Wired For The Bottom Line

Walker, the man who's taking e-commerce a step beyond eBay's auction model, isn't your typical Internet start-up CEO. At 43, he's a Scarsdale, N.Y.-born veteran of more than a dozen companies. Marketing, not technology, has been his focus. "I was the kid who had the lemonade stand," he says. The Internet, of course, is sort of a marketer's nirvana, a gathering place for millions of credit-card-holding consumers. Walker, however, was clever enough to realize that Netizens were not to be regarded as sitting ducks, but as a new population hungry for ways to empower themselves. And that the Net can enable heretofore unimaginable business models. Models that could--and would--change virtually every industry on the planet.

Walker believes that those who think up such ideas should own them, a conviction reinforced by recent legal rulings holding that business methods could be patented. This opportunity was confirmed to him by a dozen patent lawyers whom he hired to eat lunch with him in the law firm's boardroom ("It cost me about $2,000," he says). He quickly formed a company, Walker Digital, to dream up new tech-driven schemes, patent them and spin them off into businesses.

The first big idea was Priceline, which allows people to name their own price for flights, if they offer flexibility on carrier and times. The airlines can sell unused seats, and won't lose their regular customers, since Priceliners can't specify which airline they want. It's the kind of thing that could be done only on the Internet, which offers millions of people quick access to airline databases, and hooks them to software that pulls the trigger on the right prices.

Walker patented the scheme. Then, after his brain trust figured out a way that airlines might fight the idea (an "anytime ticket" sold cheaper in exchange for letting the airline choose the flight), he patented that scheme, too. Just in case. (Some of Walker's patents are being challenged by inventors who say they had thought of the ideas first.)

Potential customers were drawn by a splashy ad campaign featuring William Shatner (who hopped on the Starship Free Enterprise by taking his payment in stock). But it took a while to get the airlines on board; Priceline wound up letting Delta take a big share of its stock. As customers learned to make realistic bids, and Priceline added airlines to make more flights available, more customers (but still less than half) are making successful bids. Priceline isn't making profits yet, but it's selling about 40,000 tickets a week. And though its stock is considerably down from its peak earlier this year, Wall Street values the company at more than $8 billion.