Doing business online – advise from the internet pioneers on what not to do

October 18, 2007

By Jeffrey Gangemi

Marcel Legrand, senior vice-president for strategy and development (Monster, founded in 1999)

Advice: Don’t get burned by user-contributed content. It’s tempting to create viral, open-source information, but there are issues around liability and the truth of the data. If Monster allowed people to create career content, users wouldn’t be getting good, strong info about interviewing and how to write a resume. You have to balance between professional and community content.

As a young company, it’s tempting to allow your brand to go all over the place. Don’t let it happen! Be vigilant about managing your brand, so the blogosphere doesn’t tear you apart. You’ve got one chance to come out of the block, so make sure you’re the voice of the brand. Amy Klement, vice-president for products, Paypal (a division of eBay, founded 1998)

Advice: Focus matters — don’t lose sight of your core capabilities. PayPal has been successful by staying 100 percent focused on payments and carefully building its expertise over the last seven years. [Online] payments is a complicated business, requiring a maniacal focus on risk management and fraud. PayPal has built some of the most sophisticated and world-class fraud systems in the industry.

Neil Hunt, chief product officer, Netflix (founded in 1997)

Advice: Don’t believe that you understand the whole business model from the beginning. Plan to fail inexpensively and early. We built stuff quick and dirty, then left a lot of stuff up to customer service reps on the phone. The lesson here is, don’t be afraid to cut corners. If you spend a lot of time building something and it’s the wrong thing, then you’ve wasted a lot of resources. As we grew, we knew that we’d need Web site components that could scale hugely. We couldn’t be too attached to technology; we had to be prepared to switch and change.

Konstantin Guericke, co-founder and vice-president, LinkedIn, founded in 2003

Advice: Don’t have a bunch of promotion and marketing fluff on your page. Just saying you’re the best doesn’t mean you’re the best. Customers want to know how much it’s going to cost, how long it’s going to take to get to them, and if they’re going to get good service.

Don’t take up screen real estate that’s not actionable, useful information. Don’t make them click too much or make it too hard to find products. If they don’t find what they want from the home page, they’re going to click to the next site. They’re expecting convenience. Make a compelling offer, because customers on the Internet are expecting a deal.

Ben Nelson, general manager, Snapfish (a division of HP, founded in 1999)

Advice: Don’t chase other customer segments before you’ve won your primary. From the day after we launched, we’ve had pressure to go beyond ‘Emily,’ the woman whom we consider to be our core customer. If we solve issues for our busiest, highest-volume user, how likely is it that we’ll get our fair share of the rest of the market? High.
Don’t hire too quickly!

Dwayne Stradlin, president, Hoovers online (a division of Dun & Bradstreet, launched in 1994)

Advice: Avoid anything that doesn’t focus on the unique thing that your company does well. Protect it, invest in it. The other thing is to focus on scaling — small companies sometimes run into a wall. They can’t scale.

Clarence So, senior vice-president for marketing in Europe, the Middle East, and Asia, Salesforce (founded in 1999)

Advice: Don’t let potential investors throw you off what your gut is telling you to do. As the entrepreneur, you’re defining the market. The entrepreneur is the person with the passion and vision that started the company.

Don’t waste time focusing on anything that’s not your company’s core competency, like installing software. I would encourage small companies to adopt business Web applications before installing traditional software. Your technology should support core competency in simple, easy-to-use, easy-to-adopt fashion.

Melissa Payner, chief executive officer, Bluefly (founded in 1998)
Advice: Don’t do something that’s already well covered or already exploited in the marketplace. If you’re the small guy, you’re not going to come in and get noticed unless you have something different. We made sure that we identified our focus from a brand perspective. It wasn’t like any designer could be on Bluefly. There was trust established that it would the “in” designers and [the] “right” designers and would [follow the latest] trend. We were arrogant about who would be on Bluefly. Once you decide, you have to be true to it.

Sally McKenzie, senior vice-president and general manager, Expedia (founded as a division of Microsoft in 1995 and spun off in 1996)

Advice: Don’t assume your customer shops like you do. You need to be sure to look at everything from your customers’ perspective — to understand the consideration factors and the decision process they go through, as well as what tools, information, and services they need along the way. In listening to and observing our customers, we’ve learned that their shopping behavior varies depending on the reason they are traveling and the type of trip they are planning. This is especially true in the early stages of travel planning. A business traveler who knows that they need to be in New York next Thursday by 3 p.m. will shop one way, while a couple planning time off from work to de-stress in a warm, sunny beach destination will go through a very different process.

Mark Floisand, director of worldwide direct commerce, Adobe Systems (founded in 1982)
Advice: Evidence-based decision making is critical to successful ecommerce; avoid rash decisions based on gut feeling alone. E-commerce leaders have the technology, scale, and data available to them to do rapid testing, learn quickly from it, then implement or adjust as necessary. To not take advantage of this powerful, rapid feedback loop, is to miss a major strategic advantage of the online channel itself.

Jeff Glueck, chief marketing officer, Travelocity (founded in 1996)

Advice: Don’t forget your economic engine. Figure out where your margin is coming from, in volume and unit margin. Before Travelocity’s turnaround, we failed to drive revenue growth, because we were addicted to one vulnerable business model — commission from selling airline tickets. We realized that there was more money to be made from other products like trip packages, rental cars, and other things.

Don’t forget the human element. Part of our revival was promising consumers that there are real human beings on the phone, in case they needed help. The human trust and expertise — we layered that onto online software.David Filo, chief “Yahoo” and co-founder, Yahoo (founded in 1994)

Advice: It’s important to never lose sight of your original goal. When Jerry and I founded Yahoo we were focused on making it easier for users to navigate the Web. That’s still our goal today. Our users continue to be at the core of everything we do.

Jim Buckmaster, chief executive officer, Craigslist (founded in 1995)
Advice: Don’t do what users don’t ask you to do. If you want to control your own future, don’t accept outside money, like from VCs. Don’t do marketing or advertising. As a startup company, those are some of the costliest things you can do. Those can chew up an enormous amount of money.


The Monster Dilemma

October 18, 2007

Posting jobs on the Web is easy. It’s sifting through hundreds of resumés that’s a pain.

For business owners plagued by a dearth of candidates for key job openings, the Web was supposed to provide an ideal solution. Job-search sites like can put postings in front of millions of applicants instantly. And newer business-oriented social networking sites like LinkedIn provide similarly fertile recruiting territory, supplying access to the contacts of thousands of people. On the other hand, anyone who’s actually tried to hire someone through the Web knows the truth: You post an ad and are immediately flooded with hundreds of resumés, many from people whose backgrounds are wildly inappropriate. So much for the Web making things easier. It’s enough to make you long for the days of print newspaper ads and snail mail.

But just as technology created the problem, newer technology aims to solve it. A new generation of hiring tools promises to screen out inappropriate applicants, allow the suitable ones to put their best foot forward, and even hunt down good candidates who haven’t applied. As these new services get better at these tasks, they may well change the balance of power in the job-recruiting industry and could even redefine the way we think about jobs.

A shot at diverting a river of weak applicants is the chief advantage offered to employers by Protuo, a Woodstock, Georgia-based start-up that launched its service in January. Protuo isn’t only a job-listing site; it also forwards its clients’ listings to some 270 established job-listing sites, including Monster. But applicants can’t respond to a Protuo posting unless they spend seven minutes or so filling out a survey that asks about experience, skills, workstyles, and job preferences. Employers can customize the survey by choosing from a wide field of prepared questions or by adding their own, and they specify which responses get a candidate’s resumé past the screen. Has the candidate managed a technical project? Is he or she willing to move? The approach is modeled, to some extent, on the sort of compatibility gauging one encounters on a matchmaking site like eHarmony, notes Jennifer Gerlach, Protuo’s co-founder and vice president of marketing. Gerlach went through the dating process on eHarmony just to research the technique. “I learned a lot,” she says. “And I met some very, very nice people.”

With online job postings sometimes pulling in more than a thousand applicants, the ability to winnow the flood could mean the difference between being able to retain control of the hiring process and having to bring in a professional recruiter–at a typical cost of $30,000 for a midlevel hire. The time and expense of dealing with a huge influx of resumés is all the more frustrating because much of the flow comes from online applicants who indiscriminately bombard hirers with resumés. You can try a keyword search on the resumés to narrow things down, but applicants have learned to load their resumés with them, often by pasting in phrases from the job posting. Even LinkedIn has suffered from inflation, as many users aggressively build networks of people they don’t really know in order to make themselves appear better connected. “There’s no value in a lot of these contacts,” says LinkedIn user Chris Knudsen, who heads business development for podcasting company Podango in Salt Lake City. “It can just be someone whose card you got at a trade show.” (A LinkedIn spokesperson commented via e-mail: “Anyone can join the LinkedIn network; however, the quality of your own personal LinkedIn network is the responsibility of each individual.”) But a well-designed survey, contends Gerlach, allows users to skim the cream.

Fred Donovan, who runs Donovan Networks, a seven-employee computer network security firm, has been flooded with applicants responding to previous postings to and other online job boards. He is currently conducting a Protuo search and likes what he’s seen so far. “I can specify that I want to see only resumés from people who say they have 10 years’ experience in negotiating sales and are familiar with the software development process,” he says. “I’m seeing a small, better-qualified subset of the applicants.” There must be something to the idea. Other hiring sites, including Market10, Jobster, and Taleo, are introducing their own approaches to automated candidate screening. And Monster is doing the same, making available–for a fee that adds about 20 percent to the cost of posting a job–the ability to direct applicants to a questionnaire designed to rank the suitability of candidates.

Sure, candidates can try to game these surveys by being less than truthful. But Gerlach insists that surveys can be designed to stymie such people by asking questions that don’t have an obviously right answer–such as whether the person prefers to work independently or in groups–and by warning candidates that they can be rated as overqualified. Protuo, which costs hirers $44 to $295 a month depending on the number of jobs they’re posting and is currently free to job seekers, also offers applicants a chance to do more than post a resumé. The firm invites users to create online portfolios that can include whatever documents, photos, videos, or other material that best represents that person’s career to date. (Monster is currently testing a similar capability.)

ZoomInfo, in Waltham, Massachusetts, takes a different approach. It assembles profiles of potential job candidates from all available online data, whether or not they’re looking for jobs. Starting with the same techniques that Google uses to gather Web data associated with a person’s name, ZoomInfo adds the significant additional step of crunching the results to pull out the most relevant information, weed out data referring to other people of the same name, and assemble a professional profile. ZoomInfo has an R&D team of 35 working on the technology. So far, the company has assembled some 34 million profiles, and as far as I can tell, most of them are fairly informative and accurate. (Check out your own name to put it to the test.)

But somebody has to pay for all those scientists, and that somebody is you. The company charges $5,000 a user per year for the ability to dig up personnel profiles by company or industry. It sounds like a lot, but ZoomInfo’s COO, Bryan Burdick, notes that if you get the right candidate for a single vacancy, the price is one-sixth that of using a recruiting firm. The company also offers less expensive, more limited searching capabilities aimed at smaller companies, as well as free access to searches on individuals. Many major executive search firms, along with some 500 other corporations, already use ZoomInfo, claims Burdick. “I can find personal information, professional backgrounds–and, sometimes, damning evidence–on tens of millions of people without having to go through 1.5 million Google hits on each one,” says John Boehmer, managing partner at executive search firm Barlow Group in Norwalk, Connecticut.

Boehmer is quick to point out that as ZoomInfo-like services get better, and more companies get comfortable using them, corporate hirers won’t need professional recruiting firms like his to turn up candidates. “It’s commoditizing the front end of what we do,” he says. “Eventually, everyone will know where everyone is and how to get hold of them, so we won’t be able to charge for identifying and contacting candidates.” Search firms will still be valuable for assessing candidates, he contends, though he acknowledges that new e-hiring systems could eventually eat into that end of the business as they get smarter and have more online data to work with.

For that matter, it’s easy to imagine the not-all-that-distant day when online tools make it so easy to find people to fill a specific slot that the notion of permanent jobs becomes irrelevant for many positions. Why hire a manager for years when you can find a new one with exactly the skill set needed for the precise tasks at hand? That’s not necessarily bad for employees: Think of an economy where top employees are constantly being sought out and bid over by companies that recognize them from their Web trails as the perfect short-term solution. And talented employees would be just as smart about whom they choose to work for–using similar services to weed out companies that aren’t good matches for them. You’ll want to treat those people well. If you don’t, and they post that fact online, it could haunt you for a long, long time.