Dot-com survivors – How did they do that?
By Steve Jagler, of SBT
Since the dot-com crash that began in the first quarter of 2000, nearly 5,000 Internet-based companies have been merged, acquired or shut down. Locally, only a handful of
dot-com survivors – companies that generate their revenue almost entirely by providing an online product or service – have bucked the trend and remain viable today.
Combined, MilwaukeeJobs.com, OnMilwaukee.com and WisPolitics.com and their companion sites attract nearly 1 million visitors per month.
Their individual success stories follow.
Indeed, they are the rarest of a breed that reproduced wildly in 1990s and then nearly became extinct almost as quickly.
Although each of the local survivors has a different business model, some common themes can be found among these entrepreneurs’ successes:
1)They are well educated.
2)They offer something of actual value to their Web site customers.
3)They started lean and did not overextend their resources.
4)They operated much like a traditional brick-and-mortar business.
5)They capitalized on the inherent value of the Internet – a fast, simple method of delivering information and ideas.
6)They expanded and added to their Web sites’ core service value as they evolved.
"From the beginning, we have operated like any other brick-and-mortar startup, being frugal, even when the checking account is full. We try not to grow beyond our means and remember our most valuable assets are the people who work with and for us," says Jeff Sherman, vice president of marketing and sales and one of three partners who own and operate OnMilwaukee.com.
The Web site is known locally as THE place to find information about Milwaukee’s restaurant, pub, entertainment and arts scenes.
"Taking a city known for beer, brats and blue-collar manufacturing into the Internet world is no easy task. Attempting to capture a portion of Milwaukee’s conservative and traditional media market isn’t a whole lot easier," Sherman says.
And yet, five years after it was founded, OnMilwaukee.com has survived with a stable of advertisers who see value in marketing their businesses through a Web site that attracts about 330,000 visitors per month.
OnMilwaukee.com is attracting national attention for its design. The Web site won second place in the "Best Entertainment Service" category of the 2003 EPpy Awards last month. The award was presented in San Diego at the Interactive Media Conference and Trade Show sponsored by Editor & Publisher and Mediaweek magazines.
OnMilwaukee.com, with the help of a cash injection from equity investors in 2000, has moved out of a basement to the Webworks Building on Milwaukee’s east side, where it employs 14 people.
Scott Molitor, founder and president of MilwaukeeJobs.com, began with equally humbling resources, but he has taken a different path to prosperity.
Milwaukee.Jobs.com is a job-posting site, in which employers post their job openings, and would-be employees respond to the ads. The Web site attracts about 610,000 visitors per month.
"We strive to ensure that what we offer to our customers is better than what they previously or traditionally used," Molitor says. "The Internet should not be thought of as an ‘ends,’ but a ‘means.’"
MilwaukeeJobs.com has grown from being strictly a Milwaukee site to offering locally customized job postings in 25 Wisconsin markets.
MilwaukeeJobs.com is owned by Molitor’s parent company, Infosoft Group Inc., which is in the midst of robust growth. In fact, over the past two years, Molitor has used the MilwaukeeJobs.com business model to expand and create job-posting boards in all 50 states.
That business model includes buying key domain names in various markets and paying for those domain names to appear near the top of search engine listings when certain words are typed in by people looking for jobs or candidates.
"All of the sites are up and running in all 50 states, but we are really focusing on a select few of the states," Molitor says.
Molitor is in discussions to open another office in South Carolina to enable his company to better serve and penetrate the Southeastern United States.
Molitor says he is on the verge of further ramping up the company. The enhancements, which he says he cannot describe at the moment because he needs to protect himself from his competitors, will result in his firm hiring as many as 15 additional employees by the end of the year.
If On.Milwaukee.com and MilwaukeeJobs.com are fueled by the quantity of visitors to their sites, WisPolitics.com and its companion sites are fueled by quality – as in the quality of the people who visit the sites.
Madison-based WisPolitics.com is an Internet news site for Wisconsin’s political junkies that is becoming more of a media force in the Milwaukee market, given all the recent turmoil in the city’s political structure.
WisPolitics.com has expanded by offering two companion sites, WisBusiness.com and WisOpinions.com. WisBusiness.com covers the state’s business news, and WisOpinions.com collects opinions and editorial essays from various sources throughout the state.
WisPolitics.com’s readers are upscale: About 70% have college degrees, have household incomes of more than $75,000 and own or manage their businesses.
The Web sites are "must reads" among Wisconsin’s political movers and shakers, who pay $425 to $1,550 per year for the sites’ premium content. However, a wealth of information also is available on the sites at no cost.
Jeff Mayers, founder, president and editor of WisPolitics.com, recently has gained substantial momentum. He has partnered for news content with Small Business Times, Madison Magazine and WISC-TV (Channel 3) in Madison.
"We’re a pay-as-you-go operation, and there has been turmoil in state business and politics. Turmoil is good for news," Mayers says.
These local dot-com survivors may be positioned for a rebirth of the Internet, of sorts. In a way, the busted dot-com sector filtered out the pretenders, as those without value or appropriate business models evaporated into cyberspace.
"We believe that 36 months of often painful adjustment have prepared the sector for the next wave of growth along a rapid but more traditional path," notes Webmergers.com Inc., a San Francisco-based company that monitors the industry.
"We have seen a recent rebound of M&A (merges and acquisitions) in the e-commerce niche, as investors rediscover the potential of online services such as travel, employment, ticketing and financial transactions," Webmergers.com states. "We continue to believe that the Internet sector is in the last stages of a boom-bust cycle that has been exaggerated relative to other normal technology cycles. We are also certain that the shakeout is nearly over and that it has cleared the decks for a second wave of rapid, but sane growth that will surprise many observers who have all but dismissed the Internet as a viable tool."
Juen 217, 2003 Small Business Times, Milwaukee
