an evening with the stars of e-commerce

part 6: Mark Walsh: hard, expensive, proprietary and scary

Thank you. It's kind of surreal being at this table. I'm not sure if I stumbled into a family reunion or I'm on The Truman Show, which is this Internet worldwide broadcast, and for those of you watching us on the Net, it's a lot more fun here than it is where you are watching it.

My company is named VerticalNet. We run 16 sites on the Net. I'll read the 16 names rapidly and I think you'll get the idea. The sites are named Water Online, Pollution Online, Public Works.com, Power Online, Solid Waste.com, Food Online, Chemical Online, Pharmaceutical Online, Hydrocarbon Online, Pulp And Paper.com, Photonics Online, Test and Measurement.com, Medical Design, Computer OEM Online, Wireless Design, Fiber-optics Online and Property and Casualty.com. Each of them has vendor listings and search engines for vendors, news and editorial content, chats, forums, job listings, auctions and e-commerce.

However, I come to you tonight to tell you that e-commerce is a bust. It's a fallacy. Why? Because we keep focusing on markets where any rational disintermediation would win, like flowers, airlines, stocks, books and cars.

In all the places we say we have declared victory, the customer is always ticked off and the seller is always confusing the buyer. Of course e-commerce will win then, because disintermediation is a natural imperative, as opposed to a lot of places we expect e-commerce to win where disintermediation might never occur. E-commerce today will continue to be a bust as long as it is technology-driven. E-commerce in 1998 is just like X.25 online services in 1988. They are hard, expensive, proprietary and scary.

They will never win until we acknowledge one truth about the e-commerce industry, specifically the business-to-business sector of it. Consumers and business users of online services are exactly the same people. They behave the same way. They demand the same value. They insist upon the same ubiquity, utility and meaning for the service. That is because online services are the only technology that have come from our house to our desk. All other business technologies have had the exact reverse direction. We first used a PC in our company. We first had conferencing and transfer buttons on phones at our desk. We first started using FedEx at our corporation. We first used a cell phone or a pager when our company bought it for us. We first used Document Management in the Wang department in 1982 in our steno pool. But each of those products, now, we use as consumers universally and without any thought.

But interactive services—as a way to communicate, to buy things, to join together in cyberspace as a work unit—happened in our den and now we are bringing them to our desk. Because of that amazing reversal, the consumer is actually the person we should be looking toward to drive business-to-business e-commerce.

My example is that EDI and e-commerce will work in the business environment when the CEO sits home one night, and he or she uses it to pay the mortgage, the kid's tuition, the house painter or the credit card bill. They will go to work the next day and say, "Why can't I do this at work?" Those are four different payment channels, four different types of commerce, four different types of money, and all easily done.

I, as a consumer, figure out it should happen, and that it should happen at my business. What we see in the e-business, or e-commerce side for business-to-business, is a cycle of life in cyberspace where content attracts eyeballs, context secures eyeballs—people like me in an industry that I care about. Commerce engages those visitors to try something.

But what wins? Community. Community wins in the business-to-business sector just like it won in the consumer sector. A place in cyberspace that makes you a better business person is a place you will go and a place where you will buy things. The Internet and e-commerce are not about Beany Babies, books and flowers. The Internet and e-commerce are not about EDI standards and video conferencing. What it is about is accelerating and facilitating leads that connect buyers and sellers.

Let me read to you some leads that came through some of our sites in the last 30 days. These are pieces of email from visitors around the globe to individual vendors on our sites. This one, from Lexington, Massachusettes, "I need a price quote on an exhaust jacket assembly to be used in the filling operations of 180 to 320-gallon tote bins with hydrazine. The assembly must cover the bung opening and surround the filling lance completely. It should have a collapsible accordion outer sleeve."

This from France to Chemical Online, "We're looking for a solids level probe capable of localizing the top of a solids accumulation in a liquid-filled vessel, range zero to six feet approximate. Must be able to operate under at least 100 bar and if possible up to 690 bar. Electrical output must be 4-20 mHz, or common industrial communication protocol."

This from Water Online from Canada, "I have a textile dying wastewater treatment recycling project in China. The wastewater has the following specs: COD 650 mg per liter, etc. The new expansion would be 100,000 cubic ml a day. If your company can treat this type of water, would you please send me your technical info with price tags on 20,000 to 100,000 ml a day. I look forward to receiving your early reply. Truly, JCU, China."

This is e-commerce. It is not about disintermediation, it is about reintermediation because, in most business-to-business environments, the middleman adds value. Unlike flowers, unlike stocks, unlike airline seats, unlike books, unlike records, the middleman adds value in the real world outside of these doors. I would suggest that when we study e-commerce, we keep reminding ourselves, it isn't going to happen until we make it easy for all of us to use.

With that, I will introduce the next guest. I have not met Jack before tonight, but I enjoyed sitting next to him because I think he is a core technology guy for what this is all about. He had significant stints at the Electronic Industries Association (EIA), and, as an old X.25 guy like me, spent some time at Tymnet. Those were the days, huh? Selling that 900 baud and 300 baud stuff? He spends a lot of time with the Electronic Funds Transfer Association (EFTA), and you've heard his connections to the rest of the panel. With that, it's my pleasure to introduce Jack McDonnell.

next: part 7: Jack McDonnell: you have to be a little crazy >

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