News: Analysis & Commentary: Startups
Priceline's Bid for the Big Time
The name-your-own-price Net shopping site aims to go public
William Shatner has gone from Trekkie to techie since April. That's when he began promising in radio and print ads that a service called priceline.com was going to be "big, really big." The big idea is "real time" pricing: Consumers name the price they'll pay for items ranging from plane tickets to hotel reservations to mortgages and cars. If the seller accepts, they have a deal.
Already, priceline has lured $100 million from venture investors including Microsoft co-founder Paul Allen's Vulcan Ventures Inc. In July, Richard Braddock, True North Communications ex-chairman and former Citicorp president and chief operating officer, became priceline's chairman and CEO. Now, the company is preparing to join the ranks of hot Internet stocks: It wants to raise about $115 million by launching an initial public offering.
But can priceline be an E-commerce success story? Like many Net startups, it isn't close to turning a profit. It lost $38.5 million on sales of $16.2 million in the first nine months of 1998 as it spent heavily on the Shatner ads and aggressive marketing to build an audience.
In addition, priceline's basic approach may have limited appeal. Consumers must agree when they name a price to take the product priceline finds. So you could wind up flying from New York to London via Miami. While the service collected bids for about 1.1 million tickets from April 6 to Sept. 30, it matched sellers and buyers for only 67,300. And priceline still needs more merchants, analysts say. Citing the IPO, officials would not comment. Still, that ".com" in its name could make priceline a hot IPO.By Heather Green in New York