Alaska Airlines’ Brad Tilden: Competitors Make You Better

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Alaska Airlines’ Brad Tilden: Competitors Make You Better

This episode was originally released in April 2017. Press Play below to listen.

About this episode's guest:

  • CEO of Alaska Air Group since 2012
  • Has been with the company for 25 years in various leadership roles
  • Closed acquisition of Virgin America in December 2016 for $2.6 billion
  • Holds a commercial pilot's license
  • Learned to play the ukulele from YouTube


Topics covered in this episode:

Press Play to hear the full conversation or check out the transcript below. You can also subscribe to Office Hours on Apple Podcasts and PodcastOne.

Spencer Rascoff: Hey, Brad. Great to see you.

Brad Tilden: Great to see you, Spencer.

Rascoff: I'm a huge user of your product.

Tilden: Thank you.

Rascoff: I'm almost always on your planes, and I'm grateful for it, so thanks for being here.

Tilden: Well, thank you for saying that. I'm a huge user of your product as well. What you guys have built is just amazing, and it's a company that everybody in Seattle's very proud of.

Rascoff: Thank you. Thank you. So like we, you have engaged in transformative M&A.

Tilden: Yeah.

Rascoff: You acquired a huge company from Virgin America. Walk our listeners through the rationale for that acquisition. Tell us how the deal came together, and then we'll talk about the regulatory process around approval.

Tilden: Sure.

Rascoff: So how'd the deal come together and why?

Tilden: Yeah. You know, so some folks listening will know Alaska. Probably others will be less familiar, but we've been around for a long time. We're a high-growth airline. We've grown at 7 or 8 percent a year for 20 years. We've tripled in size in 20 years. But notwithstanding that, the industry structure is changing more rapidly than us with all the bankruptcies and all the consolidation. It used to take nine airlines to make up 80 or 85 percent of the pie. Today, it takes four.

And so we came to a couple of conclusions. One, we're proud of what we do. We think we bring value to our employees and our customers and our communities, and we thought we want to be around. And we just said with the change in the industry structure, it would be better for us if we were larger. So we have been growing organically a lot. We'll continue that relatively high rate of organic growth. But we decided that M&A would be good as well.

Rascoff: Alaska was frequently mentioned as a consolidation candidate for someone else to acquire, but you just decided –

Tilden: You know, other people mentioned that.

Rascoff: [Laughs]

Tilden: I'll just say we've been – as I said earlier, we're proud of the way we run the business, and I think we bring a lot of value to our customers and our employees. And we have never had any interest at all in being acquired. We want to stay Alaska and keep doing what we're doing for 20, 30, 40, 50 years and into the future.

Rascoff: And why Virgin America?

Tilden: I guess, here's the things you say about Virgin America. They're on the West Coast, which is usually attractive to us. When we look at Alaska, we fly to 35 states, 5 countries, but we have real concentrations of loyalty in Alaska, Washington, and Oregon. Virgin's got real strength in California. They've got a great presence in SFO and at LAX. So when you take Virgin America and Alaska, you take our strength in the Pacific Northwest and Alaska, theirs in California, and the whole idea here is that we become the go-to airline for anybody living anywhere on the West Coast.

Rascoff: So the route network was particularly –

Tilden: Super attractive.

Rascoff: OK.

Tilden: That's right.

Rascoff: Actually, let's talk about the regulatory process, first, before we get into the brands and the culture and the integration plans. It took about six months for your deal to get approved. Is that right?

Tilden: It took a bit more. We announced it on April 4 [2016]. I think we closed in mid-December, so a little bit more.

Rascoff: And who needs to approve an airline deal? Is this –

Tilden: The Justice Department.

Rascoff: DOJ and also FAA?

Tilden: No. The FAA doesn't. They will have to approve – we'll have to go to a single operating certificate, which the FAA will have to approve that, but that'll happen a year from now.

Rascoff: OK. And what was that DOJ process like? Was it touch and go, or you were pretty confident that it would get approved?

Tilden: You know, I will say that I think we were always pretty confident that it would get approved. You end up making concessions, and you make small adjustments to the deal to get it approved. But I think we were always confident that it would get approved. It's intensive. There were several trips back to Washington, DC, to talk with these folks. They look at every e-mail you've ever written and anything that's on your hard drive. I don't know. I think Alaska came out of that fine, and we learned something about how you do M&A in the process, and, ultimately, we got the deal done.

Rascoff: So I had my own grilling.

Tilden: [Laughs]

Rascoff: It took us around the same time, six to nine months, for the Zillow-Trulia merger to be approved by the Federal Trade Commission. I guess, in M&A, sometimes the DOJ reviews deals, sometimes FTC. We got FTC. And I made dozens of trips on Alaska, of course –

Tilden: Thank you.

Rascoff: – that Seattle to Dulles redeye many, many times. And we spent a God-awful amount of money on lawyers working through that process. It was very hard on the employees during that period. There was a lot of uncertainty, especially at Trulia, the company that we were acquiring. They didn't know would the deal get through, would they have a job after the deal got through, etc. So what was it like as an employee at Alaska or Virgin America during that waiting period?

Tilden: Spencer, I think you're making a really fair comment. I think I would guess it was harder on Virgin America employees than Alaska. It's a business combination, but Alaska's the acquirer. Probably Virgin employees had some of those anxieties and questions that you're mentioning. You do what you can. That time period's an awkward time period, because if you buy the – if you're successful, every decision the company has made is yours. You get whatever amount of money's in the bank account when you close. So any decision they make in that six or nine months, you inherit.

Rascoff: And you're sort of rooting for a company that might, if the deal doesn't go through, go back to being a competitor.

Tilden: That's right.

Rascoff: I mean, that was our situation between Zillow and Trulia. We were like, “OK. Do we root for them to do well during this period or not?"

Tilden: But because you might become competitors, the most important competitive information, you don't know. Route decisions, pricing decisions, marking decisions, you don't – loyalty, you don't see any of that during the period. And even Virgin America employees, we really had limited opportunity to work with Virgin America employees during the period –

[Crosstalk]

Rascoff: Yeah. I desperately wanted to go speak to Trulia employees in that period and tell them, you know, to hang in there and I know this must be hard, but this will end at some point, and then we'll all be on the same team. But I wasn't allowed to do that.

Tilden: We were able to do a few meetings, but it wasn't – it's nothing like it is now.

Rascoff: Right.

Tilden: Yeah.

Rascoff: So you said the route network was one of the major reasons that you were attracted. Let's talk about the product and the brand. I've flown Virgin America plenty. It's an amazing product, but it's very different, actually, from other airlines, including Alaska. So how would you describe that product, and, more importantly, for our listeners, how are you going to integrate that product, and what are you going to do with these two brands?

Tilden: Yeah. You know, I think the first thing we'd say is there are clear differences. There are also a lot of similarities. Two similarities between both companies – both companies really focus on customers. Both companies win awards – Virgin, Conde Nast Travel and Leisure for years in a row, Alaska, JD Power for nine years in a row. So both do well with customers, and both believe in doing well by customers by getting close with the employees, building alignment with employees, and encouraging our employees to go out and be their greatest. So that binds us.

Having said that, I would say Alaska's maybe a little bit more traditional. We're a little bit more Seattle. Virgin is, people would say, more hip, more, more flair. The mood lighting is big with them. The music is big with them. Uniform's a little bit different. Honestly, I think that's going to be good stuff.

As we move forward, I can tell you now the name of the company is going to be Alaska Airlines, but we're going to separate that from the brand decision. The brand is – we're actually going to incorporate some elements of Alaska but a lot of elements from Virgin America, so –

Rascoff: In the product.

Tilden: In the product.

Rascoff: So I'll get on an Alaska Airlines plane, but it'll be a little more hip than it used to be. It that what [ laughs] –

Tilden: I think you'll see music. I think you'll see mood lighting. I think you'll see satellite – we don't have satellite on our airplanes now –satellite connectivity, really top-notch entertainment system. We're going to adopt a lot of those features.

Rascoff: What about the cabin configuration, which is pretty different? I think Virgin America usually has a small first class, and Alaska has a little larger first class.

Tilden: That's right. So you're asking a great question. We're actually going to go to the Alaska standard there. So what that'll mean is Virgin has eight first-class seats. We're going to go to 12 on some of their airlines, 16 first-class seats on other airplanes. So it'd be a lot more first-class seats.

Everything comes with a price. So with Virgin, you know, they had that beautiful first class seat, but nobody ever upgraded. A Gold 75K never got upgraded into first class. So we'll move to the Alaska model. And one of the things we're really proud of at Alaska is we lead the industry in generosity. So if you're an MVP Gold 75K, even an MVP, you will upgrade into those seats a lot. I think we calculate that Gold 75Ks, 90 percent of the time, you'll be able to upgrade to either premium class or first class. If you're even a Gold, you'll upgrade 70 or 75 percent of the time.

Rascoff: And what about the aircraft selection? So Alaska is famously all Boeing, and I think every plane says, “All Boeing," on it. And Virgin America flies Airbus, I think, right? Have you made a decision about aircraft?

Tilden: No. I mean, I know you would know this from your Trulia/Zillow experience, but you just begin to trust – you put a process in place for everything. It's not a Boeing/Airbus decision. The decision we need to make is it one fleet type versus two. If it's one fleet type, it's definitely Boeing. If it's two, it just means we hang on to these Airbus airplanes Virgin America has. But we're going to take six or eight months in 2017 and make that decision. And you can imagine, there are – I mean, the Airbus airplanes we already own. They're already bought. To actually change them out requires a lot of capital in changeover. So that's an argument against changing. On the flipside, there are huge benefits in an industry like ours to a common fleet type.

Rascoff: So how much does it cost to take a Virgin America Airbus and repaint it and turn it into what will be a newly branded Alaska plane?

Tilden: Like, a lot of questions, it does depend, but it's millions. It's not –

Rascoff: Millions to change a plane?

Tilden: It is. It is. It is.

Rascoff: Wow.

Tilden: The paint is between one and two hundred thousand dollars, but the – it's millions. When you look at sidewalls and the overhead units, the seats, the entertainment, it's millions per airplane.

Rascoff: I was on an Alaska plane the other day that it said, “Employed powered," and it signatures of all the employees. Are there a lot of those, or that's _____ _____ –

[Crosstalk]

Tilden: No. That's the only one of those.

Rascoff: That's the only one. OK. And how many Disney planes are there – the Disneyland ones.

Tilden: You know, we've got three or four. There's Toy Story. There's Disneyland. There's Tinkerbell. There's Cars.

Rascoff: And do they pay you for that?

Tilden: [Laughs] We have a fantastic partnership with Disney. Yeah.

Rascoff: My kids love seeing those, and they feel lucky when they're on them. Let's talk about employee culture and engagement. This is something that you're very focused on, very proud of. And in particular, through the integration, did you change anything about your general approach to employee communication?

Tilden: You know, one of the things that we sort of – we did, Spencer, is the quick answer to your question. Airlines, there's two ways of looking at an airline. There's all these intricacies that need to happen for one flight to depart – when it gets fueled, how the flight plan gets done, when it gets catered, all the moving pieces, everything that needs to happen before departure for one flight a day, and we have 1,200 flights a day. And so I think in the old days, 15, 20 years ago, Alaska spent a lot of time on that stuff, on the process and the computer systems and how the airplane's routed, when pilots or flight attendants flew which trips.

There's another side of the business that I think a lot of airlines have spent less time on, and that's just working with the employees. And it's an MBA term, it's an overused term, but are you actually aligned? Is everybody in that company actually trying to do the same thing?

Rascoff: Now, why do you think the airline industry suffers from that uniquely, because not all industries – is it something about it being – is organized labor related to that?

Tilden: It's complicated. I think we started in a regulated era. Most of these airlines that you would recognize, they started like a utility company as a regulated industry, where you went to the government and said, “Hey, can I fly a new route?" The government said yes or no. And if you flew that route, your fare was calculated as your cost structure plus a certain margin on your costs to provide for –

Rascoff: So the impact of that is they didn't have to focus on building your employee culture, because their profit was kind of preordained by regulators.

Tilden: That's right. That's right. They also didn't have to focus on their cost structure. So 1978, 1979 came, and airlines like Southwest, JetBlue, Frontier, Spirit, Virgin America came onto the scene, and they put a lot of pressure on these old companies and the older airlines, and Alaska was one of them, but we all had to lower our costs. We had to utilize aircraft more. We had to restructure our companies. And the pensions were – and Alaska, we're really proud. We did not file for bankruptcy. But even at Alaska, we had to do some serious restructuring. And I think bottom line, those restructurings were hard on our people.

Rascoff: Because usually, frequently airlines go through bankruptcy so they can renegotiate their labor contracts and get out from under –

Tilden: Or leases.

Rascoff: – the debt or the pensions.

Tilden: Yeah.

Rascoff: And so Alaska never had to do that, but you've maintained good employee relations why? How?

Tilden: You know, I actually think – and I was chatting with one of our labor groups this morning. We had to restructure at Alaska as well. We had to change airplanes. We're slowly getting out of defined benefit pension plans. We did make wage adjustments for some of our groups, but we did it ourselves. If you go back to 2005, I think there are folks that would look at the Alaska Airlines story and say those weren't our greatest days. But when we look back now, we say we did it ourselves. We sat down across the table from our labor leaders. We respected them, and we actually – I personally believe through the process, we built a bond. We built trust, and we built respect for one another.

Rascoff: So isn't one of the issues on airline mergers how to deal with seniority when you're merging the two groups of employees? So how are you doing with that between Virgin America and Alaska?

Tilden: You know, that's actually an interesting thing. Seniority matters a lot. It's the trips you bid and what you get to fly. But interestingly, the airline management doesn't have a lot to do with that. We have a lot to do with the payment scenario and the work rules and the pensions and benefits.

Rascoff: So union leadership?

Tilden: It's between the two unions – seniority integration.

Rascoff: Let me explore the brand decision a little bit more. You acquired Virgin America, deal gets through, and at that point, did you start evaluating what to do with the brands, or you already knew going into the acquisition what you were going to do with the brands and the product?

Tilden: We started the process before we announced the acquisition, but we didn't complete it. Two or three months ago the process completed, I would say.

Rascoff: And to arrive at this decision, the decision of keeping the Alaska – if I understand correctly, you're going to use the Alaska brand, retire the Virgin America brand.

Tilden: That's correct.

Rascoff: But takes some elements of the Virgin America product –

Tilden: That's exactly right.

Rascoff: – and incorporate it into Alaska. Describe how you arrived at that decision. What research did you do? Who's involved in that?

Tilden: We did a ton of research. I can't remember the numbers, but we got insights from thousands of customers. We did maybe 70 or 80 focus groups. We brought lots of our employees into the conversation.

We actually looked at – we took the industry. The industry's basically $100 billion industry. And we took the industry. We broke it down into demand pools. We said, “You and I might be in one demand pool when we're traveling for work. We might be in a different demand pool when we travel to Palm Springs on the weekend." But we started to say what are these different demand pools.

And we said what brands are out there, what space does American have already or Southwest have already? Then we just started to correlate. Said what is the – if you look at the demand side of the equation, what is it that people want. And then if you looked at the supply side, what is it that airlines already providing. Then you look at your own capabilities. What is it that we think we're good at. And candidly, I would say what I think we're good at is we do good with business people, and we do good with higher-end leisure travelers. We have a low-cost, sort of low-fare position, but it's probably not the total no frills airline that you might see out there.

So there was a ton of research done. And as we looked at the research – and then you looked at, you know, what do people feel about the Alaska Airlines name? What do people feel about the Virgin America name, and how should you move forward?

Rascoff: So there were really only four choices available to you as I think through it. You could keep the Alaska brand. You could keep the Virgin America brand and switch Alaska over. You could operate them both simultaneously, which is what we've done at Zillow Group with Zillow and Trulia, or you could launch a brand-new brand.

Tilden: That's right.

Rascoff: Did you have a hypothesis going in, you personally, as to which of those four answers was the right answer before you did all the research and analysis?

Tilden: I think if you talked to folks at Alaska in our leadership team, there were several different hypotheses. I personally thought running two brands at first might be – I thought that might be the way we ended up going. The Alaska brand has an enormous amount of equity, and I also thought that might be a place we went.

As you get through the research, you just sort of – in the airline business, I think our space is different than yours. You look at people, whatever, they need to fly Anchorage to Seattle, and then they're going to fly to San Francisco. They might do Anchorage -Seattle on Alaska, and if you run two brands, do that next leg on Virgin. And there's a little friction there, or people showing up at an airport to pick somebody up or drop somebody off or duplicate costs for airport facilities.

As we looked at it more and more closely, there are people that love the Alaska brand more, and there are people that love Virgin more, but in – so there would be some benefit that you have to acknowledge of running two brands, but there's a cost. And what we concluded was the cost of running two brands is greater than the benefit.

Rascoff: Does the word Alaska in your brand hold you back because people in, you know, Florida or New York think it's, you know, an oddity?

Tilden: Yeah. You know, it's a good question, but I don't think so. I think if you look at Southwest Airlines, you know, nobody expects Southwest to fly in the southwestern part of the United States, even though they fly, they're don't expect them to fly exclusively there. One we talk about in Seattle is Amazon. You know, someone things about Amazon, nobody thinks about the river. And so I think it's a valid question, but there's a lot of historical goodness to Alaska. There's good things we've done for customers and communities and employees. The challenge we have is to go out and to folks that are less familiar with us, help them understand why this is a great company and a great name.

Rascoff: So how do you make decisions? Now that you have this brand of Alaska, and you're trying to decide what routes to invest in, to expand in, is that driven – I guess, I'm trying to understand how those decisions get made. Is it mostly driven by the economics of what the current airlines that fly those routes are charging, so there's potential there and you can get gates, or is it based on what your users tell about where they want to go? I mean, how do you decide what routes to add?

Tilden: I think in the old days, I mean, we would do a P&L forecast for any route that we'd want to fly. And in our business, we still share a lot of information with the Department of Transportation. So we know how many people fly between any two city pairs. We know exactly how many people fly. We know exactly what the average fare is. We actually know the connecting. If you're talking about Seattle – Denver as an example, we know the connections that come down from Anchorage. We know the connections beyond Denver. So you actually have great information about the market today. You don't how much bringing your service in is going to stimulate the market.

So that's one piece of it is being really good at doing a route forecast. And I would say folks at Alaska, this is something we're – we've got a lot – we've added 110, 120 cities in the last five or six years. We've got a lot of confidence in our ability to build a route forecast and sort of believe that our performance will be close to the forecast. That is only part of it.

It's got to mix with a strategy of going to market and building loyalty. And if you look at what we're trying to do now, part of it is the micro forecast, but we're trying to go into a market like San Francisco or San Jose and say, “Hey, we'd like you to consider flying with Alaska Airlines and Virgin America. Consider joining our loyalty program. Consider having our credit card in your wallet." And people won't – it's a little bit of a chicken and egg scenario. They won't get your credit card or get into your loyalty program into you fly them enough places. And then when you fly to more places, they'll get into your loyalty program. And then once they're in the loyalty program, you add a new route, and the route will be successful.

So I think if you look at what we're doing today, we are doing a lot of that micro forecast, but it's also – we're going down into California. We're getting involved in the communities. We're marketing. We're trying to build loyalty in the loyalty program. We're adding new cities. We're advertising like crazy. So it's all of it together.

Rascoff: So one of the pieces of the brand positioning of Alaska, at least here in Seattle, is the hometown aspect, that this is your hometown airline. And I'm sure in Alaska, it's probably tenfold. When Delta moved into Seattle, they tried to sort of usurp that positioning, right? I guess, talk through how you do national and local marketing and how you – you have this product, which is obviously national, international really. But all these decisions are actually made locally. So explain how your national brand and your local positioning interact with one another?

Tilden: You know, one of the things that we believe is a lot of our success is you've got to be effective locally. If you look at it – as I said earlier, we fly 118 cities or something like that. But a market like Anchorage is really important. A market like Seattle is really important. Portland's really important. The Bay Area – San Francisco, San Jose – is going to be important.

So a lot of our thinking is more local. We need to go into those communities, build loyalty, do the right – I mean, Seattle, we've been there for – our headquarters have been here since 1954, so we want to be involved. We want to be showing up, doing the right things and providing good utility, good value, low fares to our customers. And then I think you have a chance of earning people's trust and loyalty. So I don't know. We are doing more and more national things, but if I had to choose local or national, I would choose local for our business.

Rascoff: So for example, UW Stadium is Alaska Airlines –

Tilden: It's local.

Rascoff: – arena, and that's a form or your local marketing.

Tilden: That's right.

Rascoff: Probably pretty hard to calculate the ROI on the naming rights –

Tilden: It is.

Rascoff: – on a college stadium. Do you even try, I mean, or is it just, you know, your gut says that that raises your brand awareness locally and –

Tilden: You know, one of the things that people say about marketing is half the money's wasted. You just don't know which half. And I think you look at a relationship like University of Washington, we've been affiliated with those guys forever. We know that a lot of our Golds and Gold 75Ks are alum. We know that they're in the stands on the weekend. When you look at something like UW, you can say, “Well, you know, what are the economics of this and how does that compare to the next thing?" But getting to ROI, honestly, I think that's tougher. You go with some gut feel.

Rascoff: Let's shift topics and talk about leadership, something that I know you're passionate about. In your view, what's the role of a leader? What does it even mean to be a leader?

Tilden: I think the leader helps the company chart a future, develop a strategy, figure out where you're going, bring people together. But, like, in our space, I think one of the under-appreciated, one of the really important parts of the being a leader is building alignment with your team. We had a person on our board said, you know – it was a military analogy – said, you know, “A bad plan with a great army that's totally motivated to execute it will always beat a good plan with an army that's not motivated and there's no sense of teamwork."

So I think a real job of a leader in our space especially, is to build that sense alignment, build that sense of teamwork. Part of it is you've got to figure out where you want to go, what is the strategy, what are you trying to do with a loyalty program, a new market announcement, a fleet, whatever it might be. The bigger part of the job is bringing your team along, getting them to follow, getting them to go out there and be great and help your company move forward. So that's something that I think Alaska in the last five, six, seven years has spent a lot more energy on, and I think it's paying off.

Rascoff: I mean, you got high praise for this. Everything I read and hear about the way you lead and manage is fantastic. When you're hiring a leader or when you're thinking about whether one of your direct reports is a good leader, how do you assess that?

Tilden: Like, I'm sort of into my career now, and you try different things on at different points of your life. But now, I look for four things in people. You want someone that's smart. That's really important. If it's a CFO, they've got to be good CFO. They've got to be good at their job, know how to close the books, communicate with Wall Street, whatever it is. They've got to have that.

The next two are even more important. I want people that really identify with our company. I call it they're clipped in. It's personal for them. They are totally bought into what Alaska's trying to accomplish, and they are totally, personally convicted about us getting to where we want to go.

And then the final one is how they work with other people. And it's something I've really grown to appreciate the last four or five years at Alaska. There are people that are sort of sharp elbows, and, “I just want to be ahead of you. It doesn't matter if I get ahead or if you go down," or there's people that really want to – they generally want to see their peers do well. And that's the people that collaborate. They want to work together, and they want to see their – they want to enjoy success themselves, but they also want to see their peers enjoy success.

Rascoff: They celebrate teamwork.

Tilden: That's right.

Rascoff: I was on a flight the other day, and the captain of the plane's son was the head flight attendant –

Tilden: Oh, my gosh.

Rascoff: – which was super cool. So, you know, they were both super excited to be working together. So, I guess, that's teamwork, but, you know.

Tilden: Fantastic.

Rascoff: What's the best advice that you've ever received, and tell us that story?

Tilden: I don't know. Bill Ayer was the previous CEO at Alaska Airlines. He was a great mentor to me. And I don't remember him actually saying this, but his lesson was just keep at it. Whatever it is that you're doing, make sure you're doing it for the right reasons, that you're justified it's appropriate. It's a good strategy. It's a good place to go, but just persevere. Just keep going at it. And if you do, and if people sort of see the goodness of what you're trying to accomplish, they see the value of it, they'll come along. And that's something I learned from him that I think was really important.

Rascoff: How has technology impacted your company and your industry over the last 10 years?

Tilden: It's huge. I mean, I could ask you all of these questions _____ _____ Zillow –

Rascoff: You have to get your own podcast. Then you get to ask the questions.

Tilden: [Laughs] There's a suggestion. That's a good idea. But, no. People buy tickets from home. Alaska was the first airline in 1995 to let you buy a ticket over the internet. You can print your boarding pass at home. Alaska was the first to do that. You can go to an airport, use a kiosk. Alaska led there as well. You can check in with an iPhone now.

Rascoff: So how many – yeah. I mean, I use your app all the time. So approximately how many software engineers do you have?

Tilden: I think it's in the neighborhood of 400 people now, something like that. I will tell you. It's an area that where our spending is quadruple what it was maybe five years ago in that area.

Rascoff: It's a good reminder that really every company is technology company now.

Tilden: It is. It is.

Rascoff: I mean, there are more software engineers at Morgan Stanley than Facebook. It's like –

Tilden: Isn't that amazing?

Rascoff: – and many more than Zillow. So it's, I guess, airlines, which are thought of as a traditional industry, are technology companies.

Tilden: No. Even, like, in the old days, all the computer was either on the airplane itself in the avionics or it was Saber. We used Saber for the backend. And now, there's maybe – there's hundreds of systems that are critical to us and we rely on every day to get weather, plan a flight, know where the airplane is, know where to deice, know – there's systems for everything, and we're relying on them.

Rascoff: I spoke the other day at a business school, and someone asked me a question that no one had ever asked me, so I'm going to end by asking it of you. They said if you had one magic bullet that you could shoot any competitor of yours with and that competitor would just disappear, which competitor would you choose and why?

Tilden: Yeah. You know what? It's a great question. I think I might not answer.

Rascoff: [Laughs]

Tilden: I think a lot of people might actually guess how I would feel or how Alaska would feel. But what we've learned at Alaska in the last three or four years and Seattle especially is that competition's actually good. We've had somebody come into Seattle and sort of take us on big time, but the company's taken a lot of risk in that time. We've added all kinds of routes. We've reconfigured our airplanes.

Rascoff: It's made you better.

Tilden: It's made us a little bit better, made us way better than we were. There's a tempting answer to that question, but I think the better way to train yourself is you want to be with the best, whether you're running a marathon, competing in football, running an airline, you want to be competing against the best, because that will make you better.

Rascoff: Brad, thanks very much. I appreciate it.

Tilden: Thank you, sir. It was fun.

Rascoff: Thank you.

The post Alaska Airlines' Brad Tilden: Competitors Make You Better appeared first on Office Hours.

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Arc’s $50M Push Into Commercial Maritime

🔦 Spotlight

Hey LA,

As the city pushes through a record-breaking March heat wave, one of the week’s most interesting LA startup stories came with a reminder that climate tech gets a lot more real when it leaves the pitch deck and hits the water. In Arc’s case, that means tugboats.

LA based Arc, founded in 2021 by a team of SpaceX alumni, announced a $50M Series C this week, led by Eclipse, a16z, Menlo Ventures, Lowercarbon, Necessary Ventures, and Offline Ventures, as it pushes deeper into commercial maritime. The raise follows Arc’s $160M contract with Curtin Maritime to deliver eight hybrid-electric tugboats beginning at the Port of Los Angeles, with the first expected to hit the water this year.

Imsage Source: Arc

That feels notable not just because of the funding, but because it marks a clear evolution in Arc’s business. What started as a premium electric boat company is now making a serious push into the industrial side of maritime transportation, with ambitions spanning tugboats, ferries, and defense vessels.

There is also something fitting about this story happening in Los Angeles. This is a city known for spectacle, but Arc is building in a category where performance actually has to perform. No amount of branding can fake a working tugboat, and that is exactly why this moment feels worth paying attention to.

Now, onto this week’s LA venture deals, fund announcements and acquisitions.

🤝 Venture Deals

      LA Companies

      • Talino closed a $7.5M Series A led by Chemonics International, with participation from Mt Sinai Capital and Gulf Blvd, as it shifts from a venture studio into what it calls a global fintech foundry. The company said the new funding will help build an API-first cross-border payments infrastructure layer connecting the U.S. with emerging markets, starting with the Philippines, where it is targeting faster, more compliant financial product launches and modernizing legacy rails with stablecoin and real-time payment capabilities. - learn more
      • PADO AI raised a $6M seed round led by NovaWave Capital to expand its AI-powered orchestration software for mid-market colocation data centers. The company said the funding will support product delivery and global growth as it helps operators better manage power, compute, cooling, and distributed energy resources to increase GPU utilization and maximize “compute per megawatt” without requiring major new infrastructure buildouts. - learn more
      • Meadow Memorials raised a $9M Series A led by Lachy Groom and Haystack to expand its software-enabled funeral planning platform, which lets families arrange services online or by phone. Founded in 2024 by former Stripe executive Sam Gerstenzang and Emma Gilsanz, the company says it is using a real-estate-light model to offer lower-cost funerals as it expands beyond California into states including Texas, Washington, and Arizona. - learn more

                      LA Venture Funds

                      • Anthos Capital participated in Bluesky’s $100M Series B, which was led by Bain Capital Crypto and also included Alumni Ventures, Bloomberg Beta, Knight Foundation, and True Ventures. The company said the round gave it the resources to scale both the Bluesky app and the broader AT Protocol ecosystem, which it says has grown to more than 43 million users and now supports a fast-expanding network of third-party apps and developers. - learn more
                      • Navigate Ventures participated in VerbaFlo’s oversubscribed $7M seed round, which was led by Pi Labs and also included Haatch and Old College Capital. VerbaFlo said it plans to use the funding to scale its conversational AI platform for real estate operators, building on traction across more than 200,000 units and expanding further into markets including the U.S., Middle East, and Australia. - learn more
                      • March Capital participated in Xage Security’s $15M equity financing round, which was led by Piva Capital as the company posted 81% year-over-year revenue growth and expanded its Zero Trust platform for AI and critical infrastructure. Xage said the funding, which closed in December 2025, will support go-to-market expansion and continued product innovation, including new AI security capabilities, as demand grows across sectors such as energy, manufacturing, utilities, transportation, and defense. - learn more
                      • B Capital led Knox Systems’ $25M Series A, backing the company’s push to scale what it says is the largest AI-managed federal cloud and dramatically shorten the FedRAMP authorization process for software vendors. Knox said the new funding will help accelerate growth after its June 2025 seed round, with the goal of helping customers achieve FedRAMP authorization in as little as 90 days at roughly 90% lower first-year cost, while expanding adoption across both government and commercial environments. - learn more
                      • WndrCo participated in Tenkara’s $7M round, which was led by True Ventures as the company builds AI-powered operations agents for American manufacturers. Tenkara said it is creating tooling to help factories handle sourcing and operational work more efficiently at a time of rising supply-chain pressure, with backing from a broader investor group that also included Articulate Capital, Night Capital, HF0, SF1, and Transpose Platform. - learn more
                      • Aurora Capital participated in Niv-AI’s $12M seed round, backing the startup alongside Glilot Capital, Grove Ventures, Arc VC, Encoded VC, and Leap Forward as it emerged from stealth. Niv-AI is building sensors and software to measure millisecond-scale GPU power surges and help data centers use electricity more efficiently, with plans to deploy its system in a handful of U.S. facilities within the next six to eight months. - learn more
                      • Clocktower Technology Ventures participated in Fuse’s $25M Series A, which TechCrunch reported was led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures, with Fuse also naming Clocktower Ventures among its backers. The company said it plans to use the funding to expand its AI-native loan origination and account opening platform for credit unions, building on traction with more than 100 customers and a $5M “rescue fund” aimed at helping institutions switch off legacy systems. - learn more
                      • Kairos Ventures participated in Alomana’s €4M seed round, which was led by CDP Venture Capital and also included Founders Factory, Italian Angels for Growth, Club degli Investitori, and others. Alomana said it will use the funding to strengthen its enterprise AI platform, add more capabilities for autonomous workflow automation, and support larger deployments across Europe as demand grows in sectors like finance, manufacturing, and pharma. - learn more

                                        LA Exits

                                        • Optimal’s Entertainment Media division is being acquired by Capstone Point Holdings, with the business set to operate under its legacy name, Optimad Media, following the deal. The transaction keeps founder Kevin Weisberg in place to lead the company from Los Angeles, while giving Optimad more backing to expand its entertainment media planning, buying, and prints-and-advertising investment capabilities across theatrical, streaming, and broadcast campaigns. - learn more

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                                                                  Inside Tinder’s Biggest Product Shift in Years

                                                                  🔦 Spotlight

                                                                  Hello Los Angeles,

                                                                  Despite headlines about swipe fatigue and dating app burnout, Tinder believes the problem isn’t that people are tired of dating. They’re tired of bad dating experiences.

                                                                  So it felt fitting that Tinder chose the El Rey Theatre in Los Angeles, a venue known for reinvention, to make its case that the category is far from over.

                                                                  Walking into the El Rey, it was clear Tinder wanted this to feel less like a tech launch and more like a cultural moment. Music was bumping, the room buzzed with chatter and excited energy, red light beams cut through the room, and chandeliers glowed overhead.

                                                                  At Tinder Sparks 2026: Start Something New, Match Group and Tinder CEO Spencer Rascoff took the stage to outline what the company calls the biggest evolution of the app in years. Tinder remains the largest dating app in the world, used by tens of millions of people across more than 185 countries and responsible for billions of matches every year.

                                                                  Match Group and Tinder CEO Spencer Rascoff

                                                                  Rascoff framed the shift around a broader cultural reality. In a world where people increasingly interact with machines, technology and AI, the need for real human connection has not gone away. If anything, Tinder believes it has only grown stronger.

                                                                  To respond to that shift, Tinder says it’s focusing on what it calls “sparks,” the moments when a match actually turns into a real conversation.

                                                                  As Rascoff put it on stage:

                                                                  “We are not optimizing for swipes or likes. We are optimizing for sparks.”

                                                                  That philosophy is shaping a wave of new features discussed throughout the keynote by Tinder’s leadership team, including Mark Kantor, SVP and Head of Product, Yoel Roth, SVP of Trust & Safety, and product leaders Claire Watanabe and Hillary Paine.

                                                                  Image Source: Tinder

                                                                  Among the updates are Music Mode, which lets users connect through shared songs and artists, and a new Astrology Mode that highlights compatibility between zodiac signs. Tinder is also leaning further into social dating with Double Date, a feature that lets friends match with other pairs together. The feature is already gaining traction with Gen Z users, reflecting a broader shift toward more social and lower-pressure ways to meet people.

                                                                  Image Source: Tinder

                                                                  Tinder is also redesigning profiles to help users express more personality. New tools can surface stronger photos from a user’s camera roll, improve lighting, and highlight interests more visually, while integrations with platforms like Spotify, Duolingo and the restaurant app Belly bring more of a person’s real life into their profile.

                                                                  Image Source: Tinder

                                                                  But the most interesting experiment might be happening right here in LA. Tinder is launching IRL Events in the city, letting users browse and RSVP to real-world meetups directly through the app. Think coffee shop raves, trivia nights and pickleball tournaments. The idea is simple. Dating works better when it feels like a social activity instead of an interview.

                                                                  Image Source: Tinder

                                                                  Under the hood, Tinder is also leaning more heavily on AI to improve recommendations. New tools like Learning Mode and Chemistry aim to better understand what users are actually looking for and surface stronger matches faster. At the same time, the company is investing heavily in safety, expanding Face Check, a facial verification system designed to reduce bots and impersonation accounts.

                                                                  Closing out the presentation, Melissa Hobley, Tinder’s Chief Marketing Officer, zoomed out from the product roadmap to the brand’s cultural footprint, noting that Tinder is mentioned in billions of TikTok videos and has become shorthand for how younger generations talk about dating.

                                                                  Taken together, the updates represent Tinder’s most significant evolution in years. And judging by the energy inside the El Rey this week, the company believes the next chapter of dating will be more social, more expressive and more intentional. It’s a shift being shaped right here in Los Angeles, and one that could redefine how the next generation meets.

                                                                  Now onto this week’s LA venture deals, fund announcements and acquisitions.


                                                                  🤝 Venture Deals

                                                                      LA Companies

                                                                      • Hurray’s GIRL BEER raised a $5M seed round led by Lakehouse Ventures, with participation from Spice Capital plus CPG insiders and entertainment executives, as it accelerates national expansion. The LA-based flavored light beer brand says it has already landed retail placements at Walmart, Kroger, Albertsons, and Whole Foods, and plans to use the new capital to deepen distribution, enter new markets, and ramp up marketing, alongside a rollout of seven new flavors. - learn more
                                                                      • Freestyle closed a $10M Series A led by Silas Capital, with significant participation from ECP Growth. The company also noted continued backing from existing investors including Mucker Capital, Adapt Ventures, and Superangel, as it scales its premium diapers and wipes business following nationwide launches at Walmart and Target. - learn more
                                                                      • MAX BioPharma announced a new investment and partnership with Technomark Life Sciences to advance Oxy210, its oxysterol-based, orally available drug candidate for MASH. Technomark is joining as a strategic lead investor by participating in MAX BioPharma’s $13M Series A to fund a Phase 1a/1b first-in-human study, and the companies say the collaboration will pair MAX’s therapeutic platform with Technomark’s drug development experience. - learn more

                                                                                      LA Venture Funds

                                                                                      • B Capital participated in ORO Labs’ $100M Series C, which was led by Brighton Park Capital and Growth Equity at Goldman Sachs Alternatives, as the company pushes deeper into what it calls agentic procurement orchestration. ORO said the new funding follows 300% revenue growth over the past year and will be used to speed up product development, expand go-to-market and customer teams globally, and broaden enterprise use cases across procurement, finance, legal, and supply chain workflows. - learn more
                                                                                      • Aliment Capital participated in Tropic’s oversubscribed $105M Series C, which was co-led by Forbion’s Bioeconomy Fund and Corteva as the company scales the commercial rollout of its gene-edited tropical crops. Tropic said the funding will help expand production of its banana portfolio, accelerate its banana and rice pipelines, and support entry into additional climate-resilient crops, following the 2025 launch of its first new banana varieties in more than 75 years and demand that is already outpacing supply. - learn more
                                                                                      • B Capital doubled down in Axiom’s $200M Series A, which valued the company at more than $1.6 billion and was led by Menlo Ventures. Axiom said the new funding will help it extend its lead from formal mathematics into what it calls “Verified AI,” with plans to apply its technology beyond mathematical discovery into software and hardware verification. - learn more
                                                                                      • WndrCo participated in Quince’s $500M Series E, a round led by ICONIQ that values the manufacturer-to-consumer retail platform at $10.1B post-money. Quince says it will use the fresh capital to accelerate growth and global expansion of its proprietary M2C operating system, which uses AI-driven demand forecasting and direct factory partnerships to cut traditional retail markups. Other investors in the round included Basis Set Ventures, Wellington Management, MarcyPen Capital Partners, Baillie Gifford, Notable Capital, and DST Global. - learn more
                                                                                      • Matter Venture Partners co-led Eridu’s oversubscribed Series A, part of $200M+ raised as the AI networking startup emerges from stealth to tackle what it calls the “network wall” bottleneck in AI data centers. - learn more
                                                                                      • Matter Venture Partners participated in Rhoda AI’s $450M Series A, backing the startup as it comes out of 18 months in stealth with FutureVision, a video-predictive control platform aimed at helping robots operate reliably in messy, real-world industrial environments. The round included a large syndicate of investors, including Capricorn Investment Group, Khosla Ventures, Leitmotif, Mayfield, Premji Invest, Prelude Ventures, Temasek, Xora, and John Doerr, and the company says the funding will accelerate development and industrial deployments. - learn more
                                                                                      • Halogen Ventures participated in Rasa Legal’s $5M late-seed round, backing the company’s push to scale its tech-enabled criminal record sealing and expungement service nationwide. The round was led by Rethink Education with participation from Social Finance and the Richard King Mellon Foundation, and Rasa says the funding will help it expand leadership, speed product development, and grow beyond its current footprint (Utah, Arizona, and Pennsylvania). - learn more
                                                                                      • Halogen Ventures participated in Nyad’s $1.3M oversubscribed pre-seed round, backing the Birmingham-based startup as it launches an AI decision-support tool for wastewater treatment operators. The round was led by Boost VC with participation from Draper Associates, Ollin Ventures, Apprentis, First Avenue Ventures, and strategic angel Troy Wallwork, and Nyad says it will use the funding to hire, grow customers, and keep building the product as retirements thin the wastewater workforce. - learn more
                                                                                      • MANTIS VC participated in Scanner’s $22M Series A, which was led by Sequoia Capital and also included CRV, as the company builds a high-speed security data layer for AI-driven threat investigation. Scanner said the funding comes as security teams at companies like Notion, Ramp, and BeyondTrust use its platform to search years of log data quickly and power agentic workflows that help hunt threats, triage alerts, and investigate incidents more efficiently. - learn more
                                                                                      • Chapter One participated in Zcash Open Development Lab’s $25M+ seed round, joining a syndicate that included Paradigm, a16z crypto, Winklevoss Capital, Coinbase Ventures, Cypherpunk Technologies, and Maelstrom. The new company, formed by former Electric Coin Company team members, said the funding will support continued development of privacy-focused infrastructure for the Zcash ecosystem, including its self-custodial wallet and broader shielded payments tooling. - learn more
                                                                                      • CIV participated in Isembard’s $50M Series A, which was led by Union Square Ventures and also included Tamarack Global, IQ Capital, and existing backer Notion Capital. Isembard said the new funding will help it open 25 AI-powered factories by the end of 2026, expand its engineering team, and enter Germany, France, and Ukraine as it scales software-driven component manufacturing for aerospace and defense customers. - learn more
                                                                                      • WndrCo participated in Crafting’s $5.5M seed round, which was led by Mischief as the startup launched general availability for Crafting for Agents. The company said the new capital will support its push to become core infrastructure for AI-driven engineering teams, giving agents secure access to production-like environments so they can validate, test, and ship code inside complex enterprise systems used by customers including Brex, Faire, and Webflow. - learn more

                                                                                                        LA Exits

                                                                                                        • Hireguide has been acquired by HireVue, which is buying Hireguide’s underlying technology and bringing the Hireguide team into HireVue’s product org. HireVue says the deal accelerates its agentic AI roadmap, starting with a voice-based AI interviewer designed to help employers qualify candidates earlier and run smarter, more conversational hiring workflows. - learn more
                                                                                                        • Ultracor has been acquired by Applied Aerospace & Defense, bringing the California-based maker of specialized honeycomb core materials into Applied’s advanced composites platform. Applied says the deal supports its selective vertical integration strategy by strengthening supply chain control and boosting speed and capacity for space and defense programs, from satellites and missiles to antennas, radomes, and next-gen aircraft. - learn more

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                                                                                                                                  Montgomery Summit Is Back at the Fairmont Miramar

                                                                                                                                  🔦 Spotlight

                                                                                                                                  Hey Los Angeles,

                                                                                                                                  If you’re looking to stack your March with the right rooms and the right people, The Montgomery Summit, presented by March Capital, is coming back to Santa Monica (March 10–11, 2026) at the Fairmont Miramar. It’s been running since 2004, founded by March Capital co-founder Jamie Montgomery, and it consistently draws a tight mix of founders, investors, and execs who show up to have real conversations, not just do the conference lap.

                                                                                                                                  This year’s program is shaping up to be a big one: 1,200+ attendees, 180+ speakers, and CEOs from 120+ carefully selected private tech companies. In other words, if you want early looks at breakout companies and the context you can’t get from a headline scroll, this is one of LA’s most high-signal two-day events.

                                                                                                                                  What I like about Montgomery is the vibe. It’s less “conference chaos” and more “high-signal collisions,” with structured ways to connect, including 1:1 meeting scheduling through the Summit app for eligible attendees. The agenda doesn’t stop when the panels do, there’s a Getty Villa reception and a closing reception, so the Summit keeps moving well past the main stage hours.

                                                                                                                                  It’s invitation-only, but you can request an invitation here.

                                                                                                                                  Keep scrolling for the latest LA venture rounds, fund news and acquisitions.


                                                                                                                                  🤝 Venture Deals

                                                                                                                                      LA Companies

                                                                                                                                      • Vast secured $500M in new financing, made up of $300M in Series A equity and $200M in debt, to accelerate production of its Haven commercial space stations and expand its facilities and team. The round was led by Balerion Space Ventures with participation from IQT, Qatar Investment Authority, Mitsui & Co., MUFG, Nikon, Stellar Ventures, Space Capital, Earthrise Ventures, and founder/first investor Jed McCaleb, as Vast pushes toward Haven-1 and its longer-term successor vision. - learn more
                                                                                                                                      • PartsPulse has raised $3M from UP.Partners and used the momentum to officially launch its unified AI platform at CONEXPO in Las Vegas. The startup says its “command center” combines inventory planning, pricing optimization, and sales intelligence into one system for OEMs, dealers, and fleet managers, and it was built with UP.Labs and co-developed with Wabash to help parts businesses spot revenue opportunities and stock the right parts at the right time. - learn more
                                                                                                                                      • Procode AI launched out of stealth with $4M in venture funding and acquired The Auctus Group, a major revenue cycle management (RCM) firm that bills for 300+ plastic surgery and dermatology providers. The company says the combination will bring AI into private-practice surgical billing, using its “Coding Copilot” to translate operative reports into billing codes faster and reduce denials, while Auctus continues operating under CEO John Gwin. - learn more
                                                                                                                                      • Smack has raised $32M across Seed and Series A to scale what it calls the first “frontier AI lab” built specifically for national security, after landing contracts with multiple branches of the U.S. military in 2025. The Series A was led by Geodesic Capital and Costanoa Ventures, with participation from Point72 Ventures, Felicis, First In, Scribble Ventures, Bloomberg Beta, Washington Harbour Partners, Palumni VC, Fulcrum Venture Group, Anomaly Fund, and Fortitude Ventures. - learn more

                                                                                                                                                      LA Venture Funds

                                                                                                                                                      • BOLD Capital Partners participated in KeyCare’s $27.4M financing round, backing the Epic-native virtual care company as it scales an AI-enabled model designed to extend health systems’ capacity with 24/7 virtual urgent, preventive, chronic, and virtual-first primary care. The round was led by HealthX Ventures and also included 8VC, LRVHealth, and Ikigai Venture Partners, plus strategic investors such as WellSpan Health, Allina Health, University of Chicago Ventures, Edge Ventures, and Exact Sciences, bringing KeyCare’s total funding to $55M+. - learn more
                                                                                                                                                      • Fifth Wall led RenoFi’s $22M Series B, backing the Philadelphia startup’s push to make renovation financing simpler through an AI-enabled platform that underwrites loans based on a home’s after-renovation value. The round also included meaningful participation from Progressive Insurance and additional support from investors such as HighSage Ventures, Alumni Ventures, Flintlock Capital, and Gaingels, plus continued backing from Canaan, First Round Capital, Curql, TruStage Ventures, and several credit union partners. - learn more
                                                                                                                                                      • B Capital co-led Bounce’s $5M internal round alongside existing backers Accel and Qualcomm Ventures, extending fresh capital without bringing in new investors. Bounce founder Vivekananda Hallekere told The Economic Times the round underscores continued support from its current investors as the electric mobility startup pushes forward in the EV space. - learn more

                                                                                                                                                                      LA Exits

                                                                                                                                                                      • Silent House Group has been acquired by concert staging and live-experiences giant TAIT, formalizing a long-running partnership between the two companies. The deal pairs Silent House’s LA-born creative and production chops, behind major tours and live experiences including Taylor Swift’s The Eras Tour and Kendrick Lamar’s Grand National Tour, with TAIT’s engineering, staging, and global delivery capabilities to build touring, experiential, and broadcast productions at any scale. - learn more

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