consider your management style?


A: I’m direct and I consider myself to be fair. But I can be tough. And I like to be decisive. There’s a [Winston] Churchill saying: “I never worry about action, but only inaction.” I feel the same way.


Q: What will Expedia, this collection of Internet companies, look like in five years?


A: The majority of the growth is going to be organic. But really what we’re looking to do is transform the company from being a highly effective transaction processor to truly becoming a great retailer of travel.


We’re selling dreams to consumers. It’s a privilege to be able to sell a product that allows them to go visit their family or go see someone that they love. Or go have magical experiences in faraway lands. That requires us being a retailer with a real retail sensibility.


Q: How do you transform yourself from a very efficient processor of transactions to being a retailer?


A: It’s by presenting to customers what’s possible. If you are booking a hotel room in a particular market, (it means) to sell them a helicopter guide, or to offer them an upgrade to an ocean view room for another $50. That’s a solution that can delight a customer because maybe they didn’t know that was available. And it would delight a supplier because we’re adding value to the very basic transaction. It’s just adding more to a customer’s idea of a vacation.


Q: Seattle, is that new to you?


A: Seattle is totally new to me. I’ve lived on the East Coast all my life. But I like it here. The people are great. The area is just gorgeous.


Q: Do you own a sunlamp or fleece?


A: I like the dark. (He laughs.) I don’t own a Subaru, though.


Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com