No Priors: Artificial Intelligence | Technology | Startups
00:20:14 · Glenn Fogel
[00:20:14] S0: Well, the actual we just have some areas where we're we're coming out with some new things on it, but here's something really important. So when you ask me the questions, when you say it's so great, but you tell me it's not really doing much to, you know, the numbers. It doesn't really show up much in the numbers yet because it's still really, really small in terms of the absolute number. We ain't gotta talk scale here. You know, last year, we did a 186,000,000,000 worth of travel. That that's a lot of travel. You don't get over a billion room nights. So the actual numbers, so why? Well, part of it is we're not pushing it really fully. There's one of the issues that I always wanna think about is what's the cost of this? And that's not so easy to understand. What is the cost? That's what's developing of running it. How many tokens are we consuming? Where? Where? Where? How many times are they coming back and forth or doing? Tell me how much was the cost of us getting that trip for that person, and what is our ROI going to be? Then the next thing is, well, what's the return long term? Did it mean lifetime value? Did they come back? Are the loyalties up or what? How much? And will it change? These are things that we don't know yet that we're gonna have to continue to work on, develop till we know. And by the way, the whole thing of token economics now, which model should we be using, for which purpose, and when, and stuff. You know, obviously, you can get tokens a lot cheaper and certain parts to different models, and they're a lot cheaper. And that's something that we have to look at very closely too. So it is fascinating that we can do things that I I'm so thrilled that we do. Like, for example, things like using customer service right now. Customer service where we're using AI, it's it's great. It happens much faster. You you know, instead of having to staff your humans and at peak time, somebody's got to wait for somebody to pick up. We've all been in that line. In that queue, waiting for someone to pick up, and we hate it. But now with AI, the computer can pick it up. It's not a problem. And solve the problem even better and faster, than you never will have in the future.
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?