Jay Walker -- serial entrepreneur, Priceline.com founder, and named in over 650 U.S. patents -- recently raised $50 million to launch a new company, Upside. (Upside lets small business travelers save their companies 10 to 15% on airline and hotel prices while also earning 100 to $200 in free gift cards.)
It's a cool new idea -- employees can save their companies money while also personally profiting -- but what is more surprising is one of the ways Jay has chosen to publicize the startup: over the next week he's running six full-page ads that are actually essays (or op-ed pieces, if you prefer) in the Wall Street Journal.
Not ads. Essays.
Think that's an odd way to spread the word about your company? After you've spoken with Jay, you realize it's not -- and neither are his ideas and perspectives regarding business and startups.
Before we talk about your thoughts on business, tell me where the idea for Upside came from.
I'm an entrepreneur, and like most entrepreneurs I focus on unsolved problems. We see problems and whatever they may be, they drive us crazy. We can't stop thinking about them. They sit in our heads.
Maybe it's the empty piece of land in your town and you can't figure out why someone doesn't put something awesome there. Maybe it's why you can't seem to get the same level of service at the dry cleaner that you get elsewhere. Maybe it's the fact the clerk at the retail store never knows your name, much less what you tend to buy.
Business travel, especially small business travel, which involves about 25 million people, is a problem that screamed at me all the time. I knew it from my own experience, and at Priceline it was the "unfinished business." At Priceline we only operated in the leisure and entertainment travel space. Our partners were very specific about that. They wanted to protect the business travel sector.
When I worked for a Fortune 500 company I traveled a fair bit but I didn't have any incentive save the company money. I stayed within the guidelines and after that made sure the trip "worked" for me. If that meant spending $30 more for a slightly more convenient hotel... as long as I was within guidelines, I did it. Anyone who says they have never done something similar is either fibbing or standing within earshot of their boss.
Exactly. There is no incentive for employees to look for ways to save their companies money, and even if they want to, it's a real pain. The current systems are too cumbersome and time-consuming.
So in this case I was thinking about the problem and said, "Wait a second. You could ingest the entire air travel data set, all those terabytes of data, and manipulate it so you could reveal to the traveler the needles in the haystack."
The keys are to show the traveler the savings, value those savings fairly between the employer and the employee, and provide great service. Automation is great, but you have to provide service. Plans change, delays occur, things go wrong... you need to be able to service the traveler well because business trips are too important.
So the short answer to your question is big data, the cloud, mobile... the combination of tools had matured to the point we can now solve this problem.
In your first essay you talk about micro-flexibility, and buyer willingness to make small changes to their purchases to get something they want. How did that premise influence the strategy behind Upside?
First, it's easy for people to say that what we're doing with Upside is just me getting into the travel business again. That's not what is happening.
What we're actually doing is inventing a way to think about an economic problem, an economic problem faced by almost every industry and every consumer, one that is exacerbated when there is a misalignment between price and payer.
The real question is, "How do I trade away the things I don't want to get the things I do want... in a highly fluid, data-driven economy?"
Henry Ford supposedly said, "You can have any color Model T you want... as long as it's black." That's still how many companies operate. But the world is now increasingly driven by consumers who say, "Why do you force me to buy a bundle of things? Why don't you allow me to unbundle and get what I really want?"
That's why company benefit plans went to cafeteria style; basically the company said, "Here's an amount of money for benefits; spend it the way you want." You could spend it on day care, or adoption benefits, or different levels of health care... the goal for the company was to let you choose, because that would make you happier.
We've seen this trend in the macro economy, but we haven't seen a lot of software designed specifically to do it. That's our goal: to harness technology and software to allow consumers to make choices that let them get what they want, and save their companies money, too.
That leads me to this question: why run ads in the Wall Street Journal that are actually essays? I can picture all the die-hard direct response advertising execs cringing at the thought.
The purpose of the essays is to say, "Here are tech tools that allow us to find new ways to look at old problems."
Yes, we're launching a business, and yes, we're creating a great enterprise that will help small business travelers and companies get savings and earn more rewards... but there's a much bigger purpose.
There is so much anxiety today: where will the next generation of jobs come from, how do we compete globally, how do we innovate... There's a giant dialog that needs to happen in the business community, and entrepreneurs and inventors need to step forward. We need to set the discussion about where we're going with technology and how it will create new opportunities to serve the entire spectrum of the economic marketplace, from least affluent to most affluent.
That's why I'm writing a series of essays and publishing them in the WSJ.
I think it's a smart move. Get people thinking -- and talking -- and your startup becomes part of that conversation.
It's not a radical approach, though. I just took a page out of the earned media playbook. When you provide articles of real value, people engage with your company. Companies do that in digital all the time: they provide thoughtful content that engages people.
Granted, it's unusual to do it in the Wall Street Journal, but that just speaks to our scale. We want to create a multi-billion dollar company, and this approach speaks to the fact we aren't a one-trick pony. We're engaged in a thoughtful search for a way to engage in the larger world.
The essays are what I think and believe, and they're fun to share because I know they will deliver value to people... whether or not they ever become customers of Upside.
Every entrepreneur starting a new business faces at least one major hurdle they have to overcome. What is the major hurdle for Upside?
The biggest hurdle is the technology hurdle, as hard as that might be to believe.
For example, the biggest hurdle isn't marketing. If you give companies a way to save 10 to 15% on their business travel, that's an enormous amount of money. I know Fortune 500 companies that hope their business travel expense will only grow by 1% this year. Come up with a way to save 10 to 15%, prove it actually does -- because people can see for themselves how much they saved by doing some comparisons -- well, that is not a tough service to market.
Plus, if you save your company we'll give you a level of rewards in addition to your frequent flier miles and credit card points... so no, it isn't a difficult marketing problem.
Most startups have to get people to want their products. That's hard. We're starting with a product we know small businesses owners and employees want.
The real question is how do you do that that and truly give me what I need as a customer. I'm going on a trip, I have certain requirements, I need real, responsive, effective customer service if there is a disruption or change, I don't want to be on an airline without WiFi, I want a good seat, I want TSA PreCheck so I don't have to wait forever in the security line... the technology and the service has to work. You literally have to show the business traveler, in seconds, what you can do.
From the customer's point of view, these things are key: Make it simple, make it consistent, give me the right choices, make sure my company gets its share, make sure I get my share... and when I pick up the phone or text, give me service that is competent and helpful.
If we do that, we can win.
So what you're saying is that micro-flexibility is awesome for customers but can be a huge hurdle for startups. What are the keys to pulling this off?
Now that we've launched, the main challenge is to build scale and robustness. We're at what we consider version 1.0 and we had 100,000 people on the site in the first week.
It sounds simple, but the keys are to do what every successful startup does.
You hire incredibly talented people and get them to work together as a team. You don't try to do everything all at once. You build a strong foundation. You build the kind of technology that you can improve two or three times every day day. You pay endless attention to detail.
And you raise the capital that has a level of patience that will allow you to steadily improve and scale. That way you can start with a minimum viable product that is "good enough," and then work tirelessly to make it great.
And oh yeah: As every entrepreneur knows, you don't sleep. I heard Christmas was great. (Laughs.)
Let's go broader. Say I'm an aspiring entrepreneur and I run into you in an airport lounge. What general advice would you give me?
We'll start with this: Keep your eye on the real thing... and the real thing is the customer. It's not technology, it's not new ideas. It's about creating a way to serve a group of customers in a sustainably better way.
Too many people are in love with the tools. It's a bit like a marriage: In the end, a successful marriage is about compatibility, values, a shared vision of the world... those are the things that make the difference. In business, that "thing" is the customer. We live in an economy that is intensely in love with so many things that the customer gets forgotten. But look at people like Jeff Bezos -- he is intensely and maniacally focused on the customer.
Next, don't try to reinvent the wheel. There are so many phenomenal businesspeople that have lived before you. There are so many phenomenal businesspeople that are still alive. Read their biographies. Read the stories of how they built their businesses.
You're at a massive disadvantage if you don't understand the history of business and business innovation. It's like being ignorant of history and working in the State Department; the State Department is the living embodiment of the history moving forward.
The same is true for the history of business. If you haven't studied the history of commerce and business, you have an enormous gap -- and you'll have to make all those mistakes again just to learn some of what you need to know. You won't have learned how Starbucks failed twenty times, and what they learned from it. You won't know the mistakes Whole Foods has made, and what they learned from those mistakes.
Reading business news and educating yourself on current trends is important, but much of that only really makes sense when you also understand the past.
History isn't fun to talk about, but history is incredibly valuable for businesspeople. It's critically important in making you a better businessperson. 99% of the entrepreneurs and businesspeople today don't study the history of business and of successful entrepreneurs, and it's a giant lost opportunity.
Oh. And one other thing. Since you say we're having this discussion at the airport... don't eat the airport food. (Laughs.)