[EAS]Online Business Prototypes
pjk
pjk at design.eng.yale.edu
Wed May 9 14:28:57 EDT 2001
Subject: Online Business Prototypes
(from INNOVATION, 9 May 2001)
IF THEY COME, THEN WE'LL BUILD IT
In the beginning, the business model for Internet-based ventures
was fairly simple: Have an idea, convince investors to throw
buckets of money at it, and hope consumers come running. Now, with
vast fortunes vaporized in crash-and-burn e-business ventures, a
new idea is taking hold. Instead of a full-fledged launch, some
entrepreneurs are using prototyping to test out an idea's
marketability. In late 1998, entrepreneur Scott Painter approached
Idealab's Bill Gross with an idea for a company called
CarsDirect.com -- a scheme to sell cars over the Internet. The big
question was that nobody knew if anybody would buy a car online.
Gross challenged Painter to sell four cars over the Web, keeping
all costs to $100,000. A bare-bones Web site was hastily
assembled, and when orders began coming in, Painter bought the
cars retail and resold them -- at a loss. But the experiment was a
success: CarsDirect.com was a winning idea. Unlike the earlier "if
we build it they will come" business model in which assumptions
about consumer tastes and habits were treated as facts, prototyping
is based on the knowledge that most business ideas are bound for
failure, so it makes sense to test the waters before diving in
headfirst. "In the Internet world," says one entrepreneur, "the
beautiful thing is you can do your market research with real
customers." ("Will Your Web Business Work? Take it for a Test
Drive," eCompany May 2001)
http://www.ecompany.com/articles/mag/0,1640,11258,00.html
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For the person who buys online, as I do extensively, such business
prototypes are another thing to be cautious about. I generally
confine my online transactions to well established businesses,
either in the sense of a long online history, or a long-time "brick
& mortar" business with a more recent online presence. Online
businesses unknown to me I check out in ways such as a
- reverse telephone number lookup <http://www.anywho.com/telq.html>
A business that has an unlisted number or is piggybacked on quite
another business does not invite my confidence;
- business literature search.
It is still a matter of judgment after that, but I have found that
a little checking does a lot to improve the odds. I have had to
resort to credit-card "charge-backs" in less than 2% of my online
purchases.
--PJK
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