January, 2002
March 20, 2002:
Transcription:
Chicago eBusiness Year in Review: A Report
(Part 2 of 3)
Event Date:
Tues., Jan. 9, 2001
Location:
IIT's Rice Campus, 201 East Loop Road, Wheaton, Illinois
Attendance: Around 50 people
Rating:
Speakers:
-
Gary Ruderman: [Former] Editor-in-Chief,
I-Street Magazine
-
Brian Timpone, [Former] Chief Content Officer,
ePrairie
-
Ron May,
The May Report
(Speakers are listed in order of appearance)
Hosted By:
Lawrence Lerner, President
The Association of Internet Professionals (AIP) - Chicago Chapter
Story:
Part One
|
Part Two
|
Part Three
Transcript:
Part One
|
Part Two
|
Part Three
Transcribed by
Doug Elwell
[Ron May enters]
Gary Ruderman
Well, out of the clear blue western sky comes 'Sky King'!
Ron May
It's a two-hour ride out here. [Laughter] That's why I'm thankful I don't live in the suburbs.
Gary Ruderman
Your turn!
Ron May
So, sit down, or is it a panel?
Brian Timpone
It's a panel now. This is a chance to start off on a diatribe on your own.
Ron May
What do you want me to do?
Lawrence Lerner
Come on down here!
Ron May
Oh, okay. Can I get a glass of water?
Lawrence Lerner
I want to drop one thought on everybody before Ron gets settled.
Ron May
Who is this guy?
Lawrence Lerner
I'm your host, Ron. [Laughter]
Ron May
Oh are you Lerner, Lawrence Lerner? ...
Lawrence Lerner
[Yes]. In '86,
Computerworld
had a banner headline that said, 53 percent of all client-server projects fail.
Yet today, we've sort of been there, done that with client-server. Internet was put in as the next wave of
technology, the next revolution. And there was a lot of doom and gloom around that and how bad things were and
how awful it was, and these relational databases on PCs and UNIX boxes, they were going to stay on mainframes.
And it didn't happen.
Ron May
I think this chair is going to die. [laughter] Do you have any stronger chairs? [laughter] No, it'll be all
right, because I'll just blame you, right? [laughter]. There's my driver, by the way. Oh, did I thank him? I don't think
so. I told him that I was going to nail him for the fact that, you know, he took so long.
Brian Timpone
Whenever there is a new technology that comes out, everyone assumes that everyone is going to spend tens of
millions of dollars to implement this new technology and its going to work right away. When I was in TV we used
to use these 3/4" decks. What it was was it was a heavy, like, big, huge tape player. And you would strap it on
your shoulder and you would take the camera and walk around. I mean, you looked like a space martian. My station
in Duluth ... used 3/4" decks. I always used to complain to the general manager, 'Why don't you guys splurge and
get some new digital [equipment]. We're about four generations behind here.' They were like, 'This is a big
capital expenditure. We're not going to do it.' And they did it, like, the day I left, they actually got the
decks. [Laughter]
But I remember asking, I said, 'When is everyone going to be digital? Are we going to
shoot our stuff on disk, it would be so easy to edit.' And he said, 'Really, the big cities are the ones who are
going to be making the biggest investments. We'll be the last ones to change because they made so much of an
investment in this technology.' They want to see other people use it first before they splurge. So like, Chicago
TV stations are using Betamax which they having been
using for the last fifteen, twenty years. And there are stations in Oklahoma City that are using higher-tech stuff.
And the reason why Chicago hasn't splurged is for that reason. So I think that we are seeing a lot of that on the
technology side too. People are afraid to get that new stuff because they are afraid if that they spend too much
money on it they might get fired.
Audience Member
The question is, is there nobody who is making good business using new technology in the New Economy? And, aren't
there some people who are doing this, and isn't there a way that we could build more of an image around the
successful ones?
Lawrence Lerner
Well, that's a good question. You want to talk about New Economy? Here's some real good examples:
Cisco,
Dell,
and
Motorola
all have something in common besides being high tech companies: They don't build
anything. They are very good at [being] what you would call New Economy companies. They have a very streamlined, pipelined process for innovating, for aggregating and putting together and researching — they come up with the chips, they come up with the
breadboards
— 86 Designs [sp?] out there builds breadboards for Motorola's PDAs and for some of the chipsets. Motorola does not build that stuff for themselves anymore.
It's cheaper, it's more efficient to build a network of suppliers to bring it in. As long as you know that your
core competency is to kind of manage that process, that is a great example of it. Why don't we talk more about it?
It's more fun to hear about terrible things, or calls that Ron gets at three in the morning, or about what was the
latest disaster. We like scandal....
Ron May
Hey, what is the topic of this meeting, anyway?
Lawrence Lerner
It would be 'Year in Review'.
Ron May
And you did it in ten minutes? I thought you started at 6:30?
Gary Ruderman
The answer to your question — I finally had a discussion with Darcy, the publisher — and I said, 'Are we entering
a dot-com recession? What products in the New Economy is recession proof?' For eight years I covered home improvement
companies — public companies like Home Depot. And even in the worst recession, one product would sell no matter
what it cost — and it was paint. It was beige paint.
Audience Member
Toilet paper?
Gary Ruderman
That's not a home improvement product. [laughter] What I was trying to find was one product in this New Economy that
is 'recession-proof'. And
Darcy [Evon]
made a very good point, that the New Economy is not so much a product, as it is an
amalgam of services, of offerings of a way to transmit information. So the companies that don't have a 'product'
per se are going to do well, because a product — I could decide tomorrow not to buy a blue shirt, and if it's
blueshirt.com, they go down the tubes. [Editor's note: there actually is a
blueshirt.com. No word on whether or not they actually sell blue shirts.]
The companies that are really controlling their costs because they are in a recession right
now — there's no more cash for them tomorrow, okay? Those are going to do well. A company like — please don't
open the ceiling — but
MVP.com.
Why would you go to a site like that to buy shoes, running shoes, that cost $25 more than they do in the store. It's
not the cachet.
Why is
t-shirts.com
or
toga.com
— they're making money selling t-shirts. But
Ha-lo,
which bought
Starbelly,
which was a technology, they bought the technology and they killed it. So why am I focusing on dying companies?
Because the really good companies I'm having a hard time understanding totally, and the really good companies
hide behind the idea, 'I'm sorry, we're a private company and we don't talk about stuff like that.'
The big problem that B2Bs had — and I'll make this quick, because I want to hear what Ron has to say — the B2B companies
started out by saying, 'This is a $10 trillion market out there. And we're going to take 2 percent of that, which
is [$200 billion], and the VCs went, 'Sure. Here'. But in reality, you don't make [$200 billion] off of a
$10 trillion market. You make your first sale, then you make your second sale. And your sales go up, or your
sales go down. And when I say to these companies,
'Hey, what are your sales?'
'I'm sorry, we're a private company.'
'Well, are your sales up?'
'Oh yeah they're up!'
'By what percentage?'
'Oh, I'm sorry, we're a private company.'
So, the question is, how can you form a community in this town? You form a community by companies that are
successful, talking about their success — not bragging about their success — but talking about what they did
to make themselves successful. You know, there are companies out there today that are not overstaffed. They
are understaffed and people are tired, but they are making money.
Centerpost
is a really good example. I hope they are still in business today. I haven't been in the office. [They are]
They're a very good company, because they came up with an idea, with a hell of a good technology, they got
a hell of a partner in
Motorola,
Motorola opened the door to
United
and said, 'Hey United, this is a good technology. Let's put it together.' So, we need more success stories
like that. Last year's success story, up until let's say June or July, was
divine.
Audience Member
What is Centerpost?
Gary Ruderman
Centerpost is a technology, a wireless paging technology, [where] you determine on which device you want the
information. And the partner, let's say United, will send a signal to Centerpost, Centerpost will send it to you.
Now, that seems very simple, but it's probably much more complex than that. The point is there are technology
companies that don't have flash, that are doing quite well. And I respect that.
Ron May
Can I interject on that? Sort of playing off of an idea that you just threw out. And I actually used this at
the discussion — how many of you were at the
MEF
meeting last night? [Talking to the audience] Oh, you were? Do I know you? [Laughter.]...
Okay, here's the thing. I talked to
Steve Meade, who was the presenter for
gbucks,
which used to be called '2xchange'. His whole argument, and I want to sort of pick up on something that you
glossed over quickly, his whole argument was 'Don't start a company like a vertical exchange — it's going to
be like a
Commerx.
That you have to just go out and get a whole slew of buyers and a whole slew of sellers and put them together.
He wants with gbucks, which is a barter [site] to — and the example he gave was:
IBM
traded $40,000,000 in
computers, or whatever the figure was.
Brian Timpone
Like $20,000,000...
Ron May
Was it $1.7 million?
Brian Timpone
Yeah, they bartered something like $1.7 million dollars in computers for like 30 Volkswagens.
Ron May
Right, right. But, the whole idea was that he wants to focus on a couple, 2, 3, 4, 5 customers, who are doing a
lot of business in a particular market — start with that anchor. There's the point. A lot of these companies
I think that have the potential to be very successful have one side of the equation already filled in. They
have the customers on one side, now they're going out to do the other side of the deal. And to just announce,
'I'm going to be a general exchange' — that's why a
GE Plastics,
I think, has been more successful in their exchange than a Commerx, for example. You know, again, I certainly don't
claim to be a business strategy guy....
Gary Ruderman
The point there is, and the point was made earlier is, the bricks and mortar companies, the 'Old Economy'
have the revenues, have the profits, have the brand, and have the customers. So if they want to put together a
plastics site, all they have to do is go to
Best Buy
and buy the web software and they can build it, because
they have the customers, they have the brand, and they have the dollars to put behind it. So if Commerx was
going to come in and do a disruptive — see, the thought was last year, and even Andrew Filipowski said it,
'
Sears
is dead'. But it's not. It's probably a damn good partner for a lot of people, you know. The point is,
its not a disruptive technology. There are disruptive technologies out there, but a B2B exchange is not a
disruptive technology. The most venerable B2B site,
Ventro,
it's a public company, its first portal, which was life science equipment, life science chemicals, and stuff
like that, just shut down. Why did it shut down? Because people realized that they could go directly to the
chemical company and buy it. Why do I have to go to Ventro?
Ron May
Let me ask you, because you probably do know more about this than I do. Take a company — I missed his talk,
by the way — Jim, did you hear the talk from
Rob Reynolds
from
Lifeserv
last night?
Audience Member
I just caught the end.
Ron May
Oh, okay. Now they've got a pretty good slew of clients. Do you guys know about them, Lifeserv? Does anybody here know
about them? ... I understand that they already have a very good group of
Fortune 500
customers like
Kraft
and so forth, already in place. I'm not sure I understand how that fits into their business model. What about
participate.com?
Same thing. They're really going for the big corporate....
Brian Timpone
Well, what you're talking about is, you said this earlier, you said, 'Where are these positive companies needed to
rally around for the technology community?' I think the problem is, There is no technology community, okay? It
doesn't exist. There's no such thing. I mean, I'm a technology worker. Everybody is a technology worker, if
technology exists.... Ten years ago, if you used a word processor instead of a pencil, were you part of the
technology community? Right now, the problem is, a lot of these companies were started by people who didn't
understand the state they were in. And that happened a lot in Silicon Valley. Hey, you know,
Jim Clark
, you guys know who he is, he started
Netscape,
he started
Healtheon
, the
WebMD?
He didn't know anything about medicine at all and he started this company that was going to 'transform healthcare'.
That happened a lot out there. And the problem is these people not only did not have connections in that space,
alright, but they were arrogant enough to think that they were smarter than everybody else who was there, that the
doctors, the insurance people didn't know, 'I know, I'm better'.
And that's the problem with a lot of these B2B exchanges. They don't have people — the guys who started Commerx,
I think they were manufacturing....
Ron May
They came out of a plastics background.
Brian Timpone
Right. But we're talking about [having] real domain expertise and real connections if they're going to make these
things happen....
Audience Member
They were an established brick and mortar company that converted into a dot com. They did have a little bit more
background than that.
Lawrence Lerner
Fifty-three percent of some of these client-server projects fail. Was it the technology? No. The technology is
certainly sound. Was it the people? No, they were pretty smart. Was the planning bad? Was it poorly executed?
You bet! I don't know how many times I had clients come to me and say, 'Hey, we've got a thousand Word Perfect
documents, and we're going to swap over to Microsoft Word over the weekend. No big deal, right? Forget about the
macros, it all converts. It says so in the documentation. You know what? If 20 percent of the documents don't
convert over, that's 200 you've got. And that's a small, sort of trivial example. But the point is, [there
wasn't good planning]. And this goes back to what you were saying about they didn't understand the business.
There are a lot of people who get in, because the technology now is really cheap. It's really easy to get into.
[It doesn't] cost $25,000 anymore. Microsoft makes it very easy. There are people who give you money, who will
give you technology, because they think you've got an idea and they've jumped on the bandwagon. But guess what:
you do have to have a sound business concept. You have to have multiple recurring revenue streams....
Brian Timpone
A lot of you guys are programmers or have worked with project management or technology. What he's telling you is,
the problem is, you guys don't communicate with the people who know the business. And that's a big issue, I mean,
look at the
Chicago Tribune's
website. They built their own content management platform. And it's a crummy site. I mean, they have tons and tons
of content going back, you know, 100 years, and they didn't use any of it. And that's because, when they built it,
I guarantee you the technology people, they didn't think one moment about what the people on the other side would
need. And your
Sun-Times
[speaking to Gary Ruderman, formerly of the Sun-Times], I met with Dan Miller once about this, who is the business
editor, and he said, 'We have all this great news we break intraday, but we can't get it up on the site because
the site doesn't allow us to do that. That's a disconnect between the programmers, who are in their room with the
door locked, with a sign up that says, 'If you knock on the door we're going to beat your head in', and the people
who are doing the real business out in front.
Ron May
Hey, don't get me started on the Sun-Times. I tried to send an e-mail to Howard Wolinski once — he's one of their
reporters, actually he's taking a sabbatical right now, but, he doesn't have any email on his desk. They don't
actually have computers on their desks, can you believe it?
Gary Ruderman
They do, but they are called 'ATEX terminals'.
ATEX is the leading software for newspapers. What will happen in the
next year at the Sun-Times ... we all pray, is they are going to switch from ATEX.... In 1979, I used ATEX at the
Associated Press.
It's like in its third iteration, but they are probably going to switch over to
Mac,
because Mac is the publishing
software. But in order to do that, you've got to overturn over the entire inertia. Look, big companies have inertia.
One of the major failures in companies that I covered in the last year, 'New Economy' or 'dot-com' startups, was
they either outsourced their software — they took all the money that the VCs gave them and they went out and
outsourced their software — the software came back in, and 'Geez, it didn't work! And we've got $15 left....'
And people said to me, 'Why isn't there more technology transfer in Chicago, technology that goes into
commercialization?' Because, in Chicago, the technology people don't talk to the business schools to get it going.
So why isn't there a community here? There's not a community here because there's no 'dire need'. We don't need a
community here to survive, if we're going to survive regardless of the community. And the other side is, the two
sides don't talk to each other.
Lawrence Lerner
I disagree, actually. I'll tell you the big reason that caused that change, for business people to start talking
to technology people, was Y2K. That caused a lot of businesses to wake up and realize that they better communicate
and get with the ball in terms of how technology affects their business, or they're not going to be in business.
Now, every company has a Chief Information Officer. Ten years ago, not every company had a Chief Information Officer.
Ron May
That, actually was about 10 years ago — because I was an IT recruiter for many years — about 10 years ago was
when the CIO started to actually come into existence.
Lawrence Lerner
Started, but now its common....
Story:
Part One
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Part Two
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Part Three
Transcript:
Part One
|
Part Two
|
Part Three
Brand Warfare: 10 Rules for Building the Killer Brand
David F. D'Alessandro
Rating:
Powerful lessons on how to build and sustain your own "killer brand".
Creating and sustaining a good brand is the most complex and perilous task any business will ever face, yet nothing is as misunderstood. Under the direction of marketing wizard David D'Alessandro, John Hancock transformed itself from a sleepy old life insurer into a leading financial services giant, with a sustained 20% annual rate of growth. In Brand Warfare, D'Alessandro draws on his personal experience as a brand-builder and examples from America's smartest and most foolish corporations, developing principles that you can use in any market. At the same time, he creates an entertaining picture of the marketing business with anecdotes that convey a keen sense of the absurdities of corporate life, balanced by a tremendous respect for the consumer.
This tough-minded, funny, and refreshingly candid book gives you a proven roadmap for marketing success as you learn:
Why every business needs a good brand to compete
Why consumers need good brands as much as good brands need them
Why sycophancy from the agency and meddling from inside the company will sink your campaign every time
About sponsorship: how to avoid being taken, and how to make the investment pay for your brand
Why it's as important to market your brand to your employees as it is to your customers
Why every business decision should be filtered through the prism of the brand
Gonzo Marketing: Winning Through Worst Practices
Christopher Locke
Rating:
The coauthor of the no-more-business-as-usual blockbuster
The Cluetrain Manifesto — which basically told Net-age marketers to stop talking at their markets and start conversing with them — follows up with a book that's more a highly entertaining, nimbly erudite screed against our current mass-market, mass-media culture than it is a recipe book for e-commerce marketing success in the post-cyberboom era. Writing in a paler imitation of the profanely irreverent, freely associative "gonzo" journalism style pioneered by his obvious idol
Hunter S. Thompson,
Locke starts with the by-now-familiar idea that old-style mass-marketing "broadcast" advertising just won't work on the Web. Indeed, he says, conventional print-ad tactics as embodied online by banners and pop-ups might actually generate more ill will than sales, and that's why companies must use the Web to somehow enjoin their products and services to the quirky niche interests of the gazillion individual cybercommunities (or "micromarkets") whose greatest advantage for marketers is how freely and speedily their members talk among themselves, touting a brand when and if it's truly deserved.
The Virtue of Prosperity:
Finding Values In An Age Of Techno-Affluence
Dinesh D'Souza
Rating:
In The Virtue of Prosperity, former White House policy analyst Dinesh D'Souza offers the first
in-depth analysis of the spiritual and social crisis that has been spawned by the New Economy and
new technologies.
The chief problem societies have faced "since the time of the Babylonians," writes Dinesh D'Souza,
has been the problem of scarcity. "But now that age has passed, and America has a new problem: coping
with prosperity." It's a good problem to have, but also a serious, even debilitating, one. "The moral
conundrum of success," the author continues, means that all too often, "the body is flourishing, but
somehow the soul still feels malnourished." D'Souza is well known for his bestselling conservative
books
Illiberal Education,
The End of Racism,
and
Ronald Reagan.
On these pages, however, he seems to
set politics aside to ask deep questions about the meaning of life in a world of material abundance.
(Review by Amazon.com)
The Monk and the Riddle:
The Education of a Silicon Valley Entrepreneur
Randy Komisar, Kent L. Lineback (Contributor)
Rating:
Prospective entrepreneurs may think they know everything there is to know about starting a business in Silicon Valley. They can draw up business plans, have meetings with venture capitalists, maybe even get funded and actually launch a start-up. However, in The Monk and the Riddle, Silicon Valley sage Randy Komisar reasons that's only half the equation for success. And it may not be the important half. Komisar has worked with a number of companies — Apple, LucasArts Entertainment (the gaming division of George Lucas's empire), and WebTV among them — and has come to a rather startling conclusion: if you can't see yourself doing this business for the rest of your life, don't start it. In other words, he wants to see passion and purpose in business, not just spreadsheets and a by-the-numbers business model.
To illustrate, Komisar takes the reader through a hypothetical Silicon Valley start-up, with an eager entrepreneur named Lenny trying to get funding for an online casket-selling business. As Komisar helps Lenny find the real purpose of the business, the passion behind the revenue projections, he reflects back on his life as an entrepreneur. Komisar emerges as a master storyteller, the kind of guy you'd feel honored to share a bottle of wine with. And you believe his conclusion: "When all is said and done, the journey is the reward." It's great if you've made billions on the journey, but the important thing is that you do something you can truly throw yourself into.
(Review by Amazon.com)
Burn Rate
Michael Wolff
Journalist Michael Wolff is a recognized pioneer in the business of cyberspace, meaning he has been developing products and services for the online world since the dark ages of 1994. During the intervening years, however, not all the activities he engaged in, nor all the people he dealt with, left a pleasant taste in his mouth - although, to be sure, his cumulative adventures certainly have been very lucrative.
In Burn Rate: How I Survived the Gold Rush Years on the Internet, Wolff pulls few punches as he candidly and methodically recounts the single steps forward and multiple steps back that marked his experiences while trying to transform a fledgling print media enterprise into a towering New Media colossus. After developing a series of
"NetGuide"
books that proved hugely successful, he attempted to transfer the concept to a variety of online offshoots and in so doing connected with
Wired
magazine, Time-Warner's Pathfinder, the late Robert Maxwell's media empire,
AOL
, assorted venture capitalists, sundry competitors, and numerous would-be partners. Burn Rate is a fascinating tale
that might best be characterized by the old adage that warns us to "be careful what we wish for, for we just might get it."
(Review by Amazon.com)
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