Lessons of the Wild Web

Brice Scheschuk October 16 2000

Lessons of the Wild Web

Brice Scheschuk October 16 2000

Lessons of the Wild Web

Brice Scheschuk

If the Internet were a debutante, it would be safe to say that the “coming-out ball” is over and the princess is aging. After six years of experimentation that has wrought huge successes and enormous failures, it is worth taking stock of the World Wide Web and the e-revolution. What are some of the lessons learned from this crazy, sometimes senseless period?

The Good: Traditional business models have been turned on their head. The popular phrase “Internet time” embodies speed in leading, hiring, branding, reporting, selling and changing the supply chain. An Internet cycle from conception to product implementation is three months, rather than two years for a brick-and-mortar company. Imagine the Hudson’s Bay Co., an organization with thousands of disparate suppliers, now able to connect all of them through a standard Web interface that improves productivity by cutting out countless inefficient intermediate steps, speeds delivery, reduces carrying costs and slashes prices.

Information is power. Although an overused term these days, “empowering individuals” with greater access to all information has revolutionized stock picking, travel, news delivery and countless other aspects of personal and business life. Pick any topic and you are sure to find, with the click of a few buttons, a hoard of information. An offbeat example of a niche site is wivw.cal-Look.com, run by two Canadians catering to modified VW Beede owners.

The surefire winners are rarely the 1,000th company trying to sell airline tickets to consumers. Infrastructure and service companies that supply the revolution have been hugely successful. Trusted names like Purolator, IBM and Oracle are growing at earth-shattering rates by Web-ifying their businesses.

The Bad: All those mundane business success factors are still important. Branding, probably the largest single cause of death among companies in the consumer Internet economy, has caused seemingly smart marketers to spend their entire annual budgets for 30 seconds of face time during the Super Bowl. Guess what? Customer service is still important. Jupiter Research recently found that only one in five Internet retailers is using widely accepted technologies such as Macromedia Flash or online chat. Wouldn’t it be nice to click on a live chat with an employee at your favourite shopping site when you are having trouble with the item you want to buy? Profits, a dirty word when com-

Brice Scheschuk is a chartered accountant and a Torontobased executive at an Internet financial services company.

panies such as Boo.com were trying to capture “eyeballs” and customers, have suddenly become important as the bleeders do not have the cash to carry themselves through the next six months.

Remember when entire Internet business plans were funded solely on the ability to generate advertising dollars? Were all Canadian companies really going to start doubling and tripling marketing budgets and moving all advertising to the Web? Canoe Inc., a subsidiary of Quebecor Inc. and one of the more prominent news and portal sites in Canada, has lost most of its executives and laid off a third of its staff as advertising revenues are not covering costs.

One-to-one distribution is still expensive and unproven. Although the Grocery Gateway delivery trucks are seen with increasing frequency around major cities in Canada, similar online companies elsewhere have struggled with delays, high costs and customer reluctance.

The Ugly: Abuse of communications not seen since the propaganda campaigns of the Second World War is astonishingly commonplace on the Web. It can be very difficult to differentiate truth from fiction on the Net. A few weeks ago, a 23-year-old student allegedly was able to knock $3.7 billion off the market capitalization of a Nasdaq company, Emulex Corp., in a day, starting within a few seconds of distributing a phoney press release. While the student could go to jail, what about the innocent buyers and sellers?

Irrational exuberance of a type not seen since the 17thcentury tulip craze or the Roaring ’20s infected the stock markets in the midto late-’90s. Venture capitalists and investment banks rushed fledgling, unready companies to market all in the name of an exit strategy. Retail investors could not stop buying the next dot-com, and stock prices of these companies soared. Young billionaires had to seek counselling to try to cope with their newfound wealth. After endless quarters and sometimes years of red ink, investors are finally beginning to wise up. Could it be that the efficient market hypothesis, the theory that stock prices properly reflect past and current information, is once again rearing its beautiful head?

A friend tells a story about a large company in Ontario that is still questioning whether the Internet is even worth thinking about in its future plans. The shock most people have at hearing this story drives home the pervasiveness of the Web and e-mail in daily life. The Wild Wild Web will not be tamed anytime soon. With Net advances like Napster grabbing headlines and traffic daily, keep your lasso close at hand, your money belt secure and enjoy the ride.