David Siegel's talk - Nov 97

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Hi John,

Thank you for your warm welcome at the recent Economic Round Table forum. I found David Siegel's talk to be exciting and inspiring. As we agreed, I've provided a summary of David's talk preceded by a brief version of his Verso bio. Please let me know if it will need further editing. I hope you will be able to use this!

Looking forward to hearing from you soon, and to pointing the Webgrrls chapters to the ERT site.

Devora Fishman -----------------------------------------------------------------------

On Wednesday, Nov 26, The Economic Round Table was honored to host David Siegel, founder and chairman of the Verso design agency in San Francisco.

After receiving a master's degree in Digital Typography from Stanford in 1986, David worked at Pixar, started a business painting Macintosh computers, designed some of the country's best-selling typefaces (Tekton, Graphite, Eaglefeather), wrote a book on environmental problems, and has now set out to conquer the Web. His personal site is linked from thousands of pages around the web and won runner-up in the 1995 Cool Site of the Year competition. One of Multimedia Producer magazine's Top100 Producers of 1995, his popular High Five web-design column appears every week. David is also active on several W3C committees defining the future of the Web. David has spoken at many industry events, including Seybold, the Center for Electronic Arts, the Game Developer's Conference, Viscomm West, Bay Area Internet User's Group, and Software Entrepreneur's Forum. His recent book, Creating Killer Web Sites, was the best-selling book in cyberspace of 1996. The second edition of his book is now available in stores and on the Internet.


Is it true that many companies' web sites are revenue sinkholes?

David claims that many companies are spending money unwisely, or are spending more than they're getting in return by way of revenues. But, he says, this is to be expected when we navigate a new medium, and already companies are learning some valuable lessons about how to leverage the Net as both a new distribution medium and as a channel for developing closer relationships with customers. On the implosion of a trapped CD-ROM market, he cited the example of plummeting prices for Microsoft's "Encarta", an encyclopedia on CD-ROM.

Publishing a website is increasingly expensive, yet for every dollar spent on content, 95" is retrieved in revenue. He admitted that an ancillary revenue stream - such as selling books printed on dead trees and going on highly-paid speaking tours - helps.

Online magazines, he says, are highly competitive, with Ziff Davis at the top. Even so, they are still money losers. Wired employs 120 people on site, yet their revenues come from the print side.

The web offers a tremendous amount of leverage. Amazon's "ready-fire-aim" and others' shoot-from-the-hip non-strategies seem to be working. Amazon.com is a year ahead of both Borders and Barnes & Noble chains. Even though they have had to hire 30 people per month, Amazon's revenues are still rocketing upward. Much of this success is due to content affinity and advertising on search engines.

With his own clients, David does employ highly focused customer-centric strategies, although he admits he sometimes "throws stuff at the fridge to see what sticks". Many times, clients have no rationale for budget: What would be the benefit of a web presence? He uses a "catch & release" fishing analogy for the customers that are lured to his clients' sites. Websites and website visitors are constantly in flux; sites must be updated weekly, daily, or even hourly. "Saturated ponds" or super-targeted small web boutiques and fanzines that can support even the narrowest of interest groups, are populating cyberspace at an ever-increasing rate.

Yet one has not to imagine the web as millions of individual storefronts, but perhaps as a huge cybermall where at least 30,000 people surf regularly. With connectivity increasing exponentially, the web is a distribution weapon. It is moving quickly from second generation "brochure-ware" to third- and fourth-generation sites that offer users powerful applications, many of which are free, and most are driven by advertising. The IRS, for instance, will soon accept tax returns on secure web forms. The paperless office concept that never really happened a decade ago is now being truly borne out by the web.

As quickly as distribution efficiencies rise on the web, so too do tiers of traditional jobs become irrelevant and go away. An example is the travel industry. Agents are becoming irrelevant now that users are able to find discount fares and make reservations through such sites as discountfare.com or expedia.com. Could this be the industrial revolution at warp speed?

Internet advertising will soon be a $6 billion market according to the Morgan Stanley "Internet Advertising Report" by Mary Meeker. (http://www.ms.com/misc/inetad/). David's philosophy is "you have to give away a lot to get a lot". Visitors are encouraged to navigate to his "highfive.com" site; the top 5 companies with a successful web presence. David's company, Verso, itself has top 1% status of web design agencies.

The art of "knowing your customers" is taking on new meaning. David mentions the recent Peppers and Rogers book, "The One to One Future: Building Relationships One Customer at a Time " (http://www.1to1now.com/aboutus/1to1-future.html). The authors suggest that web businesses can easily set up automatic reminder systems via email or extranets for return customers.

David's take on internet business trends of the future include the following ideas:

 profiling: user info is contained in tiers within the browser which can be released by the user when it is requested, as a replacement for online application forms. Privacy issues arise with this trend as well.

 click-stream analysis: Alexa.com has an accessory, like a cookie, that is added to the users browser to track users' surfing patterns. They can sell premium targeted user information to advertisers.

 auction: Utilities and other legitimate and high ticket products such as cars will be ubiquitous and attainable primarily through online auction.

David Siegel can be contacted via david@verso.com, http://www.verso.com

-- Devora Fishman (devora@wombat.net), December 01, 1997


Having someone post a summary of what transpired at the last meeting is a great idea. Keep up the good work. Thank you Devora.

-- Mimi (mimi@slip.net), December 02, 1997.

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