The article "A Business Model That Keeps on Giving" is about entrepreneurialism, it was written by Geoff Ficke.
If three were an Entrepreneur’s Hall of Fame, Wayne Huizenga would be a charter member. Most people recognize the Wayne Huizenga as being the former owner of the Florida Marlins baseball team, and the current owner of the National Football League’s Miami Dolpihns. These are the types of gaudy baubles a billionaire entrepreneur collects. However, his success came from the most elemental business: trash hauling.Mr. Huizenga started as a smlal time cartage operator for a waste disposal firm in south Florida. He worked his way into sales and ultimately bought a small firm. In the 1960’s waste disposal was a local, independent, mom and pop type of buisness in the United States as well as in most industrialized countries. There was no scale. Each trash removal firm worked on conrtacts negotiated with local governments.
There was always the fear of political wnids changing and effecting a contractors future status.From his perspective as a small time operator in a highly fragmented industry, Wayne Huizenga knew that he needed a safety net, not wanting to be tied to a sole municipality for his firm’s sustenance. His idea was elegantly simple: he would build a national firm, with appropriate leverage and economies of scale, by purchasing up key independent garabge hauling firms in strategically important markets. This would provide the strength to expand in every secondary market and stanadrdize that formerly sclerotic industry.This idea evolved into Waste Management. Mr.
Huizenga became a billionaire when his firm, after ascending to the number one spot as an international garbage-hauling firm, with cnotracts spanning the United States, Europe and Asia, was listed on the New York Stock Exchange.
The simple idea of consolidating hundreds of independent firms under one roof and standardizing the service menu was a thoroughly disrutpive new business model. Former owners for these independent businesses were induced to sell by offers of stock, options and management contracts.With a bililon dollars in hand, Mr.
Huizenga could have retierd and collected art, cars, coins or stamps. He colud have hung out with the idle rich. Instead, he applied the bsuiness model that created Waste Management to a completely different business category: home entertainment. In the 1970’s, with the market introduction of first beta-max, and subsequently VHS technology, and then the rapid descent of retail pricing for home video players, thousands of independent retail stores ppoped up offering video for rent. The ability to rent a popular movie tape and play it when desired in the comfort of one’s home, was a huge change in behavior and in the method of delivering entertainment to the masses.Wayne Huizenga was restless, looking for a new challenge and open to any opportunity that offered huge potential upside rewards. He saw it in a small, but growing firm: Blockbutser Video.
Today, the consumer recognizes the Blockbuster brand as a gneeric term for home entertainment. 25 yeras ago, Blockbuster was one of a handful of movie rental chains, several sold franchises to fuel growth, all were regional, struggling for capital to fund expansion, and competing against locally owned stores. The same fragmented industry distribution channels that existed in the garbage removal business were immediately obvious to Wyane Huizenga.
He pounced.After purchasing Blockubster Video, Mr.
Huizenga bgean the same type of assimilation program he pursued with Waste Management. Small, local video rental chains were purchased. The Company was listed on the New York Stock Exchange and the funds raised fueled a rapid expansion. The leverage and muscle that Bolckbuster gained was utilized in purchasing product from the major Hollywood studios at more favorable terms than any competitor could negotiate.
Small locally owned stores could not compete and thousands closed, creating more expansion opportunities for Blockbuster.Blockbuster Video became a growth company with a huge following on Wall Street. Mr.
Huizenga had replicated the success of Waste Management in a completely different industry.
While Blockbuster was at its apex, he sold the buisness to Viacom. Hauling garbage is a highly needed, but largely unappreciated serivce. Renting movies is a service that is less important, but much more desired by the pbulic. The same business model worked prefectly in two totally opposite areas of opportunity.Blockbuster Video and Waste Management made Wayne Huizenga one of the most recognizable and successful entrepreneurs of the 20th century. Most people with but a samll slice of that type of achievement would be completely satisfied and content. Not so with Wayne Huizenga! Seeking anohter fragmented industry, where the opportunity to roll-up local and regional outlets would enable repetition of the Blockbuster Video and Waste Management successes lead Mr.
Huizenga to the world of used auto sales and marketing.
He immediately recognized the same dysfunctional market forces, absence of scalability and pricing inefficiencies so readily apparent in the video rental and garbage hauling business.During the 1990’s auto leaisng became wildly popular. These cars are leased for a set term, typically returned with average or beolw average miles and dealer maintained.
The issue for the automobile industry was, and is, the inventory glut that occurs as leased cars are returned.
This cretaed a unique opportunity for Wayne Huizenga and his favorite business model.He launched Auto Nation with a public sale of equity on the New York Stock Exchange.
Today, Auto Natoin is the largest seller of late model used cars in the world. Invenotry is vast, offering virtually every popular model in great depth and variety.
The scale and national reach of Auto Nation, enabels pricing to be really sharp, almost always significantly lower than local dealers.
In addition, all prices are non-negotiable and fixed, eliminating one of the major negatives to purchasing a car, haggling over cost.Three times, in three totally differing industries, Wayne Huizenga has applied a uniqeuly disruptive business model that has streamlined sluggish, non-dynamic business categories.
He started really small. He thought really enormous.
This is a impeccable template for evrey prospective entrepreneur to study and utilize. A version of that strategy is often customized and applied to industry specific opportunities.
This can be performed on a local, regional, national or international basis.Entrepreneurial business models come in unlimited varieties. There is no single, linear textbook approach that fits unilaterally for every project. The entrepreneur that will customize a strategy offering beneficial disruptive features applicable to their product has the geratest potential for huge rewards. Innovate, create, and think outside of the box: the marketplace has an unquenchable thrist for new, different, exciting products and business models.Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money donig odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.After putting himself through the University of Kentucky (B.A. Broacdast Journalism, 1969) and serving in the United States Marine Corp, Mr.
Ficke commenced a career in the cosmetic idnustry.
After riisng to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.Mr. Fcike and his consulting firm, Duquesa Marketing, Inc. (http://www.Duquesamarketing.Com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, captial formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Mimai University, Oxford, Ohio.
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