The Be All And End All Of B2 B Sites?
If you set a record for the amount you pay for an Internet domain name, you had better deliver an impressive site. No doubt that's what Sky Dayton and Jake Winebaum, the Internet entrepreneurs who launched the eCompanies LLC incubator a year ago, figured after they plunked down $7.5 million for the Business.com name in November. Since then, they've been hunkered down in their offices in Santa Monica, Calif., assembling a giant business portal that will live up to its name. The new site, which they expect to launch in June, will offer such services as industry-specific news and product directories.
WHAT, HIM WORRY? The ambitious pair--Dayton founded Internet service provider EarthLink while Winebaum is a Disney Online veteran--say Business.com could be a major hit for eCompanies. But they've got a big task ahead. For starters, the portal faces powerful rivals, from powerhouse Yahoo! Inc. to thousands of independent industry sites. And even as many Web sites are turning to e-commerce services to make up for weak advertising, Business.com is counting on Net advertising for most of its revenues. Moreover, the demand for a broad-based business portal has yet to be proved. "Every week, a half-dozen more industry-specific sites spring up," says Forrester Research Inc. analyst Dan O'Brien. "It's not clear that a third-party business portal can carve out a profitable niche."
But if he's worried, acting CEO Winebaum sure doesn't show it. "Five years from now every business is going to be on the Web," he says. "Helping businesspeople be better businesspeople is what we want to do." He figures Business.com will blow rivals away with content. Its 50 editors and librarians assemble company profiles, industry overviews, financial data, and news in 57 industry groups encompassing 25,000 subcategories--more than anyone else.
What good will all that information do? A baker looking for a dough pump, for example, might go to the food and beverage area, click on "baked goods," then "equipment and supplies," and find eight manufacturers. Then the baker could use an eCompanies purchasing site called Change.com to actually buy a pump. The same can't be said for rivals. Searches on Yahoo and Bakeryonline.com both come up empty. "Yahoo doesn't know what a businessperson wants," Winebaum says.
That could change. Yahoo, with its global audience of 145 million, is pursuing businesses more than ever. It's already making money from online ads--a feat unto itself. And early this year, it began broadcasting an original personal-finance TV channel over the Web, which could boost ads even more.
Still, Winebaum says the market is young. Citing a prediction by Forrester Research that overall revenues from business-to-business advertising will hit $8.7 billion in 2004--up from $880 million this year--he says plenty of room remains for startups to capture both audience and ads.
BRANCHING OUT. But there's a risk in counting too heavily on ad sales. Many advertisers question how valuable Net ads are, and they command far lower prices than on TV. That's one reason rivals are branching out. Hoover's Online, bolstered by e-commerce commissions, should turn a profit by the first quarter of 2001. VerticalNet Inc., which operates 56 industry-specific portals, now earns more than half its revenues from e-commerce. And later this year, Excite@Home and Dow Jones & Co. will launch Work.com, which will get some revenue from services like online file-storage and high-speed Net access.
Will eCompanies have a hit on its hands? It could certainly use one. The three sites it has launched so far--Icebox, eMemories, and eParties--compete in crowded consumer niches and will have a tough time becoming household names. But don't count them out. Analysts say it's all in the execution. "These guys could be positioning themselves very smartly to offer services to all industries," says Forrester's O'Brien, "or they may become irrelevant." Winebaum and Dayton will have to prove that there is indeed a great site behind the great name.