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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This LA Startup Wants to Make It Rain and Just Raised $25M to Do It

🔦 Spotlight

Hello LA!

While most tech headlines are busy chasing AI chatbots and flying taxis, one startup in El Segundo is aiming a little higher. Literally.

Rainmaker just secured$25 million in Series A funding to expand its cloud-seeding drone technology. The round was led by Lowercarbon Capital, with participation from Starship Ventures, 1517 Fund, Long Journey Ventures, Naval Ravikant, and others.

Their idea is simple but urgent. Instead of relying on old-school aircraft to spray rain-making particles across the sky, Rainmaker uses AI-powered drones that find and seed clouds with pinpoint accuracy. It is faster, more affordable, and could reshape how regions fight back against droughts.

California's ongoing water struggles have made it clear that simply "saving" water is not enough. Cities and entire economies need new tools to create it. Rainmaker plans to use the funding to grow its fleet, invest in atmospheric science, and expand commercial partnerships with utilities and governments searching for solutions.

Bigger picture, Rainmaker is part of a growing shift in LA's tech ecosystem. While software remains dominant, more investors and founders are quietly betting on "hard tech" that addresses real-world problems like water, energy, and infrastructure.

It is not just about apps anymore. It is about survival tech.

With the skies getting hotter and the reservoirs getting lower, the next great tech export out of LA might not be entertainment or social media. It could be rain.

Stay tuned…

🤝 Venture Deals

LA Companies

    • SimpleClosure, a Santa Monica-based startup that automates the business shutdown process, has raised a $15M Series A funding round led by TTV Capital. The company, which launched publicly in late 2023, helps startups and businesses navigate legal, regulatory, and compliance hurdles when closing down, using AI to streamline paperwork and communications. The new funding will support SimpleClosure’s platform growth and product expansion, as rising economic pressures create heightened demand for efficient dissolution solutions. - learn more

      LA Venture Funds

      • Alexandria Venture Investments participated in Haya Therapeutics’ $65M Series A funding round. Haya Therapeutics, which is developing precision RNA-guided medicines for chronic and age-related diseases, will use the capital to advance its lead therapeutic programs targeting heart failure and fibrosis. The company plans to expand its pipeline, invest in its discovery platform, and grow its team to accelerate clinical development. - learn more
      • Griffin Gaming Partners led a $7M funding round for Fuse Games, a gaming studio focused on developing new original IP. Fuse Games, founded by industry veterans with experience at major gaming companies, plans to use the funds to accelerate production of its first title and expand its team as it builds ambitious new gaming experiences. - learn more
      • Shamrock Capital has made a strategic growth investment in Neocol, a leading consulting platform that specializes in sales and AI-driven software solutions for subscription businesses. Neocol, which helps companies optimize revenue operations and digital transformations, plans to use the investment to accelerate its growth, expand its services, and further strengthen its leadership position in the Salesforce ecosystem. - learn more
      • Trust Fund participated in a $7.2M seed funding round for Agree.com, an all-in-one platform that combines e-signature and integrated payments, aiming to streamline and speed up service agreements. The company plans to use the new capital to grow its engineering team, expand integrations, and enhance payment capabilities to help service providers close deals faster. - learn more
      • Hyperlink Ventures participated in Orca AI’s $72.5M funding round. Orca AI, headquartered in London, develops AI-based navigation and collision-avoidance solutions to improve safety and efficiency for commercial shipping fleets. The funding will help Orca AI scale its autonomous shipping technologies, expand its team, and support global growth efforts. - learn more


      LA Exits

      • StoryFire, a social storytelling and video platform with over 2.5M users, has been acquired by Flashy Finance to launch a new platform called Flashy Social. The move aims to merge content creation with blockchain-powered financial tools, allowing creators to monetize through token incentives, streaming features, and community engagement. This acquisition supports Flashy Finance’s broader vision of building a cultural, creator-led financial ecosystem. - learn more
      • Jaanuu, Inc., a Los Angeles-based medical apparel brand known for its stylish and functional scrubs, has been acquired in an asset sale by VentureOn Management, LLC. The acquisition includes substantially all of Jaanuu's assets, encompassing its intellectual property, inventory, and customer relationships. VentureOn Management plans to continue Jaanuu's operations, focusing on delivering high-quality medical apparel to healthcare professionals. - learn more
      • Skechers has agreed to be acquired by 3G Capital in a deal valued at approximately $9.4 billion. Shareholders will receive either $63 per share in cash or $57 plus an equity unit in a new private parent company. Following the acquisition, Skechers will become privately held, maintain its Manhattan Beach headquarters, and continue to be led by its current management team. - learn more

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        Biometrics, Crypto, and Comfort: New Tech Lands in LA

        🔦 Spotlight

        Happy Friday, Los Angeles!

        This week, it's all eyes, quite literally, on LA's latest tech headlines.

        Image Source: World

        First up, World has officially touched down in the U.S., launching its ambitious biometric crypto project in six cities, including right here in Los Angeles. Cofounded by OpenAI CEO Sam Altman, World is betting big on a future where proving you're human is just a blink away. Their tool? An orb-shaped device that scans your eyes to create a "World ID," a decentralized digital passport built for the AI era. Verified users can then claim Worldcoin, a cryptocurrency aiming to become the first truly global digital currency. To tie it all together, World has rolled out the World App, a wallet to manage your ID and crypto and World Chain, a new blockchain designed to prioritize real people over bots. The ambition is bold. The stakes are high. And the question still lingers: How much privacy are we willing to trade for convenience?

        Image Source: Lyft

        Meanwhile, Lyft is rolling out the red carpet, or perhaps a comfortable seat cushion, for LA’s senior citizens. The rideshare giant just launched Lyft Silver in Los Angeles, offering older adults personalized support, live phone assistance, and specially trained drivers. It's a savvy play into an often-overlooked demographic, combining technology and empathy to serve a growing market of tech-savvy seniors. Will Lyft’s new approach give them an edge in LA’s competitive rideshare market? Stay tuned, and maybe text your grandma… she just might become Lyft’s latest power user.


        🤝 Venture Deals

        LA Companies

          • True Classic, a Los Angeles-based apparel brand known for its better-fitting basics, has received its first institutional investment from 1686 Partners. This strategic partnership aims to accelerate True Classic's global expansion and diversify its product offerings to include women's and children's lines. The investment will also support enhancements in supply chain, logistics, and omnichannel retail operations, positioning the brand for continued growth in the global market. - learn more
          • Chaos Industries, a Los Angeles-based defense technology startup, raised $275M in a Series C round led by Accel and New Enterprise Associates, valuing the company at $2N. The company develops advanced detection, monitoring, and communication systems for defense and commercial sectors. The funds will be used to expand product development, grow the team, and scale manufacturing operations. - learn more
          • Apex, a Los Angeles-based spacecraft manufacturer, raised $200M in Series C funding to scale production of its productized satellite bus platforms. The company will use the funds to expand operations at its 50,000-square-foot facility and increase manufacturing capacity to meet demand from government and commercial customers. Apex aims to accelerate delivery timelines and support national security initiatives like the U.S. Department of Defense’s Golden Dome program. - learn more
          • Deferred, a technology-driven Qualified Intermediary, has raised $3.6M in seed funding to modernize and democratize 1031 exchanges for everyday real estate investors. The funding round was led by B Capital and Fika Ventures, with participation from strategic investors. Deferred's platform offers AI-driven compliance, robust fund security, and a no-fee exchange model, aiming to make tax-deferred real estate transactions more accessible, secure, and efficient. The funds will be used to expand access to 1031 exchanges, ensuring that every investor, not just institutional players, can leverage this powerful wealth-building tool. - learn more

          LA Venture Funds

          • Village Global participated in Stately Bio's $12M seed funding round. Based in Palo Alto, Stately Bio is a biotech startup developing an AI-powered live-cell imaging platform that enables non-invasive, real-time analysis of cell behavior, enhancing regenerative medicine and cell therapy development. The funds will be used to scale the platform and expand its pipeline of stem cell-derived therapies. - learn more
          • Riot Ventures participated in True Anomaly's recent $260M Series C funding round. Based in Centennial, Colorado, True Anomaly develops advanced spacecraft and software systems for U.S. national security missions, including its flagship Jackal vehicle designed for close-proximity operations in orbit. The funds will be used to support upcoming space missions, expand manufacturing capabilities, and grow the company's workforce. - learn more
          • Navitas Capital led a $10.5M Series A funding round for Field Materials, a Charlotte, North Carolina-based startup that automates construction material and equipment procurement using AI. Field Materials' platform leverages proprietary large language models to process vendor quotes, delivery slips, and invoices, integrating the data into major construction accounting systems. This approach reduces purchase order and invoice processing time by 90%, improves margins, and helps construction companies secure volume pricing. The funds will be used to double Field Materials' team and triple its revenue in 2025, accelerating the delivery of AI capabilities to meet growing demand in the construction industry. - learn more
          • Bold Capital Partners participated in Near Space Labs $20M Series B funding round. Based in Brooklyn, New York, Near Space Labs deploys helium balloon–lifted "Swift" robots to capture ultra-high-resolution aerial imagery from the stratosphere. The company plans to use the funds to expand its fleet and increase coverage, aiming to provide 7cm-resolution images to 80% of the U.S. population twice annually. - learn more
          • Alexandria Venture Investments participated in a $15M Series A funding round for Hoofprint Biome, a Raleigh, North Carolina–based agtech startup. Hoofprint Biome develops enzyme-based feed additives aimed at reducing methane emissions from cattle while enhancing productivity. The company plans to use the funds to advance product development, conduct on-farm trials, and prepare for commercial launch. - learn more
          • Finality Capital Partners participated in a $25M seed funding round for Miden, a privacy-focused blockchain protocol spun out of Polygon. Miden leverages zero-knowledge technology to offer fast, confidential transaction processing tailored for large institutions handling sensitive payment flows. The funding will support the development of Miden's ecosystem and developer tools, with plans to launch its main network by the end of the year. - learn more
          • Overture VC participated in Glacier's $16M Series A funding round. Glacier, a San Francisco-based startup, develops AI-powered robotic systems designed to automate and enhance the efficiency of recycling processes at material recovery facilities (MRFs). The funds will be used to expand Glacier's operations, deploy its technology to more MRFs across the U.S., and further develop its AI and robotics capabilities to improve recycling rates and reduce environmental impact. - learn more
          • Powerhouse Capital and Rideback participated in a $10M funding round for Cheehoo, a Los Angeles-based startup developing AI-powered tools to streamline 3D animation workflows. Cheehoo's platform integrates with industry-standard software like Maya and Unreal Engine, offering features such as AI-assisted character animation, speech-to-motion capabilities, and real-time collaboration tools. The company plans to use the funds to enhance its technology and expand its reach to a broader range of creators, from major studios to independent animators. - learn more
          • Village Global participated in P-1 AI's recent $23M seed funding round. Based in Henderson, Nevada, P-1 AI is developing an artificial general intelligence (AGI) platform named Archie, designed to automate engineering tasks for physical systems. The company plans to use the funds to advance Archie's capabilities, starting with applications in data center cooling systems, and eventually expanding into sectors like industrial systems, automotive, and aerospace. - learn more
          • TenOneTen Ventures led a $3.3M seed funding round for Domos, a startup developing an AI-powered workforce to streamline property management operations. Based in New York City, Domos' platform automates routine communications and workflows, enabling property managers to focus on higher-value tasks. The funds will be used to expand the company's engineering team and further develop its AI capabilities to enhance efficiency and resident experience. - learn more
          • Leap Venture Studio participated in a $1M seed funding round for Buddy Bites, a Hong Kong-based dog food brand that donates to shelters with every order. The funds will support Buddy Bites' expansion in Hong Kong, Singapore, and the UK, with plans to enter Taiwan and launch new products later this year. Additionally, Buddy Bites joined Leap Venture Studio's 12-week accelerator program, gaining mentorship and access to a network of industry experts to further its mission of providing premium dog food while supporting animal shelters. - learn more

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          From Metro Rails to Blended Wings: LA’s Transportation Era

          🔦 Spotlight

          Hello Los Angeles,

          Move over Coachella, hello Stagecoach. With crowds headed east, LA might feel a little quieter this weekend, but beneath the surface, the city is busy making moves that could shape the future of travel.

          Image Source: Metro

          First up: a major milestone at LAX.

          This June, the new LAX/Metro Transit Center Station will officially open, finally linking Metro's C and K Lines to a new ground hub near the airport.

          It marks the first real rail connection to LAX in the airport’s history, a major step for a city that has long been synonymous with gridlock.

          While the fully Automated People Mover system connecting the station to the terminals is still under construction and expected to open in 2026, the launch of the transit center is a critical piece of LA’s broader infrastructure upgrade ahead of the 2028 Olympics.

          Even if most travelers will still rely on cars or rideshares for now, it is a sign that even the most car-centric corners of the city are starting to shift.

          Image Source: JetZero

          Meanwhile, in Long Beach, a local aerospace startup is aiming to transform air travel altogether and just got a major boost.

          JetZero, a stealthy aviation company based in Long Beach, announced a new investment from United Airlines to advance its radical new aircraft design: the blended wing body.

          Unlike traditional tube-and-wing planes, JetZero’s blended design integrates the wings and fuselage into a single structure, reducing aerodynamic drag and dramatically improving fuel efficiency.

          United's investment is more than just financial support. It is a strategic bet on JetZero’s vision for cutting long-haul flight emissions in half, a critical goal as the aviation industry faces mounting pressure to decarbonize.

          JetZero plans to have its first full-scale prototype flying by 2027, and if successful, it could set a new blueprint for the next generation of commercial aircraft.

          For Los Angeles, it is another reminder that some of the boldest ideas shaping the future of mobility are being built right here in our own backyard.

          Planes, trains, and a city learning to move a little differently. Just another week in LA.

          🤝 Venture Deals

          LA Companies

          • Durin, an El-Segundo startup aiming to automate drilling for critical minerals exploration, has secured $3.4M in a pre-seed funding round led by 8090 Industries. The company is developing a sensor-equipped drilling rig capable of drilling 300 meters deep, gathering data to build an automation model. The funding will support the development of this technology, with the goal of enabling unattended drill rigs within two to three years. - learn more
          • Altruist, a Los Angeles-based custodian and software platform for registered investment advisors (RIAs), raised $152M in a Series F round led by GIC, bringing its valuation to $1.9 billion. The platform streamlines account opening, trading, reporting, and billing for over 4,700 advisors. The new funding will be used to accelerate product development, expand the team, and scale enterprise capabilities. - learn more
          • Sesh, a superfan engagement platform that connects artists with fans through interactive experiences, exclusive content, and live events, has raised $7M in funding led by Miura Global. The funds will be used to expand platform capabilities, onboard more artists, and enhance technology for deeper insights and engagement opportunities. - learn more
          • Khloud, a new consumer brand founded by Khloé Kardashian, has raised $12M in an oversubscribed funding round with participation from Jessica Bixby, Serena Ventures, William Morris Endeavor (WME), and Shrug Capital. The Los Angeles-based company is debuting with a protein-rich popcorn made from whole-grain corn and its proprietary “Khloud Dust” seasoning, delivering 7 grams of protein per serving. The funds will be used to expand into additional snack categories and scale retail distribution, beginning with a Target launch on April 29. - learn more

          LA Venture Funds

          • Anthos Capital co-led a $20M funding round for Theo, a New York-based crypto trading infrastructure startup. Theo enables retail investors to access institutional-grade trading strategies—such as high-frequency arbitrage and cross-chain funding rate optimization—through strategy-specific vaults, eliminating the need for technical expertise. The platform operates on a custom validator network that facilitates real-time execution across centralized and decentralized exchanges, enforcing margin requirements and system-wide overcollateralization. The funds will be used to expand Theo's validator infrastructure, integrate with additional financial platforms, and grow its user base. - learn more
          • Pinegrove Capital Partners participated in a $70M Series B funding round for Nourish, a New York-based startup offering AI-powered, insurance-covered virtual nutrition counseling. Nourish connects patients with registered dietitians to manage chronic conditions like obesity and diabetes, boasting a network of over 3,000 dietitians across all 50 states. The funds will be used to expand its provider network, enhance AI tools, and deepen partnerships with healthcare organizations. - learn more
          • Mantis VC participated in Chainguard's $356M Series D funding round. Based in Kirkland, Washington, Chainguard secures software supply chains by offering tools like secure containers, virtual machines, and libraries for open-source development. The funding will be used to expand product offerings, grow the go-to-market team, and support its expanding customer base. - learn more
          • Clocktower Technology Ventures participated in a $30M Series C funding round for Steadily, a landlord insurance provider based in Austin, Texas, and Overland Park, Kansas. Steadily offers tailored insurance solutions for rental property owners, serving policyholders across all 50 U.S. states. The funds will be used to expand operations, enhance technology, and grow the team, aiming to streamline the insurance process for landlords. - learn more
          • Blue Bear Capital participated in Ocient's recent $42.1M Series B extension, bringing the Chicago-based data analytics company's total funding to $159.4M. Ocient specializes in high-performance, energy-efficient analytics solutions for large-scale, complex data and AI workloads, leveraging its proprietary Compute Adjacent Storage Architecture® and Megalane™ technology. The new capital will be used to advance the development and delivery of energy-efficient solutions for costly, complex, and operationally burdensome data and AI workloads. - learn more
          • Group11 participated in Healthee's $50M Series B funding round, supporting the New York-based company's mission to simplify health benefits through AI. Healthee offers an AI-powered platform that helps employees and employers navigate complex healthcare systems, enhancing user experience, reducing costs, and improving care outcomes. The funds will be used to expand Healthee's product suite, scale go-to-market operations, and accelerate the development of its AI-powered tools. - learn more
          • Sum Ventures participated in Irrigreen's $19M Series A funding round. Headquartered in Edina, Minnesota, with operations in San Francisco, Irrigreen develops robotic irrigation systems that utilize digital mapping and AI to optimize water usage for residential lawns. The funds will be used to advance product development, expand manufacturing in the U.S., and enhance the company's smart lawn care solutions. - learn more
          • Ventek Ventures participated in Recce's $4M funding round. Based in San Francisco, Recce offers data-native code review tools designed to enhance data validation in AI and software development workflows. The funds will be used to advance Recce's open-source toolkit and launch its collaborative SaaS platform, Recce Cloud, aiming to streamline data validation processes across the software lifecycle. - learn more
          • B Capital led an $87M Series C funding round for Omnidian, a Seattle-based provider of performance assurance services for residential and commercial solar and energy storage systems. Omnidian offers comprehensive protection and performance plans, ensuring optimal operation and maintenance of clean energy assets. The funds will be used to scale core operations, expand into high-potential markets like Australia and Europe, and explore new product lines such as electric vehicle (EV) charging infrastructure and commercial energy storage solutions. - learn more
          • Overture VC participated in PHNX Materials' $2.5M seed funding round. Based in the U.S., PHNX Materials has developed a process to purify coal fly ash by removing impurities like sulfur and carbon, making it suitable for use in concrete production. This approach not only repurposes industrial waste but also reduces the carbon footprint of concrete by replacing a portion of cement. The funds will be used to scale PHNX's purification technology and expand its operations to meet the growing demand for sustainable construction materials. - learn more

          LA Exits

          • Maza, a fintech startup catering to Spanish-speaking consumers in the U.S., has been acquired by Flex for $40M. Originally focused on helping immigrants open bank accounts and obtain ITINs, Maza shifted its services toward small business owners, such as landscapers and construction subcontractors. This pivot aligned with Flex's mission to provide comprehensive financial tools for business owners. Post-acquisition, Maza will rebrand as Flex Consumer, with its founders assuming executive roles within the combined company. The merger aims to accelerate their shared roadmap in delivering integrated financial solutions. - learn more
          • Moondust Management, a talent agency known for representing creators in travel, lifestyle, wellness, and purpose-driven content, has been acquired by Fixated, a digital entertainment platform. This acquisition aims to enhance Fixated's capabilities in content creation and brand partnerships by integrating Moondust's expertise and creator network. - learn more
          • ClaimShark, a provider of payment integrity solutions, has been acquired by Lyric, a leader in healthcare payment accuracy and integrity solutions. ClaimShark's innovative tools, including the Virtuoso command center and Replay audit platform, will be integrated into Lyric's AI-driven Lyric42 platform. This acquisition aims to enhance payment accuracy, transparency, and efficiency across the healthcare ecosystem by streamlining and simplifying healthcare transactions to eliminate waste. - learn more

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