InformationWeek

Building A Business In The New Economy

Keynote Speech by:
Jay S. Walker
Vice Chairman & Founder, Priceline.com

Interviewer:
James I. Cash, Jr.,
Professor
Harvard Business School and Forum Host

January 28, 1999

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As a business person and as an entrepreneur, one of my jobs is to assemble capital, resources, and ideas for the formation of new economic enterprises. So as an entrepreneur, I am constantly looking for ways to assemble businesses. However, entrepreneurs have a new role to play in today's economy. That role is not simply to assemble another auto parts business or another bookstore or another set of gas stations or another group of chain of grocery stores, but entrepreneurs in today's marketplace are actually for the first time in a long time working with a palette of entirely new ideas. In other words, we expect our entrepreneurs not just to create and assemble businesses by pulling together capital, people, etc., but we expect them to actually be latching on to entirely new ideas for the first time. Remember, a new idea 20 or 30 years ago might have been a new dress store or a new way to serve somebody an old product or service.

The ideas in today's world are much more akin to genetic engineering where we are trying to imagine entirely new forms of life. New plants and new animals whose DNA is totally different than what came before. This is not a small difference because the entrepreneurs who are building great fortunes are not building them executing old business models. They are actually building them by recognizing new forms of DNA. I use the term DNA very loosely here to mean anything that resembles the information architecture of a living organism and I am going to include a business in the definition of a living organism.

The DNA of plants and the DNA of animals as a design problem is a relatively new problem. The notion of a genetic laboratory engineering a new plant that can resist cold and disease and can improve crop yields in the green revolution is a radical idea. Yet, to botanists and geneticists, this is old news. To business people, this is like unbelievable. What do you mean re-engineering the DNA of a business or a commercial process? What does that mean? I would put forth what it means to re-engineer the DNA is not to re-engineer the corporation in terms of the systems and processes that ERP might address or the methods of doing business in the current model might address, which of course is an important function that many of you spend a great part of your lives dealing with. But I would argue that once you get down to engineering the DNA, you are creating an entirely new life form.

This morning, I believe Jim and others went over with you the difference between Amazon and Barnes & Noble. And interestingly, Amazon's DNA is no different than Barnes & Noble's DNA. The business is highly automated but it is almost the same DNA. They sell books to customers who sort of browse through them and decide which books they want, pick the book out, pay for them and go on their merry way. The book is picked, packed, shipped. That DNA is almost the same. Yet, Amazon looks very different than Barnes & Noble as a business but the new DNA would look something like this. Supposing 1,000 people got together and went to the Web site and say, I want John Grisham's new book to be about this and I will pay $20 now. Suddenly, we have collected 50,000 people who all advanced-purchase a book which an author then writes to that demand where we have cut out the book house providing an advance and we have cut out the retail system deciding how many books are going to necessarily be printed and the manufacturing process, how many are going to be manufactured. That would be an entirely new form of DNA between the author and the consumer reader. Now, I am not suggesting that form of DNA is going to exist soon. But what I am suggesting is that that concept is how radical business is going to be reinvented.

If this were just one element of a larger picture, it would be interesting but not particularly important. It is not. It is the picture. To some extent, all of the discussion about the Internet and all that the Internet means, is really a discussion when you talk to business executives about the re-engineering or the re-architecting of the information layer of the commercial world. What do I mean? Until recently, the information about products was embedded in the product. The price, for example, was a price tag physically attached to a product. So the information about the product was attached to it.