Richard S. Braddock: From Citicorp to Cyberventure
What can an ex-global banker bring to an Internet start-up?
Richard S. Braddock
For an Internet entrepreneur, Richard S. Braddock is practically a time traveler -- he had a full-blown career before there ever was a World Wide Web.
Around the time 20-something Net entrepreneurs were tackling shapes and colors,
56-year-old Braddock was on his way to becoming president and chief operating officer at Citicorp. In 1992, he left to head up Medco, a midsize medical-benefits company. But
Braddock already had his hand in technology, as a board member and investor for a handful of ventures.
Now, Braddock is going full-tilt at a Net business, in which he is both an officer and an
investor. On Aug. 27, he was named new chief executive of Priceline, an online
"reverse-auction" service that lets buyers offer a price -- which sellers accept or decline -- for airline tickets, new cars, and soon, home mortgages. The four-month-old company's concept just received a patent, the first-ever granted for a business concept.
How does a former corporate general fit into the Net's guerrilla-entrepreneur culture in a venture with only 100 employees? And how do decades of hard-core business experience translate in the ethereal, look-ma-no-assets world of cyberventures? Business Week Online's Dennis Berman spoke to Braddock about this transition, and the prospects for Priceline. Here are edited excerpts of their conversation.
Q: What are the main differences between running a small company like Priceline and a global conglomerate like Citibank?
A: Ever since I left Citibank, I tried to work in environments that have high-growth opportunities. Having managed [at Citibank] in a high-growth environment and
later during aggressive downsizing, it wasn't hard to figure out which of the two was
Over the years, as I got into growth areas I naturally started to run into technology. If you look at the numbers on growth in the U.S. economy, most of it is coming from
technology-intensive or technology-influenced businesses. In addition, if you're
looking for growth, you begin to look at smaller or intermediate-size companies. That's
where the job engine has been, as well as the source for most innovation.
Priceline is an effort to really redraw the relationship between buyers and sellers with
significant benefits for each and create a different business model. That's the appeal to me -- the opportunity to participate in building a truly new business.
Q: How do you fit in culturally to this Web business? Is everyone wearing sandals to your loafers?
A: I'm definitely the oldest, though I have been known to wear sneakers,
sometimes. But they are very presentable people. Some wear ties, some don't.
We have 100 people, who are basically quite young and work extremely hard.
Measured against a traditional corporate group, they don't have the same depth of
experience. But broadly speaking, a corporation is in the business of leveraging things it's created previously. More or less, the next day is where they were before. A new business has a totally different mindset. Yesterday doesn't matter much, it's about creating a new presence tomorrow.
Q: Just how large do you envision Priceline?
A: Of course, the airline-ticket product is our most visible one right now. But if you step back, what we're really trying do is create a brand and a thought in the minds of consumers that this is the place to go for values in a variety of products and services. I envision over time, offering a range of products: airline tickets, hotel rooms, mortgages, and credit cards. We view, overall, that Priceline may be capable of delivering a business with revenue at least in the hundreds of millions of dollars.
Q: Priceline's airline service has received mixed reviews to date. Most say the service has potential but that it's suited only for a very narrow range of travelers. Any response?
A: I think the airline-ticket offering so far would suggest that we've hit a pretty
responsive consumer chord. We're getting firm offers that run annually at
$750 million. We've written more than 50,000 tickets and have a lot of very satisfied
customers. To be honest, we haven't had as much inventory as we'd like.
Q: How do you build that inventory? How do you convince an airline to
release discounted seats? Aren't they worried about cannibalizing their higher-margin offerings?
A: The eight major airlines take off with 500,000 empty seats every day. They're getting zero dollars for them. Our argument is that we structure the offering in a way that ensures the customers are leisure travelers. And we offer the airlines the opportunity to fill those, highly anonymously, on a one-on-one basis. [Each user's offer can be accepted or denied at the airline's choice.] If you're a seller, those are distinct benefits you can't get in the real world. If you have a retail store, you can't show a $300 suit at the end of the aisle and have it on another rack for $450. It wouldn't fly. What we're offering sellers is an insulated distribution system, where they can sell a product at the price they choose -- as few or as many as they want.
We also generate information on consumers that airlines have never been able to
see. We're able to take travel routes and tell them how many people would travel on that
flight at various price points. They're understanding that we're not only delivering new
business but giving them information that is reasonably comprehensive for them.
Q: Priceline has been in the spotlight because its business model was granted a patent, a true first. Is this just good marketing or something more? Any plans to license it in the future?
A: This is an endorsement that this is innovative and real. And it's a bit of an insulation that our products will not get commoditized over time. I don't think patents are going to matter all that much to consumers. But they matter in that they're part of a well-differentiated service.
We would be able to say now, philosophically speaking, that we're comfortable with the
thought of licensing patents. But we don't have any specific plans yet.
Q: With your first-ever business-model patent, do you see yourself as part of early Web history?
A: We have a bunch of building blocks in hand, which suggest this is going to be a great
business. But this is not yet a mature business. I think that the Internet-driven businesses are going to be significant. Not all will succeed. In a few years, I hope we will have made a major contribution, and offered an opportunity to re-architect a few businesses that need it.
Q: Any plans to go public soon?
A: Depends on the day you ask us.
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