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Published in U.S. 1 Newspaper on February 16, 2000. All rights

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Internet’s Promise: Dan Schulman

When William Shatner, a.k.a Captain Kirk, calls

Priceline.com

"big," it gets people’s attention. Here is a man who spent

several decades traveling the universe at warp speed, making eloquent

speeches on profound cosmic matters, and yet this website is

apparently

just too awesome for words.

The commercial is tongue in cheek, of course, but if you ask Priceline

president Dan Schulman to describe the trajectory of E-commerce

over the past year or two, you hear echoes of the same optimism and

awe. "It’s sort of a digital tornado," says Schulman, who

joined Priceline eight months ago after working for AT&T. "It

doesn’t just touch down in one industry. It completely alters the

landscape, sucks up different industries, spits out different

distribution

trains, and redefines the way things are done."

The Internet, suggests Schulman, can even rewrite the rules of

capitalism.

"The Digital Revolution: A Look Ahead," will be the topic

Schulman explores at a free lecture sponsored by the Princeton Child

Development Institute on Thursday, February 24, at 7:30 p.m. at McCosh

50 at Princeton University. Call 609-924-6280.

Schulman grew up on Snowden Lane in Princeton and was a quarterback

at Princeton High. His mother was the associate dean at the graduate

school of psychology at Rutgers; his dad was vice president of

marketing

at Morton Thiokol. Schulman graduated with a BA in economics and

geography,

Class of 1980, from Middlebury College. Although he now works in

Connecticut,

where Priceline is based, Schulman lives in Warren with his wife,

Jennie Kassanoff, a professor of American literature at Barnard, and

two kids.

Schulman earned an MBA from NYU and, from 1981 to 1999, worked at

AT&T in Basking Ridge. As chief of marketing for the company’s $24

billion business markets group, Schulman led integration of wireless,

E-commerce and local services into innovative bundles.

Once bitten by the Internet bug, Schulman craved the excitement of

launching a new business. So he joined Priceline, entering a new

galaxy

of sorts. "The vast majority of the company is in their 20s so

it’s a whole different frenetic energy level," he says. "I

can send E-mails to 20 people at 11 at night, and 18 will respond

within five minutes."

Priceline’s business concept is simple: one price doesn’t fit all.

A consumer may be willing to pay retail for a brown sweater, but will

only purchase the blue sweater at a discounted price. That means a

supplier could end up with a lot of blue sweaters. Likewise, airlines

don’t sell every seat, and certain brands of soap just sit on the

shelves at supermarkets. A supplier can move the items at a discount,

presumably, but again one price does not necessarily fit all.

Priceline, therefore, comes in as an intermediary between consumer

and supplier, choreographing supply and demand in a true buyers

market.

Customers bid on a product, and suppliers respond to the bid according

to demand. It requires some flexibility on the part of consumers —

they have to be willing to take an earlier flight or use a different

brand of laundry detergent, for example. Meanwhile, suppliers get

a chance to step back and look at the real demand curve — rather

than a hypothetical demand curve — and factor that into their

pricing. It’s "data-rich pricing," says Schulman: "For

the first time ever suppliers aren’t thinking about a hypothetical

demand curve, they’re looking at an actual demand curve, and they

can figure out how and when to capture it."

And capitalism — as we know it — is forever changed. "For

the last 100 years the predominant way of selling items is the

manufacturers

suggested retail price," says Schulman. "But with the Internet

a tremendous amount of power is shifting from the producer to the

buyer of goods. With the Internet you can do comparison shopping,

and a lot of the inefficiencies will move out of the market place.

It’s consumer-driven commerce."

Last year Priceline was selling 5,000 airline tickets a week, says

Schulman, compared to 80,000 a week now. The company just rolled out

an online grocery shopping feature that allows consumers to bid for

certain products at reduced rates. "In 12 weeks, two percent of

the entire New York City marketplace shopped using Priceline.com,"

says Schulman.

High volume is only one of the challenges that face Priceline’s

technical

teams — size is becoming a major issue. "Our biggest issue

is ensuring ourselves that anything we put in place has the

scalability

to go 10 times within a year," says Schulman. "If we put a

database in, we know it has to be able to expand to 10 times its

capacity.

It looks like just a website, but in the background you have huge

databases interacting on a real-time basis with all our different

supplier partners, who are looking at demand curves. You need to be

able to juggle balls, chainsaw, and a bowling ball all at the same

time."

To accommodate growth, Priceline revamps its site roughly once

a quarter, gearing up for the day when more than two percent of New

York City hits the site for groceries. That time may not be far off.

Eventually, Schulman hopes that Priceline will be less of a novelty,

and more of fact of every-day life for the middle-class.

When asked to predict what the Internet will look like a few years

from now, Schulman sounds less like an executive and more like the

company’s famous spokesperson. "I feel like we’re at the end of

the beginning," says Schulman. "Two years from now you won’t

have the same kind of frontiers that you had six months ago."

Those frontiers, says Schulman, are voice recognition, wireless

communications,

and broadband. "It’s going to reshape the way people live and

conduct commerce and it will be pervasive," says Schulman.

"Voice

recognition will open it up to the masses, wireless will make it

anywhere,

and broadband will open it up to a torrent of applications. This idea

of talking to the Net — that isn’t a science fiction type of thing

— five years now that will be a reality."

— Melinda Sherwood


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