e-Strategy Pure and Simple
Chapter Three
Killer.com: Page One

A CEO's Worst Nightmare: killer.com

A few years ago, the CEOs of the two dominant book retailers in the U.S., Barnes & Noble and Borders, were sitting in their respective offices, listening to the business news on CNN's Moneyline, contemplating ways and means of taking away some of each other's business.

During the newscast, there is a short interview with a gentleman named Jeff Bezos, who declares that he has formed a company named amazon.com, which, effective immediately, will start selling books on-line through the Internet. Furthermore, he states that amazon.com will carry over 1,000,000 titles, a hundred times the average bookstore, that the price will be 30-50% less than in a bookstore and that a purchase can be made in a couple of minutes from the comfort of your home by simply using your PC.

A few weeks later, while the CEO of Merrill Lynch is thinking about ways and means to compete with Smith Barney while watching the same TV program, another young entrepreneur announces the launch of an on-line broker company called e-trade.com which will allow individuals to trade stocks from their home PCs at a fraction of the cost of going through a broker.

Only days later, another Internet entrepreneur announces the start of a company called priceline.com which will allow an individual to purchase airline tickets on-line at a price that individual wants to pay and not at the exorbitant price that the airlines want that individual to pay.

Ama...who? E...who? Price...who? Doing...what? must have been the reaction of these CEOs on the day of these announcements. All were caught completely off-guard by this announcement and since then, each of these new Internet companies has become their biggest nightmare.

The day that amazon.com went on-line, Barnes & Nobles' and Borders' business models were put into jeopardy. The day that e-trade.com went on-line, Merrill Lynch's business model of selling stocks through thousands of highly commissioned salespeople was put into jeopardy. The day that autobytel.com went on-line, Wayne Huizenga's Autonation business model of selling cars by offering thousands of models displayed on massive car lots was put into jeopardy. The day that Jay Walker went on-line with priceline.com, the entire airline industry's business model was put into jeopardy.