1998 Direct Marketer of the Year - Jay Walker
by Denny Hatch
Never heard of Jay Walker? He has crammed several lifetimes of direct marketing successes and bombs into his 43 years. Among his successes:
• The first use of videocassettes in a direct mail offer.
• Marrying overnight Federal Express delivery to the catalog industry, thus creating a hugely profitable new selling season (last minute holiday gifts).
• Revolutionizing magazine subscription sales with mega-success, NewSub Services.
• In just six months, making his priceline.com the second most recognized Internet brand among American adults.
I first met Jay Walker in 1986 when he was a storm off the coast of American Business—a tropical depression that was developing and bore watching. When I interviewed him two years later for a story in my newsletter, Who's Mailing What!, I described him as
... the peripatetic proprietor of Catalog Media Corporation in Ridgefield, CT, whose main business is selling advertising pages in catalogs. Walker is wiry-thin and rumpled, with a mop of dark hair; he burns with intensity. When he talks, he seems to loom up from behind his big desk and fill the room.
Since that 1988 interview, Walker reaped the whirlwind with two gargantuan failures that completely wiped him out, only to rise Phoenix-like from the ashes to become a full-fledged Category 4 hurricane; unlike his predecessors, Andrew, Georges and Hugo, Hurricane Jay is likely to intensify as it moves further inland across the continent of American Business. He is a revolutionary whose vision and execution of that vision may put a stamp on commerce, communications and business well into the 22nd century.
Jay Walker was born in Queens, NY, and grew up in Yonkers where he attended the public schools. It's likely that he got his intensity and hustle from his successful real estate developer father and his math and analytic skills from his mother, who was a bridge champion and teaching life master.
Midweek Observer: Wipeout #1
In his junior year at Cornell, the restless Walker dropped out to start a newspaper—the weekly Midweek Observer—and go head to head with the local Ithaca Gannett Daily. "I ticked off Gannett big time," Walker remembers with a smile.
The Premise. Daily papers across the country were being aggressively attacked by free weekly shoppers. By pulling advertising out of the dailies, the supermarket chains and national food manufacturers could reach every household via saturation mail rather than going only to newspaper subscribers. Grocery advertising was the backbone of local newspaper advertising, and Walker wanted in on the action.
The Execution. With a staff made up of college students, the fledgling paper was launched with a $500,000 loan which, amazingly, Walker negotiated with Bankers Trust.
What Happened. Gannett sent a SWAT team to deal with "The Ithaca Problem," as it was called, and promptly launched a directly competitive weekly and gave away most of the advertising. Against such deep pockets, Walker and his paper lasted five months before the final denouement.
After taking summer courses in pre-law and computer programming, Walker returned to Cornell to get his degree in Industrial and Labor Relations in 1978. Where most college students graduate owing money on student loans, Cornell was paid in full thanks to Jay's father and royalties from a book Jay co-authored on how to win at Monopoly. "Instead, I left college owing Bankers Trust $500,000," he chuckled. "Imagine Bankers Trust lending a college kid $500,000!"
NYU's Publishing Course: A Brief Interlude
"Newspapers get your hands dirty," Walker says. "What's more, it never ends. You have a seven-day product cycle and a huge, perpetual news hole. It's a never-ending nightmare." Walker thought magazines might be the answer and enrolled in New York University's course in magazine publishing. While there, he so impressed one of the instructors, Joe Hanson, founder and publisher of Folio: The Magazine of Magazine Management, that Hanson offered him a job.
After finishing the course, Walker went back to Hanson and said, "Here's the deal; I want to be an entrepreneur inside your company [The term "intrapreneur" had not yet been invented]. You will own all the equity in whatever I do and I will take a commission." Hanson agreed. The arrangement was that Walker would be rewarded modestly for modest achievements but hugely for huge achievements.
The Folio 400: Success #1
The Premise. Joe Hanson's Folio was the flagship of a small empire that included books and a highly regarded conference in New York. Editorially, Folio dealt with successful magazine publishing. The readers were people at magazines; the advertisers were their suppliers. Why not, Walker thought, create a powerful ancillary product that the magazines themselves would advertise in? Walker invented The Folio 400.
The Execution. For the first time anywhere, Walker combined the advertising and previously secret circulation revenue streams for 400 magazines and came up with an endless series of rankings: total revenue, revenue per copy, revenue per reader, total circulation, and on and on. The numbers were sliced and diced every which way for both consumer and trade magazines so that virtually everybody finished high up in at least one category. Walker and his team sold ads adjacent to the magazine's most favorable listing.
What happened. The magazine publishers loved it! In its peak year, the single issue of The Folio 400 generated $1 million in advertising revenue. Walker himself was making $250,000 a year—plenty to live comfortably and still pay off Bankers Trust. But, by the early 1980s, Walker was ready to start a business of his own and build some equity.
Dabbling in the Art World: Wipeout #2
The Premise. Walker discovered a technology-based artist who created spectacular light sculptures—an entire new genre of electronic high-tech art. Walker formed Visual Technologies, a company to manufacture editions of the sculptures and sell them by catalog.
The Execution. Walker persuaded Richard Thalheimer, president and founder of the Sharper Image catalog, to feature the $1,200 sculptures on the cover; he cinched the deal by paying Thalheimer an unheard of $40,000 co-op advertising allowance.
What Happened. Sharper Image sold out the first edition of 1,000 pieces in just 30 days to a blue-ribbon group of collectors, including Ringo Starr, John Kluge and Diana Ross. In addition, Walker created a video for use in cold mailings as well as follow-ups to leads—the first known use of videocassettes in direct mail.
But, the manufacturing facility Walker built in Stamford, CT, could not keep up with the orders, and even though Walker tried to diversify, the business failed. He lost $2 million personally and wound up owing $4 million more to investors.
Catalog Media Corp.
The events that follow did not happen in sequence, but rather concurrently. "I always have two or three businesses on the burner," Walker explains, "like a farmer rotating crops."
Catalog Ads: Wipeout #3
The Premise. The lesson learned from the sculpture business was that catalogs represented an enormous opportunity for national advertising. He had spent $40,000 advertising in the Sharper Image catalog, and it worked. Thalheimer made a lot of money even if Walker had lost everything.
One day Walker was in the Sharper Image offices and asked Thalheimer if he had ever considered taking full-page national advertising from blue-chip companies. "If you can do it, I will be your first catalog," Thalheimer said. Walker sketched out a business plan. It was like selling ads for a magazine, but with virtually no overhead—no editorial or production costs, no circulation expense. Instead, he had created what he later dubbed a "leveraged business method."
"In a leveraged business, we don't touch the underlying business or inventory anything," Walker explains. "I didn't fully get the concept then, but I do now."
What Happened. The business started strong, with a dozen catalogs signed up. It was a logical idea—Kodak in Sharper Image or Cadillac in Austad's golf catalog. In its best year, the catalog advertising business did $10 million. But a serious problem arose: Walker had a hard time persuading catalogers to commit to setting aside space for ads. If an advertiser contracted for an ad to run in October, the cataloger might say, oh, gee, we decided to run it in December, because we had some profitable merchandise and this was the best sales season. Or catalogers would simply put ads in the back of the book. In Walker's words, "It was the marriage of two unwilling partners, as if the bride and groom were doing each other a favor."
The business hemorrhaged money. Instead of shutting down early, he kept it going in the belief it would turn around. "The hardest thing about being an entrepreneur is knowing when to quit," Walker says. "It's an ego thing. Most entrepreneurs view quitting as a failure, when it's really the end of an inning, not the end of the game."
The Federal Express Connection: Success #2
The Premise. During the early '80s it took anywhere from four days to a week or more for a catalog order to be delivered. Competition was not other catalogs, Walker reasoned, but the local shopping mall where buyers can get instant gratification. Ship a catalog order overnight—or second-day air—and you not only compete with retailers, but you can take orders right up to a couple of days before Christmas, thus creating an entire new selling season.
While UPS was the cataloger's shipper of choice—and could have offered this express service—only the FedEx logo in a catalog would be the powerful guarantee that a last-minute holiday order would be delivered.
The Execution. For any lesser salesman than Jay Walker the obstacles for such a scheme would be insurmountable. FedEx was a far more expensive service than UPS, which which meant a a radical pricing shift; further, UPS had 90 percent of the consumer delivery business. It would take a lot of money to put in the new system.
Walker wheedled his way onto the FedEx corporate jet on a flight from Memphis to Seattle where he found himself alone with CEO Jim Barksdale (now CEO of Netscape). He introduced himself to Barksdale and told him that he had an idea that would not only revolutionize Federal Express from top to bottom, but kick UPS squarely in the butt. "If you can kick UPS's butt," Barksdale is reported to have said, "tell me what you have."
Walker spilled 250 consumer catalogs all over the floor of the small jet to illustrate that the catalog industry was huge and then handed out a ream of spreadsheets to show him the business plan. After four hours, Barksdale was convinced that he could leverage a business on top of the catalog business without owning a single catalog or inventorying a single SKU; FedEx gave Jay $10 million to get started.
What happened. Federal Express service is now the staple of just about every catalog and represents $400 million additional annual revenue to the company. December is the biggest shipping month for Federal Express and December 23rd is the busiest day. "Because of what happened, UPS started advertising its brand on TV," Walker crowed. "It was unbelievable!"
Two Hiccups and a Wash
During this period, Walker dreamed up three more startups:
•Hiccup #1: A tie-in with CompuCard (now Cendant) whereby catalog buyers would get free $50 gift certificates for their favorite catalog every time they bought an airline ticket through CUC's TravelersAdvantage. The mailing completely failed; the business flopped.
• Hiccup #2: CallTrack—a system that would enable large corporations to monitor the number and length of employees' personal calls and bill the employees at the companies' costs, thus raising productivity. It got a ho-hum from the corporate world.
• The Wash: Walker dreamed up an idea whereby catalog buyers could spend an extra $25 on top of their order and receive a coupon good for an upgrade on any TWA flight (buy tourist, get business; buy business, go first) or a 25 percent discount on a ticket. Tens of millions of these offers were bound into catalogs and hundreds of thousands of people bought coupons and flew TWA producing a reported $55 million profit for the airline. It came to an abrupt end when the owner, Carl Icahn, felt he was being cheated by catalogers who sold too many of his coupons. Icahn sued Walker. Only after two years and a million dollars in legal fees, Carl Icahn dropped the suit.
Catalogs at Retail: Wipeout #4
The Premise. If a consumer wants a catalog quickly—say, the L.L. Bean book for camping gear or Victoria's Secret for an upcoming tryst—there's no way of getting one; catalogs arrive on an unpredictable basis. Walker came up with the idea of selling catalogs at retail for $1 to $2. On each catalog would be a peel-off sticker that guaranteed a $5 savings on the first order. If he could persuade the catalogers to give him catalogs plus an allowance equal to the delivery cost (about 35 cents at the time, which represented postage plus list rental), Walker, in turn, would guarantee to get the catalogs into the hands of very upscale buyers who would buy only the catalogs they were interested in (and therefore likely to buy from, since they had paid $2). It was far more efficient than mailing 1,000 catalogs to cold lists and having 990 go into a landfill. What's more, catalogers wanted the new customer, not the revenue from the sale of the book. "Here was a product with a negative cost of goods," Walker said enthusiastically.
Walker drove down to the Stamford, CT, headquarters of America's (then) biggest retail chain of bookstores, Walden Books. His pitch: Put my catalogs in your bookstores for $2 each, and you can keep 60 percent of the revenue or $1.20 on each $2.00. "Considering the mark-up on magazines is 20 percent and books is around 40 percent," Walker said, "Walden executives thought they had died and gone to heaven."
Walden had two caveats: No merchandise could go on a retail floor without a UPC code (and catalogers would have no reason or desire to print UPC codes on their covers). Further, Walden bookstores could not afford to give up shelf space for low-ticket items such as $2 catalogs. Walker thought fast: He would print up stickers for UPC codes and get a fulfillment house to affix them and he would order custom designed display racks that would represent a small footprint on the selling floor. The deal was signed for a test across all 1,000 Walden outlets.
The Execution. Walker signed up 200 catalogers for a 10,000 test each and ordered sleek, high-tech revolving display racks from Germany (at $1,000 a pop) with 60 pockets. An additional source of income: position allowance.
What Happened. The test was a raging success. Consumers bought catalogs like crazy and ordered from them. Catalogers and Walden were delirious. It was time to roll out and cash in big for Christmas the following fall—going not only to the 1,000 Walden stores but to 75,000 newsstands nationwide. Eight million catalogs were committed to the promotion and Walker saw himself on the way bringing in $10 million over the holidays.
Then What Happened. One glitch: Walker's small fulfillment house couldn't affix UPC labels or stickers on 8 million catalogs, so one of America's biggest magazine printers stepped in; catalogs would be shipped to this printer which would affix UPC labels and discount stickers and piggyback catalogs with its magazine shipments.
Everything went like clockwork until it was discovered that the UPC labels weren't adhering to the catalogs. The printer had used the wrong glue for the glossy covers and it crystallized. Retailers were getting bags of catalogs with UPC stickers all at the bottom. A product with no UPC code is not merchandise; it is waste that is returned or destroyed.
The newsstands pushed all the catalogs back and the entire distribution was lost. Following the debacle, no magazine or book retailer wanted anything to do with the catalog business and no catalogers wanted to sell copies at retail. Walker had taken in $3 million in subsidies and spent a million to support the business.
After Walker refunded all the allowance money and paid off every creditor, he had gone through all of his personal capital. In the words of former Folio editor Chuck Tannen, "Jay is scrupulously honest. He always paid back people and paid off loans he didn't have to."
"And to think," Walker said, "the business was profitable from day one." He added, "For the want of a nail ..."
With Catalog Media, Walker had one stupendous success (the Federal Express catalog business) and two titanic failures (ads in catalogs and catalogs in retail outlets). In order to save the Federal Express business—and all those jobs he had created—the FedEx segment of Catalog Media was spun off, sold to management and renamed Cooperative Marketing Concepts. In order to protect this new company from creditors, Walker got none of it, and lost all equity. He recalls: "I lost all my years of work in order to save it. I was left with the deadest part of the company." He was completely wiped out. In his short career, he had gone completely broke four times. "I have had a negative net worth for most of my life," he said, shaking his head in amazement.
How did he take failure? "I put my heart and soul into every business," Walker said. "This is not an analytical or intellectual exercise. I'm talking emotional devastation." How did he keep going? "I have always been terrified of failure, but not paralyzed by it," Walker replied. "I am more terrified of not amounting to something."
Walker, by the way has a wife of many years and children. When asked how these business catastrophes affected his family, he shrugged. "I was an entrepreneur when she married me," he explained. "She said, 'I don't want to know. Tell me only if you absolutely have to tell me.'" Walker added that for 18 years she had a steady paycheck in IBM's human resources department.
DMB: Success #3
In the late 1980s, Joe Hanson sold his company to Cowles Media and retired. Folio and Catalog Age Editor Chuck Tannen found he was not happy working in a big corporation, so when Walker called, Tannen jumped.
"Tannen is phenomenal at what he does," Walker said. "What's more, he had been an entrepreneur and had his failures out of the way. As a struggling entrepreneur, you identify with other entrepreneurs who have survived failures."
Having spent years perfecting the great Folio shows for the magazine industry, Tannen immediately created the Direct Marketing to Business Conference (DMB) in 1990 with Dun & Bradstreet and Federal Express as sponsors. The conference was successful from year one. Recently sold to Cowles Media for a multimillion-dollar price, it is today the major show in the field.
Operations & Fulfillment: Success #4
Following the DMB success, Tannen surveyed the field of direct marketing publications and determined that an entire area of the catalog industry was not being served. So he and Walker launched Operations & Fulfillment—the magazine and, later, the conferences. Both DMB and Operations & Fulfillment were separate corporations with separate investors, so they were not affected by Jay's losses in Catalog Media.
Tannen calls Jay Walker the perfect partner. "He's more fun than anyone I have ever worked with," Tannen chuckles. "Jay is fun!"
The Phoenix Rises
A mutual friend suggested Walker get to know Time Inc. circulation wizard Michael Loeb (son of Fortune editor Marshall Loeb) and they met for an early dinner in Ridgefield, CT, that stretched to six hours. An extraordinary business was born.
NewSub Services: Success #5
The Premise. Walker 's current discourse on the state of magazine marketing:
The magazine business has the most inferior circulation model of any publishing category—a business that regularly takes its customers out once a year, points a gun at them and says, "If you don't pay me right now, I'm no longer shipping you any product." Renewal notices are a coping mechanism for a fatally flawed selling system. No other service in the world forces its customers to reevaluate its usefulness once a year and decide whether or not to continue. Newspapers would be out of business if this were the model.
In addition, according to Dan Capell, publisher of Capell's Circulation Report, the subscription agency business—as embodied by the sweepstakes-fueled Publishers Clearing House and American Family Publishers which are being roundly trashed by Congress and state attorneys general—is currently off by as much as 30 percent. Consultant Paul Goldberg says it's more like 50 to 60 percent. The result: Magazines cannot guarantee advertisers the promised circulation base—meaning they either have to pony up rebates to their advertisers, jump in the mail themselves with circulation offers or cut their rate bases.
The Walker-Loeb solution: Break this cycle of dependency on renewals and sweeps by offering continuous service tied to a credit card with the magazine being mailed until the subscriber cancels the subscription (known in direct marketing as "'til forbid").
The Execution. NewSub Services was launched whereby bank card members are offered a menu of 400 magazines in their monthly billing statements; any magazines they choose are guaranteed to be billed at the absolute lowest rate to that credit card.
What Happened. Today, Loeb and Walker are selling tens of millions of subscriptions a year. "NewSub Services is huge," says Dan Capell, "one of the three or four top subscription agencies in the country."
NewSub Services started a separate company, CAP Systems, which enables frequent flyers to cash in some of their miles for magazines—a boon for airlines, since most of these loyalty programs require vast amounts of travel before a reward can be collected. With frequent flyer miles figured at two cents apiece, a $20 magazine subscription could be had for just 1,000; the traveler was happy; the airline got the liability off its books; publishers were thrilled with these high demographic subscriber (and renewers); and, God knows, NewSub Services was in hog heaven. Because of the automatic credit card billing, renewal rates are far higher than those of sweeps-sold agencies.
Jay's Skunkworks: Success #6
The Premise. One morning, Walker read an article in a technical journal about cryptography, a different kind of encoding system whereby the locking and unlocking codes were separated. In an intuitive flash of insight, he saw how this new form of cryptography would allow for the creation of an online casino where cheating is impossible because the software lock and key would be separated. He thought:
Am I the only person who realizes this coming sea change in the casino industry? What can I do? How can I make money from it? I had never had an idea that could singlehandedly revolutionize an industry, and I wanted to protect it.
Walker began researching U.S. patent and trademark law. "Many businessmen are inventors and don't realize it," Walker explains. What is patentable?
Twelve years ago, the Supreme Court said life forms are patentable—bacteria that eat oil, hybrid forms of corn. Biotech laboratories got patents on forms of DNA. They didn't have to make it or service it. If they invented the code—the DNA—they could patent it and use it themselves or license it to others; either way, they could make a lot of money. Walker:
Most people think of a patent in relation to a machine or a device. Fifteen years ago the earliest pioneers of software argued that it was a patentable process—a method of doing something. On July 28, 1998, in Signature vs. Fleet Financial, the Federal Court of Appeals for the Second Circuit reaffirmed that a business method can be patented so long as it meets the three traditional criteria for legal protection: that it be new, useful and not obvious to someone with knowledge in the field. For example, Diner's Club could have patented the charge card. Dan Bricklin of the Harvard Business School could have patented VisiCalc, the first spreadsheet program. Direct marketers have invented many systems that could have been patented: merge-purge, scoring systems, the suppression of nixies, new phone selling systems. If I could patent the cryptography of online casinos, what else could I patent? It's imperative to prevent competitors from ripping off intellectual property you have created!
At that moment Walker decided to put together a group of people and learn how much he could own. The company was called Walker Digital.
The Execution. Walker told Michael Loeb that the NewSub Services business model might be patentable. Loeb, convinced that competitors would copy NewSub Services as soon as they figured it out, told Walker that if he could patent the idea to go for it; Loeb agreed to let Walker take some of his money out of NewSub Services to launch a new company to patent this and other inventions while Loeb left his money in. "Michael realized I had to do this," Walker said. "Talk about great partners ..."
Walker Digital was born, fueled by $3 million a year of Walker's share of profits from NewSub Services. "I began with one idea for the casino industry, and it grew into a class of thinking—of being able to patent entirely new systems of commerce." He added, "I believed I could build a team of people and spend a significant part of my time inventing the future of business."
What Happened. Walker recruited one of IBM's top intellectual property attorneys, Jeff Brandt. In the words of a long-time Walker colleague, "When Jay wants something or somebody, he is articulate, generous and relentless." Walker Digital board member Nick Nicholas, former co-chairman of Time-Warner, likens the company to Lockheed Corp.'s Skunkworks—a 1950s think tank of the best and brightest put into an academic setting and challenged to think outside the box. From the original Skunkworks came the fabled U2 spy plane. "I feel like the scientists at Los Alamos in the 1940s," Jay says. "Either our nuclear devices are going to split the atom and make a big bang, or we'll have the biggest dud in the desert."
So far, with a portion of Walker's profits from NewSub Services supporting his Skunkworks to the tune of millions of dollars, plus millions more from such private investors as the fabled Allen and Company, the small think tank of inventors—spearheaded by Walker—has presented Brandt and his team of attorneys with ideas for business systems that have resulted in applications with the U.S. Patent & Trademark Office for more than 250 patents based on leveraging existing businesses—direct marketing, financial services, insurance, travel, magazine subscription sales and retail. So far, the first six patents have been issued and six more have been granted, but not yet published.
Priceline.com: Success #7
The Premise. In 1996, Walker and his team discovered an astonishing statistic: Every day of the year, the major airlines take off with an average of 500,000 empty seats, representing dead loss in terms of revenue. As a flight gets closer to departure, the price of seats goes up. For example, three or four weeks out, you might pay $300 for a round trip to Los Angeles from Baltimore; if you want to fly next week, it's $1,200 which is very lucrative business. One $1,200 ticket equals four $300 fares. Trouble is, 500,000 empty seats remain every day. Why not, the Skunkworks team figured, put together system whereby the airlines were offered a reasonable price on those empty seats? They'd be nuts not to put a $250 passenger in a seat, rather than fly it empty.
The Execution. Walker Digital identified the five methods of commerce, starting with the dawn of humankind: (1) barter; (2) the classical agora or marketplace; (3) retail, a scheme developed in the Renaissance whereby price was fixed in a store and a buyer paid that price; (4) the auction where many buyers bid for one item; (5) the Request for Proposal (RFP) in which a buyer solicits bids from a number of suppliers.
Walker Digital's radical concept: buyer-driven commerce with a take-it-or-leave-it offer to sellers. Under the priceline.com model, if you want fly to Los Angeles, you make a reasonable offer (say, $250) via the Internet or an 800 phone call and agree to the following stipulations: you choose the dates up to six months in advance for your round trip and the departure and arrival airports. You will fly on only a major airline (the DOT's definition is an airline that does at least $1 billion a year in revenue) and will leave any time between 6:00 am. and 10:00 p.m. with the possibility of one stop or connection. You will arrive the same day and will not fly a red-eye unless you agree to it.
This is no browsing service; it's only for those who are ready to buy. Your offer is secured in advance by a credit card. You don't know which airline or what time you will depart. Priceline's computers will circulate the offer and, if accepted, your credit card is charged; the tickets are non-refundable and non-transferable. You will be notified within hours and the e-tickets will be issued. If you want conventional printed tickets, there is an additional $12.50
delivery charge. Priceline.com makes money on the spread between what the customer bid and what was finally paid. Customers who don't get seats the first time can try again, offering a higher price or different dates at no charge. The buyer trades flexibility for price. The system is not in competition with travel agents; the participating airlines are not revealed. This represents revenue to the airlines that they would never have enjoyed.
Conventional companies would have simply launched the business and got on with it. Instead, Walker Digital described the key unique ideas of the business in a patent application covering the broad business method and began developing the business during the year and a half that the patent was pending. Once the patent was issued, Jay explains, it was easier to raise $25 million in start-up capital "because the investors were confident that a copycat could not commoditize the concept and destroy the business margins."
Incidentally, Walker's patents are heavily researched with the expectation that a competitor will eventually try to overturn them. For that reason, Walker Digital spends millions to do much of the Patent Office's job (known as researching "prior art"). Each application is researched worldwide and the results are forwarded to the Patent Office for inclusion in the final document. Walker Digital patents are as strong as they can be.
What Happened. Walker has no interest in running companies. "Very seldom does the architect stay around to manage the building," he explains. Once the patent was granted, Walker, in a very high-profile move, persuaded Rick Braddock, former president of Citicorp, to take the helm and persuaded General Atlantic Partners to invest another $20 million. The service was launched in April; the patent was published in July. In its first nine months, priceline.com supplied more than 75,000 airline tickets, filling about one-thirdof customer requests.
According to a recent Opinion Research study commissioned by priceline.com, in just 150 days, with a $25 million advertising budget—primarily using radio with Star Trek's William Shatner as the spokesman—priceline.com became the second most-recognized Internet brand in the country among all adults; only Amazon.com is better known.
On Oct. 5, 1998, Walker was ranked number 25 in Time Digital's "CyberElite Top 50"—ahead of such high-profile luminaries as George Lucas and Michael Bloomberg—an astonishing achievement, considering priceline.com opened for business on April 6.
What of the future? "Priceline.com has been made possible by the computer coupled with the advantages of the Internet combined with basic knowledge of direct marketing," Walker says. "Future business models will require an understanding that the Internet is a different animal.This is the first of dozens of new forms of commerce and will give rise to entirely new forms of business. In the 21st century, the difference between second tier and first tier businesses will be the ownership of intellectual property." Walker's advice:
If you are not spending time thinking about how the 'Net is going to change your business, somebody else is thinking about how the 'Net will change your business for you...
That somebody else may well be Jay Walker. With 250 patent applications—all of them secret until granted—Walker Digital has a leg up on many businesses. If he calls you for an appointment, see him right away. If you don't, your competitor certainly will.