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 Riding the Web to Easy City Many e-businesses promise to use the Web to simplify our lives. Some will actually do what they say. How much more convenience do you have an appetite for? Just how much convenience can the World Wide Web bring to our lives? I know that you busy people don't have time for questions like this--you'd rather ponder the truly weighty conundrums, like "Why are we alive?" and "Who put us here?" But answering that question is really important to me and my business, so I'd appreciate a little help--right now.
See, in my day job as a venture capitalist, I'm inundated with proposals from businesses that aim to make life much simpler by redesigning part of the commercial infrastructure. I'm itching to invest. But I need a better sense of how far this all might go. These plans don't just propose to use the Net to improve your life. They go further, proposing to combine the Internet with a change in the physical infrastructure. The most famous such business is Webvan. Webvan's ambition far exceeds that of other outfits that deliver groceries ordered online, like Peapod and Homegrocer. Webvan plans to build its own network of warehouses and a fleet of delivery vans to get all kinds of stuff--groceries and more--to you as directly as possible. (I didn't get a chance to finance Webvan, but I like the company so much that I recently bought some shares of WBVN. It had 47,000 customers and $13 million in revenue last year, but its market cap is a mere $4 billion. In Internet terms, that is what we call a bargain!) This kind of thing is just getting off the ground. Carsdirect.com and CarOrder.com propose to let you buy cars on the Web and have them delivered to your house. (My firm plans to invest in CarOrder.com, which is being spun out of another of our portfolio companies, Trilogy. One factoid from the company's presentation--76% of consumers surveyed said they would rather go to the dentist than buy a car from a car salesman.) PurpleTie.com will pick up your dirty clothes and return them from custom-designed cleaning centers. OpenTable.com guarantees restaurant reservations. Xtime.com says it will help you make appointments at any service business--from a hair dresser to an auto repair shop--and keep your calendar updated online. I've even seen a proposal that would let you order customized women's sports apparel to be delivered to your door. Some of this may sound like answers to problems we've never had. But I've been surprised by how willing consumers are to change old habits and adopt new technology-based approaches. For instance, in the four years since E*Trade started offering online trading through a Web browser, such service has gone from being an oddity to being the hot way to trade stocks. Furthermore, the Web companies do manage to make life simpler. Sure, Webvan's market valuation seems ridiculous. But every single person I know who has ordered stuff from the company has raved about the service. They were on time, they were polite and helpful, and they delivered the right stuff. In fact, that's the "research" that led me to take a flier on some Webvan shares; happy customers tend to translate into successful companies. So as I look at these business plans crossing my desk, this is the question: Just how far are these companies going to go? I recently came close to investing my firm's money in OpenTable.com. I shied away at the last minute. My friend and colleague Bill Gurley--the other venture capitalist who writes a column for Fortune--did the deal, along with Adam Dell. The problem I had? I just didn't think OpenTable made a big difference. The company blends Web technology and a change in restaurant infrastructure in an intriguing way: It installs a real-time terminal at a restaurant's host station, and the restaurant agrees to trade in its paper reservations system for the terminal. When you make a reservation at an OpenTable restaurant, you're reaching over the host's shoulder and writing in your own reservation. Cool stuff, indeed. But even in Silicon Valley, with our rich nerds and great restaurants, it's just not that hard to get a table. What's more, restaurants are for the most part crummy, slow-growth businesses. Still, I'm not totally confident about my decision. In fact, I'm now jealous of Bill and Adam, because their startup just got an investment from Zagat, the famous restaurant-guide company. That will help it sign up more restaurants, and as the service starts to get accepted, even more restaurants could sign on, and soon you're starting to look at a significant network effect, and then who knows what will happen? I may well regret my decision. One thing's for sure: I can't stop thinking about these deals. The firm
is investing in CarOrder.com, and I'm itching to do more. Changing our
commercial infrastructure gets to the heart of how the Web shapes the new
economy. So help me out: What part of your life stinks? Where are you
desperate for an alternative to the standard operating procedure? No, I'm
not up to starting an airline. But I'll get started on almost anything
else--just point me in the right direction! Stewart Alsop is a partner with New Enterprise Associates, a venture capital firm. Except as noted, neither he nor his partnership has a financial interest in the companies mentioned. He can be reached at alsop_infotech@fortunemail.com. Vol. 141, No. 5
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