Gary Hoover: Where the opportunities are now
February 12, 2002 Posted: 1950 GMT
NEW YORK (Fortune Small Business) -- When he was a teenager growing up in Anderson, Ind., in the mid-1960s, 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. 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 1970s, 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.
Nevertheless, Gary Hoover says he's ready to start up yet another company, and he's counting on his list to yield the next big idea -- click here to see his top five ideas.
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