I sat down with Brian Barth at SideStep’s office in Silicon Valley just after he announced he was stepping down as CEO. Russ Lemelin, SideStep’s CFO has since become Interim CEO. Here’s what Brian had to say.

My comments are indented.

On how SideStep works “SideStep has relationships with all of the brands on its site. We will win by being a good partner. It’s a lot more work building partnerships, but all the brands [airlines, car rental companies, hotel chains] appreciate our permission-based model. We want to create value, not create spite.”

This model is in contrast to players like Yahoo’s FareChase which crawl the brands’ sites and then scrape the pricing information. Note that FareChase was sued by American Airlines in 2002 in connection with FareChase’s access to AA.com. SideStep obviously wants to prevent situations like this.

On competition: “The rise of sites like Mobissimo and Kayak is validation of the model. If something is this great, other companies are going to get in on it. At this point, though, they’re talking a big game, but they don’t have the traffic.”

According to March ComScore MediaMetrix numbers, SideStep had 3.3mm unique users while Kayak had 0.6m, Qixo had 0.2m and Mobissimo had 0.1m.

On Shopping.com entering the travel market: “Shopping.com is thinking about the problem in the wrong way. The feed model they use for consumer products makes it difficult to handle dynamic content. And prices on cars, hotels, and flights are changing every couple minutes.”

Brian brings up a good point here which I will have to investigate further. Currently Shopping.com takes product feeds every 24 hours (although they might do something different for the recently launched mortgage section). If they use the same strategy for hotel prices (they are not immediately going after air and cars), this could be a drawback to the service as just released specials would show up on competitor sites quicker than on Shopping.com.

He went on to say that “With a number such as $100mm in travel referrals, Shopping.com would get limited attention from large travel providers. It would be lower cost, lower risk, and more profitable for Shopping.com to partner with a company like SideStep, which is responsible for over $1b in referrals. “

On Expedia, Orbitz, and Travelocity:

Brian was humble in talking about these larger players.

“We’re only taking $1b of a $65b industry. We’re not going head-to-head with Expedia. At the same time, these companies do a lot of business and it’s not a surprise that someone else wants a piece of it.”

At this point Orbitz works with SideStep while Travelocity and Expedia have been critical of SideStep’s model and do not let SideStep crawl their sites. In a March 21, 2005 WSJ article, Travelocity CEO Michelle Peluso said in a statement, “We continue to evaluate them all [travel search engines], but we’re still not convinced that any of them are good for consumers, suppliers or us. We see these engines as commoditizing travel at a time when we’re working hard with suppliers to go in the opposite direction.” In the same article, Expedia CEO Steven McArthur said “Our view is that anyone that aggregates travel is a competitor in one way or another.”

In response, Brian said “They are public companies. Even if they see us as a threat, they can’t just re-invent themselves. There’s too much risk involved as a public company, so they have to come out and say that our business model is wrong.” Defending his business, Brian continued “Suppliers like SideStep because they are looking for ways to fight back [against the costs of the large booking engines]. Through working with us, they get more business and develop closer relationships with consumers [users go directly to Airline site vs. booking through a Travelocity or Expedia call center] at a lower cost.”

On what’s next for the company: Sidestep does not want to be a travel agent. “Travel 1.0 was about moving the traditional travel agency business online. Travel 2.0 takes that business model to the next level for both consumers and travel providers. SideStep [in contrast to Travelocity, Expedia, and Orbitz] is not going to run a call center. We’re a search engine and lead generator, not an online agency. This new model has been well received by travelers and travel providers, and the key at this point is to figure out how SideStep, which currently has 95% marketshare [in the travel search engine market], continues to be a winner in the space. We need to continue to attract smart people and great leaders, including a new CEO [Brian Barth announced in April that he will step down as CEO] to help us grow into a public company.”