What Amex GBT Can Do for KDS

KDS CEO Dean Forbes talks:

• Amex acquisition
• The consumerization of business travel
• Concur's Hipmunk deal

It had to be done. For KDS to continue to scale its business, the company had to be acquired, according to CEO Dean Forbes. American Express Global Business Travel, one of many interested parties, sealed the deal on Oct. 4. Amex GBT has explained why the deal is good for the travel management company, and now Forbes has spoken with BTN payment and expense editor JoAnn DeLuna about how it benefits KDS. He also praised both parties in Concur's acquisition of Hipmunk and said the industry likely will see more such deals.

BTN: Why did you decide to sell the company?

Forbes: We talked about it a lot, but we never said, "Let's go be acquired." When I look back 18 months, I wasn't really thinking about it, but it was inevitable. After we launched Neo [in 2013], I got more calls about buying the company. The trajectory has grown and grown in the last two years and we had a bunch of offers at different times. There were different reasons [why they didn't work out]. Some were for money. Some weren't culturally a fit for the company or customers. Others were a combination of timing and value alignment.

BTN: How have your nine TMC partners reacted to the news?

Forbes: We've had pretty good reactions from TMCs because of the structure. We're going to be an independent company, which dictates how data and information can or can't be shared. If we have a contract with a corporate customer that says their data can be used by KDS only, I can't share that information with GBT. Things like [the Payment Card Industry Data Security Standard] govern the way information is managed and shared, so I can't suddenly take Carlson [Wagonlit Travel's] information and ship it to Amex so they can corner [CWT's] customer. Not that I want to do that. I wouldn't and legally am unable to do that. That has given partners some degree of security. Of course, there is an emotional element of, "I'm relying on my technology partner, which is owned by our No. 1 or No. 2 competitor." We have half of our business with partners, and I'm hopeful that continues.

BTN: Amex's strategy is to build digital products and services focused on the traveler experience. How does KDS fit into that?

Forbes: One of the biggest issues in delivering value in this space is that you're always aggregating, always trying to gather up all of the rats and mice on behalf of a customer. The pain point for the customer is that they're relying on others—other technology, people and suppliers—to get their hands on that [data]. We can help with that. Amex wants to offer customers a true end-to-end proprietary offering that is all managed by them to eliminate all the loose threads when one third party is relying on another third party: Amex GBT becomes the apple of the travel management space. For them to deliver that end-to-end solution, they need a lot of the technology we have, as well as the skills and capabilities to develop that technology.

BTN: What does KDS get out of this deal?

Forbes: We put our foot into some new geographies and we've done well, but it's going to be difficult for us to scale to the next level. We went from one person in North America to six or seven. Getting from seven to 50 was going to be difficult for us, but going from seven to 50 as part of Amex will be much easier. Scaling in other geographies will be much easier, too. For a long time, we also had to deal with a brand issue. I don't know how many times we competed to the end and people said, "We love your technology, your products, your people. We want to choose you, but we're talking about a $55 million program in 20 different countries. I'm having a tough time getting my executive team to be comfortable with a 150-person Paris-headquartered company." Concur never had that problem. It's a global brand and a few years back listed on the stock exchange. That brand and stability question is now taken care of, and we get access to Amex's customers.

BTN: How much overlap in customers is there?

Forbes: In France, most of their customers are ours and we have some [overlapping] customers in the U.K., but beyond that almost none of their customers are ours.

BTN: Amex has said it's not focused on expense. Will KDS stop investing in its expense tool?

Forbes: No, there's no plan to stop investing in any product within our composition today. It's two elements: There is a dominant activity, which is about enabling their strategy, and another big part of our activity is to continue to charter our own course with some refinement because now we have new owners.

BTN: What will be the biggest challenge of combining the two companies?

Forbes: Most of the challenges are M&A 101: Taking a watermelon and an orange and trying to mix them together. Amex has been absolutely phenomenal to work with. I had a very low regard for TMCs and TMC people—they were not my favorite people—but they've been fantastic.

BTN: Will KDS integrate fully into Amex GBT, kind of like a white-label product within Amex?

Forbes: I couldn't tell you "never," but that's not the plan at the moment. The plan is to make sure we continue to operate as a stand-alone company owned by Amex, which has some obligations because they're 50 percent owned by a bank. So some of our cavalier but legal business practices will have to be refined.

BTN: There's been so much activity in the expense management sector lately: Concur acquiring Hipmunk, Coupa's IPO, Spanish expense provider Captio raising funds. What else might we see?

Forbes: We're going to see more of what Concur has done with Hipmunk. More of us are going to buy edge capabilities you can put on top of the core offering to further consumerize ourselves. We've looked at stuff in gamification and fare-prediction capabilities. More of that's going to happen.

BTN: What did you think of the Hipmunk deal?

Forbes: I was pleased that Concur bought Hipmunk. I'm a fan of Hipmunk, and it's a very cool company. It was the biggest admission from Concur that they had to do something on the [user interface]. More of us are going to do that kind of stuff. I told Amex that once we get settled down, to delve into doing more stuff to accelerate consumerization. And we're ahead of everybody on the corporate space on the UI look and feel.

BTN: Artificial intelligence is a hot topic and formed a big portion of Hipmunk's value to Concur. How is AI working for KDS?

Forbes: We've been doing machine learning for over a year now, and it's been the biggest change enabler in our Neo adoption because what Neo is trying to do is predict the perfect timeline of door-to-door services. Sometimes, in fact very often, Neo was picking highly logical choices but not personal choices. So what we've been able to do is: When people change stuff, we've been able to learn their preferences and use that to drive results next time. We started in hotel, and now we're shifting it to air.