If there was an Entrepreneur Hall of Fame, Wayne Huizenga would be a founding member. Most people recognize Wayne Huizenga as the former owner of the Florida Marlins baseball team and the current owner of the National Football League’s Miami Dolphins. These are the kinds of flashy knick-knacks a billionaire businessman collects. However, his success came from the most basic business: the transport of garbage.
Mr. Huizenga started out as a small-time trucking operator for a waste disposal company in South Florida. He worked his way up in sales and eventually bought a small business. In the 1960s, waste disposal was a local, independent, family-owned type of business in the United States, as well as in most industrialized countries. There was no scale. Each garbage collection company worked under negotiated contracts with local governments. There was always the fear that political winds would change and affect the future status of contractors.
From his perspective as a small operator in a highly fragmented industry, Wayne Huizenga knew he needed a safety net, not wanting to be tied to a single municipality to support his business. His idea was elegantly simple: he would build a national company, with the right leverage and economies of scale, by buying key independent haulers in strategically important markets. This would provide the strength to expand into all secondary markets and standardize this previously sclerotic industry.
This idea evolved into Waste Management. Mr. Huizenga became a billionaire when his company, after rising to the number one spot as an international garbage hauler with contracts spanning the United States, Europe and Asia, was listed on the New York Stock Exchange. York. The simple idea of ​​consolidating hundreds of independent firms under one roof and standardizing the menu of services was a completely disruptive new business model. The former owners of these independent businesses were induced to sell through stock offers, options and management contracts.
With a billion dollars in hand, Huizenga could have retired and collected art, cars, coins or stamps. He could have hung out with the idle rich. Instead, he applied the business model that Waste Management created to an entirely different business category: home entertainment. In the 1970s, with the introduction to the market of early beta-max technology and later VHS, and then the rapid decline in retail prices for home video players, thousands of independent retailers sprang up offering video. for rent. The ability to rent a popular movie tape and play it on demand in the comfort of one’s home was a major change in behavior and method of providing entertainment to the masses.
Wayne Huizenga was restless, looking for a new challenge and open to any opportunity that offered huge potential rewards. He saw it at a small but growing company: Blockbuster Video. Today, the consumer recognizes the Blockbuster brand as a generic term for home entertainment. Twenty-five years ago, Blockbuster was one of the few movie rental chains, several selling franchises to fuel growth, all regional, struggling for capital to finance expansion, and competing with locally owned stores. The same fragmented industry distribution channels that existed in the garbage collection business were immediately obvious to Wayne Huizenga. He lunged.
After purchasing Blockbuster Video, Mr. Huizenga began the same type of assimilation program that he followed with Waste Management. Small local video rental chains were bought. The Company was listed on the New York Stock Exchange and the funds raised fueled rapid expansion. The leverage and strength Blockbuster gained was used to purchase products from major Hollywood studios on more favorable terms than any competitor could negotiate. Locally owned small stores were unable to compete and thousands closed, creating further expansion opportunities for Blockbuster.
Blockbuster Video became a growing company with a large following on Wall Street. Mr. Huizenga had replicated Waste Management’s success in an entirely different industry. While Blockbuster was in its heyday, he sold the business to Viacom. Trash hauling is a much-needed but largely under-appreciated service. Movie rental is a less important service, but much more desired by the public. The same business model worked perfectly in two completely 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 just a small portion of this type of achievement would be completely satisfied and content. Not so with Wayne Huizenga!
Searching for another fragmented industry, where the opportunity to accumulate local and regional outlets would allow for a repeat of the successes of Blockbuster Video and Waste Management, led Mr. Huizenga into the world of used car sales and marketing. He immediately recognized the same dysfunctional market forces, lack of scalability, and pricing inefficiencies so apparent in the video rental and trash hauling business.
During the 1990s, car leasing became very popular. These cars are leased for a set term, are usually returned with average or below average miles, and are kept at the dealership. The problem for the automobile industry was, and is, the excess inventory that occurs when rental cars are returned. This created a unique opportunity for Wayne Huizenga and his favorite business model.
He launched Auto Nation with a public sale of shares on the New York Stock Exchange. Today, Auto Nation is the largest seller of late-model used cars in the world. The inventory is extensive, offering virtually every popular model with great depth and variety. Auto Nation’s national scale and reach allows for very targeted pricing, often significantly lower than local dealership prices. In addition, all prices are fixed and non-negotiable, which eliminates one of the main negatives of buying a car, haggling over the price.
On three occasions, in three totally different industries, Wayne Huizenga has applied a uniquely disruptive business model that has simplified slow and non-dynamic business categories. It started very small. He thought very big. This is a perfect template for every would-be entrepreneur to study and use. A version of this strategy is often customized and applied to industry-specific opportunities. This can be done at the local, regional, national or international level.
Entrepreneurial business models come in limitless varieties. There is no single, linear textbook approach that one-sidedly fits every project. The entrepreneur who customizes a strategy that offers beneficial disruptive features applicable to his product has the greatest potential for high rewards. Innovate, create and think outside the box: the market has an insatiable thirst for new, different and exciting products and business models.