“Did you see American Idol last night?” asks Ken Austin. Beaming like a proud parent, he pops a tape into the conference-room VCR. “You’ve got to see this.”
He fast-forwards through the two-hour finale of Fox’s season-long talent show until the anxious moments before the big announcement: Bo Bice or Carrie Underwood, the long-haired southern rocker or the long-haired country ingenue. Host Ryan Seacrest reminds the fidgety crowd what’s at stake–a $1 million recording contract and a new bonus prize: use of a private jet. The live audience emits can-you-believe-it squeals. Seacrest holds up what looks like a black credit card. The camera zooms in, and the words “Marquis Jet” fill the screen.
Austin gets chills all over again. “I don’t know how many times I’ve watched this, and I still can’t believe it,” he says. He’s executive vice president and chief marketing officer for Marquis Jet, and this morning the man looks like a freaking genius.
Underwood may have been the official winner of the competition, but Marquis, which sells pricey flight time on luxurious private planes, was the unexpected corporate winner. Marquis came out of nowhere. The producers asked the company to fly the final three performers home for a prime-time family reunion, and Marquis agreed.
And so just like that, in exchange for $175,000 in complimentary flights, Marquis finagled a priceless cameo. The season’s top-rated show. An edge-of-your-seat moment. Thirty million viewers. It was an audacious move, to be sure, but not uncharacteristic of Marquis, which just might be the savviest piggybacker in business. It was a new reality show called The Apprentice that introduced the brand to a mainstream audience in 2002. The episode, which revolved around teams creating an ad campaign for Marquis, was essentially an hour-long infomercial for Marquis hosted by huckster extraordinaire Donald Trump. Thanks to reruns and DVDs, Marquis still gets 5 to 10 sales leads a week from the show.
At Marquis, though, making the most of bigger and stronger friends and partners is more than a brand-building strategy. It’s the business model. The company doesn’t own or operate planes. NetJets, the private-aviation giant owned by Warren Buffett, does. What Marquis does is lease flight time on those planes.
NetJets, founded in 1986, pioneered fractional jet ownership as a less-expensive alternative to buying a multimillion-dollar plane. It works much as a time-share condo does. Typically, owners sign a three- to five-year contract and buy a fraction of the aircraft, starting at $397,000 (plus monthly management fees and hourly operating costs). Because they own part of a plane, if they leave the program, they have to sell their share.
Marquis pioneered the jet card to offer an even lower entry point to private aviation. The service works the same way as a prepaid calling card. Marquis buys fractional shares on NetJets. It then sells flight time to customers in 25-hour chunks, starting at $109,900 for a Citation V Ultra, which comes with seven leather swivel seats and catered meals. Customers have a year to use the hours, but the average burn rate is eight months, at which point most buy another card–and some graduate to buying shares at NetJets.
Since selling the first card in 2001, Marquis has added more than 2,000 owners. The privately held company is profitable, and annual revenue, growing at 55%, is more than $300 million. As for NetJets, the arrangement boosts business; the number of U.S. owners increased 28% last year, thanks in part to Marquis, its largest customer. And Marquis brings NetJets a new customer base: The typical Marquis Jet user pulls down about $2 million a year (some notable exceptions: Jennifer Lopez, LeBron James, and Derek Jeter); the typical NetJets owner at least $10 million a year.
The phrase “Fleet by NetJets” appears in every ad and on every card, right below “Marquis Jet.” The two brands are inextricably bound, an association that evokes instant trust and respect for the young luxury brand. That kind of reputation usually takes years, but NetJets provides Marquis with a shortcut. And, of course, an endorsement from the Sage of Omaha himself, whose Berkshire Hathaway company purchased NetJets in 1998. “We were a new brand with an existing product,” says Marquis cofounder Jesse Itzler. “We were starting the game on second base.”
The NetJets fleet consists of more than 570 planes, by far the most in private aviation and second overall when compared with commercial airlines. Last year, it flew more than 275,000 flights to more than 140 countries and employed 2,800 pilots. At the operations base in Columbus, Ohio, the air-traffic controllers, meteorologists, and customer-service agents manage the logistics. When a Marquis Jet owner requests a plane, a dedicated group at NetJets’ call center–team 36–makes the arrangements. “If we didn’t have the infrastructure that NetJets provides, we wouldn’t have a business,” says Marquis chairman Bill Allard.
Ditto if Rich Santulli, the founder and CEO of NetJets and one of Buffett’s closest confidants, hadn’t allowed Marquis to piggyback. It was a stretch. Santulli’s first brief meeting with Marquis’s brash young cofounders–one a former rapper, the other a former T-shirt entrepreneur–didn’t bode well. Santulli said he wasn’t interested. Little did he know that Itzler and his pal Kenny Dichter were just getting started.
How this improbable partnership came about is a strange and serpentine tale. It begins at 68th Street and First Avenue in New York, where Dichter, now 37, and Itzler, 36, met on an outdoor basketball court in the mid-1990s. Both played weekly, grew up in Long Island, and were hungry entrepreneurs in their midtwenties. Itzler, who’s tall with blond curls and a surfer’s cool bearing, was a rap artist aka Jesse Jaymes. A few years earlier, he had signed with Delicious Vinyl, the same label as Tone-Loc and Young MC, and hit the Billboard Hot 100 with ” thirty footer in your face.” during a dry spell, he wrote “go ny go!,” rally rap that made him minor celebrity and is still played today at knicks games. dichter built more like bouncer or an extra on the sopranos. ran business selling “attitude t-shirts”–one of big sellers asked, why work?–to kmart, sears, other chains.
They teamed up when Itzler began rapping promos for the NBA playoffs on TV, which eventually led to songs for various teams (“I’m a Mavs Fan”) and various professional-sports leagues and colleges. Itzler crafted the rhymes, Dichter the business opportunities. Their company, Alphabet City, produced about 60 CDs. It was their first foray into piggybacking. “We were layering our business on the team’s brands, learning how to take care of those brands and extend them,” says Dichter. “We were under the radar, but we felt like DreamWorks.”
They were on concert mogul Bob Sillerman’s radar. Sillerman, the head of the sports promotion and talent agency SFX, acquired Alphabet City and encouraged Dichter and Itzler to think beyond sports music. They began creating events that offered wealthy individuals access to SFX’s talent–at a price. A flag football game with Michael Vick at quarterback. A basketball clinic with Dominique Wilkins. A chance to sing backup (on a dead mike) for Christina Aguilera in concert. They arranged that gig for the daughter of Jim Jacobs, whom they later learned was vice chairman of NetJets. It proved to be a serendipitous connection.
At SFX, Dichter and Itzler would accompany agents, athletes, and entertainers on charter flights. During one such trip, Dichter told Itzler, “We should be in this business.” He meant private aviation. As an undergrad at the University of Wisconsin, Dichter had developed a prepaid card for sports tickets that boosted sales and attendance. He thought fans of private air travel would jump at a similar card. NetJets, with half the market, was the ideal partner.
After that first meeting with Santulli, Jacobs arranged a follow-up. Hoping to demonstrate their access to the younger jet set in sports and entertainment, Dichter and Itzler brought along some friends: the members of Run-DMC and former New York Giants star Carl Banks. Santulli, 61, listened, then sent them on their way. “J.J. [Jim Jacobs] said, ‘Now we’re getting somewhere,’ ” recalls Itzler. “I said, ‘But twice he threw us out of his office in eight minutes!’ He said, ‘No one gets eight minutes.’ ”
The two were aggressive, Santulli noticed, in a good way. “They reminded me of how I wouldn’t take no for an answer when I was starting out,” he says. His reluctance had nothing to do with their aviation inexperience. They were salesmen. They could learn. No, the agonizing part of the decision was putting a brand he’d spent years building in someone else’s hands. “I felt that if someone was going to screw up the brand, it would be me,” he says.
In the fifth meeting, however, he agreed. He thought the jet-card idea was a smart way of recruiting customers NetJets might otherwise miss. NetJets could have developed a jet card on its own, but Santulli, the math genius who created the algorithms that created the industry in the first place, didn’t want to divert his team from its core business. Selling jet cards was a different transaction aimed at a different audience. So he cleared Marquis for takeoff.
The “exclusive alliance” between Marquis and NetJets is an interesting twist on cobranding. Usually, both parties are established, so that each benefits from the other’s strength, says Sridhar Balasubramanian, an associate professor of marketing at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. (Think toys from Pixar’s Finding Nemo in McDonald’s Happy Meals.) This, however, is a marriage of unequals. “The greater risk lies on the part of NetJets because of potential damage to the brand,” he says. “But just because it’s risky doesn’t mean it’s a bad idea.”
From the beginning, Santulli was determined to protect his brand. He and his staff gave Dichter, Itzler, and Allard, a former executive at SFX and a member of the original Marquis team, a crash course on aviation. They learned about the 14 types of planes in the NetJets fleet, the economics of the business, the logistics of managing hundreds of planes with access to some 5,000 mostly smaller airports, and a flight schedule in constant flux (owners can request a plane with as little as 10 hours’ notice). They shadowed Santulli and spent hours listening in on customer calls and absorbing the NetJets 24-7 culture.
Santulli also introduced them to Buffett, who hosted Marquis’s early owners at a dinner and mingled with the company founders earlier this year at a poker tournament in Vegas. “Surprisingly, given how many companies he owns, he knows how many cards we’ve sold,” says Allard.
Santulli isn’t as hands-on as he was in the beginning, when he would call Marquis customers and interview them about their experience dealing with the company. Marquis has proven itself. Sure, Marquis can obviously create marketing buzz . But it can also provide the personal service that meets NetJets’ high standards. It’s a tricky business; because owners are spending so much, they expect a lot more than a bag of airline pretzel sticks.
That’s why “Get in their lives” is Marquis’s mantra. It means learning the details that matter–family members’ magazine and cereal preferences, as well as food allergies. Having flowers and a card on the plane for anniversary and birthday trips, a team hat for a flight to a big game. Sales staffers and executives alike receive email alerts on their BlackBerries anytime one of their designated owners books a flight. In Itzler’s case, service often includes befriending owners: having LeBron James over to his lake house to jet ski, flying with Matt Damon to play poker in Vegas.
Flying on Marquis is “definitely a luxury,” says Body by Jake’s Jake Steinfeld, a customer for four years. “But once you do it, you don’t want to give it up. It’s like the drug of all drugs.”
Jake Steinfeld, the CEO of Body by Jake Global and founder of Major League Lacrosse, says Marquis has changed his life by eliminating the stress and hassle of flying. A recent four-city business trip took a day and a half on Marquis instead of the four days it would have taken on commercial airlines (which he still flies on cross-country trips). That gives him more time for his wife and four kids. “It’s definitely a luxury, but once you do it, you don’t want to give it up,” he says. “It’s like the drug of all drugs.”
In fact, the only reason he would leave Marquis is to co-own a NetJets plane. Now on his eighth card in four years, he’s thinking about it. But even if the company loses him, he has rewarded it fifteen-fold. That’s how many friends and associates he says he has recruited into the program. “I guarantee you I’m their number-one salesman,” Steinfeld says. For Santulli and Marquis’s founders, he’s something more: proof that they’re right on course.
One Millionaire’s Flight Plan
When does flying Marquis Jet, which costs $4,400 or more per hour, make financial sense? When you’ve crunched the numbers, says cardholder Todd Duncan, a CEO and author. Duncan, who travels at least twice a month, giving as many as 75 speeches a year, kept track of his unproductive downtime while flying commercially after September 11. With the delays caused by the new security precautions, he estimated that he was wasting 23 workdays a year. Here’s how Duncan, who still travels commercial on cross-country flights, breaks it down.
|Commercial Airfare||Marquis Jet|
|Lost time||Has to arrive 90 minutes before departure.||Plane takes off when he’s ready|
|Flexibility||Arranges schedule around the airlines to make four speeches in four locations in four days.||The private jet follows his schedule, so he can give eight speeches in those same four cities in four days, doubling revenue.|
|Stress||“I can tell you my resting heart rate is 41 beats a minute, but when my flight has been canceled, it goes up to 87 beats. That lifestyle isn’t healthy.”||Able to stretch out his 6’5″ frame and not have to worry about legroom.|
|Travelling to smaller cities||To go from South Bend, Indiana, to Waukesha, Wisconsin, means stopovers in Chicago and Milwaukee and changing planes. Three airports, two airplanes, countless potential for snafus.||One 48-minute flight from South Bend to Waukesha.|
|Productivity||Even in first class, can’t have a serious budget meeting with a few colleagues.||Used a one-hour Atlanta-Nashville flight to have a budget meeting, freeing time at his destination.|
Chuck Salter (email@example.com) is a Fast Company senior writer based in Chicago.