It's a Guy Thing
So here's a sentence I never thought I'd read: Priceline posted a small second-quarter profit last month. To do it, though, the company had to face some tough facts. Not only did it have to rein in costs, but it also had to come to grips with its true identity—it's simply a travel-services flea market, not an all-purpose, name-your-price bazaar.
This realization cost a lot of people a lot of pain and money, including me; I received 100,000 options priced at $78. Wall Street Internet analysts are partly to blame. Had they done their homework instead of filing reports bursting with New Age hyperbole, they would have known that "name your price" is a limited proposition—it works only for perishable products like air travel. My advice for analysts who are still covering Priceline: Walk down the hall and get a tutorial from your brethren covering the airline industry. They'll know to ask the tough questions, like "Can this company increase its revenues and margins?" and "Is this a management that creates shareholder value?"
What's going on in business these days is a dichotomy of personal philosophies. Etched in my memory is the 1967 New York Times obituary of L. L. Bean, founder of the mail order company that bears his name. A reporter asked Bean why he did not expand. "We are expanding," he said. "We are adding some new synthetic red suspenders to the catalog." "No," said the reporter, "I mean really expand. Get some investors to put in some capital and become the Sears or Montgomery Ward of the outdoors and sporting goods business." Bean looked at the reporter quizzically. "I eat three square meals a day," Bean said. "I can't eat four."
But for many of today's CEOs, business is a test of their manhood. How big they can get, how much money they can make. Does anybody care about the customer anymore?