- According to the brochure, the purpose of the Evolving Markets conference that Columbia University and several venture capitalists sponsored in New York earlier this month was to challenge conventional thinking about the evolution of e-businesses.
Yet nearly all of the venture capitalists, entrepreneurs and business executives on the agenda emphasised that Old Economy fundamentals still apply to online enterprises.
If they’re to succeed, new internet businesses must solve a real-world problem, rather than simply automate an old process, says Jay Walker, founder and chairman of Priceline.com.
“Ideas are wonderful, but they’re much better when they’re hooked up to a problem,” Walker says.
Carl Bass, CEO of Buzzsaw.com in San Francisco, says his firm — a year-old internet marketplace for architects, builders and suppliers — pinpointed the problems it aimed to solve by talking to the users of software from Autodesk. Buzzsaw.com is a spin-off of Autodesk, a computer-aided-design firm.
“Customers said their need wasn’t for newer or better design tools. Their problem was moving information” among suppliers, builders, designers and others in the construction industry, Bass says.
Buzzsaw.com functions as a neutral site where users can buy and sell products and services, as well as exchange blueprints, designs and other data to cut production time, Bass says.
But the problem a new venture sets out to solve may change over time. E-Steel opened its doors in September of last year as a public marketplace serving the $US700 billion global steel industry.
“But what we were being asked for from the beginning was to provide private exchanges to our customers,” says Peter Regan, vice president of marketing at the New York-based exchange.
Now, e-Steel offers end-to-end integration services, linking buyers and suppliers via private connections over the exchange to collaborate with other firms in their supply chains.
Dot-coms are also partnering with traditional firms for everything from customers to management.
For example, Safeway formed a partnership earlier this year with GroceryWorks.com, a Dallas-based online grocery delivery service.
“GroceryWorks has a viable business model because they leveraged Safeway’s purchasing power,” says John Fullerton, a senior investment officer at LabMorgan, the venture capital arm of J.P. Morgan & Co in New York.