Survival of the Fastest

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McLemore: Maybe, maybe not. Certainly, many entrepreneurs -- myself included -- originally thought that the quickest way to build an E-commerce company was to farm out distribution to a third party. The idea was to focus on company growth without the distraction of a land-based-style infrastructure. But without control over distribution, it's tough to control quality. Last holiday season, all the sites that served their customers well did their own distribution.

Inc.: Last question: What lessons have you learned about business on the Internet?

Owen: That the more things change, the more they stay the same. John is right: customer service is still the basis of loyalty. And outstanding execution is still as important as a good strategy. Profits and basic economics win out. Companies that forget those things in the belief that the paradigm has changed for Wall Street do so at their peril.

Briggs: It's all about trust, too. Consumers need to trust the brand they are buying and believe that their on-line purchases will be safe transactions. They need to feel comfortable that personal data will not be sold to others and that they won't get spammed by giving their E-mail address. And they need to know about shipping costs, product availability, and return policies up front.

Schwartz: Ultimately, it's all about people. I think we've learned that people don't do everything for entirely rational reasons. And we need to understand real human behavior better before plunging too far into new business models.

McLemore: One thing is sure -- the Internet waits for no one. In a chaotic world with countless opportunities, fast enough sometimes isn't. If you don't move quickly, your competitors will.

Mark Hoffman is the CEO of Commerce One, a business-to-business software company based in Walnut Creek, Calif., whose products handle electronic procurement from requisitions through payments. Launched in 1997, Hoffman's company made a Wall Street splash: on July 1, the day the company went public, shares of Commerce One nearly tripled in value, soaring from $21 a share to a high of $61 a share.

John Briggs is director of E-commerce production for the Yahoo Network, which entertains 80 million regular visitors. Briggs develops and launches new E-commerce subsites; those produced under his watch include Yahoo Shopping, Yahoo Store, Yahoo Auctions, Yahoo Classifieds, and Yahoo Yellow Pages. More than 2.3 million listings have appeared on Yahoo Classifieds and more than 930,000 auctions have gone gavel to gavel daily on Yahoo Auctions.

Thomas Malone is the Patrick J. McGovern Professor of Information Systems at the MIT Sloan School of Management. As founder and director of the MIT Center for Coordination Science, he studies ways in which technology can help people work together. In a 1987 article, the prescient professor predicted many of the major developments in electronic commerce, including electronic buying and selling and the use of intelligent agents for commerce.

Evan Schwartz, a contributing writer for Wired and an occasional columnist for the New York Times, is the author of the business best-seller Webonomics (Broadway Books, 1998) and a new book, Digital Darwinism (Broadway Books, 1999). In the latter, Schwartz argues that the Web is undergoing a process of natural selection, in which weak ventures are being replaced by strong and adaptable ones.

Greg McLemore is president and CEO of WebMagic Inc., an incubator based in Pasadena, Calif., that dreams up -- and finds funding for -- Internet ventures. McLemore was the force behind Toys.com (which was acquired by eToys Inc. in 1998) and Pets.com, the on-line category leader for pet products, information, and services. McLemore started his first business, in retail computer supplies, when he was just 14 years old.

Richard Owen is vice-president of Dell Online. He oversees the company's fast-growing Web business, which includes running separate sites for different kinds of customers (big businesses, small businesses, and consumers). Of the 30,000 products that Dell sells, Owen says, more than a quarter are sold over the Web, generating more than $14 million in daily revenues and 25 million site visits per quarter.

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