“What we need to do is always lean into the future. When the world changes around you and when it changes against you—what used to be a tail wind is now a head wind—you have to lean into that and figure out what to do because complaining isn’t a strategy. ”
Marquis Jet's Kenny Dichter
In 1999, when Kenny Dichter took his first private jet ride on a friend's Hawker 800XP from New York to Boston, the airplane wasn't all that took wing. Dichter spotted an untapped market. Less than a decade later, he helms a jet-card subsidiary to industry giant NetJets that had sales of approximately $800 million to $900 million last year.
jet cards-good for 25 hours of flight time and starting at close to $130,000-give purchasers access to the Berkshire Hathaway-owned NetJets fleet
and operations infrastructure without the commitment and higher upfront cost of
fractional jet ownership. The cards are popular with those who need airlift efficiency and prefer a no-strings-attached, short-term deal.
A self-described "team organizer," Dichter partly credits his entrepreneurial acumen to lessons learned on the baseball field and basketball court while growing up in Merrick, N.Y. (Neither he nor Marquis Jet cofounder Jesse Itzler has an MBA.) He runs the company with a scant 120 employees, an owner base of nearly 4,000 people-about 3 percent of whom are flying on any given day-and a 10- to 15-percent markup on NetJets' fleet.
With 20-percent growth in the past year alone, the still-nascent, Manhattan-based company is poised for expansion. "We are in the first or second inning of this whole game," Dichter said.
You have some major competitors. How do you differentiate yourself?
I'll give you two words: Berkshire Hathaway. And NetJets. We have the best partner we could ever have as it relates to the delivery of a product. Our business is not a commodity business. If you boil down Marquis Jet to its essence, it's NetJets 25 hours at a time. It's a totally different product when we sell against competition. It's not Coke and Pepsi.
How many people who start flying with Marquis Jet move on to NetJets?
I would say on an annual basis, between 5 and 10 percent of our owner base is graduating up to NetJets. On the other side of the coin, the NetJets sales force actively sells Marquis cards to prospects that aren't quite ready for the fractional commitment.
One thing that strikes me when I look at the inception of Marquis Jet is that you had everything to gain from a partnership with NetJets-you weren't really risking anything. But NetJets CEO Richard Santulli had a lot at stake.
I give Richard all the credit in the world. He had more risk in the beginning than we did. He had brand risk and he had operational risk by putting a new product in. We didn't have aviation experience. We were young guys. Richard says he saw a young Richard Santulli and [NetJets vice chairman] Jim Jacobs in me and [cofounder] Jesse [Itzler]. I think he gave us the opportunity because to develop something from scratch, he needed a different DNA than a company that had 20 years under its belt.
How long did it take to start Marquis Jet, from idea to implementation?
June 2000 was when we took meeting number one with Richard and Jimmy and it took five or six or maybe seven meetings. February 2001, we shook hands and said, "Let's go." It took us four months from there to actually sell the first card.
The opportunities you've gotten in your career seem very serendipitous.
Serendipitous by design. We have had lightning strike a couple times, but I always tell my salespeople lightning can't strike unless you're in the way of lightning. Half of it is great timing and being lucky, and half of it is being in position to be lucky.
How much growth do you foresee for Marquis Jet?
This could be a $2 billion business five or six years out. I don't know if we want to take it to there, but that is a discussion we'll have with NetJets about how big the fleet should be, what the U.S. aviation infrastructure looks like. At some point, we may use the Studio 54 model, put up the velvet rope and slow down, so that it remains a club and doesn't get too big.
Is the souring economy affecting your business at all? I read an article that said very affluent people in tough economic times try to appear sympathetic.
I think that sympathy ends between Teterboro [Airport in New Jersey] and [New York's] LaGuardia. We market to the top one-tenth of 1 percent of households in America. In the last 10 or 15 years, that one-tenth of 1 percent has acquired a tremendous amount of wealth versus the field. We haven't seen the slowdown that the economy in general has seen. How do you build your customer base?
Word of mouth is huge. And our advertising and marketing teams put the message out there that it's not a luxury-it's an efficiency.
How much do celebrities help sell Marquis Jet?
Eighty percent of our owner base is self-made [millionaires]. So sports and celebrity marketing is a small piece of it. We really want to market to the self-made millionaire next door. Our target is overachievers-the working wealthy. The average owner is in his or her late 40s to early 50s, net worth of $5 million or greater all the way up to people on the Forbes list.
How does that differ from NetJets?
It's relatively higher on the net-worth piece, but it's really determined by how many hours you fly in a year. You might be worth $1 billion, but fly only 35 hours a year. Although you could buy three airplanes, it's smart for you to buy a card and a half on Marquis. We may be 10 or 15 percent more expensive than NetJets on an hourly basis, but you pay that little premium for the convenience of not having to be committed beyond the 25 hours at a time. We're also 80 percent personal to 20 percent corporate while NetJets is 50-50.
What happens when a passenger has a complaint? Are you going to get on the phone?
You bet-I will take that call any day of the week. And I tell you what, Richard Santulli and Warren Buffett would also take that phone call.
What kind of complaints do you get?
I would say 90 percent of the complaints are for safety stuff-a weather condition or mechanical issue. We remind owners that they signed up with us to not take that chance.
What do NetJets' fractional owners think about the jet cards? Aren't the airplanes getting more wear and tear?
There is no additional wear and tear because for every 25 hours we sell, we have to buy 25 hours just like any fractional owner. So we're not taking any hours from any NetJets fractional owner. We have our own fleet within a fleet.
What is Tour GCX?
It is a golf version of Marquis Jet-access to private golf without making a long-term commitment to the golf clubs. And it's a network versus joining one club. We think it's the future of golf and how people are going to join golf clubs.
This Marquis Jet formula has endless possibilities.
I think it's generational. If you think about the generation between age 30 and 60, long-term commitments are not in the DNA like they used to be. Short-term commitments, but best of class, exist today where they didn't exist 20 years ago.
Do you ever get in a situation where you don't have enough airplanes and have to use charter?
One to 2 percent of the time, we need extra lift. We go to the 200 approved charter operator partners that have been audited. We know the pilots, we know the planes and we're only allowed to choose from those.
Don't you rail against charters on your Web site, though?
Open charter is very different from our approved vendor list. There are companies out there that are much smaller than NetJets that operate with the same safety standards that we operate under. We have groups of people who go and audit those 200 houses out of the 5,000 charter operators in the world. We explain to our owners that on a busy day they may end up in a partnered plane, but that plane is checked eight ways to Sunday and we're very stringent in our selection of those surplus airplanes.
To what degree do you owe your success to NetJets?
They gave us an incredible opportunity. In the beginning of our business, they had to run a lot more cover for us than they do today. They had to make sure we were integrated properly, so they were more hands on. It's like raising a child. In the beginning, you have more physical responsibility and then, toward the end, they want to borrow the car. I think we're up to the borrow-the-car phase.
Where do you see yourself in five to 10 years?
Hopefully, at Teterboro Airport and not LaGuardia. I think this business has tremendous growth opportunity. I think that our partnership with NetJets is going to be even closer than it is today. We're very involved in a lot of charitable efforts and I hope to step that up. And I hope to remain a good family guy and have a great time watching my daughters grow up.
Résumé: Kenny Dichter
Positions: CEO and cofounder, Marquis Jet; founder and board member of Tour GCX Partners.
Past Positions: Cofounder of Alphabet City, a production and distribution company specializing in sports. In college, ran an on-campus retail store.
Education: B.A. in sociology from University of Wisconsin-Madison.
Personal: Age 41. Lives in New Jersey with wife Shoshanna (his college sweetheart) and three daughters.