Internet Superstart Enlists Locals to Battle Giants
BY Jerry Useem
An overview of a Web business that is banking on networking with local businesses to overcome giant competition.
TYPE OF BUSINESS: Publishes community guides on the World Wide Web
HEADQUARTERS: Pasadena, Calif.
FOUNDERS: Charles Conn, 34, former partner in McKinsey & Co.; and Bill Gross, 38, chairman of Knowledge Adventure
CAPITAL: $10 million from investors including Cybercash founder Bill Melton, Goldman Sachs, and AT&T Ventures
KEY COMPETITION: America Online's Digital Cities, Microsoft's CityScape, and AT&T's Hometown Network
COMPETITIVE STRATEGY: Network heavily with the natives to create a barrier to entry
Sure, it's cool that the Internet can access the contents of Sweden's GÖteborg University library, but wouldn't it be a tad more useful if it provided information closer to home, like which local restaurants deliver? CitySearch, a start-up that plans to roll out World Wide Webbased community guides in 30 cities by 1998, is betting that local markets are where the big Internet bucks are to be made.
With a snazzy Java-based interface and a juiced-up search engine, CitySearch helps residents of select cities find everything from listings of community-service opportunities to school-lunch menus. You can summon a map that pinpoints kosher delis near your office or send electronic mail to all 15 furniture stores in town to ask which sell billiard tables. "Ninety to 95% of people's time and disposable income get spent within a few miles of home," says CEO Charles Conn. Developing local content, he reasons, will be key to turning the Web into a truly mass medium.
Problem is, just about everyone in the industry agrees with him. So a host of competitors are poised to storm the same market. But CitySearch has a guerrilla-style battle plan: infiltrate cities before competitors do, co-opt the populace by hiring locally, then mobilize the indigenous powers-that-be to provide content for the Web site. "We're making CitySearch a community project they have ownership in," says Conn.
CitySearch went on-line with its first community guide, for North Carolina's Research Triangle area, in May. The Research Triangle office, headed by the former manager of a local newspaper, Beth Deacon, has tapped into the region's networks of power. Her staff of 40 has included a Chapel Hill city councillor and a "community content manager," whose sole task is to schmooze with local organizations. And rather than rely on selling banner ads to national advertisers, CitySearch's "Internet business advisers" approach local merchants and offer to create home pages for them on CitySearch's site for less than $250 a year. The commercial response so far has been strong: the Research Triangle site amassed 1,000 tenants in its first two months of operation.
That grassroots content generation may give CitySearch an edge over America Online's Digital Cities, which mostly aggregates and repackages information from its far-off command center. When it comes to sheer promotional firepower, however, the start-up is clearly outgunned. AT&T is purported to be investing $100 million in its own Hometown Network, compared with CitySearch's modest war chest of $10 million, and Microsoft will undoubtedly use its enveloping presence to martial computer users to its CityScape sites.
But an undaunted Conn believes he can get his ground troops well enough ensconced to withstand such marketing bombardments. "A small company with the right local partners can build a whole lot of brand," he says.