The Quick and the Dead: New Internet-based Business Models
by Marc DiPaolo

Marc DiPaolo covers the 2000 Software Forum where experts discussed Internet-based business models and the trend toward consumer-centered markets.

In the Wild West, there were two kinds of gunfighters – the quick and the dead. And in the modern world of Internet business ventures, the same categories apply. "To stand still is death," said Karen Southwick, author of Silicon Gold Rush and executive editor of Forbes ASAP magazine. "It's a Darwinian imperative that forces companies to cooperate and adapt and anticipate change."

As the keynote speaker at the New Jersey Software Forum 2000, Southwick spoke about new Internet-based business models and the trend toward consumer-centered markets – the convention's two central themes. In the past, a business had an advantage over its competitors if it was close to its market, had its product and/or procedures patented, and was unparalleled in its size and breadth, but these advantages are disappearing rapidly, said Southwick. "Now, small companies that are quick to market are tough to beat, so the best new advantage is speed of execution," she said.

According to Southwick, as the current technological revolution continues to change the face of the world market, only the businesses that are the fastest to anticipate change and to participate in the revolution will prosper. Those businesses that cling to old rules and old procedures, hoping to survive for generations, are far more likely to fall victim to change than to be an agent of change, she said.

Offering advice to the Forum attendees, Southwick explained that companies benefit from an empowered, knowledgeable staff of employees, so executives should no longer keep secrets from their employees. Large companies should also create small teams to stimulate innovation and enable parallel problem solving. In addition, businesses should forge alliances through strategic partnerships, mergers and acquisitions, she said.

But the most important partnership of all may be between the business and its customers. "In today's technological world, in order to have a successful project, the customer becomes vital in its development," said Southwick. Hence, the trend toward a fully integrated market. While the first generation of eMarketplaces are standalone markets that facilitate their own transactions, the markets are rapidly evolving via vertical technology into a fully integrated market in which the customer, the sales organization, and the production team all work together to create and sell a customized, personalized product.

"The Holy Grail for us is deep integration," said Craig Garno, vice president of information technology at Cirqit.com, and a Software Forum panelist. And several of the other panelists participating in the forum also cited integration as the wave of the future.

According to Steve Schmidt, founder and partner in OfficePlanIt.com, the office furnishings company was originally visualized as an open market business until the realization hit that more products would sell if clients were afforded the opportunity to customize the product. "In order to get the big transactions on big networks, static catalogues don't work," said Schmidt.

He explained that the decision to reshape the company entailed new challenges, among them configuration and integration conflicts, but the reshaping was worth the effort.

According to Bill Van Emburg, director of Quadrix Solutions, it will be easier to stake a claim on the web now before the rapidly evolving Internet landscape begins to leave small-time prospective investors behind. "Once the second generation of eMarkets gets going, the cost of entry will go up," he said.

"That's why there's such a land rush," agreed Martin J. Boyd, director of product marketing, Marketplace Products, Ariba. "That's why the first companies to reach critical mass are the ones that'll be left standing in the long run."

Although it is impossible to predict exactly how technology will continue to evolve, one way to make an educated guess is to examine the history of technological innovation and the impact that it has had on business ventures of the past, observed luncheon keynote speaker Katie Hafner. "No one seems to care about history, especially young people, because we're so intent on where we're going," said Hafner, a reporter for the Circuits section of the New York Times. And yet, she argues that business can learn a lot from history, especially since, "the industry is rife with stories of missed opportunities."

These missed opportunities, which she chronicled in her two books on the evolution of the Internet, "Where Wizards Stay Up Late: The Origins of the Internet," and "Cyberpunk: Outlaws and Hackers on the Computer Frontier," seem to all have a common thread, she said. In each historical instance, large companies foolishly passed on opportunities to invest in Xerox photocopying or in groundbreaking cellular phone technology because highly paid consultants "wisely" advised the companies to pass up on an opportunity to revolutionize the industry and make a mint in the process.

"The big problem with management in all of these cases is its viewing the future entirely within the frame of present reference, but new technologies break the frame and change the rules," said Hafner.