Low-Tech Winners in an On-Line World

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O'Reilly & Associates released more computer-related books. The company's technical-book publishing division soon eclipsed the consulting business and by 1991 had put it to rest. O'Reilly attributes the publishing success to its employees' background in computers. "We are the market," he says.

The company continues to test new ventures. One of its best-known products, Global Network Navigator (GNN), informs users about interesting spots to visit on the Internet and also offers magazine-like content. GNN wasn't the product of formal strategic planning or market research: in fact, it began life as a WWW demo. The demo, O'Reilly had thought, could serve as the centerpiece of a kiosk in bookstores, where potential customers could learn about the Internet and O'Reilly's Internet books. However, once the company's managers saw the demo, they realized it was a product in its own right, and a new market was born. Books remain O'Reilly's core business, but the company keeps expanding into new electronic-publishing endeavors. Books about the Internet are the fastest-growing segment of the company's publishing business, representing about 20% of sales.

Printer
Dick Izzard
Bindery & Specialties Inc., Plain City, Ohio
You might think the increased use of computers to exchange information electronically would be bad for the printing industry. In the long run, maybe it will be -- but Dick Izzard doesn't worry. Not long after he started his printing company, Bindery & Specialties Inc., in Plain City, Ohio, Izzard completed his first job for a nearby client that was also "very, very small" but growing: CompuServe. Sixteen-year-old Bindery & Specialties is one of 50-plus printers to work for the on-line giant, which last year sent manuals to approximately 120,000 new members each month. CompuServe, based in Columbus, Ohio, represents about 15% of Izzard's business, and sales at his 70-employee company have been growing at a steady rate of about 25% annually.

College Student
Mubashir Cheema
Sparco Communications Corp., Starkville, Miss.
There are an estimated 12,000 computer stores in this country. But few serve a predominantly international clientele -- especially from Starkville, Miss.

Just as cars changed the profile and number of customers an ordinary retailer could hope to reach, on-line selling dramatically alters the potential market of today's retailer. Now even a tiny start-up has a global reach, as Mubashir Cheema knows. Late in 1992 Cheema was a college student looking for a particularly hard-to-find, high-performance modem. When he finally located a distributor of the desired unit, Cheema decided to take a risk: he purchased an extra 18 modems. Soon, as he was peddling those modems over the Internet, Cheema realized that he was in business.

Sparco Communications today sells a lot more than modems, and at least two-thirds of its customers are outside the United States. Cheema is proud of the company's 49,000-item Internet catalog, which represents a wide variety of computer products. The company has automated E-mail and a World Wide Web server, so Sparco's customers need never interact with a person to get product and price information or place orders. Cheema, in turn, orders electronically from several of the distributors whose products he represents.

Sparco maintains almost no inventory -- just a few of the best-selling products. Four full-time and five part-time employees spend much of their time placing orders with distributors and managing the constantly advancing technology of the Internet. Since many of Sparco's suppliers won't ship overseas, Cheema's staff spends a fair amount of time receiving orders and relabeling the packages for international shipment. Cheema expects that this year Sparco will double its 1994 sales of $750,000.

Advertising Agency
Doug Ahlers, G.M. O'Connell, and Robert Allen
Modem Media, Westport, Conn.
Unlike many other on-line entrepreneurs, Doug Ahlers and G. M. O'Connell didn't stumble into business. They had a plan. They had a vision. They knew the market they wished to target. There was just one problem: they started before that market existed.

Ahlers and O'Connell knew from the start that they wanted their advertising-and-marketing agency to specialize in the new technologies they called interactive media. Their plan was to help clients adapt to the new ways of selling. But in 1987, when the pair launched Modem Media from a Westport, Conn., condominium, interactive media like on-line services were embryonic. Instead of representing clients in the new media, Ahlers and O'Connell found themselves building and marketing on-line shopping malls for the likes of General Electric's GEnie on-line service.

It took a few years of market growth before Modem Media could become the agency for interactive advertising that the founders had envisioned. Today the firm represents and counsels clients like JC Penney, Coors, and MasterCard International in the use of new marketing technologies, such as CD-ROMs, on-line services, and fax-on-demand programs. About 20% of Modem Media's advertising-and-marketing business involves commercial on-line services, and 20% is Internet related. Voice-response, multimedia, and fax-on-demand projects make up much of the rest. The fastest-growing part of the business? "Answering questions about the Internet," O'Connell jokes. But the whole business is expanding: in the past year Modem Media's staff has tripled, to 50 employees.

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