My feeling is that we are approaching what the more pretentious among us like to call a 'defining moment' in the life of the internet. I suppose it's the moment when everyone wakes up and realises that it's here to stay. Obviously this reality has always been obvious, but it is surprising how many people have been in denial about it. What we are seeing more and more of these days, are positive assessments of businesses who survived the creative destruction gale which followed the NASDAQ crash. This first started going through my head when my European conscience and alter ego Frans came back at me about Google, Yahoo and Amazon. Now I think that Frans is a really nice guy, but he's missing something important here. And like Frans, millions of others. The internet bubble was always going to burst, too much easy money is never good for anything, but after, when the dust settled, surely it was also always clear that what was left would represent the future. Little by little this is begining to dawn on people. The landscape has changed, and will continue to change. All those 'household names' which were politely congratulated for their realistic prudence in reigning-in their on-line-selves (and thus found temporary shelter from the storm: come on in, she told me........) will now have to address their future as the 'outsiders' they have become (this is already all-too-obvious in the case of Time Warner, and, mein gott, Bertellsman even went 'off-ine').
At the start of all this people would laugh at expressions like 'the death of distance' or 'the weightless economy', today they are not so sure. Clearly distance is not dead, but the dimesions of global 'space' (measured say by the number of clicks which separate us one from the other) are clearly on the down-and-down, whilst the weight of each dollar of GNP (real prices) is getting less-and-less. The much vaunted rise of global services is only one very evident indicator of this. Meanwhile the e-commerce and e-communication companies who have survived look stronger and better every day. I cited a piece from the Economist on the Yahoo's and E Bay's of this world earlier in the week, today a piece in Business 2.0 has caught my eye. Restaurant.com have reinvented a one-to-many version of the prisoners dilemna, and are turning it into a gold mine:
Two years ago, Scott Lutwak, the CEO of Restaurant.com, took his family to Puerto Vallarta, Mexico -- on a trip that felt less like a vacation than a last hurrah. As he lay on the beach, he forced himself to face reality about the floundering company he had co-founded in 1999 with $7.4 million from angel investors. "I was thinking, 'OK, let's take a deep breath, come back, and shut this baby down.'"
Before Lutwak could pull the plug, though, he learned of another failing dotcom, CitySpree, which sold gift certificates. Lutwak and his team realized that if they delivered the certificates by e-mail and stuck to restaurants, they could run more efficiently than CitySpree -- and even, gasp, make money. After going back to investors, Restaurant.com bought CitySpree at a bankruptcy auction for less than $500,000 and refocused on selling gift certificates. Now, instead of being just another nondescript dining portal, it would have its own identity as the gift certificate power seller. Lutwak then brought his clients this proposal: Let us sell your certificates from our site on eBay (EBAY). Unlike placing certificates in newspaper inserts, this campaign won't take any cash from your pocket -- we will simply keep the proceeds from selling the certificates. (A $50-off certificate at New York City's Manhattan Grille, for example, recently auctioned for $16.) Everyone, in short, sees value: Diners eat cheap; restaurants get traffic with no out-of-pocket for marketing; and Restaurant.com gets paid by customers who know exactly what they're getting -- namely, $25 or $50 off a meal -- rather than by cash-strapped restaurateurs who continually need proof of return on investment.
Lutwak and his team relaunched in July 2001, and the concept took off. Revenues doubled in the first five months. Today the company sells about 75,000 gift certificates a month at an average of about $9 each. Lutwak says the company brought in $5 million in revenues last year, is growing 12 percent each quarter, and has been profitable since the third quarter of 2002. Driving traffic with discount coupons is not, admittedly, an Internet-age breakthrough. But Restaurant.com clearly couldn't survive without the Net. By claiming a spot on eBay, the Web's largest virtual mall, Lutwak gets an audience of millions of online shoppers. By e-mailing coupons to customers, it saved the single largest cost of most conventional coupon marketers -- postage and printing. It's a model well suited for these hard times. "Restaurants have to be more aggressive to get people in the door," Lutwak says. "The big expense-account days are over. And price-conscious consumers are saying, 'I'm going where I can get a deal.'" Now they know where that is.
Source: Business 2.0
LINK
Or again, there is the case of Harris Interactive:
In 1997, if you'd polled pollsters on Harris Interactive's (HPOL) decision to bet its future on Internet surveys, you'd have found opinions ranging from highly dubious to frankly incredulous. After all, measures of public opinion depend on data that accurately reflects the general population, and Internet users aren't like everyone else. "We got called charlatans and frauds," says Gordon Black, founder and CEO of the company best known for its 40-year-old weekly Harris Poll. Then he adds: "The criticism stopped immediately after the election."
The 2000 presidential election, notable for how it confounded other poll takers, was a watershed for Harris Interactive. The company correctly predicted the vote in 36 of the 38 closely contested states. Even more remarkable, Harris was the only one to predict that the race between Gore and Bush would end in a statistical dead heat. The company's main reason for switching from the traditional telephone poll was that Net surveys are 15 to 20 percent cheaper to administer. The unexpected bonus is that they're also arguably more accurate. "People just don't tolerate phone calls anymore," Black explains. Because people have to opt twice to join Harris's database of willing Internet respondents -- first clicking an ad and then confirming by e-mail -- response rates tend to be higher than with phone polls generated by random dialing. In addition, Internet surveys are free of the biases caused by subtleties in the way telephone interviewers ask questions or prompt for responses.
But what of the biases in the sample of Internet users, who tend to be better educated and more affluent than the general population? Consumer researchers have long relied on weighting systems to correct skewed samples, but most of them believed that data collected online was simply too slanted. In 1997 a Ph.D. at Harris proposed a solution: The company could build on formulas used to make samples of high school students representative of all teenagers. At the time, the split between dropouts and students mirrored the ratio of Internet users to nonusers. Then, by simultaneously conducting hundreds of surveys via phone and Web, Harris refined the algorithm for correcting the Web's obvious biases. It also fixed some not-so-obvious ones, like Net users' tendency to be more participatory than most citizens -- more likely to vote, go to the movies, and so on. Internet surveys now account for 47 percent of Harris's $120 million business, and their efficiency helped profits double from the third quarter to the fourth, while its average competitor grew in the single digits. "Online research is one of the industry's hot areas," says Bob Lederer, editor and publisher at industry group RFL Communications. "It's costly, but Harris has a head start. Everyone else is playing catch-up."
Source: Business 2.0
LINK
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