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Just Did It

Just Did It

All netrepreneurs -- online entrepreneurs -- start out in the same place: big ideas. Lots of energy. Typically, nowhere near enough money. Of the 30-plus enterprises we've visited in the past four years in our Netrepreneurs column, several are thriving, most notably 800-pound gorilla Yahoo Inc., profiled in the debut issue of WebMaster in June/July 1995 and now the Web's most-visited site. Many, including Tripod, WebRing and Inquiry.com, have changed hands, some more than once. Many are still trying to turn a profit. Some, such as The Mining Co. and Cyberian Outpost Inc., have filed for initial public offerings (IPOs) of their stock. And some, such as the writer-friendly Bylines.org, seem to have slipped from sight. Individually, their tales are as compelling as any from those "where are they now" TV specials. Collectively, they offer pretty good cartography of the first half-decade of Web business and some useful lessons for others with similarly webby dreams.

Ask the Builder

Netrepreneur: Tim Carter

URL: www.askbuild.com

Based: Cincinnati

Previous Appearance: WebMaster, March 1997Lessons Learned: Keep experimenting with new sources of revenue, wherever possible switching from traditional to new-media delivery. Consider cannibalising existing channels to promote the Web site-after all, profits end up in the same place.

In late 1996, when Tim Carter's Ask the Builder site was a year old, the contractor-turned-netrepreneur had two goals. He wanted to be the Web's top resource for homeowners. He also wanted to make $1 million online within two years. Whether he's achieved the first is subjective (but let the record show that Carter believes he's there, chuckling as he reports that even his competitors have bought ads on askbuild.com). As for his second goal: "I'm about 50 percent shy," he says. "It's approaching $500,000." Not bad for a guy who still runs the entire business from one room in his house.

Most of that money comes from ads. Ask the Builder now claims 25 advertisers, a fivefold increase from 1997. In exchange for a one-year contract, each advertiser gets exclusivity in its category, meaning there's room for just one window manufacturer, one roofing company and so on. (Even with a rate increase from $500 to $600 a month, Carter boasts a 95 percent renewal rate). However, Carter adds, "e-commerce is taking off like a Saturn 5 rocket," with a 450 percent increase in sales of his products in 1998. His biggest sellers are his bid sheets, which customers can use as checklists for questioning contractors about various jobs. As in 1997, the bid sheets sell for $5 to $25. His own costs, though, have dropped to near zero because he's "replaced atoms with electrons," delivering the bid sheets by e-mail in rich text format rather than mailing them on paper.

Another change was made: Carter, the longtime author of a weekly column for homeowners, now gives the column away free to more than 50 newspapers nationwide. That's because he views the columns, which always end with the Ask the Builder URL, more important as a promotional tool for the Web site than as revenue generators by themselves. (He compares the move to Bill Gates giving away Microsoft's Internet Explorer.) The strategy seems to be working: Traffic is up 400 percent since 1997 to 32,000 unique visitors monthly-although Carter's nationwide radio show may also account for some of the business.

Carter seems to find revenue in every corner. For instance, there's the free newsletter e-mailed twice monthly to visitors who request it. Carter, who sells ad space in the newsletter, makes about $600 on each edition and in fact has no more ad space available. And he's resisted hiring a staff by employing his family: Wife Kathy handles the books, his teenage daughter handles the newsletter, and two younger children, ages 8 and 6, help pack the products he sells. As always, Carter's looking ahead. He's purchased 20 domain names, mostly for household products (bucketsonline.com, for instance). He plans to set up deals with product distributors where, for a fee, he handles the orders and the manufacturers or distributors handle fulfilment. And he's expanding his repertoire a little to include Hollywood, planning to establish some online fan clubs under two of his other domain names, greatactors.com and oldactors.com.

BusinessTech

Netrepreneur: Ed Rosenfeld

URL: www.businesstech.com

Based: New York City

Previous Appearance: CIO Web Business, Nov. 1, 1997Lessons Learned: Without a brand name, it's very hard to survive online by subscriptions alone. To prosper rather than merely survive requires growing up and turning pro. When Neal Goldsmith and Ed Rosenfeld converted their print Business Technology newsletter into a Web-based magazine in March 1996, they created a rarity: a virtual product that 1,000 executives were willing to buy for $99 a year-and which contained no advertising. Subscribers who visited the password-protected site generally liked its business, management, IT and strategy content ("I would crawl through ground glass for the kind of content you offer," one wrote). By late 1997 the partners projected increasing subscriptions tenfold worldwide over the next few years.

But BusinessTech's paid subscriptions never climbed much above the 1,000 mark, and Goldsmith, chasing greener pastures, recently left to work for the Concours Group, an IT consultancy. He remains on BusinessTech's board of directors.

Rosenfeld now acknowledges that creating a subscription-dependent site was a gamble from the start: To date, The Wall Street Journal Interactive Edition stands as the sole victor in that arena-and that site accepts ads, draws from an existing subscription list, offers bargain-basement rates of $29 to $59 a year and of course benefits from one of the business world's best-known brand names.

"When you're out there competing with companies that have raised millions of dollars and then make deals with companies that have billions and trillions of dollars in assets, branding becomes an extremely important issue," says Rosenfeld, a publisher of business and technology newsletters and a founding editor of Omni magazine.

Competing with the big brands required the pair to reconsider some of their first assumptions. "Initially, we felt we were offering something of great value to our subscribers by not having advertising," Rosenfeld says. "Now I think we can still offer value and embrace the advertising model," generating revenue allowing BusinessTech to offer some free content.

Later this year, if all goes as planned, BusinessTech will evolve into a business-information portal with two service levels. The basic level will offer much of BusinessTech's current content without charge. The premium level will offer more in-depth information targeted to five niche groups (executives, netrepreneurs, webmasters, consultants and investors). Niche content could include company profiles, research papers, law briefs, trend-tracking, buying services, travel arrangements and more. Pricing would probably be around $99 a year for each niche.

"The business space is still relatively unclaimed despite Yahoo and Netcenter," Rosenfeld says. "We felt there was a lot of good space out there that was not exactly virgin territory but territory we could stake out with a unique business-to-business approach."Conquering that territory, though, takes more than an army of two. So Rosenfeld has been lining up advisers, courting potential investors and looking for specialists in marketing, administration and other areas. Ultimately, he anticipates building a 40- to 50-person company with offices on the West Coast and in Europe-a big change from the venture they've been running around Goldsmith's kitchen table. He also hopes to turn the management of the company over to a professional management team, freeing himself to focus on strategy and content development. As Rosenfeld notes, "It's time to grow up."Cyberian OutpostNetrepreneur: Darryl PeckURL: www.outpost.comBased: Kent, Conn.

Previous Appearance: WebMaster, November/December 1995Lessons Learned: Be prepared to scale up everything-staff, inventory, infrastructure, budgets-in a hurry. Beat competitors by offering the biggest selection and the fastest delivery. Get big bucks upfront. Expect no personal life during ramp-up.

What's new at Cyberian Outpost? Everything and nothing, CEO Darryl Peck says: "The business model hasn't changed much, but the environment has." Case in point: Peck launched the computer-product retailer for $28,000 in early 1995.

"We certainly couldn't start Cyberian Outpost today for that," he says. "Today, if you don't have $100 million, forget it." And, he says, he underestimated the cost of competition: "I don't think we ever intended on spending tens of millions of dollars on marketing." On the other hand, he adds, funding comes easier now: "Back in those days, you'd talk to people about electronic commerce and they'd say, 'What?' Now they're standing in line to write million-dollar checks."The Outpost's birth legend is, well, legendary: In January 1995, Peck, a former software publisher, read a book called Internet Starter Kit for Macintosh on a cross-country flight home from MacWorld Expo in San Francisco. That night, he ventured onto the Internet for the first time. Five months later, he launched Cyberian Outpost, stocking 800 products; by August that year, the company offered 3,000 items. Seemed like a lot at the time, but today Outpost customers can choose from more than 150,000 products, ranging from software to joysticks, handheld organisers and computer games.

And they can make their choices more easily. Outpost has redesigned its site twice since 1995, with no original code remaining, Peck says. There are some glitches, such as a balky order-tracking system: "We're still constantly fine-tuning it," he admits. "We're going to get it right."As for customer service-the only competitive advantage that matters, in Peck's view-Outpost is about to offer 24-hour real-time staffing, up from 18 hours.

Outpost also moved its warehouse from near Hartford, Conn., to Wilmington, Ohio, where the Airborne Express delivery service is based. That lets the company take orders until midnight and deliver in-stock products domestically the next day. During the 1998 holiday season, Outpost guaranteed that joysticks, computer games or CD-ROM encyclopedias ordered by midnight on Dec.

23 would arrive in time for Christmas. Most overseas orders can now be delivered within 36 hours.

Outpost has grown from a one-man show to a 160-person company, prompting a recent move to a new two-story, 18,000-square-foot building and an IPO filing last July. But Peck swears the company's casual culture remains intact: "We're real obsessed with not changing it," he says as one of the company's pet gerbils-either Dot or Com, he isn't sure which-scampered around his office during an interview.

Still, given today's environment-a $600 billion computer-products marketplace with competitors like Egghead, Beyond.com and Buy.com-Peck hasn't been able to relax his work ethic much either. He says he's cut back from 18 to 15 hours a day, and he recently took his first vacation in seven years. In Peck's book, that kind of personal investment is nonnegotiable for netrepreneurs: "You've got to put your heart and soul into it." Asked what he'd do differently if he could do it over, Peck says he might have tried to raise more venture capital much earlier. "We're real proud of ourselves for bootstrapping for two-and-a-half years," he says, then adds: "But if we'd had some of the millions" in investments earlier, he and others on his team might have been able to cut back just a bit.iPrintNetrepreneur: Royal P. FarrosURL: www.iprint.comBased: Redwood City, Calif.

Previous Appearance: WebMaster, June 1997Lessons Learned: Be prepared to respond if bludgeoned with success. Build a strong, scalable infrastructure. Aim for simple, mistakeproof ordering. Keep prices low. Balance expansion opportunities against preservation of the main business.

Every netrepreneur should have this problem: "We're still on a very steep growth curve, up 1,400 percent from 1997 to 1998," says Royal P. Farros, CEO of iPrint, which offers do-it-yourself printing for business cards, stationery and other products. During the 1998 holiday season, the company pulled the plug on its marketing campaign when it got 10 times as many orders as expected (largely because of yet another wave of new telephone area codes taking effect in early 1999). "We literally stopped advertising as of Nov. 28," Farros says.

But iPrint's basic mission hasn't shifted one inch since Farros, a former executive at Deluxe, the largest U.S. check printer, launched the company on Dec. 30, 1996. The Silicon Valley-based company still lets customers design and order their own high-quality, low-cost business products, then outsources the actual production to commercial printers. Individuals and small businesses still get 24/7 access and a 25 percent to 50 percent discount over traditional print prices for everything from letterhead to promotional items such as magnets and postcards.

And it remains simple: "It's as easy to use a bank ATM," Farros is fond of saying. Customers fill in text boxes, point and click their colour and font choices, and cut and paste their own photos and logos. They can even proof the final draft of their products before paying for 500 copies simply by pressing the "print" button on their own home computers. That has not only cut the expensive preprint typesetting but dropped the number of orders that must be redone because of mistakes from the industry-standard 15 percent to less than 1 percent.

The privately held company, which has grown from 10 employees in 1997 to more than 70 today, has also expanded into business work. The company private-labels its technology for major office-supply companies and quick printers. It's the exclusive online print shop for the Lycos portal-search engine site. According to the NetRatings audience-research company, iPrint was number 66 of the 100 most-requested Web domain names during November 1998.iPrint has added matching digital photography with digital printing capability and is now offering new products, such as customised soda cans for kids' birthday parties. "All we do is print [a design] on this shrink-wrap material that you slip over a can and then you hit it with a blowdryer," Farros explains. So instead of Orange Crush or Coca Cola, you'll have Tiffany's Tangerine or Corey's Cola. New products, they hope, will mean new business. And new business, they know, means new problems.

"Probably the number one thing we learned here was scalability," says David Hodson, iPrint's vice president of technology. "If you build it they might come, and if they do you'd better be ready for them." At the same time, he warns against leaning too heavily on any one technology. "You definitely don't want to put all your eggs in one basket," he says. "We were burned when we pushed initiatives and then six months later, the [vendor] company wasn't there."Senior Editor Anne Stuart can be reached at astuart@cio.com.

The Consultants' Take on Netrepreneurial NecessitiesSix steps to successThere's no single formula for doing well on the Web. But experts say that the winningest netrepreneurs share a list of traits: creativity, flexibility, dedication, strong motivation and lots of chutzpah (not to mention perfect timing and, often, sheer good luck). They're fund-raisers, brand-builders, risk-takers. They're fiercely competitive. They hire the right people. They're true believers in whatever they offer or sell. Michael Krauss, a principal with OmniTech Consulting Group in Chicago, Patricia B. Seybold, founder and CEO of the Boston-based consulting group that bears her name, and other experts offer the following advice to netrepreneur wannabes:Be first. Or best. Or be both.

Market aggressively.

Use PR to create buzz.

Keep it buzzing.

Control the process from order to delivery.

Understand customers. Offer them value.

Test and debug. Then test and debug.

Trust your instincts, and keep an eye on the competition.

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For More on Netrepreneurs

Read an additional profile about The Mining Co. at www.cio.com/archive/webbusiness/050199_mining.html.

For an index of previous Netrepreneurs columns,see www.cio.com/archive/webbusiness/050199_revisit.html

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