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Command Performance

Command Performance

On a cold February morning in 1999, Shabbir Dahod was searching for something that eludes the CEOs of many Web startups: a short, unique and memorable name that signifies the purpose of his Web site. He and his newly formed, three-member management team sat around a conference table, shouting out words that could serve as the name brand of their forthcoming business-to-consumer e-commerce site. The site, which Dahod had been planning for months, would be an online marketplace in which consumers would request products and services, and businesses and individuals would browse through and reply to requests.

Dahod knew he had a good idea, the right combination of talent (he and his management team had been developing software and Internet-related technologies since the early 1980s) and investor interest to introduce the site to the world and start building a critical mass of users. But he couldn't do anything until he and his cohorts emerged from the conference room with a name. "It wasn't until Peter [Spellman, the company's CTO] said, ‘When a little kid really wants something, he raises his hand and says I want,'" recalls Dahod. "‘Well,' Peter said, ‘that's what we're doing, in its most basic form: telling people to state on the Internet exactly what they want.'" Hence, the venture was christened iWant. "We identified [the new site's] core essence in a name," Dahod says.

Dahod dreamed up the idea for iWant with Spellman in 1998 when both were working for Microsoft. The two decided to leave Seattle and relocate to the Boston area, where Dahod grew up, to start their own Web company. They set up shop in January 1999 at the Massachusetts-based facility of Matrix Partners, iWant's incubator and initial funder.

Things have gone well for Dahod, Spellman and the rest of the founding team since their name-defining meeting last year. After buying the domain name www.iwant.com from a squatter for a sizeable amount of money and adding a few more seasoned veterans to their core management team, they started building the site and its user base. With $US3 million in financing from Matrix, iWant moved from the incubator facility into swanky new digs in May 1999. Launched in September 1999, the iWant Web site saw 10,000 users log on in the first week. By mid-October the site had 25,000 registered users. In March 2000, iWant secured $US7 million in a second round of funding from Matrix and US-based Pequot Capital Management and introduced a redesign of its site. The new site streamlines the process by which buyers list wants and sellers search listings, reducing the number of pages each has to visit before adding and retrieving data.

Relationship Building

Communication between buyers and sellers is at the heart of iWant.com. The rapport begins when a buyer visits the site with a preconceived idea of the product he desires. He creates and posts a listing for a "want", (which can be as diverse as vintage posters, vacation rentals or a house), sets up a mailbox and waits for appropriate sellers to contact him. The sellers - individuals and small business reps - have to respond to the buyer's direct requests before completing the sale. The buyer may not initiate correspondence until he hears from a seller who has what he wants - whether it's babysitting services from a local sitter with references, a modern apartment on a quiet street or tickets for a cruise that caters to young people.

People selling their goods can be selective about potential buyers, and small business owners can develop long-term relationships. "For most of these businesses, getting a customer is extremely valuable because this opens up a whole new network of customers they can go mine," Dahod explains. Sellers that contact more than 10 buyers a month have to pay iWant a subscription fee of $US9.95 a month; when a customer buys a product on the site, iWant collects a fee from the seller worth 1 to 2 per cent of the transaction, up to a maximum of $US75.

Candi Catanise, the chairwoman of Hear & There, a non-profit travel service for the deaf and hard of hearing in Rochester, New York, stumbled across iWant. Although she was in need of buyers, she took the reverse approach of many sellers and placed a want ad, requesting people interested in travelling to Italy with a group. Within days, she received several responses, arranged two group trips and began browsing iWant's travel listings on a weekly basis for others seeking European adventures. "It's great to look at your prospective clients on the site and compare them," says Catanise. That's something she isn't able to do when matching vacationers for group travel over the phone.

Dahod is proud of the personal interactions iWant facilitates and says there's no other company doing what it's doing. Other sites that allow buyers to control sales interactions focus on price and product, not on the communication between buyer and seller, Dahod points out. Mercata, for example, provides group buying discounts, Priceline.com allows consumers to name their price, eBay facilitates auctions, Egghead.com sites sell clearance items and Buyersedge.com enables merchants to bid for customers' business.

While iWant isn't profitable yet (the company's revenue comes from the subscription and transaction fees instituted in February and from advertising on the site), Dahod feels the emphasis on buyer-seller communication is enough to propel the company into the black. He's convinced consumers want to build a relationship when making involved, personal purchases, such as buying a new car or planning a week-long vacation. Unlike eBay, which prevails because it removes the middleman from the purchasing process, the majority of current iWant-enabled sales are travel packages that cannot be purchased easily through an automated, anonymous process.

Sellers in the Middle

While iWant includes the inevitable collectibles categories, Dahod feels its most valuable interactions occur in travel and the similarly assistance-heavy realms of electronics, vehicles and real estate. Thus, iWant's middlemen - the small travel agents, pet store owners and software sellers using the site - help people make purchases they would otherwise not make online because they want personalised advice and guidance. "Some purchases made online can't end with first discussion or first contact," says Dahod. "The universe of things special to you, like a B&B in Italy, a new pet or a special system for a nongeneric computer, need more attention."

Dahod has gone to great lengths to ensure that iWant has the middlemen sellers that will give its buyers such attention. While iWant welcomes any sellers to browse the site and respond to the wants listed, many sellers are small businesses connected with affinity organisations that have agreements with iWant. These organisations, such as First USA Affinity Partners, are umbrella organisations for smaller, focused affin ity groups such as the American Boating Association and World Travelers of America. Recognising these affinity organisations as easy avenues to groups of small businesses without established presence on the Web, Dahod's crew has cultivated relationships with them since the site's inception. iWant reaches these small businesses by inserting brochures into the affinity organisations' mailings, informing business owners and reps that they can find interested buyers on the Web via iWant. The World Travelers agreement alone allows iWant direct access to more than 50,000 small car rental companies. In March, iWant inked deals with Smarter Living, a travel site with hundreds of thousands of members, and with Cruise Lines International Association, which has 100,000 affiliated travel agents.

Dahod attributes much of iWant's early success to the incubation at Matrix where he and his team were in constant contact with investors. "It was fertile ground for networking," says Dahod, who also met iWant's second investor, Pequot, during the time at Matrix. "When other companies came in and gave presentations, [the Matrix people] would grab us and bring us right in the meeting. We were in a hub of startup activity."

Dahod also found most of his core management team while at Matrix. From the start, iWant signed up seasoned veterans who came from large and small companies alike, many with at least one garage-type startup experience under their belts. "People who go through a startup process for the first time may run faster in motion but don't get traction as quickly," Dahod says.

Looking Ahead

iWant has kicked off a consumer marketing campaign this (US) spring and is working on more than 10 partnerships with Web portals and regional sites. The first such agreement, announced in February, is with Boston.com, a Boston area portal. Dahod hopes that such partnerships will increase iWant's already robust buyer base, while marketing campaigns, including television ads and radio spots, will make the brand more visible.

Eventually, Dahod believes iWant will turn the tables on traditional commerce. "We're letting the consumers come and state exactly what it is that they want, and state it in their own words," he explains. "iWant.com allows them to actually command the commerce, from their perspective."

And consumers are commanding this commerce not only from small business owners, but also from other people like themselves. Stacey Cole found iWant by chance, after placing listings on every online classified site she knew without success. When she saw a banner on one of these sites advertising iWant, she ventured to it and placed a listing, expecting nothing. And Cole's want was very personal to her. She wanted a red and white husky to replace her dog that died. "Within the hour I had e-mails from everywhere," she recalls. "I picked the one that best described the dog I wanted, replied to it and picked up two dogs within the week." Cole feels iWant's best attributes are its ease of use and hefty user base.

Many Web companies have been trying to figure out how to unlock the potential of small businesses on the Internet, with endless service pro-viders aiding their transition into e-businesses. iWant, conversely, is not trying to transform businesses into anything, but instead is aiming to enable them to take advantage of the Internet.

"Because if you ask a small business owner, it's not the Web site they want; it's the customer," says Dahod.iWant's Model Encompasses Several Online Commerce Trends Trend one - Demand drives the model. Suppliers don't push goods through a distribution model. Instead, customers initiate a transaction with descriptions of what they want. Small businesses are well situated to respond to such queries insofar as the customers may require high personalisation and creativity in solving their problems.

Trend two - Price is not the key motivation for buyers. The "rightness" of fit matters more in many transactions. One buyer may prize precision delivery, another fit and finish, a third, ease of integration with existing paperwork and process.

Trend three - Create a market in which buyers and sellers meet. Operating in territory formerly occupied by closed institutions such as The Chicago Board of Trade or Nasdaq, these online businesses combine the Internet's powerful, open infrastructure with a good idea, a traffic-generating strategy (alliances in the case of iWant) and an attractive pricing scheme designed to generate transaction volume rather than cover some real or imagined cost structure. -- E RutherfordExpert Analysis by John JordanThe Market is the Message As a startup, iWant's success factors include traits shared by most good online businesses - a quality management team, relentless focus on core functionality and creative alliances. iWant allows small businesses to respond to customer-initiated transactions. This collaborative, iterative process of description and response allows commerce to proceed in ways that would be economically unfeasible by phone, fax or mail. Such a dynamic is in keeping with the behaviour of scale on the Internet: very large players can do new kinds of mass production and distribution, while niche players can be highly effective at meeting complex needs within small pools of demand.

What's useful about iWant is the degree to which buyers can articulate exactly what they value and, by implication, the price they will pay. iWant's business model parallels those of eBay, MetalSite, Gofish.com and many others: it's better to be the market where buyers and sellers meet than to make stuff or sell services. Being the market relieves iWant from pricing the offer (the market does that) and fulfilment - two very difficult tasks. Marketplaces also have the opportunity to capture network effects. Having more buyers means more sellers pay attention, and more sellers increase the odds of a buyer's request finding its exact provider, which should pull more buyers into the loop. iWant is not home free. In an open economic system, switching costs tend to be very low; a customer doesn't have to rip out onsite equipment or install new proprietary software to change vendors. The challenge is to create perceptual switching costs so that customers served sufficiently well won't make the effort to find a new provider. To some extent, iWant is at the mercy of its network. Poor customer turnout or sloppy seller execution can start an exodus - particularly if a powerfully branded online competitor challenges the startup. The trick will be to learn how to nurture and seed the buyer and seller sides of the equation with techniques not well understood in traditional theories of management. After all, nodes in a network are not the same as boxes on an organisational chart or customers in a market. iWant seems adept at learning on the fly, however, which is a key requirement for success in any online venture.

Tom Jordan is the director of electronic commerce research at the ernst & Young Center for Business Innovation (US).

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