Linux Consulting: How To Market on the InternetSep 05, 1999, 23:59 (2 Talkback[s])
(Other stories by Tom Adelstein)
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Companies using the Internet want to succeed and do so in Internet time. Analysts need a program guide to tell the players from one another. You can help your clients by understanding and using a "best practice" approach. You have the formula for creating a successful business on the Internet.
The Internet IPO Lottery
Going into business on the Internet has the trappings of a lottery. First, you see the prize winners in the form of Internet billionaires. Second, you see banner ads and spam telling you someone can show you how to win. Finally, you can buy your ticket on many Geocities style sites. You can have a free Web site, for just a few dollars you can commerce enable your site and watch the dollars roll your way.
The great glow you felt the day you bought those lottery tickets only dampens a little when the numbers appear on television or in the papers. You got two out of six numbers. Or, better yet, you got three of six and won five dollars. Sometimes, you win four of six and get twenty dollars. You know you found a system and if you keep playing you will win. You'll fine tune your system and win. Now, when you get your money, you won't spend it like other winners. You have a financial plan and you will continue living just as you do now with only an improvement here and there.
The Internet billionaires club differs only slightly from the weekly lotto. People with dreams of Internet billions have technical abilities and feel special. They may not line up at the counter and buy five dollars worth of tickets, but they often buy a recruiter's pitch and go for lower salaries in hopes those stock options will cash them out.
Wake-up, Bottom-out and Get Real
Two examples of reality can help get you unhooked from a lotto addiction. The first example involves Sun Microsystem moguls of Silicon Valley liked the NetDynamics business plan. NetDynamics promised a very workable CORBA-Java solution to interoperability in an enterprise. Using a variety of methods, NetDynamics provided a way to Web-enable CICS applications and have them work with Oracle database solutions, for example. NetDynamics could turn hard coded SAP application screens into browser forms. Suddenly, the lone applications that you still needed to run after a SAP conversion had a way to work with the enterprise behemoth.
The founders of NetDynamics and their venture fund partners went on a recruiting hunt for the best talent in the industry. They pulled frustrated managers and sales people mainly from Oracle. They promised an IPO and handed out many stock options as a bonus. The stories of worthless stock options provide a cliché. NetDynamics had raised $15.4 million in three rounds of venture capital. Investors included Hummer Winblad, US Venture Partners, Intel, The Galleon Group, Attractor Investment, VanWagoner Capital, and Integrated Capital Partners.
NetDynamics, Inc. offers the first comprehensive Enterprise Network Application Platform, solving the problems organizations face in integrating disparate computing environments, scaling business-critical applications and managing distributed systems. The NetDynamics platform leverages a powerful, open and secure architecture to enable innovative business solutions. More than 650 customers including AT&T, Chevron, Fidelity Investments, NationsBank, and Service Merchandise, use NetDynamics, which also is supported by more than 100 leading systems integrators, VARs, and ISVs. Based in Menlo Park, Calif., the company was founded in 1995.
Sun Microsystems acquired NetDynamics for approximately $190 million in 1998 in a merger. Netscape set the precedent for the price by paying $180 million for Kiva -- NetDynamics rival.
Those employee stock options? Ah, well, dah, I guess they're only good if the company does an IPO. Ask around and you'll find many such stories of hard work, promises and the numbers just didn't fall right for the holders.
The next example of Internet lotto fever comes to us courtesy of AMR -- momma of American Airlines and Sabre among other subsidiaries. Sabre arrived in electronic business before anyone. They appeared on the Internet with Travelocity.
While yomomma.com, makemerich.com and others have seen incomprehensible stock prices, a solid citizen like Sabre receives very little notice as an Internet company. Compare Travelocity revenues with Amazon.com and Broadcast.com and ask yourself a simple question -- what? Myriad reasons exist for the discrepancies most of which have to do with the way Wall Street structures IPO's. Underwriter warrants, trading profits and portfolio positions can drive IPO prices while little speculative money finds its way into the trading booths of pre-existing public companies like AMR.
These two examples can serve us. Like the lottery, they represent the norm in our industry rather than the exception. Winners Rose and Bill from their little cottage in the country represent something like one in fifty million who played the game. Consider the other 49.9 million who didn't win. You don't see headline stories about the losers.
Internet Marketing Realities
I started running searches for BHS on newsgroups, on the WEB and at various relatively unknown places such as the InterNIC. A friend and I ran into them at InternetWorld in Los Angeles and got some first hand information.
BHS used a strategy for becoming known and welcome at that time that represents a remarkable set of "best practices". Unfortunately, some slick dudes have taken those practices and made it impossible to do a reasonable search on the Web these days. For example, I searched for information to verify some facts about the Sun acquisition of NetDynamics for this article. After hunting through 30+ normally reliable engines, I wound up at http://www.sec.gov and searched the tedious EDGAR database for Sun Microsystems' SEC filings until I got the information.
Even today, BHS has lost sponsors and visibility. A few announcements in newsgroups, registration with search engines, referrals from reciprocating Web sites and magazines will not bring the hits like they once did. Instead of the myriad banner ads I once saw at the BHS sites, they now belong to the Link Exchange and get banner ads like "dog pile". Yuk!
What You Can Do Today
Drop the Expectations of Billions
Determine Your Real Purpose
An endeavor without a reason for being will fail. I don't mean you shouldn't expect to make money from your site. If you put service first and do the best job possible, the money will come as a result.
An endeavor without a vision will fail. Without a vision you can't determine your mission. Without a mission you can't set realistic goals. Without goals you're like the people who don't know where they are going and don't know how to get there.
I don't think anything else needs saying about vision, mission and goals here. The evidence for strategy and tactics working in one's life has many reporters. If you need to find out more, cruise your friendly local bookstore.
Focus on Specific Areas of Interest
What do you do best? Do you build the best firewalls in the Linux Universe? If so, create a web site that covers all areas of firewalling. Write articles and submit them to Linux publications. Fill your site with how-to papers on Linux firewalls. Write and submit your articles to the Linux Documentation Project HOWTO archives. You can find information on writing and submitting a HOWTO at http://metalab.unc.edu/LDP/HOWTO/HOWYO-INDEX-4.html. A Linux consultant has two objectives in doing his own site development. First, you want to establish yourself as a "known" authority in your area of interest. By providing significant content, you can demonstrate to the world what you do best. Secondly, you want to build a following or a "community of interest". By creating a specialized site you will attract others with a similar interest. You will also gain commercial attention, command a higher rate and receive more inquiries to provide consulting services. In establishing yourself on the Internet, you tell others you have special skills they need.
For example, two of our engineers specialize in security. Prabhakar Vijayarangam brought me several articles on firewalls. We pieced them together and wrote our own how -to article for the "consultants tool kit" at lcsrc.org. Following the publication of the article interesting events occurred. For example, we received approximately fifty e-mails from Linux specialists giving us feedback on the article. One of the people who wrote us, provided ample material to create an article on a dmz. His material gave us the ability to provide additional service to our clients. Since he lives in Europe, he didn't mind sharing his solutions. His material will add to the knowledge base of Linux solutions. He will also present his article at several conferences and has been asked to speak at SANE on Internet security.
In the meantime, Prabhakar's client load has increased. People have called him to help them either fix or implement IP masquerading, packet filtering, setting up proxy services, and so on.
Look around and see what problems Linux users encounter. You can find this information in newsgroups, by running searches at Searchlinux.com and corresponding with Linux users you see at familiar web sites. A couple of nagging problems seem to persist in the Linux world - interoperability with other platforms and messaging. I can see two opportunities for Linux consultants. Consider building a site dedicated to interoperability. Such a site could contain mountains of content. If you want to build a "community of interest" take that one on. A Linux consulting site dedicated to messaging can also create a massive "community of interest". How many people do you know that want to use Lotus Notes on Linux desktops? Did you know that several people have run Lotus Notes using WINE?
How about tutorials on sendmail or the use of Internet newsgroups within a corporate intranet. People around the globe look for video conferencing solutions and that's an emerging market for messaging.
Content drives Web sites. Matt's script archive provides a great example of focus. From the early days of the Web through now, Matt Wright has consistently provided high quality focused content. Many people consider his site a historical marker in cyberspace. People drop by regularly to see the content he adds. Many sites link to him for prestige.
Whatever you do, make sure your effort provides a tight focus or specialization. Provide ample content and updates regularly. Also, make sure that your topic has an audience.
One of the early commerce successful stories on the Web provides another example. A technology guy wound up with his family cheese cake business. Through next day delivery via Federal Express, this bakery could bring a cheesecake to your door fresh and ready to eat. I got one for Christmas one time from an uncle. At first, I thought he'd lost it. It only took one bite to discover he was a man of impeccable taste.
This company's president knew how to bring a Web site on-line and put out several Web pages. He provided information on how to order cheesecakes and put out the company's product line. In a little over a year, he received no orders from the Internet.
One day, he did something very bold. He took the family's secret recipe and published on his Web site. You guessed it, the calls and orders swamped his small staff.
First, a search engine indexed the recipe and people looking for cheesecake recipes wound up at his site. After reading the recipe, a person soon discovered the enormous effort required to make the cheesecake. Finally, just pure economics came into play. Just the cost of ingredients made doing it yourself too costly. For the cost of the cake and shipping, you could have the world's best cheesecake in the morning.
I refer to this as my cheesecake story. Eric S. Raymond calls it
Open Source. Eric says, publish the recipe and build a
Make Your Site Accessible
You can lease a Cobalt RaQ2 or comparable Web server for approximately $75 a month from a local ISP with 13 GB of hard drive space, 128 MB of RAM and remote administration capabilities. Rack space, due to the small form factor, runs about $25 per month and co-location charge run anywhere from $50 a month and more. More Web appliances will soon appear from several manufacturers such as IBM and you can pick and choose your interface, processors, memory and disk configurations. Co-location at a proper facility also gives you access to large bandwidth connections, often redundant OC3's from different backbone providers.
When you finally add your expenses from a Total Commerce tm or Geoplop site, you'll spend more for 50MB of disk space. You'll also find some hidden charges if the site becomes popular based on some formula for the excess disk space used from simultaneous hits. You will also have no control over CGI scripts you can use. These high density starter sites prevent you from getting revenues from mirroring popular download archives, getting direct advertising and setting up virtual sites and your own mail server. Forget about backend databases.
You want to control the applications you think best fulfill your needs. Co-location will afford you the ability to choose your own Web server such as Apache instead of IIS 4, for example. You can choose your own scripting language, e-commerce software, credit card clearing utilities such as Cybercash or Open Market and catalog.
As we see, accessibility involves more than how a surfer can get to your site. Good accessibility includes the ease of access you have to your site.
Have Service be the Specific Objective of Your
Web businesses fail when people don't provide enough content to create a community of interest or to serve their existing community of interest. For example, I have a personal complaint about a certain computer manufacturer. I purchased a server from them and it's still under on-site warranty. However, they refuse to provide updated firmware to make the BIOS year 2000 compliant. To make matters worse, the warranty period runs out in July, 2000. While the same models sold with faster pentiums have Y2K BIOS flashes that also allow the user to upgrade to a 233Mhz MMX processor, my machine is upgradable to only a 166MHz.
In talking to a support representative, he informed me that the company only made a limited quantity of the model I own due to a change in processors during the time they considered it in service. I have located an OEM BIOS for the motherboard that accomplishes everything I want, but the manufacturer says they will void the warranty if I use it. Further, they won't provide me with any sort of service documentation including a motherboard diagram for jumper settings.
The cost of losing a customer in any business can be calculated with relative ease. The computations involve the costs of advertising, promotion, marketing collateral, service, certain legal and human resource costs, facilities and outsourcing among others. Recently, I saw one study where the cost of losing a customer for a digital wireless phone company ran approximately $25,000.
When you see someone purchase a cable company , for example, try not to act surprised when you see what one firm pays another for the customer base alone. Even the high cost paid for small Internet Service Providers doesn't seem quite right to some of us. Customer acquisition costs justify the price, however. The typical churn rate for an ISP runs approximately 30% of the total customer base. The take rate, or percentage of offers made to people signing up is usually less than 10%. The companies with the best track record as ranked by Inverse suggests that the churn rate is lower and the take rate higher for those ISP's with the best customer service.
The key to providing service revolves around the content a site provides and maintains. The quantity and quality of content determines the number of users a Web site will attract and hold. If your client sells pharmaceuticals, it should provide significant information for the health care practitioners who need information about the products. For example, management at Alcon Laboratories owned by Nestle, argue incessantly about the look and feel of their Web site. They have paid high six figures for a fairly bland Web presence. They could have taken an iterative approach, put as much information about the products up for the people who prescribe their products and stopped worrying about the color of the graphics. Cool graphics will not create a community of interest -- but content will.
Manage your Site Daily
We use the phrase "scrubbing a site's content" to describe analyzing logs to determine the most visited areas of the Web site and where people spend the most time. Some Web analysis software can make distinctions so closely that you can tell if an originating URL happened to be a bookmark in the visitors Web browser.
If you see that certain pages get the most hits, find out why. Recently, I saw an abnormally high number of hits at an area of our site where a certain kind of content resides. I found the referring URL, visited it and discovered a link in an article. The link resided in a paper distributed internally to a group of Web developers on Web site management.
Tom Adelstein, CPA, is the CIO/CFO of Bynari, Inc. He's the author of several books and articles on business and technology and has management, consulting and hands-on experience in the Information Technology field.
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