Mind your own business at marketplace
AT the end of 1998, two FT.com executives were having a drink at the bar of the Pudong Shangri-La hotel in Shanghai, lamenting the difficulties of doing business far from home. Almost two years later, Donal Smith and Jonathan Schmidt are about to launch eCountries, an Internet business designed to address those complaints.
As media executives scratch their brains trying to turn their content-rich sites into moneymakers, eCountries may have outfoxed the opposition. ECountries is a site that provides news and analysis about 150 countries. As with most publishers, the information comes free of charge .The site consists of profiles on countries from Austria to Vietnam, and up to date news feeds.
Marketplace seeks to take the hassle out of the international transactions, sparing companies the trials and tribulations that afflicted Smith and Schmidt during their deal making for FT.com years ago. Matchmaking has proved to be a successful formula for first Tuesday and eCountries has taken the concept further by adding a global dimension.
"There is a large volume of international professional services that gets traded," Smith says from eCountries’ London Headquarters. "But the market is very disaggregated. The Internet is a fantastic way of introducing buyers and sellers to each other."
Say a British company needs a translation of Bulgarian telecommunications legislation in a hurry — an actual request that came to eCountries last week. The company fills a form at the eCountries site and eCountries will try and come up with appropriate matches.
If the transaction is consummated, eCountries takes a cut of up to 10 per cent of the fees. Transactions are expected to range from $ 7,050 to $141,000 and eCountries is counting on commissions to make up at least half of the company’s revenues.
Others have spotted the potential for business matchmaking via the Net. Business.com and Work.com are doing something similar in the USA. The two American companies have constructed directories organised around business topics and plan to add partners’ services and news feeds around them.
But eCountries has its eye on the global market. With cross-border trade growing, eCountries believes there is plenty of scope for its venture as companies seek out reliable professionals in the countries in which they are doing business.
Building up a database of service providers from accountancy firms to law firms was tough at first. It took six months to sign up the first supplier, but then the momentum built up and eCountries now has about 400 service providers in its database focusing on four areas: legal translation and market research; recruitment; property and insurance; and financial services. When a client posts a request on the site, it will get at least a global and a regional player.
Utmost care is taken to vet the companies for the marketplace. Of the 400 Russian companies suggested for eCountries’ marketplace, only 50 survived the cull. In the most important part of the vetting process, a candidate that wants in has to provide references from three companies with which it has done business.
Clients "are entering a walled garden for vetted suppliers," says Smith, 38, who sold a broadcast monitoring business to Pearson in 1995 for $5.64m and then went on to run the company’s FT.com subsidiary.
Schmidt, 36, founded Asia Intelligence Wire and ran the Asian division of the FT. The company expects to break even by 2002. Investors like the look of the top team, which includes Michael Elliott, the editor in chief, who jumped ship from Newsweek.
ECountries undoubtedly has hit upon a good idea. The keys to success will be the thoroughness of its vetting process to keep out less than reputable companies from its database and whether people use the service. It could be cheaper and easier to conduct searches on the Net and call up a few local companies, although there is no safety net as with eCountries.
But Elliott had no qualms about joining the new venture from the safety of Newsweek. "I sort of thought, if I don’t make the leap into something new now, I never will. I’m having a blast."
— By arrangement with The Guardian