Myth No. 1: Building a Website is Easy.

Myth No. 2: Traffic will make you rich.

Myth No. 3: Smart money makes you smart.

Myth No. 4: Razzle-dazzle works.

Myth No. 5: Brand is everything.

Myth No. 6: Wild ads make Web stars.

Myth No. 7: Community, community, community.

Between the Lines

Corrections or additions?

Published in U.S. 1 Newspaper on February 16, 2000. All rights


Myths of the Internet

There are irrefutable laws of physics, and there are

irrefutable laws of business. The latter seems to have been forgotten

by many who have gotten caught up — and occasionally washed up

— in the Internet hype. So argues Inc. magazine in its February

cover story entitled "I was seduced by the Web economy —


lessons from CEOs on the front lines."

The Inc. article chronicles how one dotcom spent $7 million on an

advertising campaign that did not mention its product? "Reality

always tends to be more complicated than the hype would have you


says Inc. magazine. "The Web really is a great frontier of


It certainly does move fast. But common sense still applies. A


still must have the basics: customers, suppliers, employees, a


Top Of Page
Myth No. 1: Building a Website is Easy.

The reality: Building a website is easy — but putting

a traditional business online is not. A business can get choked up

by problems with an ISP or online application, never mind getting

the customers to the site. Says one Inc. magazine expert, James J.

Cramer, co-founder of "A lot of the technology

out there doesn’t work well. Nobody admits it, because no one wants

to tarnish the gloss that’s on the Web."

Top Of Page
Myth No. 2: Traffic will make you rich.

The reality: Traffic is just eyeballs — not dollars.

It doesn’t matter how wildly popular your site is if your audience

isn’t buying. Says Inc. expert David Rich, a vice-president of


at "You’ve got to have users and customers. Driving

visitors to a site is not a guarantee for a viable business."

Top Of Page
Myth No. 3: Smart money makes you smart.

The Reality: Venture capitalist are pouring money into

Internet start-ups, but that’s not a guarantee of success. As one

CEO of an Internet start-up explains: "A lot of companies in my

industry got funding and grew quickly and then realized that their

margins were too low. They ended up going out of business."


being undercapitalized is a good thing — it gives your business


Top Of Page
Myth No. 4: Razzle-dazzle works.

The Reality: Speed is far more important than esthetics.

"There’s a tremendous focus on the cool things you can do,"

says another Inc. magazine expert, Kelly Mooney of Resource Marketing

Inc. "Technology has gotten ahead of the concept in many cases.

The most important thing is to know what people want."

Top Of Page
Myth No. 5: Brand is everything.

The Reality: Sales are everything, and when the


is only a click away, it’s the product, not the brand, that’s going

to make customers stay put. The case study here is of

North Brunswick (U.S. 1, November 10, 1999), which struggled until

it brought in a retail-minded executive, Fred Horowitz, to replace

the technically-oriented founder as CEO. "We can tell which sites

technicians have built and which have been built by people who


retail," Mooney. "Retailers know where to put the most


stuff. They know how to trigger impulse buys."

Top Of Page
Myth No. 6: Wild ads make Web stars.

The Reality: It doesn’t matter how brilliant the ads are

if they don’t target customers. created outrageously funny

ads but since it made only an oblique reference to "computer


the target customers missed it. Traffic on the site went up, but the

visitors weren’t the buyers. Dotcoms should be focused on their


and delivery — not TV commercials, says one Inc. expert.

Top Of Page
Myth No. 7: Community, community, community.

The Reality: Not everyone is destined to be a portal;

"not every business begets a cult." "There are a lot of

customers who are functionally driven, who simply want to go to a

merchant and buy something. They don’t want a community," says Scott

Randall, founder of an Internet auction hosting service.

Top Of Page
Between the Lines

If you had invested in ITXC stock back when it first went public, you

might be a millionaire today, happily retired to a warm winter clime.

If you have invested in Medarex last fall you would have reaped

similarly astounding returns and you would also be blissfully retired.

What do they have in common, in addition to their high flying stock

market performances? Well, they both are run by husband and wife teams

and they both have been featured on the cover of U.S. 1 newspaper

(ITXC on U.S. 1, July 15, 1998; Medarex on July 17, 1991, and November

17, 1999). If we were in the business of selling stocks, now we would

slide in a little sales pitch: Follow our cover stories and we will

make you rich.

Of course we are not in that business and we will not make that

get-rich offer. Nor will we tell you about the many other cover

subjects presiding over companies that are either now out of business

or that are still wallowing in the great middle ground of the stock

market. All of which explains why we are still here, working five or

six or seven days a week, instead of playing golf in Arizona or

fishing in Florida.

We will tell you, however, that we have more news to report on both

ITXC and Medarex in this issue, in the Life in the Fast Lane section

that begins on page 44.

We can also bring you up to date on another U.S. 1 cover subject, a

man who figures prominently in this month’s cover story in Inc.

magazine, "The 7 Myths of the Web Economy," which are summarized on

our page 43. Fred Horowitz, CEO of, was featured on the

cover of U.S. 1’s November 10, 1999, issue, in an article on online

grocery shopping and its prospects.

The Inc. article this February told the story of Horowitz in

dispelling one of the 7 Internet myths, the illusion that "brand is

everything" in the ‘Net. was founded in 1997 by a

"techie" named Uri Evan. "In the months after launch," Inc. reported,

the company "was ready to charge into an initial public offering. But

there were signs of trouble." One of the biggest problems was that the

website forced potential customers to click through level after level

of brand-building greetings before they got to the merchandise. "Web

or no Web," reports Inc., "if you want to sell groceries, you have to

get that product in front of the customers — right on the shelf, as

it were."

Inc. notes that the website redesign has "created a spectacular

turnaround." We will keep an eye on and if there is a

public offering, let you know. In the meantime, we will keep our day

job, part of which involves putting out the annual U.S. 1 Business


Many of you have received letters or faxes asking you to update your

listing information. We appreciate your prompt turnaround and your

neatly printed changes to the form. Those of you who are not sure if

you received a form or not, and those of you who may be new in town

(or not yet discovered by U.S. 1), can photocopy the listing form in

the front of any U.S. 1 Directory or can find a submission form on the

Internet — at If you still can’t find a form

just fax us a note (preferably on your letterhead) requesting one, and

we will fax it back ASAP.

And if our fax lines (609-452-0033 connects you to both of them) are

forever busy, it’s still not too late to use snail mail. We look

forward to hearing from you. And someday we will tell you about all

the companies that first came to our attention through Directory

coupons and then ended up as cover stories.

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