For many years, Priceline.com was an even more widely known venture that has made money highly malleable. Jay Walker, the founder of Priceline speaks of a buyer-driven commerce that enables buyers to “name your own price” when purchasing airline tickets, making hotel reservations, or purchasing a wide variety (and growing number) of other goods and services. The primary target of Walker’s venture, however, is actually the sellers not the buyers:[iii]
“For all the consumer empowerment implied in its “name your price” format, Priceline is really about solving a vendor’s problem: in this case \, how to make money from the 500,000 airline seats to go unsold daily. Most businesses with excess merchandise cut prices over time. But airlines can’t because they depend heavily on socking it to last-minute business travelers. Besides, many of those empty seats are on early or late flights, when no one wants to fly. In pitching his “name your own price” model to airlines beginning in 1997, Walker argued that his novel format could fill those unattractive seats with price-conscious leisure travelers. To assure the airlines that Priceline wouldn’t poach their full-fare business travelers, Walker agreed to impose draconian restrictions on whatever discount tickets the airlines made available to him. . . . Says Walker: ‘We called it consumer freight, because the consumer is behaving like freight.’”
In the case of both FreeMarket and Priceline, the monetary value of various commodities is highly volatile. An airline seat might be worth $1,000 or $150, while a computer hard disk might be worth either $40 or $400 depending on where it was bought and on the demand for this seat or drive by other potential purchasers. While price has always related directly to demand, the link is now much more intimate—as it is in the bazaars of the Near East or the public markets of Asia. We are truly living in a global village—complete with premodern bartering and auctions.
Money and Knowledge in Partnership: The Venture Capitalist
Money has been transformed in postmodern societies not only by the commerce of the Internet, but also more broadly by the interplay between finances and knowledge. Modern societies have always focused almost exclusively on money as the primary form of capital. New modern businesses require money for startup and existing businesses need money to remain viable. If one wants to measure the extent to which a “third world” country has entered into the modern era, one need only look to the growth of this country’s banking industry and to rates of monetary investment in various kinds of organizations in the country. Money also makes the postmodern world-go-round. However, postmodern money is inevitably coupled with information and knowledge (the two primary forms of postmodern capital).
The intermixing of modern (money) and postmodern (knowledge) capital is certainly a potent brew—especially in the hands of the venture capitalists. These creatures of the postmodern world have coupled their own knowledge of finance and technology with the specialized knowledge of electronic visionaries to create massive new wealth and opportunity, as well as extraordinary volatility in many economic sectors (from Silicon Valley to Washington D.C. and from Tokyo to London). This amassing of wealth is particularly noteworthy given that many of the new businesses started by venture capitalists have yet to show a profit. Amazon.com, for instance, is a major “success story” in the e-commerce world, yet as of the year 2000 it still hadn’t made any money for its investors. As reported in the November 8, 1999 edition of Fortune: “All in all, net losses [for Amazon] in 1999 will top $600 million. Even the most optimistic estimates say the company won’t earn a penny for at least two years.”[iv]
