狼协博客

How to Make Money on the Net

The second Internet boom is quietly taking shape — and this one looks like it’s going to last. Here’s how six innovative businesses learned from the past and have begun to make the Web work for them.
By Mark Athitakis, May 2003 Issue

When Wells Fargo (WFC) was a startup, broadband meant 5 mph. That was the average speed of the Wells Fargo stagecoaches that carried bullion and financial documents between the boomtown of San Francisco and cities to the east. The system had its problems — bandwidth was limited by the need to replace the horses every 12 miles, and then as now, online security was an issue. (Hackers today, bad guys with six-shooters back then.) But the stagecoach beat shipping by sea, which took upwards of six months. Mail delivery from St. Louis to San Francisco in less than four weeks? That was revolutionary technology.

But once the railroad appeared, Wells Fargo realized that it wasn’t really in the stagecoach business, after all. Its value lay in conveying money and information to its commercial clients by the best available means. A similar realization dawned when the Internet era began. "What the stagecoach did was connect people in the fastest, most convenient way that existed at the time," CEO Richard M. Kovacevich says. "The stagecoach goes 5 miles per hour; the Internet goes 30,000 miles per second. But in many other ways, it is not that different a connector."

It took three years of bear market, nearly 1,000 dotcom bankruptcies, and trillions of dollars in vaporized capital, but the essence of Kovacevich’s metaphor is now common wisdom. Doing business on the Web does not make you an "Internet company," whatever that is. You are what your customers need you to be — a bank or a retailer or a service outfit or a marketer — and the Internet is merely your tool. No successful online enterprise subscribes any longer to the delusion that the Web somehow lifts commerce to a new plane. "It’s still Business 101," says Donna L. Hoffman, a professor of marketing at Vanderbilt University’s business school and a student of e-commerce since 1994. "You have to ask, ‘Who are my customers, what do they value, and how do I give it to them?’"

As more and more online companies figure out the answers to those questions, a surprising thing is happening. The Internet is starting to pay. Yes, eBay (EBAY) always made a buck, and Amazon (AMZN) just posted its fifth straight quarter of operating profits. But these two icons have been quietly joined by a host of online operations ranging from Wells Fargo’s $4.8 billion wholesale banking arm to the homespun e-commerce businesses that have sprung up around eBay and Google. Today’s tech malaise overshadows the fact, but 88 percent of the companies in TheStreet.com’s Internet Index made a profit last year. Imagine the headlines (and the P/Es) had that black ink started to flow in 1999.

In the following pages, you’ll hear about half a dozen moneymaking online companies. Of the four that are publicly traded, all have at least two consecutive quarters of profits as measured by generally accepted accounting principles. (We confirmed the two private companies’ profitability with investors, accountants, and business partners.) They are not the usual suspects: They include survivors like Restaurant.com, which most people — including, at one point, its own CEO — had given up for dead, and newcomers like poll taker Harris Interactive, which experts swore could never adapt to the Web. Their variety suggests just how broad the online opportunity has become.

Even so, getting a business to work online is still largely a process of discovery. Most of our moneymakers didn’t get it right on the first try. The predecessors of United Online, for example, launched on the premise that they could give Internet service away and make money selling eyeballs. E-Trade (ET) fed off the hallucination that trading stocks online could turn truck drivers into investment geniuses. Both companies survived by cutting spending — a discipline rarely imposed during the boom — and by adopting a more realistic vision of the Net’s power.

But power it has. Successful Internet companies, Yankee Group analyst Robert Lancaster says, exploit the Web’s unique ability to attract and engage. "They’re building profiles of their customers, understanding what they like to do, and delivering a service." Those virtues, not eyeballs or Super Bowl ads, sustain real enterprises. The dotcom era is over, thank goodness. But business on the Web is just getting started.

发表回复

你可以 回复, 或者 trackback 到你的网站.