Ah, those were the days: IPOs, "e" and "i" everything, Superbowl ads, Pets.com, eager VCs and aeron chairs. But enough reminiscing. It wasn't that great anyway. Now that most of us have caught our breath after the dotcom free fall, it's time to get ourselves together and figure out how to move forward and make e-business work.
Rob Powell is a one-man band. The founder, owner and manager of EngineerSupply.com steered his engineering equipment site through the storm, all the while maintaining a full-time engineering job. E-tailing has been one of the most maligned victims of anti-dotcom sentiment, but Powell, 31, shows it can be done smartly and profitably.
Powell's first good move was registering the EngineerSupply.com domain name in 1999 in Christiansburg, Virginia. He had heard and read about the online boom and was excited to secure a site of his own. Six months later, the site was launched as a purely informational resource that became popular with engineers. As Powell got up to speed on the vagaries of e-commerce over the next two years, he slowly weaned the site off information and built a retail outlet in its place.
While his site was evolving, e-business as a whole was choking. The dotbomb list was sobering for Powell to read, but he had one definite comfort: profitability. He's willing to share his secret to thriving in e-tail: "my small amount of overhead." Drop-shipping products straight from the factory and backing it all up with fastidious customer service kept revenues rolling. If this sounds familiar, it's because we've been hearing about it in the offline business world since before the Internet was a gleam on Tim Berners-Lee's monitor.
What's the best news? The worst is probably over. Heather Petersen and Lauren Wang had their own doomed dotcom once. After the crash, they took their hard-earned expertise and started Handl Consulting, a technology business consulting firm in San Francisco. "The way people talk has changed," says Petersen. "What they're focused on has changed. It's come full circle in some ways. Hopefully, we're going to be back on some kind of an upswing."
At a time when most e-businesses can't get the time of day from venture capitalists, DataCert, a Web-based e-billing company in Houston, has just rounded up $11 million in funding. With 61 employees and profitability just around the corner, CEO, president and founder Eric M. Elfman must be doing something right. For Elfman, 39, the answer is simple. "Smart business models still get funded," he says.
It's never too late to tweak your business model, but it's a bit harder to really pin down what makes a smart e-business model. The dotcom shakeout helped by imposing the survival-of-the-fittest rule. Keys to DataCert's strong showing are focus, more focus and a dose of forced luck. DataCert narrowed in on legal e-billing, specializing in working with Fortune 500 companies. Smart move. That's definitely a solid marketplace. A carefully planned move into health-care e-billing next year will help propel them forward. Know your target market, keep it specific, and make sure it is actually worth mining.
Limited capital in the early years of DataCert kept them from being swept away in the waves of hype circa 1998 and 1999. "To us, it was always about the customers and revenues and dollars coming in the door, and not about eyeballs and stickiness," Elfman says. "This bootstrap mentality, even though it was forced on us, was good in the long run." Bootstrapping is once again the name of the game. Accept it as a challenge that will help keep your e-business lean and competitive.