GuruWatch

A high-tech entrepreneur talks about his newest start-up and what technology can do for small businesses.

In his engaging new book Startup (Houghton Mifflin, 1995), Jerry Kaplan describes how he raised and spent $75 million in an ultimately unsuccessful bid to grow his start-up, Go Corp., into a thriving company selling pen-based computers. Today, he runs a more modest though no less interesting company, Onsale, an interactive retail service on the World Wide Web (http://www.onsale.com) where participants bid for novelty items. He recently spoke with Inc. Technology about business and technology.

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On the risks of high-tech start-ups:
To sell lightbulbs, first you have to come up with the idea for the electrical grid. Understanding that is critical to success in a start-up venture. You have to know what sort of infrastructure has to be in place. I have definitely learned that lesson. This time around, we are creating no infrastructure. We are leveraging off technology that is already in place or coming into place, so we have very low technology risk and high market risk. In the pen-based area we had both high technology risk and high market risk.

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On the nature of the World Wide Web:
Clearly, technology is much more ubiquitous today than it was 10 years ago. And the biggest difference is that computers are now used primarily as a communications medium, whereas 5 or 10 years ago the technology was primarily a computing medium.

The Internet is not inherently best suited to entertainment, but in practice it is turning out to be used that way. The Net is really a new communications medium that will take its place alongside radio and television. And individuals use those media for entertainment. The Web is distinguished by the fact that it's for people who engage their minds while being entertained -- as opposed to people who turn off their minds when at leisure.

Our job is to entertain them and, as a side effect of that, to sell them goods.

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On how the Internet will force businesses to confront customers:
Whenever you get a new medium, you get new distribution channels, new ways to sell, new ways to advertise, and -- in a very fundamental way -- new ways in which knowledge and information flow through society. And those changes are certainly going to have some significant effects. For example, as the Internet changes the way that information flows, it will change the way we do business.

Businesses that were able to sweep things under the rug are now faced with the communications equivalent of collective bargaining. So they need to be aware of the possibility that their customers can locate one another and communicate -- and thereby identify and publicize practices and problems that were previously never brought to public view. [See "Letters from Cyberhell," [Article link].] A great example is the whole flap over the Intel Pentium chip. That would never have happened had the Internet not provided a way for Intel's customers to communicate with one another and exchange information very efficiently.