March 16, 2001 11:45 AM PST
Business.com rides the shakeout wave
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Winebaum's credentials as a die-hard dot-com booster were established in 1999 when the Internet incubator that he co-founded, eCompanies, paid $7.5 million for the Business.com domain name and built an ad-based Web site around it. At the time, the purchase underscored the blind optimism of the Internet sector, where even small advantages such as an attractive Web address could spark outrageous bidding wars.
These days, even Winebaum admits times have changed, offering a cautious but optimistic long-term appraisal for his own company and the market.
"Is it worth it yet? No," said Winebaum, who spends most of his time working as chief executive of Business.com. "But I do feel that over the long haul it will be worth our investment, and it's too early to tell right at this moment anything."
He said that beyond the temporary market swings, the Internet represents a once-in-a-lifetime opportunity for those that can survive both the highs and the lows.
Winebaum knows the pain of the downturn firsthand. In February, his company slashed 25 percent of its work force; it now has a staff of 102 employees.
Unlike some, however, Business.com is still in business for now, essentially offering a search engine for business people looking for more information about companies or industries.
The company is living on $61 million in funding secured last September. Although Winebaum refused to discuss finances, the company has billed the recent reductions as a means to reach profitability by mid-2002.
That could be a tough deadline.
Over the past year, some of the biggest Web destinations have incurred massive losses in stock valuation because of revenue cutbacks from the online advertising crunch. Giants such as Yahoo have drastically reduced revenue estimates, a longer list is filled with start-up dot-coms that have folded from lack of funding, and the chorus of online advertising critics is growing louder. Even Walt Disney's Go.com, which Winebaum once ran, has folded the portal and reinvented its site.
"It's a buyers' market right now, and it will continue to be for a while," said Patrick Keane, an analyst at Jupiter Research. "This is an epidemic facing all media right now--people are pulling back their budgets, and they're pulling back pretty hard."
Although Winebaum pushes away from labeling Business.com as a portal or a destination, the company is in the same ball game for online ads. The company's primary source of revenue stems from different forms of advertising, such as targeted ad banners, e-mail lists and onsite offers.
Today, Winebaum is looking far into the future and trying to shield his company from the swinging pendulum of the market. He said he thinks the Internet industry is going through a blip, a natural snap back from the hype and irrationality during the bubble days. Once it emerges from the storm, it will be a medium like no other in history.
Once a staple of dot-com excess, Winebaum is keeping the glitz low and staying away from big-budgeted branding campaigns. Business.com will relaunch its site with more features in April, but don't expect to see any flashy TV ads for the revamp. Instead, the company will continue to rely on word-of-mouth, strategic listings in other search engines, and linking agreements with some of its content partners.
In the meantime, Business.com will continue to play the numbers game. Editors have profiled nearly 45,000 companies and have created a taxonomy of 25,000 topics and categories. By the end of March, the site will log 1.8 million visits for the month and anywhere between 1.2 million and 1.5 million unique users, according to Winebaum.
The days of paying $7.5 million for a domain name have been overshadowed by today's economic malaise. Still, Winebaum has no regrets for the high price tag of the times.
"People have every reason to question the business models, to question portals and the deals that were cut, and to question their efficacy," he said. "This is not something that gets solved overnight."
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