Seller, Beware: The Buyers Rule E-Commerce
The laws of E-commerce are being written by buyers, not sellers. The future won’t be pretty for companies that don’t start paying attention now . . . Some cutting-edge companies will find ways to leverage this new buyer-centric environment to their advantage . . .
Fortune, November 10, 1997
In addition to the difficulty of filling in our technology team, we had other new challenges to meet. Compared to the nearly infinite data available on the Internet, our previously deep and robust product catalog on CD flattened to a shallow, sparse database.
But however energetic our efforts were, we could only gather information on a couple of thousand products from a few hundred manufacturers. This represented a small subset of the products available. And many of our radiology visitors also wanted information on products that were outside the boundary of the radiology department.
There were several companies that sold comprehensive, paper-based directories of healthcare products, but I couldn’t think of a way that we could afford to pay them enough for them to allow us to republish that information freely to our visitors. In fact, I was certain that they would see us as their competitors.
Then I noticed that these directories used information from the Food and Drug Administration (FDA), the government agency that regulates all healthcare products, and wondered how they acquired their information. It turned out that the FDA website published into the public domain all the information they had regarding all healthcare products. This wealth of information was published in a form completely useless to someone seeking help on purchasing a product, but there was a wealth of information on fifty thousand products from ten thousand manufacturers. I just had to figure out how to get it out of the website in some usable form.
The current company that JP and Alexander were sponsoring, Junglee, made something called a wrapper. A wrapper was computer code that could gather huge amounts of data from websites and then republish it with other data on a new website. I figured that, maybe, I could do something similar.
So nearly every day and evening for a month, I wrote clumsy computer programs to gather, clean and organize this large database of public information. My technical limitations made many of the steps manual, mind-numbing ones, but in the end, I was able to create a pretty good set of data to add to our site. I was nervous that the huge amount of data might slow down the site, but it didn’t.
I sent the updated database to our developers and waited anxiously to see the results through our website. Suddenly, with a simple search on our site, anyone in the world could get information on nearly every healthcare product available.
Playing with the search engine, I was able to find just about any conceivable product. And I wasn’t the only one. Due to Todd’s ability to make our database visible to the generic search engines, our number of website visitors grew quickly and geometrically.
There was no denying it, Neoforma was suddenly a player in a much bigger world than we had anticipated. We had real muscles to flex.
Now that I had completed this consuming project, and seen its scope, I could no longer hide from the problem of how we were going to live up to our meatier profile. We had so much to do and so little money to support it.
Anni and I were now broke and deeply in debt to my father-in-law. Jeff and his wife were now broke and deeply in debt to Jeff’s father-in-law. Both fathers-in-law had been very generous to have trusted a substantial amount of their money with their daughters’ husbands. We would not have survived without them. Jeff and I had been care-less in using these personal sources of money. Both fathers-in-law had made it clear to us that they expected to get the money back.
Our funding prospects had cozily sheltered for the holidays. And the stock market was jittery. That made investors jittery. It made my father-in-law jittery too. In fact, these jitters made my father-in-law inquire for the first time how far in debt I really was.
He panicked when he realized how close I really was to the edge of survival and became very concerned that he might not only lose his investment in me, but that the equity he shared in our house might be at risk too.
He had a simple solution to that problem. He demanded an immediate payment of forty thousand dollars to reduce my debt to him to acceptable levels.
My euphoria from our new website additions dissolved immediately and was replaced by an equally intense sense of dread.
How could Anni and I come up with that much money when we were completely broke? He was my wife’s father. I did not have the luxury of avoidance.
But, of course, for those who have chosen to risk everything, there is almost always more money somewhere. Isn’t there? At least, that’s what I’d always believed.
The potential of this Neoforma project had simply grown and grown. I refused to allow a little thing like money slow us down. So, Anni and I cashed in our last safety net—the retirement money from my ten years at Varian. The nearly one hundred thousand dollar account would yield just over forty thousand dollars, after paying taxes and early withdrawal penalties.
Now, we just had to figure out how to keep this monstrous database up-to-date.