No Priors: Artificial Intelligence | Technology | Startups
00:22:18 · Glenn Fogel, Elad Gil
When you finally talk to a human, the human says, I'm sorry, you'll have to be on hold again while I get somebody else who can solve that problem, which you by then you wanna throttle somebody, AI will solve that problem. But here's the question again about that is sometimes though, you want to figure out because people want to talk to humans sometimes. You got to balance that because what you don't want to do is end up, yeah, you can do it all AI, but actually that's not what the customer wants. And in the end, it's always what's best for the customer. [00:22:49] S1: Yeah. That makes sense. And I I think you said on your q one call that customer service costs are already down about 10%. Well, we For reservation and [00:22:56] S0: Let's booking security about 10 just go let's go this just this Our costs per customer service per contact are down. Mhmm. Mhmm. That's great. Customer satisfaction is up. That's even better. But we have to make sure that we are able to always recognize some customers want a human being and some customers are, you know, you're happy as could be just through AI. [00:23:24] S1: Yeah. That makes sense. I mean, I I think you also mentioned that you're investing something like $550,000,000 of cost savings into AI and platform on that on that same quarterly call. Where are you investing it, or where where are you putting the brunt of that, both capital and effort?
00:23:24 · Elad Gil, Glenn Fogel
[00:23:24] S1: Yeah. That makes sense. I mean, I I think you also mentioned that you're investing something like $550,000,000 of cost savings into AI and platform on that on that same quarterly call. Where are you investing it, or where where are you putting the brunt of that, both capital and effort? [00:23:39] S0: Yeah. So we and and the amount we're investing is actually higher. We talked about 700,000,000 approximately this year is being invested, but it's in many, many different areas, just, you know, developing more AI. Though AI, there's definitely money going to, call it tech enablement, but there are different projects, different areas. I would not put that all into and say, oh, you're investing in techno old and and AI. That's not correct. There are lots of areas of investment. We talked to them on the call. That's not what's important is the idea that but you've got savings. You've got money. You've got cash flow. How much should you be putting in reinvesting in the company? How much should you be looking perhaps acquisitions? And how much should we handing back to shareholders? And that's always a balance, trying to figure out what's the right ratio, what is it. It really is the first thing is, do we believe investing in the company is gonna give a positive ROI that's sufficient to justify doing that? Or after that, are there acquisitions? And if you can't do either of those, then get the money back to the shareholders because they can then invest it better than you can. And that's what I've always believed in.
00:23:39 · Glenn Fogel, Elad Gil
[00:23:39] S0: Yeah. So we and and the amount we're investing is actually higher. We talked about 700,000,000 approximately this year is being invested, but it's in many, many different areas, just, you know, developing more AI. Though AI, there's definitely money going to, call it tech enablement, but there are different projects, different areas. I would not put that all into and say, oh, you're investing in techno old and and AI. That's not correct. There are lots of areas of investment. We talked to them on the call. That's not what's important is the idea that but you've got savings. You've got money. You've got cash flow. How much should you be putting in reinvesting in the company? How much should you be looking perhaps acquisitions? And how much should we handing back to shareholders? And that's always a balance, trying to figure out what's the right ratio, what is it. It really is the first thing is, do we believe investing in the company is gonna give a positive ROI that's sufficient to justify doing that? Or after that, are there acquisitions? And if you can't do either of those, then get the money back to the shareholders because they can then invest it better than you can. And that's what I've always believed in. [00:24:48] S1: Mhmm. Makes a lot of sense. And I think you you folks did something like a record 4,000,000,000 in q one in terms of buybacks and other sort of returns to investors.
00:24:48 · Elad Gil, Glenn Fogel
[00:24:48] S1: Mhmm. Makes a lot of sense. And I think you you folks did something like a record 4,000,000,000 in q one in terms of buybacks and other sort of returns to investors. [00:24:57] S0: You know, I really am very proud of the fact that over the last, let's say, dozen years or so, we've bought back approximately 40% of the outstanding share. That's good. And we offer a dividend. We have a nice dividend. So in the fourth quarter, it was we bought back $3,600,000,000 worth of stock. We gave out approximately, you over 300,000,000 in a a dividend. And in addition, we also were paying for the taxes for the equity grants that vested in the know, paying the taxes to do it by withholding shares that part of the vest. That's another 300,000,000 or A lot of money making sure it's going back to the shareholders if we don't think that we can use it properly ourselves. That's I've I've been really and this got me from an investment banking background, maybe back then or maybe trading, where companies that just build up huge amounts of cash and they're not doing anything with it and they're not giving it back to their shareholders. I'm like, that doesn't seem like the right thing.
00:26:01 · Elad Gil
[00:26:01] S1: I think one last thing that you mentioned earlier, one thing that you mentioned earlier that I thought was really important is just the scale of your business. And I think it's at an enormous scale, and that's kind of underappreciated as an asset. And so as an example, you closed 2025 with what I believe is 8,600,000 alternative accommodation listings. So that's people listing homes or rooms or other things for rentals. It could be a variety of different types of of spots. But that creates a really interesting, I think, durable asset. So, you know, I feel like people overstate sometimes how AI is gonna transform certain businesses. It's obviously gonna be transforming everything. But there are also things that are very hard to build and that are very durable in the long run that if you have an agent that's gonna go and book an alternative accommodation with you because you have all them listed. Right? You have the marketplace built. Are there other aspects of your business that you view as especially durable going into this era?
00:26:53 · Glenn Fogel
[00:26:53] S0: So on that one, it it it is a good point. I think you're right. I think it's underappreciated by some people. Probably, I'd say Americans. Because in the alternative accommodations area, obviously, a big player is someone who invested in very early Airbnb. Congratulations your part. But a lot of people don't recognize that globally, when you look at our amount of listings and you look at Airbnb, it's not that different. And even more so is when you look at our total amount of transactions, our room night for an alternative company, you look at what, you see that we are approximately three quarters the size of Airbnb, and that's just our alternative accommodation. We're the whole much bigger hotel business on top of that. And and, you know, over the last five years, we've been growing for the last five years, we've grown faster than Airbnb in the alternative accommodation area. We do like to like. We've growing faster for the last five years. So it's a great product, great thing. It's going very well. Your question though, does that give us an advantage, so to speak, against somebody who comes in, all they're doing is creating a nice AI, a tentative type system, and how are gonna get the connectivity to these players or not? And I'll say, there is no such thing as a moat. There is no such thing as somewhere you're gonna be protected against innovation. And that's what I try and get across to the team. I've got 25,000 employees. I try and get this across to everybody that every day we've gotta be fighting. And, yeah, today, we have a competitive advantage on areas. Absolutely. But those can go away tomorrow. The only way to wait the only window in the long term is to continue to develop new services, new ways to do things, come up with this agentic travel assistant that I want this university that will make it so much better. That's the only way. Working on the other side, by the way, also very important with the partner to ways that we're helping them a lot. Again, a lot of people understand the complexity involved. It's not just getting the inventory loaded into some database. Anybody can do that. That's nothing. We got thousands of people who are dealing with hotels and other property managers. How can we do your business better? What do you need? Where you need more demand? Where are you hurting? What can we do in terms your systems better?