[Book Review] “The Internet Entrepreneurs”Madanmohan Rao
by Christopher Price
2000 Pearson Education Books, London
196 pages, paperback
Looking for a book for start-ups which covers some of the lessons learned and ground covered by leading Internet entrepreneurs over the short but tumultuous history of the Net? Try Christopher Price’s slender but informative collection of business biographies, “The Internet Entrepreneurs.”
Christopher Price, editor of financial news site EOnews.net, was formerly the infotech correspondent at the Financial Times newspaper of London.
12 chapters cover the trials, tribulations and gleaned wisdom of entrepreneurs Jerry Yang (Yahoo), Bob Davis (Lycos), Jay Walker (Priceline), Jim Barksdale (Netscape), Jeff Bezos (Amazon), Christos Cotsakos (E*Trade), David Hayden (Critical Path), Steve Kirsh (Infoseek), Rod Schrock (Altavista), Joe Kraus (Excite), Pierre Omidyar (eBay), and iVillage’s Candice Carpenter and Nancy Evans.
The emphasis is heavily on the U.S. Internet market – and especially major portal players – but the lessons are informative and carry across to other sectors as well.
Based on individual interviews about strategy, motivation and ambition, the author identifies five common traits among these star entrepreneurs: ability to take on high-stakes risks, strong belief in business model and management team, scalability of the original idea, relentless focus on customers, and effective team leadership.
“One of the things I believe in very very strongly is that if you let up you lose. I have to earn you as a user of Lycos services,” according to Lycos CEO Bob Davis. His key contributions were the development of Lycos’ unique multi-brand strategy (cross-selling via multiple media properties), and driving international expansion by giving away equity to foreign partners.
Lycos’ acquisitions include communities site Tripod in 1998 (whose competitor GeoCities was bought a year later by Yahoo), directory site WhoWhere, email facilitator MailCity, search engine HotBot, news site Wired News, and games portal GamesVille.com. Though one of the proposed mergers – with USA Networks – went sour, Davis walked away as a winner in May 2000 when Lycos was bought for $12 billion by Spain’s Terra Networks.
The diversity and ethnic mix of Yahoo played an important part in the company’s development, according to Jerry Yang, co-founder of the ultimate Internet start-up. The U.S. experience was also important, says Yang, a Taiwanese immigrant.
According to Price, Yang’s outstanding vision lay in recognising the power of the ‘free’ business model on the Web, and being able to hand over the reins of control to an experienced management team.
“We have what we call a hallway culture – more things happen in the hallway than in formal meetings. The informality is almost driven by the necessity of our business,” says Yang. Upcoming challenges for Yahoo include finding the right telecom partner to compete with the likes of AOL.
Priceline’s Jay Walker stands out for his courageous taking on of the notoriously protective airline industry and then expanding this model to other sectors, again in the face of adversity. Unfortunately, his decision to patent his business models has caused him a lot of flak as well.
To launch the marketing of his ‘name your price’ campaign, Walker had to pay a hefty meeting fee to get access to actor William Shatner – but within half an hour Walker managed to get Shatner to waive his $500,000 campaign fee in favour of stock options!
His challenges, of course, lie in attaining profitability, boosting market cap, and combatting an increasing trend in several industries to use the Net to streamline inefficiencies.
“If you’re successful, you have to keep moving,” reflects veteran entrepreneur Jim Barksdale, who turned down hefty deals from AT&T and Microsoft to head a then-unknown start-up called Netscape, which became one of the fastest and most astonishing wealth-generators from Silicon Valley.
“A good start-up plan has to be different, creative and executable. Its team will have a look about them that’s half crazy,” he jokes.
The former COO of FedEx is generally credited with giving the technologists at Netscape the freedom to innovate, increasing market share by giving away the product free, and selling out to AOL at the right time.
Amazon.com’s Jeff Bezos, almost a cult figure, is credited with pioneering low online prices, wide selection, and outstanding user experience for book lovers. “We are obsessed more than any other company with the customer experience. Every aspect of it. We only want to be one thing and that is the earth’s most customer-centric company,” says Bezos.
A key hurdle for Bezos will be to “keep laughing in the face of mounting losses,” says author Christopher Price.
“Bravery in the business world does not come much harder than on the Internet,” observes Christos Cotsakos of E*Trade. “I love that intensity. When you’re dead, you’re going to be dead for a long time, life is too short. I want to suck up as much energy out of this planet as I can before my time comes,” says Cotsakos.
His prior experience at FedEx led him to recognise the importance that Internet technology would have on industries like finance in terms of trading services and customer relations; few, however, were able to build an entirely new brand in the face of the biggest names in banking.
Challenges for the former Vietnam War veteran include expanding E*Trade overseas aggressively, converting more customers into higher value users, and continuing the pace of innovation.
More sobering lessons are drawn from the experiences of Infoseek, the search engine portal founded by Steve Kirsch in 1993 which “failed to inspire the market.” The company had a talented technologist, but lacked a manager of sufficient expertise and a marketer of a particular flair, according to the author.
Still struggling but not down and out is Altavista, whose head Rod Schrock is trying to outline a niche service in online finance. The weakest of the second-line portals has acquired e-commerce site Shopping.com, personalised portal company Zip2, and finance site RagingBull.com.
Competing portal Excite has a more vibrant brand, but the jury is still out on its merger with broadband company @Home. The rapport that co-founder Joe Kraus had with his team of six entrepreneurs helped received strong support from venture capitalist Vinod Khosla of Kleiner Perkins.
Leading women’s site iVillage’s Candice Carpenter and Nancy Evans, veterans of TV and publishing, actually entered the Internet realm less out of excitement over its potential than because of frustrations at its early limitations – especially for women users.
“We are a media company, not a technology company,” they insist. Spotting the enormous potential of the female Internet user market, iVillage puts its users at the centre of the business model and builds services around them.
Notable successes include getting Ford as a major sponsor, who was able to elicit useful car manufacturing ideas from women users – such as fitting seat belts better suited for women, cup holders for kids in the backseat, and dividers for grocery bags placed in the boot.
The company is eyeing markets in the U.K. and Japan, but faces challenges in leveraging traffic for e-commerce.
French-born Pierre Omidyar, founder of eBay, uniquely recognised the Internet’s potential not just for B2C but C2C e-commerce. “What I wanted to do was to bring the Web to benefit individuals,” says Omidyar.
Acquisitions like San Francisco auction house Butterfield & Butterfield have enabled eBay to bring its users high-quality authenticated and guaranteed merchandise from dealers across the world.
Challenges remain for Omidyar in policing transactions for items of bad taste (such as Nazi memorabilia), guarding against growing competition from Amazon and Yahoo, maintaining robust technology platforms, and increasing payment options between users.
In sum, this book is an easy but informative read; parts of it come across like an account of the Great Portal Wars, but still the underlying lessons in competitive advantage, strategic positioning and innovative leadership should prove useful for budding entrepreneurs across the world.
// Archived book review by Madanmohan Rao //