Becoming a billionaire is hard.
As of April 2021, there were only a total of 2755 billionaires in the entire world meaning
that only 1 in every 2.8 million people reach the elusive 10 figure mark.
Given the difficulty of the task, it’s not surprising that most billionaires spend their
entire careers working towards 10 figures with the average billionaire taking 21 years
to reach the mark.
Even the most notable billionaires in history including Bill Gates, Steve Jobs, and Elon
Musk took over a decade to make their first billion.
One entrepreneur named Jay Walker, however, managed to accomplish this feat within just
12 months which is the fastest in history.
So, here’s how Jay Walker made $1 billion in 1 year.
Taking a look back, Jay Walker was born to an immigrant family on November 5, 1955, in
Queens, New York.
His mother’s family had fled to New York from Germany right before the start of World
War 2.
Meanwhile, his father’s side of the family had lived in the US for a few generations
and even made some good money during the roaring 20s.
From a very young age, Jay found himself embarking on endeavor after endeavor trying to make
a bit of money here and there.
He sold candles, seeds, and jelly door to door, and he delivered newspapers to his community.
As he grew older, Jay became more involved in the community, joining student government.
Nowadays, student government is more or less just a resume padder, but it seems like back
in the day, Jay actually played an active role in the community.
One time, he was the student representative in a debate between the teacher’s union
and the city of Yonkers during a funding crisis.
Anyway, Jay ended up graduating from high school in 1973, and he would go on to attend
Cornell University where he majored in industrial relations.
Jay later revealed that the motivation behind getting this degree was to hopefully score
a spot as an assistant to an extremely wealthy individual.
Jay strongly believed that understanding how wealthy people operated was essential in becoming
wealthy himself.
Jay didn’t stick around at college for too long though as he would drop out and try to
start a business.
Unfortunately, though, this didn’t go too well.
Jay started a free weekly newspaper in Ithaca, New York.
Things started off great as Jay quickly grew to 175 employees with 25,000 newspapers in
circulation.
However, his business would crumble when the local daily paper company came out with their
own weekly newspaper.
Jay shut down his newspaper business and returned to college shortly after, but now he had $150,000
in debt or $675,000 today.
Jay would graduate in 1977 and get a job at a magazine company called Folio after college.
He worked on the marketing side of Folio for about four years before he quit and tried
to start another company called Visual Technologies Corporation.
The company sold glass sculptures that emitted light whenever someone touched them.
But, while these sculptures had some novelty, they didn’t really serve much of a purpose.
Jay also quickly found out that the sculptures were extremely expensive to manufacture.
Just a few years after starting the company, Visual Technologies Corporation would file
for bankruptcy in 1986, having lost a painful $5.3 million.
Jay didn’t quit though, he instantly switched to running another business called Catalog
Media Corporation.
Jay partnered with Trans World Airlines to offer discounted flight tickets to readers
of the catalog.
Jay actually managed to sell a large amount of discounted tickets; however, there was
a problem.
Jay had been selling the discounted tickets to travel agents as opposed to end consumers
which was in violation of the contract with Trans World Airlines.
Trans World Airlines would sue Catalog Media Corporation, and this company would also be
shut down in 1988.
At this point, Jay was only 33 years old, but he had already run 3 businesses into the
ground losing millions of dollars and destroying his credit.
Nonetheless, Jay still wasn’t ready to give up.
In 1991, Jay would form a joint venture with one of his biggest investors over the years
Michael Loeb.
This business was called NewSub Services, and it specialized in selling magazine subscriptions
through credit card companies.
The company didn’t skyrocket or anything, but for the first time in Jay’s career the
company also didn’t shut down.
In fact, this company is still around 30 years later, and they go by the name Synapse Group.
They employ about 170 people today so nothing super insane, but also nothing to scoff at.
Jay could’ve stuck around at Synapse Group, and he would’ve done just extremely well,
but Jay had even larger ambitions.
So, in 1995, he would start yet another company called Walker Digital.
Jay was a massive fan of Thomas Edison, and he wanted this company to basically be a digital
version of Thomas Edison’s laboratory.
At first, Jay dabbled with some software that could be used in restaurants, but soon enough
Jay would land on his billion-dollar idea: buyer-driven pricing.
Buyer-driven pricing is when consumers tell companies how much they’re willing to pay
for a service or product, and then, the companies will do business with customers with reasonable
offers.
This business model was especially attractive within the airline industry.
Consumers often wanted discounted airline tickets, and airlines were often willing to
get rid of empty seats for below-market prices.
Spotting this massive opportunity, Jay went ahead and applied for a patent for the business
model.
And fun fact, this was the first time that the US Patent Office granted a patent for
a business method.
After receiving his patent, Jay founded a company called Priceline.com in April of 1998.
Jay had partnered with a plethora of different airlines, but despite that, during the first
year of operation, only about 7% of customers were actually able to buy a ticket through
Priceline.
Honestly, though, this wasn’t that big of a deal.
If you were planning on traveling somewhere, you could make a bid for a flight ticket on
Priceline.
If you were lucky, you’d get a discounted ticket.
If not, you can just buy a ticket at market price.
In other words, there was no reason to not give Priceline a shot, and this made Priceline
extremely popular amongst consumers.
Despite this monumental demand, Priceline was losing a lot of money, but given that
investors were more than happy to back internet companies at the time, their financial shortfall
wasn’t that big of a deal.
In April of 1999, one year after founding the company, Jay took Priceline public, and
as you would guess, the stock exploded.
Priceline ran up to a valuation of $11.8 billion and Jay’s stake ballooned to $5.2 billion.
Jay had finally made it as an entrepreneur, and so, he decided to celebrate.
Jay bought himself a third Mercedes and he started construction on his dream mansion.
Jay didn’t get complacent though, he continued to aggressively expand Priceline.
For example, Jay worked quite hard to get actor William Shatner on board.
At first, William didn’t want to meet with Jay at all, so Jay agreed to pay William to
have a meeting with him.
During the meeting though, William would become so impressed with Jay that he agreed to do
the ads for Priceline for stock compensation as opposed to cash compensation.
Jay also tried to expand the business model to groceries and gas as well with the launch
of Priceline WebHouse.
Though there was a large amount of demand from consumers for this service, the logistics
of running this business were a nightmare.
But little did Jay know that this was the least of his concerns.
In early 2000, the dot-com bubble burst, and valuations of all internet and tech companies
fell off a cliff.
Jay wasn’t phased by the crash at first though.
He was like, I’ll just buy the dip at these discounted prices and hold until the stock
recovers.
Unfortunately, though, Jay wasn’t buying the dip.
He was buying a downtrend.
To make things even worse, 9/11 would kill consumer demand for airline tickets, and this
would push Jay over the edge.
At the end of 2001, Jay would shut down Priceline WebHouse, and sell his entire stake to Hong
Kong investors.
In retrospect, Jay literally sold at the bottom.
I’m really not sure why he did this.
He could’ve sold when he was down 50%, 60%, even 80%, and he could’ve stilled walked
away a billionaire.
But, he decided to sell when he was down 94%.
On the bright side, this still came out to about $333 million after taxes.
But, when you’re down 94%, you might as well weather out the storm and stage a recovery.
I know that’s easy to say in hindsight, but many entrepreneurs like Jeff Bezos and
Steve Jobs did exactly that and it worked out extremely well for them.
Given the resilience Jay showed in the 70s and 80s by starting business after business,
this decision is quite confusing, but whatever the reasoning, this is what Jay ended up choosing.
Anyway, after the dot-com crash, Priceline stock didn’t really move for another 5 years.
Priceline started to make a recovery in 2006 and 2007, but they got crushed once again
by the 2008 financial crisis.
It wasn’t until 2009 that Priceline really started to grow once again, but they haven’t
looked back since.
In the 2010s, Priceline went on a buying spree acquiring everyone from Kayak and OpenTable
to HotelsCombined and Venga.
At the end of 2013, Priceline finally broke out of their dot-com peak, and they have over
doubled since then.
In 2018, the Priceline Group changed their name to Booking Holdings and now they sit
at a valuation of $94 billion with a total of 19,400 employees.
Jay had a 35% stake in the company, and even if we say that stake was watered down to 20%,
Jay would be worth a little under $20 billion today if he held on.
After leaving Priceline, Jay returned to Walker Digital, and he’s been working there ever
since.
As we previously discussed, Walker Digital is more of a research company as opposed to
consumer business.
So, Walker Digital mainly works in the background licensing technology and inventions to companies
like Time Warner.
Given that Walker Digital doesn’t actually sell any products themselves, many consider
the company to be a patent troll.
Given that Jay Walker is the 10th most patented living inventor today, I don’t think that
title is necessarily inaccurate.
Today, Jay Walker is estimated to be worth about $500 million, so it doesn’t look like
Jay ever recovered the money he lost during the dot-com crash, but I don’t really think
he cares to even do so.
At the end of the day, Jay was able to go from 0 to over a billion dollars within a
single year thanks to the explosive success of Priceline combined with the dot-com bubble.
Though most of Jay’s wealth was made within an extremely short period of time, the truth
is that Priceline’s success was a culmination of decades of repeatedly starting businesses,
failing, and trying again nonetheless.
So, I personally think Jay’s eventual success was well deserved even though there was a
good amount of luck mixed in with his final rise.
Do you guys agree?
Comment that down below.
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