This week’s Throw Back Thursday is about the decline of the once single most important site for miles and points collectors. It was not only a place to get information, but a community.
FlyerTalk was the center of the miles and points universe.
However, it was bought by a company that purposely neglects its websites as part of its investment strategy, which makes this a dramatic story of a public company, lawsuits, and our once beloved site’s mismanagement. A tale that goes way back…
The Data Of IB’s Decline
Did Internet Brands Ruin FlyerTalk?
FlyerTalk was one of the world’s largest forums when I got into points and miles as a hobby was trending then, and its continued to soar. The data shows that hindsight proves miles related sites overall grew a ton over the last decade. A ton.
If you’re not familiar, FlyerTalk was started by Randy Petersen.
Randy rightfully has a great reputation in the miles and points world. First and foremost, he started FlyerTalk which is the reason many of us got into miles.
If that wasn’t enough, after he sold FlyerTalk he started BoardingArea, which is now a giant miles/points themed (mostly) blogging platform. He was able to do it twice.
(Also, I love that apparently Internet Brands waived Randy’s non-compete for BoardingArea because “they said they did not believe in the future of blogs”. Boy does Internet Brands sure know the internet. Quote from MMS interview).
Google Trends Data (since 2004):
Unlike any of Internet Brands’ other businesses, FlyerTalk continued to grow during the great miles boom.
While I believe I can show that it should’ve grown even more (just look at BoardingArea’s dramatic growth since Randy started it), there seems to be a turning point, which I’ll come back to.
But my first thought was to check Frugal Travel Guy
What is crazy is that the largest spike above (in 2012) is around the time Rick sold FrugalTravelGuy.
Since Internet Brands took over, the site took an incredibly steep decline… Which seems to be a theme.
Based on my best estimate, FTG’s traffic was 100x greater under Rick.
I want to mention that I recognize Google Trends is not the most comprehensive way to guess-timate traffic. In my own analytics I noticed a declining percentage of people who arrive at the website by searching some variation of “travelisfree” on Google – after all, Chrome autocompletes the websites I’ve been to.
In contrast, here are the stats to two other leading websites at the time – One Mile At A Time, which is still independently owned, and The Points Guy, which has similarly been bought by corporations (first bought by BankRates which was later acquired by RedVentures).
OMAAT and TPG have grown dramatically since the decline of FTG started, which is around the time of its acquisition.
In all fairness, I don’t really care how much OMAAT has grown, or for that matter any site. I just think it’s interesting that a brand of websites can’t manage websites.
For further evidence of this, I want to show a few other travel websites that Internet Brands has acquired.
Do I really need to keep going? I think I’ve shown enough decline, right? That’s 5 sites that have less traffic now than when InterBrands bought them, and in some cases it’s a 100x difference!
And I can go through a number of other sites that have the exact same fate, or worse (RIP Horsetopia.com!).
The point is, if you’re a blogger and Internet Brands approaches you for a buyout, take all cash up front! That’s not a stock you want.
Speaking of stock, I’ll do one last thing to set the stage…
Introducing Kohlberg Kravis Roberts (KKR)
In early June, 2014 Internet Brands was acquired by K.K.R. for $1.1 billion.
In this world and life there are a lot of mysteries. How were the pyramids build? How did those people get to Easter Island? What is the meaning of life?
How do people as incompetent as the executives of Internet Brands get to be billionaires?
Better yet, who are the geniuses running a publicly traded company that bought InternetBrands – the largest collection of declining websites one could buy with $1.1 billion.
How’s that going?
The Business-Model Problem
Let me be clear, I’m not saying Internet Brands is the reason their stock is performing under the market.
However, I do question the logic of buying a company like Internet Brands. As I’ll discuss, they are controversy-ridden and they have an intentionally neglectful business model. I believe I’ll prove both of these things.
To explain their business model, let me real quick explain how they’re approaching buying a site.
First, this isn’t an acquihire and they don’t focus on “buying talent” and keeping founders around and keeping them happy- (far from it).
Instead, when they buy a well-monetized site like this, they just pay a multiple of the cashflow and then neglect it.
Cashflow in this world is defined by how much the owner makes and profit in a year. However, if they fire/decrease the staff working on the site, they’ve effectively increased their cashflow. Now they can make their money back in a shorter amount of time.
The problem with this is, in my opinion, that it would be minimal additional effort to hire people who care about the site and actually fix the bugs. But as I’ll show, they just don’t. They just neglect the site.
This is what Warren Buffett calls the cigarette butt approach to investing. Instead of building something that lasts, they neglect it.
In my view, it’s marginally more effort to fix the issues of FlyerTalk. In other words, with barely more effort they could build lasting, growing brands that pay dividends forever. Instead, they have a collection of dying sites.
KKR either knew this and thought it was a good company to buy, or they didn’t do the due diligence. Either way, it doesn’t speak positively to their investing model.
So What Happened To FlyerTalk?
Interestingly enough, FlyerTalk has declined more under the new ownership, however I believe this is mostly due to years of neglect and incompetence adding up.
First of all, Internet Brands and WikiTravel are the only two sites that experienced temporary growth after the acquisition and before the steep decline.
Why? In my opinion, it’s largely due to the fact that forums are user-generated content.
With a blog, you need a personality like Rick to come up with interesting ideas.
With a forum, the usefulness is being comprehensive and interactive due to its crowd-sourcing nature.
With FlyerTalk, once Randy is no longer running the show, they can just sit back and not touch anything and in theory they should be able to enjoy the growth of the forum.
Also, “Network Effects” are extremely powerful and defensible. In other words, once you achieve critical mass with a network-effect based business or site, it’s really hard to be dethroned. Why go comment on the new forum with barely any users, when there are 1,000 times more people on FlyerTalk?
In my opinion, this is the reason MilePoint/InsideFlyer has not reached the same heights as FlyerTalk despite FlyerTalk being completely dysfunctional. I commend Randy for starting a new forum, but the fact that people still prefer to use FlyerTalk instead of a forum that does the exact same thing but works, is a testimony of the power of network effects.
Internet Brands didn’t do nothing.
As I said, Internet Brands acquired a website with user generated content in an extremely growing trend, now they can sit back and experience the growth. Of course, doing nothing isn’t as great as innovating, so maybe they would miss out on growth, but surely if you do nothing the site would continue to grow due to the fact that the community was already there.
I’m not saying lack of innovation doesn’t matter, however, wikipedia hasn’t changed its format much and it’s still growing. I personally have not looked into why WikiTravel has declined to 1/3 of the site traffic that it once was, but they too have also clearly failed to innovate, and worse, they have obvious usability issues.
Introducing Lawsuit #1
However, with FlyerTalk, Internet Brands began to do something much worse than nothing, they made updates that broke the site.
According to The Gate, Randy Petersen and InternetBrands had a pending lawsuit (that was settled), stating “Internet Brands has failed to properly support FlyerTalk, leading to a significant increase in technical complaints and user complaints and specifically cites the failure to properly fix the Search feature”.
It seems Randy saw the decline coming.
I’ve also heard rumors that InternetBrands completely failed to pay Randy a portion of their agreement, a sort of Trumpianism way of business.
I can’t verify that, but I want to say that I greatly side with Randy Petersen for a number of reasons. First, my personal experience with FlyerTalk and second, the reports and lawsuits that surround Internet Brands.
The Other Lawsuits
Here is a list of Internet Brand related lawsuits. This list doesn’t even mention Randy’s which was settled, so who knows how many more people have had this experience.
The scary thing is the content of some of these lawsuits, which I don’t want to get into for various reasons!
Either way it’s safe to say that a jury found Internet Brands guilty of a breach of contract elsewhere, so it would hardly be surprising that their conduct with Randy and others was inappropriate.
The Problems With FlyerTalk
According to The Gate, there were many tech issues, including not fixing the broken searches.
Why this would matter for Randy after he sold? First, he could’ve taken a piece of equity as part of the sale, or a percentage or revenue, as that’s common.
Second, it’s his baby so he cares. It was a useful service to him and a lot of his friends, and it slowly became unusable.
Third, he had a non-compete that prevented him from launching MilePoint, unless there was a breach of contract. I believe he ended up waiting until the non-compete ended.
My personal experience on FlyerTalk has been increasingly frustrating.
The issue I tweeted about was an infinite scroll, which on its own is not the proper use of that feature. But I was on page “200” (which doesn’t make any sense because there’s no pagination) of some thread and as I went up to the top to see the wiki, page 199 loaded pushing my screen down… So I scrolled to the top again, just to load another page.
At that rate it would’ve taken me an hour to get to the wiki at the top. Instead I gave up.
8 years later, search is still broken, and there are tons of other issues:
- Search for “African Safaris” and the top results aren’t remotely related. What the heck? Why did Randy settle? 😀
- Ads seem to be taking over mobile?
- No search result difference between threads and posts.
- Buttons don’t seem to do what they say.
- Infinite scroll is terrible (as I stated), but it seems to cause other issues as well.
- Like, I can’t just do an in-page search.
- There’s no return to top button.
- Links to go back are inconsistently displayed on different pages.
- The sub-forums are not easily navigated. How did I know which folder a thread will be in?
- There’s really no way to link to the latest page? Like I can link to the currently latest thread, say page 256. But as soon as there is a page 257, my link is too old content.
That is after about ~2 minutes of browsing, which is about my limit. But you get the point.
Personally, I believe Randy has a point, that these folks were neglectful. Not only that, the changes they did make are annoying.
Could Someone Save FlyerTalk?
I believe there is something left to salvage.
1) I don’t see any other medium replacing it.
A few times, I’ve had friends say Reddit is the new FlyerTalk. I’m a Reddit user, but my personal opinion is that it’s not naturally as good of a resource.
I think the upvoting system is great for news. Get the most important story now.
However, I don’t think it’s as good at resources. The one thing I love that FlyerTalk has added is the Wiki pages. I think for Reddit to do this on every subject ever, you would need to create a zillion subreddits that are interconnected. As many as you have on FlyerTalk. One for Hyatt, that Hyatt people lurk; one for AA; one for hotel deals; etc…
2) Network Effects
The problem with creating a large interconnected series of subreddits (with wikis), is that you need a ton of people. People tried creating a mistake fare thread and other threads, and they did not work.
I believe it could work with enough scale, but that’s precisely the hard part that FlyerTalk already has solved.
I could be wrong, as there may be a way of doing it that I haven’t thought of. For example, getting the content for the main Award Travel reddit from the other related subreddit. That way you’re forcing people to post in the subreddit.
I don’t know. I’m not saying it’s impossible, I’m just saying it requires a ton of scale, or another really clever solution.
I think the best way to know if Reddit could take over as a new miles/points community is to ask the executives of Internet Brands and if they say Reddit has no place in the future, then you can know for certain Reddit is the future. 😉
3) The problems are largely tech related.
I’m not saying tech related issues are easy. They probably have competent programmers. The problem is that they have no execution.
So you need someone who could manage the programmers, who has a vision of how it should work in 2019, and someone who actually uses it.
Whenever I say that FlyerTalk is un-useable, the number one response is that the community is also toxic.
To me, this is the most solvable issue with a company that cares even a little bit.
Internet Brands seems to have a format, a road map if you will, for failure.
First, buy a company. Second, make sure there’s no leadership.
RedVentures had made sure that Brian is CEO of The Points Guy and they seem to give him a ton of control.
This is how Berkshire Hathaway works. Buffett says he hardly speaks to his CEOs, unless they really need his advice. He makes sure he finds the right CEO and then steps back.
Google realized that they’d created an extremely bloated organization. Head of HR wrote a book where he said he called a meeting with a team on a small, new project expecting maybe 2 or 3 people to show up, and 100 people showed up. He couldn’t figure out how 100 people were doing so little.
This is why they’ve modeled themselves after Berkshire and are trying to move to a new system as “Alphabet”.
In stark contrast to giving one passionate person control, Internet Brands seems to try to do as little as possible. They seem to drop in one lowly manager with little support financially or personnel wise.
Any site needs someone to set direction, and they don’t even give the site a chance to fix bugs.
What happened? Our beloved community site was bought by a brand that, I believe, has made it a business model to neglect their investments.
If Internet Brands asks to buy your company, don’t take any equity or revenue, because they have ruined every single company that I could find. Literally every company I checked has declined since their ownership, without exception.
FlyerTalk has to be the most extreme case of neglect because they still have a large, active community and still have bugs that have been around for many years. I can’t even imagine why it’s not worth their time or money to fix them.
FlyerTalk was an amazing community that fell into disarray without any solutions. Seemingly without any care for their issues as well.
Jokes on us and K.K.R.
Anyone else miss the old FlyerTalk? Anyone disagree that something like Reddit could take over?