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
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 TheStreet.com: "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."
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 Bigstep.com: "You’ve got to have users and customers. Driving
visitors to a site is not a guarantee for a viable business."
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
"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."
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 NetGrocer.com 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."
if they don’t target customers. Outpost.com 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.
"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.
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 NetGrocer.com, 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. NetGrocer.com 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
Inc. notes that the website redesign has "created a spectacular
turnaround." We will keep an eye on NetGrocer.com 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 www.princetoninfo.com. 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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