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 / Second Quarter 2000 / Issue 19(originally published by Booz & Company)


Jay Walker: The Thought Leader Interview

S+B: Had this always been a motivating vision of yours?

WALKER: I didn't spend most of my career in intellectual property. I spent most of my career as a marketer developing value-added systems, without any hope of creating property around those systems, because I didn't understand I could.

S+B: How did the epiphany occur?

WALKER: It wasn't a moment; it was just a general process. I was reading an article about encryption technology one day, and I had an insight that all gambling would change ultimately because encryption technology made it possible to have a hand-held casino that couldn't be cheated or lied to. Then I began to wonder how I might benefit commercially from the idea. Since I wasn't going to open a casino, I thought maybe I could own the idea. That led me to patent law. I hired some lawyers and said, "Let me see if I've got this right. If I invented the credit card and was able to describe it as a 'periodic billing system for transaction charges,' I would have been able to own the credit card?" And the patent lawyers said, "Yeah." I said, "If I invented the frequent-flyer program as a 'rewards points tracking system,' I could have owned any frequent-flyer program?" "Sure, of course," they said.

And I said, "Does it strike any of you as odd that nobody owns those things?" And they said, "Business does that all the time. They invent things and they don't realize they could own them." Only a group of lawyers could possibly look that kind of incredible wealth loss in the face, and not see that there was something odd that nobody owns those ideas.

S+B: Did it occur to you at this point that maybe you were reading it wrong?

WALKER: Sure. I went to businesspeople I knew and said, "I could have owned the ATM machine." "You're kidding! You must be wrong." "I could have owned the travelers' check." "You're kidding! You must be wrong." Every business person I asked said, "What are you talking about? You can't patent that."

S+B: What convinced you otherwise?

WALKER: Every patent attorney I asked said I was asking stupid questions. Of course those things were patentable. It was clear the business people were all wrong, and the patent attorneys were all right, because it was a matter of law. So I started raising and investing millions of dollars on the basis that I could invent new solutions that were indeed ownable. If they were useful, they'd be valuable. And if they weren't useful, I would just own something useless. The only question was: Was I going to own land in Montana or own land on Park Avenue. That's about the quality of invention, not the quality of patents. It turns out I can own land on Park Avenue.

S+B: The notion of theory-based, ownable business models has taken the New Economy by storm.

WALKER: Outside of the consulting world, academia, and a handful of large corporate players that use strategy as a discipline, almost nobody would think that it's worth their time and effort. I've got to tell you, that's still largely true even on the Internet. I can't tell you the number of times that I meet with Internet entrepreneurs or executives, and how little theory they have, and how little cognitive behavior they seem to exhibit about what it is they're doing.

S+B: There is an argument that says that managers can get sidetracked by theory.

WALKER: You can be bothered by anything that requires you to take time out to think. But the mantra of "execute, execute, execute, speed, speed, speed" seems to preclude any consideration of what we are speeding toward. That's sort of like saying, "Don't bother me with the facts — I'm busy executing them."

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