The Travel Business

Velma Jane Livergood was the fifth woman to marry Joe Kirkland of Kirkland Deluxe Travel, and she became Jane Kirkland the day she said yes. Barney once stopped to consider the math of being married five times. Then he remembered that the bandleader Artie Shaw had managed it eight, and he stopped considering. Joe Kirkland was a successful agency owner with four offices around St. Louis — in Clayton, downtown, Belleville (across the river in Illinois), and South St. Louis — and he hired Barney as a sales agent in late 1958, a few months after Barney had brought Martine home from France and a few weeks after Barney had decided that his career was going to involve seeing the world for a living. Joe assigned Jane to manage the Clayton office. One month later, Joe died.

Jane became Barney's boss. The arrangement was, by Barney's later judgment, the worst possible match: an insecure widow with no business experience inheriting a four-office travel agency, and a twenty-four-year-old former Army corporal with a Mizzou-and-Wash-U accounting brain who knew exactly what was being done badly. He took the situation as a research project. He moved between Clayton, downtown, Belleville, and South St. Louis ten times in the year he worked under Jane — a function partly of business need and partly of Jane's preference for keeping the man with the car at whichever office happened to be most underwater that week. She closed Belleville. She closed downtown. She closed South St. Louis. By the end of his year at Kirkland Deluxe, Barney was running the Clayton office alone. The other three were locked.

What Jane was doing, in the language of corporate finance Barney had not yet been formally trained in but was watching her exemplify, was milking the business. She paid herself her own salary plus her late husband's. She was the highest-paid person at the agency by a wide margin and contributed almost nothing to its operation. Barney, who in his entire life had never quite mastered the art of professional silence in the face of irrationality, finally said it out loud one morning when Jane had irritated him about something he no longer remembered the substance of.

The end of his time at Kirkland Deluxe arrived shortly thereafter, by mutual unspoken agreement. He needed his next job before he had said the sentence; he had it within weeks of saying it. The job was across the river, in Alton, Illinois, at a small struggling outfit called International Travel Advisors.

Alton, Illinois — The Wig-Shop Office

Alton in 1959 was a small Illinois city of about thirty-three thousand people, perched on the bluffs above the Mississippi River fifteen miles upstream from St. Louis. It had been a steamboat stop in the nineteenth century, an industrial port for the Owens-Illinois glass company in the twentieth, and was now in the slow decline that would define mid-century Midwestern industrial towns generally. Its downtown was three blocks of two-story brick buildings with the kind of narrow Main Street facades that had not been redecorated since the late 1920s. The northern edge of the downtown grade ran up against the limestone cliffs that gave the town its name.

It was here, on a stretch of Alton's State Street that no one would have called fashionable, that a man named Harold “Sully” Sullivan had established a travel agency called International Travel Advisors. The agency occupied a ground-floor storefront that had previously housed a wig shop. The plate-glass window still bore the faint outline of the wig-shop letters where the previous owner's signage had been removed. The room behind the window was small, dingy, badly lit, and decorated in a color scheme that nobody, including Sully, could quite name. The rumor among the agency's three employees was that the second-floor space above the wig shop housed a bookie joint operating out of an unmarked office. Barney, reporting for his first day in early 1960, did not investigate the rumor. He had work to do downstairs.

Sully Sullivan was, in Barney's measured later assessment, a wonderful guy and a terrible businessman. He had founded the agency on personal charm and had run out of money about as quickly as a man can run out of money in the travel business. To stay afloat he had taken on a partner: John Jenkins, a St. Louis surgical-supply and medical-bookstore owner who in 1959 had bought half of International Travel Advisors for $5,000 cash. Jenkins put the money in. The agency's manager promptly quit. Sully needed someone with sales-and-marketing instincts who would also work in the wig-shop office without flinching.

Sully made phone calls. The airline sales managers Sully called told him a name: There's a kid named Barney Ebsworth who's been at Kirkland Deluxe for about a year. He's been in the business about twelve months. He's sharp. He's going somewhere. Sully called Barney. Barney drove the fifteen miles up to Alton, walked into the wig-shop office, looked around at exactly the kind of working environment that would have horrified most twenty-five-year-old Mizzou-and-Wash-U accounting graduates, and accepted the position.

His first administrative act as the new manager was to fire Jenkins's daughter. She was the agency's only employee at that point. Barney's autobiography describes her as a nice girl who could not do the job. He also describes the firing as an experiment, conducted on his first morning, in finding out exactly how much authority his new title gave him.

Nobody, including Jenkins, gave him a hard time about it. Barney took this as the answer to his question. He hired a competent replacement — a woman he had worked with at Kirkland Deluxe — and started organizing the agency's operations with the methodical attention he had developed in the Lorraine ammo depot. Within twelve months the wig-shop office was profitable.

The First Profitable Year

Barney was good at travel-agency sales because he was good at sales generally. The aptitude that had made him the city sprint champion in three events was the aptitude that made him competent at calling on potential clients, asking them what they wanted, and matching them to a product. The aptitude that had made him a straight-A student at Wash U was the aptitude that made him competent at running the office's books, controlling its costs, and identifying which categories of work produced the highest margin per hour. He was, in the language of mid-century American business journalism, a natural. The wig-shop office did not yet have the marketing budget or the brand recognition to compete for walk-in customers against the larger St. Louis agencies, so Barney did the only thing he could do: he went out and got business.

By the end of year one, ITA was making money. Barney had been profitable enough that the Dutch airline KLM noticed him. KLM offered him the position of district sales manager for the airline's central United States territory at a substantially higher salary than the small commission percentages he was earning in Alton. Barney walked into Sully and Jenkins's office and put a counterproposal on the table.

Sully, predictably, was running out of money again. Jenkins, who had not understood until that moment how serious Barney's KLM offer was, asked what it would take to retain him. Barney named a number: half the company. Sully, with characteristic generosity and characteristic absence of personal funds, agreed to sell his half to Barney for $5,000 — the same amount Jenkins had paid him for the other half a year earlier. Barney did not have $5,000. Jenkins, who was not running out of money, walked Barney to the bank and cosigned a loan for the full amount. Barney bought Sully out. He was, at the age of twenty-six, a half-owner of an Alton, Illinois travel agency.

Harry Pope and the Fuse

The single most important encounter of Barney's first year as a partner was a man named Harry Pope. Harry was a barrel-chested St. Louis cafeteria owner who ran a daily lunch operation a block down State Street from the wig-shop office. Barney ate at Harry's cafeteria several times a week. They became friendly the way two unrelated men whose offices are near each other become friendly. Harry, it turned out, owned three other cafeterias around St. Louis and employed approximately six hundred people across his operations. He had also, in his role as a senior figure in the American food-service industry, founded an organization called the Food Service Management Guild, a national professional association of independent restaurateurs and cafeteria owners.

Harry had been buying his airline tickets from Barney for several months when, one afternoon in the late spring of 1960, he came into the wig-shop office with an idea.

The trip Harry described was a multi-city European tour aimed at the Guild's senior membership: the founders, the executive directors, the heads of the largest food-service operations in the country. The tour would visit the most distinguished restaurants and cafeterias in Copenhagen, Stockholm, Milan, Zurich, Paris, and London. Each visit would include a behind-the-scenes look at the host operation's kitchens, sourcing, and service models. The members would come away with both a luxurious vacation and a working education in European food-service practices. Harry would underwrite the planning costs out of the Guild's treasury and recoup the cost through participation fees from the attendees.

Barney, who at this point in his career had executed perhaps a dozen domestic-and-European booking transactions of any significant complexity, said yes immediately.

The trip was a triumph. Harry's reputation in the food-service industry was substantial enough that every restaurant the Guild visited rolled out the red carpet. The guests were treated as visiting dignitaries. Barney had executed the bookings competently. The agency's commission was modest — the contacts were Harry's, not Barney's, and the margins were thin — but the experience was the most important professional education Barney had received in his life so far. He understood, by the time the Guild members had returned to the United States, exactly what the structure of his business was going to be from this point forward.

The Special-Interest Tour as a Business

Barney's insight from the Pope trip was the founding insight of his career. The travel-agency business as it was then practiced involved waiting for customers to walk through the door or call on the telephone, and selling them whatever they happened to want. The travel agent was, in this model, a passive intermediary — a paperwork operation between the airline and the consumer, paid by commission. The margins were thin; the volume was capped by the size of the agent's local market; the differentiation was negligible.

What Barney now understood was that an agency could, instead, create its own demand. It could identify a community — a professional association, an alumni network, a hobby club, a religious congregation — that had a natural reason to travel together. It could design a custom itinerary tailored to that community's interests. It could buy the constituent elements of the itinerary in bulk at group prices, sell the package to the community's members at a price that bundled in a healthy margin, and capture the value the previous travel-agency model had left on the table. The work was harder — you had to design the trip, market it, recruit attendees, coordinate vendors, manage logistics on the ground — but the margins were two or three times what an airline ticket commission paid. And the brand the agency built around its custom-tour business was something the walk-in agency model could never produce: a reputation, a customer roster, a recurring-revenue relationship with the same communities year after year.

The first community Barney targeted, in the spring of 1961, was his own alma mater. He drove down to Columbia, walked into the office of the head of the Mizzou alumni association, and made his pitch. The alumni association ran a fund-raising operation that was always looking for new revenue streams. If they would allow Barney to design and market an alumni Europe tour, with a Mizzou postgraduate-center professor as a featured tour guide, the agency would handle every piece of the operation: the brochure, the mailings, the booking, the vendor coordination, the on-the-ground hospitality. The alumni association would receive a commission on every booked seat plus, for every thirty bookings, two free tickets that the association could award to a senior administrator and spouse. The senior administrator and spouse, Barney observed, were the two people most likely to authorize the program.

Mizzou said yes. The first tour ran twenty-one days. Barney called these “rat-race” tours, because of the relentless three-week pace: London for two days, ferry across to Holland, a bus through Belgium and into Germany, on to Austria and Italy, swing back through Switzerland and France, fly home. The format was punishing. The market loved it.

Through 1961, 1962, and 1963 Barney expanded the model: golf clubs, dental societies, bar associations, churches, more alumni associations. The wig-shop office grew to three full-time employees. He kept his office costs low; he kept his marketing relentless; he worked seventy-hour weeks; he slept badly. Martine, who had brought to St. Louis a young French wife's instinct for proportion in life, gradually understood that the man she had married was congenitally incapable of working less than seventy hours per week when he was building something. She made her peace with it.

The Jenkins Buyout

By 1962, Barney's relationship with John Jenkins had reached an impasse. The two men had genuinely incompatible philosophies of running a small business. Barney wanted to invest in the agency — to upgrade the office, to hire competent people at competitive salaries, to put real money behind the marketing. Jenkins wanted to extract dividends. If a competent bookkeeper cost $500 a month, Barney would pay $500 a month and get a competent bookkeeper. Jenkins would pay $300 a month and get a barely-functional one. Barney's question to himself was: why would you inflict that on yourself to save $100 a month? Jenkins's answer, never spoken but obvious from the pattern, was that he was running the business to feed his other businesses.

The single most irritating annual ritual was Jenkins's free trip. Every year Jenkins took, as a partner-of-the-business perk, a trip worth approximately $5,000. Barney, who was working seventy hours a week to generate the revenue that subsidized the trip, found this intolerable. By the end of 1962 he had decided that one of the two of them needed to leave the company.

He went to Jenkins with a three-option ultimatum, framed in the classic small-business-buyout style: You can buy me out, I can buy you out, or I can walk out. Since it is my proposal, you choose. Jenkins chose to be bought out. He named his price: $50,000, on the grounds that the company's net worth was about $32,000 and his half was therefore worth $16,000, but his partnership had additional good will that he valued at the difference. Barney's mental math was instant: my half is worth $16,000 and your half is worth $50,000? Jenkins did not see the contradiction. Barney, who did, made a counterproposal that Jenkins had not yet realized was the better deal.

Jenkins took the deal. Nine years of $5,000 was, of course, $45,000 in nominal dollars — less than the $50,000 he had asked for. But Jenkins, who had been taking a $5,000 free trip every year as a partnership perk, calculated — correctly — that the deal would simply continue his existing benefit at no opportunity cost. He was, he believed, getting nine more years of free travel. Barney, who had not bothered to point out that the present value of nine years of $5,000 payments was meaningfully less than $45,000 in 1962 dollars, watched Jenkins sign the agreement and felt the pleasure of a man who has solved a recurring annoyance with a single signature.

Jenkins's last act as the departing partner was to require Barney to put the company's stock into escrow at the bank until the full $45,000 was paid. Barney, who had no objection in principle, agreed. The agency was now operationally Barney's. The legal title would catch up.

Business improved dramatically in the year after Jenkins left. The hidden cost of Jenkins's presence had not been merely his $5,000 annual trip. It had been the daily friction of having to argue every operational decision with a partner who saw the agency as an asset to be milked. With Jenkins out, Barney could finally invest. He bought the upgraded office furniture he had been wanting. He hired a marketing assistant. He upgraded his typewriters. The first full year after the buyout, the agency made $150,000 in profit — nearly five times what it had been clearing in any previous year. Barney decided he could not stand to wait nine years to be free of Jenkins. He paid Jenkins the remaining $40,000 in a lump sum and ended the relationship.

The Day in 1965 That Two Offers Came Two Hours Apart

By 1965 the agency was three years past the Jenkins buyout, profitable, growing, and starting to attract outside attention. The early-1960s rise of jet-age commercial aviation had compressed transatlantic travel from six days at sea to six hours in the air, and consumer demand for European tours had exploded in proportion. Barney's special-interest model was particularly well-positioned for the new market: the one-week European trip was now possible for working-class teachers and middle-class alumni, and the volume of group bookings the agency was generating was beyond what a sixteen-employee organization could comfortably handle without expansion. Barney was looking for capital. He was also exhausted.

The first offer arrived in late spring through a personal connection. A man whose name Barney's autobiography preserves only as a fellow who was in the record business until he suffered a heart attack had a son at Harvard who would graduate the following year and was interested in entering the travel charter business. The father, who had recently sold his record-distribution company for a substantial sum, proposed buying International Travel Advisors so the son would have an established platform to step into upon graduation. The asking price he offered: $350,000. The two men drew up a contract. They set a date for a lunch meeting at which the contract would be signed.

The day before the lunch, Barney's office phone rang. It was the chancellor of Washington University, which by this point had become the agency's largest single corporate client through the alumni-tour relationship Barney had been developing for four years. The chancellor wanted to have lunch with Barney the following day. Barney, who under any other circumstances would have rearranged his entire month for a lunch with the chancellor of his largest client, had to decline.

The chancellor, who was not accustomed to being told no, accepted Barney's explanation that Barney had a previously scheduled lunch he could not move on short notice. The chancellor proposed three p.m. as an alternative. Barney accepted.

The signing lunch went exactly as expected. The buyer, who had brought his own pen, signed the contract and slid it across the table to Barney for the countersignature. Barney, looking at the contract, felt a quiet but unmistakable hesitation he had not expected to feel. He told the buyer he was about to leave for Europe for two weeks and asked for time to think before signing. The buyer, who had not anticipated this delay, accepted with what Barney later remembered as a slightly forced smile and signed his side anyway, leaving the document waiting for Barney's countersignature.

Barney drove from the lunch directly to the chancellor's office at three p.m. The chancellor came out of his inner office, sat down, and offered Barney the position of vice chancellor for external affairs at Washington University — a senior administrative role that would put Barney in charge of every revenue-generating activity the university operated, including the bookstore, the cafeterias, the housing services, the campus travel office, and a dozen other adjacent operations. The salary was substantial. The institutional prestige was, by St. Louis 1965 standards, very high.

Barney started laughing. The chancellor, mildly offended, asked what was funny. Barney told him there were two things he didn't know.

Barney sailed for Europe that week. He spent two weeks thinking. By the time he returned he had decided that he was not, in fact, ready to sell the company. He was also not, in fact, interested in becoming a vice chancellor of Washington University. He turned the buyer down. He turned the chancellor down. He went back to the wig-shop office, looked around at his sixteen employees, and started the strategic planning that would, two years later, result in the year he named, before it had begun, B or B.

The Specialist-Salesman Idea

By the end of 1966, Barney was working seventy-hour weeks and knew he could not personally scale beyond his current single-person sales-and-marketing throughput. He had two ideas for how to grow.

The first idea was a concept he later called Travel Calling — an Avon-style direct-sales model in which Barney would recruit and train hundreds of part-time travel-agent representatives in cities across the country, who would sell custom tours to their personal networks and earn commissions on bookings. He never executed it. Forty-five years later, in his autobiography, he would still say he wished he had given it a try.

The second idea was the one he did execute. The concept was that he could find one person who could become a second Barney Ebsworth — a workaholic with the same sales-and-marketing instincts who could replicate Barney's full job. Then he realized this was a stupid idea. If he ever found someone with that profile, that person would be smart enough to leave Barney as soon as he had learned the business and start his own competing company. Barney would have created his own competition.

The version of the idea that worked was different. He could hire specialists — people who could replicate one piece of his job, but not the whole thing. He hired his first salesman: a former Adler typewriter salesman who had spent his career trying to sell a less-known typewriter brand against IBM. Barney did not want a former IBM salesman, on the theory that anyone could sell a brand everybody already knew. He wanted someone who had learned to get a foot in the door with an unfamiliar product, because that was what selling Barney's small Alton agency to a new alumni association would feel like for the next several years.

The Adler salesman started in late 1966. He was good. He brought in three new alumni associations in his first six months. By Christmas of 1966, Barney could see what 1967 was going to require. He gave the year a name, before it had begun, that he kept in his head and shared only with his closest associates.

The plan for B or B was to expand the agency from its St. Louis-and-Mizzou base into a national operation, targeting alumni associations and professional societies coast to coast. The capital expense would be substantial. The marketing expense would be punishing. If the expansion worked, Barney would have a national specialty travel company; if it did not, he would lose the company he had spent eight years building. He chose the name to keep the stakes vivid in his own mind every morning.

The year that followed is the subject of Part V. The bottom line, told here at the close of Part IV: the year worked. By the end of 1967 Barney's agency was no longer a wig-shop operation in Alton, Illinois. It had outgrown the storefront. It had outgrown the State Street name. It had moved across the river to a high-rise office building on North Grand in St. Louis — a building called the Missouri Theater Building, named for a movie theater that had been demolished in 1957 to create a parking lot. Barney had given the company itself a new name to mark the new era. The name was deliberately not Ebsworth Travel, because Barney did not want his career permanently coupled to a company he might one day sell, and not the inherited International Travel Advisors, because the inherited name no longer described the operation. The new name was a coined word built from the first three letters of international and an abbreviated suggestion of travel.

The name was INTRAV. The story of what Barney did with it is the story of the next thirty-two years of his life.