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Selling e-normous change: CMU speakers explore the possibilities of electronic commerce

Sunday, February 13, 2000

By Ken Zapinski, Associate Editor/Business

Clearly, doing business on the Web is not nearly as cutting-edge as everybody seems to believe. How can it be, when it is celebrated by that oldest of establishment exercises, the official government proclamation? The world will little note, nor long remember, but last week was E-Commerce Week in Pittsburgh as declared by Mayor Murphy.

The designation was a good excuse for Carnegie Mellon University alumnus Bill Seibel of Internet consulting firm Zefer Corp. to return to campus with other e-commerce experts to ruminate on the e-commerce phenomenon.

What Seibel had to say may have made some of the students striving for CMU's new master's of science in electronic commerce wondering why they were shelling out the $38,000 in tuition.

"Eighty percent of you have more clear and crisp insights into the Internet than I do because you grew up with it," Seibel told an overflow crowd at CMU's Graduate School of Industrial Administration. The only group with more expertise, he quipped, is high schoolers.

William Seibel, CEO of Zefer Corp., talks with students after his address to the e-commerce symposium at CMU. (V.W.H. Campbell Jr., Post-Gazette) 

Seibel said that oddity is one more way that the Internet is destroying the old ways of the world. When Seibel was in grade school, he said, he knew more about dinosaurs than his parents did. When he was in high school, he knew more about rock 'n' roll. For the first time, Seibel said, "what you know is more relevant and more important than what the older generation knows."

Seibel's own company is testament to that. Zefer was founded less than two years ago by six Harvard Business School students who won a business plan competition with their idea. At about the same time, Seibel, one of the co-founders of Cambridge Technology Partners, was trying to figure out his place in the e-commerce universe.

Could a consulting company such as Cambridge stay on top of e-commerce if it wasn't focusing with laser-like intensity on that single topic? And how could it compete for talent with smaller, pre-IPO companies offering generous stock option packages? "It was easier for me to leave Cambridge and start with a clean sheet of paper," he said.

He had a half-dozen like-minded executives in his group when it bumped into the 12-member Zefer team. They got together last year and raised $100 million in venture capital in 1999.

Zefer now has 550 employees (including 38 in Pittsburgh), was named by high-tech magazine Red Herring as one of the industry's hottest young companies and is preparing for an initial public offering in the next few weeks.

In the early 1990s, businesses used the Internet for little more than presenting online marketing information about themselves. As the Web evolved, its uses became more and more sophisticated. Now, he said, we're on the verge of a change "where we lose the 'e' and there isn't any difference between e-business strategy and business strategy, any difference between e-business and business."

Take, for instance, one of Zefer's clients,, an online reservation system for restaurants in New York and other cities. Customers use their credit cards to guarantee tables, and they are charged $20 if they don't show up or cancel.

"It totally changed the way restaurants were managed," Seibel claimed. And technological advances are continuing.

The site could be used, for instance, to call a customer's wireless phone 10 minutes before the reservation to remind the customer. Or customers strolling down Fifth Avenue could use a Palm Pilot to remotely access Foodline's directory of nearby restaurants. Both Foodline and the restaurants change their business models as they adapt to technology over time.

The Web permits sales techniques that would never be possible in the bricks-and-mortar world, said Monte Zweben, another of CMU's E-Commerce Week speakers. The former NASA scientist founded Blue Martini Software, which develops e-commerce programs that utilize huge databases of information.

A Web retailer, for instance, using information on customers' own interests and buying habits, could set individualized prices for each shopper that are intended to maximize the company's profit margins.

But Web companies need to remember the real world is out there. Retailers can use sites to drive traffic to their stores -- customers could order online, then pick it up at a store.

And customer-service operators should not just answer technical questions from customers who call in because they are having trouble with the site or because they want to return an item, Zweben said.

Customer-service centers should also be selling and marketing to customers. "That should be a profit center or at least a revenue center," he said.

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