Listening to potential customers is one of the biggest keys to success in your business, says online entrepreneur Jeff Hoffman, former CEO of Priceline.com and Black Star Entertainment.
He shared this in a recent interview with Marian Cook, founder of consulting firm Business Transition Experts, as part of her series of interviews on “Selling Your Business for More”.
In this extract from the interview he explains this in more detail.
Marian Cook: You were at Priceline for a few years. What lessons did you learn there?
Jeff Hoffman: My experience with Priceline started when I got a call from a gentleman called Jay Walker. There wasn’t any Priceline then. There was a company called Walker Digital, which was an intellectual property company.
Jay wanted to spin off some of his ideas into companies and he called me asking if I could help him create businesses, since I had launched and built companies out of intellectual property.
The business process patents that Jay had created in Walker Digital were what we took to launch the Priceline companies.
That was the time of the Internet craze, so we went the IPO route. Selling the business was a lot of really fast learning because everything happened in hyper-time.
Priceline went public after only being open for 11 months. In the real world, an 11-month-old company is not ready to be a public company. But during the Internet phase, everyone was IPOing everything.
If we hadn’t been in that time, we would have built the company out to more maturity and stability before doing that. We had to learn very fast about public markets and IPOs, and I had never been through the public company piece until then.
This is a really important piece for anybody with an idea. It sounds simple, but I’m amazed at how many people still miss this. Everything is about value equation.
You can tune out everybody’s opinions, all the stuff that you hear all the time. If you have a value equation, you win. And the good news is that we had a huge sea change in the business world. The shift of power with the Internet went from supplier to consumer. It’s like the Internet gives the power to the people.
Use the music industry as an example. Back before the Internet, let’s say you had some small artist you heard somewhere and you loved this person’s music. Odds are that person’s CD was not for sale in the record store. The distributors decide the only music you could buy was the CDs they were selling in the store. There was really no other way to get a CD.
So the little artist that you love, his CD wasn’t in the store. Big names like Justin Timberlake and Beyonce were. The choices made available to you were determined by suppliers, not you.
The Internet put the power in the hands of the consumer and changed the whole thing around. It enables the consumer to decide what they want to buy and then they can find it somewhere.
So once we disintermediate it and the Internet created the age of consumer being in control, it created another wonderful opportunity for entrepreneurs. I’m not just talking about the Internet. This applies to any kind of business; it’s just more visible in online businesses.
If you have a true value equation and consumers like it, nobody can stop you from being successful.
You’ve got to ask, why the music industry? Whoever had the most to gain or lose didn’t invent the iPod and iTunes. Because they didn’t listen to the consumers. They didn’t think it was a good idea.
Facebook was not created by corporate America. A couple of people that listened to their friends and said, this would be cool. Just built it. Twitter, Google — these things were not created by large corporations. They were created by a couple of people that said, I know what people want, and I’m going to give it to them. So that’s what we learned.
Everybody initially thought the Priceline idea was amazingly stupid. Nobody liked the business model. Nobody wanted to invest. I had trouble hiring people initially.
But the customers we were trying to deliver a value to, the people we were trying to trade the value equation for told us, yes, I’ll pay. That service is value to me and I’ll pay to use it. So we stayed focused on the end consumer.
The big lesson we learned was figure out how to create a win/win value proposition that both ends of the food chain win on.
The market will tell you what they like, and if they like it, nobody can stop you from being successful delivering it.
For this entire interview as well as those of 14 additional world class experts on selling a business, please visit our Business Transition Experts “Education at Your Desktop” site at: http://www.businesstransitionexperts.com/telesummit .
