Hotwire.com: Navigating Through Turbulence

On September 10, 2001, after speaking at an industry conference at New York’s World Trade Center, Hotwire co-founder Spencer Rascoff boarded a flight from Newark to San Francisco. After returning home, Rascoff awoke the next morning to a phone call informing him that the same numbered flight from Newark he had boarded the day before had been hijacked and crashed into one of the World Trade Center’s Twin Towers. That same morning, Rascoff’s co-founder and Hotwire CEO Karl Peterson was about to give the keynote speech at a travel conference in New Orleans. Peterson saw the second plane hit the towers on the hotel’s lobby television. With all commercial flights in the U.S. and Canada grounded for three days after the attacks, 15,000 Hotwire customers were stranded away from home. In the weeks that followed, customers demanded refunds for cancelled flights, and new flight bookings plummeted as Americans lost faith in the safety of air travel. To make matters worse, Hotwire’s founders learned from the FBI that some of the 9/11 hijackers had purchased their flights on Hotwire.com. While 9/11 took an emotional toll on all Americans, the travel industry faced the additional burden of intense financial pressure. Hotwire’s leadership team needed to make immediate and hard decisions to stem cash outflow and determine where, when, and how to let employees go, while trying to maintain morale. The business required a new capital raise on terms that would be acceptable to existing investors. And, while facing trade-offs in the use of Hotwire’s scarce resources, the team needed to position the business for future growth amid a field of well-funded competitors.