My Next Business Few are better than Gary Hoover at identifying big opportunities. Which one of these ideas will he pursue now?
(FORTUNE Small Business) – When he was a teenager growing up in Anderson, Ind., in the mid-'60s, Gary Hoover began scribbling ideas on scraps of paper. His scribblings were not exactly like those of other boys in the neighborhood, who might have listed lineups for Hoosiers basketball one week and statistics for the Cincinnati Reds the next. No, Hoover's scribblings were different: He jotted down ideas for businesses he wanted to start.
Over the years, Hoover's list became the source for six different businesses, three small ones when he was in college and three ambitious startups later on. Two of those companies became significant national players: a book superstore chain that was eventually acquired by Barnes & Noble, and a publicly traded business information service, Hoover's Inc.
All that entrepreneurial activity has exhausted neither Hoover's list of ideas nor his desire, at age 50, to take a few more sprints down the track. He has offered to share the 70 ideas now on his list--an unusual gesture in a world where entrepreneurs typically guard their ideas with the ferocity of a bear protecting her cubs. But Hoover figures he can't pursue all his ideas, so why not find fertile soil for his seeds elsewhere?
In the aftermath of the dot-com blowup, smart business ideas--those actually capable of forming the basis of a consistently profitable business--have a particularly sweet resonance. Never mind the ideas that require big giveaways in order to create traffic. Radical though it may sound, investors now want ideas that respond to unmet consumer needs and desires.
That is the prism through which Hoover has always viewed the world. Where the rest of us see a crowd of shoppers on Fifth Avenue, Hoover sees a retail opportunity missed: the possibility of selling, via the Web, a large number of items available only on the back streets of Milan or Paris. He carries a small notebook to record his ideas; then, if they pass muster, he researches, refines, and updates them. His list contains ideas large and small, concepts that could be billion-dollar businesses (specialty hotels, for example, or a chain of creativity stores) and others that could generate a few million dollars in sales (see box, "Hoover's List: Looking for the Next Little Thing Too"). Size is not necessarily the point for Hoover. The point is the excitement of the idea itself, as well as the sheer thrill of the hunt for a consumer's dollar.
Hoover's fascination with business started early. When he graduated from high school in 1969, he asked his parents for a round-trip bus ticket to New York City, where he spent a week steeping himself in business history and collecting annual reports of Fortune 500 companies by knocking on doors. "Everyone was watching the marionettes," says Hoover. "I wanted to see who was pulling the strings."
While he was studying economics at the University of Chicago in the early '70s, he took three ideas from his list and made them into small campus businesses--including a vacation bus service for students. That kept him in spending money. In 1982, impatient with waiting to climb the ranks as a retail executive, Hoover decided to start his own companies. When he opened Bookstop, one of the first book superstore chains, he saw two major trends supporting his idea. First, baby-boomers had spending money and were "the first generation committed to lifelong learning," he says. Furthermore, the leading purveyors of books, Waldenbooks and B. Dalton, occupied small stores in malls and charged full price. With Toys "R" Us as his model, Hoover figured that superstores with a broad selection and discounted prices would succeed.
Hoover had opened 22 stores in four states when he was fired by the board in the summer of 1989 to make way for professional managers. But Bookstop was sold by its venture capitalists later that year to Barnes & Noble for about $41 million, of which $2.4 million went to Hoover. "I went on a trip around the world," he says. "Then I looked in my idea file." What he found was the opportunity to become a purveyor of business information. The longtime publishers of such data, such as Standard & Poor's and Moody's, were too expensive and too complex for the average person. Hoover recalled growing up in a town where "everybody either worked at GM or supplied GM, but nobody knew the name of the CEO. Business in America was a secret then." With business and personal finance becoming of greater concern, he figured that many people would be interested in buying some basic information tools.
His new company, Reference Press, sold a total of 35,000 copies in the first year of Hoover's Handbook, which contained profiles of leading corporations. The company followed with additional volumes profiling international companies, emerging companies, and the like. In 1992 Hoover turned operating responsibility over to an old college friend, Patrick Spain, who is now CEO. Hoover remains a director of the company, now named Hoover's Inc. (fiscal 2001 sales: $30 million).
Turning yet again to his list of ideas, Hoover decided to try another superstore retailing concept, this time in travel. "I saw a backward, awful business," he says, describing the travel industry. In 1994, using $3 million in capital he had raised in a private placement and from small investors in Texas, Hoover opened the first of three TravelFest stores in Austin.
Hoover says his superstore concept was beginning to prove itself when calamity struck a few years later. Trying to reduce their costs, most of the major airlines drastically cut back the commissions they paid to travel agents. Suddenly the main revenue source supporting his superstore concept was declining. Hoover struggled for a few years and then gave up, selling two of the stores to a local travel agent who subsequently closed them.
Hoover says he's ready to start up yet another company, and he's counting on his list to yield the next big idea. Quite possibly, he says, it's one of the six below.
The Travel Play: If it's Tuesday, this hotel must be a Marriott. Or is it a Hilton? Hyatt, maybe?
Hoover travels nearly half the year on speaking engagements. Even when he stays in one of the more upscale hotel chains, it doesn't make much of an impression on him. "There is little differentiation outside of price," he says. "Look at Hilton, Marriott, Hyatt, and Sheraton. When you wake up in the morning, you don't know what hotel you're in."
All of which suggests to Hoover that a major opportunity exists to create distinctive hotels that appeal to travelers based on their interests or demographics.
What family, asks Hoover, wouldn't be attracted to a hotel specially designed for kids and their parents? Rooms would be childproofed, of course, and would be appointed with colors and designs, gizmos and gadgets to please the younger set. For instance, each room would feature a large-screen TV. There would be a "fun room" with toys, perhaps supervised by a hotel employee trained in child care, much like what some newer supermarkets offer their shoppers.
Other segmentation ideas could be appealing as well, says Hoover. What about a Digital Inn for folks addicted, as he is, to the latest in electronic gadgets--including high-speed Internet access, digital cable, a DVD player with wireless headphones, a desktop computer, a color printer, and more? Hoover also figures that a hotel chain devoted to seniors would attract customers. And profitability is tied to occupancy rates.
The Internet Play: Is this the one e-commerce concept that will work?
One of the pleasures of foreign travel is the discovery of local products for sale that capture something unique about the country. These items, often made in limited quantities, are typically not available in the U.S. "The whole world has local products made in limited quantities," says Hoover. "There are hundreds of cool items in Milan that aren't on sale in New York."
Unlike many sites that failed in selling commodity products, Hoover's market would offer items that could be otherwise obtained only by flying overseas and buying them yourself. The site could offer regional U.S. as well as foreign merchandise. "Having unique merchandise is the key," Hoover says.
Hoover would send his buyers out to interesting locales. Armed with digital cameras, the buyers would transmit pictures back to headquarters. Soon after, it would be posted online. "There would be new stuff every day," he promises.
The Boomer Play: Will they pay to learn?
As millions of baby-boomers stream into retirement and splurge on vacations, entrepreneurs will line up to catch their dollars as they march by. Hoover thinks he can attract more than his share by starting up an education enterprise that will offer seminars on an array of subjects. "It could be a $50-million to $100-million-a-year business," he predicts.
The potential market for adult education is huge because boomers will have unprecedented money to spend at retirement. As their careers wind down, they are likely to pursue interests well beyond golf and gardening.
If he were starting the business now, Hoover says one of his first offerings would be a seminar on the human genome project. He would also offer a seminar on the rise of fundamentalism in the world and another on the U.S. Supreme Court and its impact on American law and society. Other courses would be conceived around a particular location, such as a seminar on the Civil War in Gettysburg or an art seminar in Florence.
Some universities may move deeply into this field, but Hoover argues that he will bring more marketing savvy to the task.
The Retail Play: Is the once-ubiquitous department store finally ready for a full-fledged comeback?
Where have all the department stores gone, long time passing? They've been picked apart by Hoover and other entrepreneurs, who have spun fast-growing categories like books, electronics, and toys--once a mainstay of department stores--into superstore chains touting broad selection and low price. Now that most department stores are gone, Hoover proposes a retro idea: He wants to bring them back, and not just out of nostalgia.
Many of the department-store survivors concentrate on apparel and lack the breadth of old-time retailers. The most successful true department store today is Wal-Mart. "It's a downscale version of what we once had," says Hoover. By contrast, he adds, "people get excited about Target. That excitement can be carried to a new level."
Hoover reveres Harrods and Marshall Field's. "People still love going into a big store with all the stuff in it," he says. "If Harrods was in Manhattan, it would be incredible." A Hoover's department store, he says, would boast a book section rivaling Barnes & Noble's, a music department like a Virgin Megastore's, and home furnishings competitive with Crate & Barrel's.
Hoover says it would take about $100 million in capital to open a single store. But he says that two of the biggest costs in retailing--labor and real estate--would be favorable in a mammoth store generating big sales numbers.
The Passion Play: Is Grandma actually a budding Grandma Moses?
Crafts stores and art-supply stores dot the landscape, but they don't do much more than sell materials. "You can go to a store that will sell you crafts," Hoover says, "but it offers you limited instruction." He believes he can integrate the two, creating a chain of at least 250 stores that sell not only the supplies but also the hands-on instruction that people need to pursue creative hobbies.
"You would take everything creative and put it into a store," he says. "Want to write? Sculpt? Paint? Well, here are some classes. Here are the tools you need to do it." To draw interest, there would be contests, shows, recitals, and an interactive Website. "The whole message would be, 'You can do this,' " says Hoover. The target audience would be adults. "As we age, we want to make our lives more full," he says.
For Hoover's professional life to be full, he requires plenty of time to browse through the streets and the stores, notepad in hand. For him, the world is a bazaar of ideas just begging to be turned into businesses. One of those ideas may be his next startup--or yours, for that matter. If not, he's always refreshing his list from those scribbles on his notepad.