BizRate.com, provides customer feedback to users on online vendors, and recently signed a deal with Consumer Reports to offer their ratings on Consumer Reports' web site. If you do any sort of online shopping, you might have begun to notice their post-purchase surveys at online retailers.
BK: How did Bizrate get started, and what prompted you to start the company?
FM: I was in business school in '95 when I first became exposed to the Internet and immediately saw it as an incredible opportunity. Here was something that was going to change the world, and I was in a great position to be a part of this.
Why? Well, the net was going to fundementally change the world, but the people that understood this (the techies) were all in the 18 - 25 range and quite unsophisticated / uncaring about the ways of business. However, the world that would be most effected by this change (and had the $$$ to invest in this change) were those in the business world, dominated by 40+ businessmen (and women) without the faintest clue of what was about to hit them or how to communicate with these young "tech-geeks."
What was needed was a liason. Someone who could bridge the gap and bring the geeks and suits together to make something great happen.
Well here I was, a "techy geek" by undergrad training (Math, Computer Science and Economics @ UCLA), and vocation (Systems Integration Consultant -- a euphamism for programmer -- @ Andersen Consulting), getting the training in the vernacular of business at Wharton, one of the better business schools in the country.
I therefore saw myself as the ideal person to bridge this gap between the techies and the suits.
All I had to do was figure out what concept to use. I bascially did just this during my two years at Wharton. In fact, BizRate.com was my thesis project for graduating with an MBA in Entrpreneurial Management. And, my partner and co-founder, Henri Asseily, was a class-mate who worked on the project with me at school.
BK: What's Bizrate's model for revenue, and where do you see the company going in the next year or so?
FM: BizRate.com basically sits at the online point-of-sale (the receipt page of 1700 vendors to be precise), inviting every single customer to provide feedback regarding their experience.
The information is used in two ways that generate revenues:
i) It is packaged and sold back to the merchants and others interested in e-commerce research, as the best marketing research available. Afterall, it is e-commerce research based on direct feedback from millions of online buyers.
ii) It is presented back to the consumers in the form of BizRate.com awebsite that is the ideal place to start your online shopping because it allows you to confidently select vendors based on the experiences of everyone who went before you. The revenue model for this site is manifold, including cobranding of the ratings for third parties such as AOL, MSN, Lycos, Go, etc, select sponsorships, and demand aggregation (coming in q2 2000).
BK: What difficulties, if any, did you find in getting the company started, finding venture capital, and otherwise getting BizRate off the ground?
FM: When we were getting started VC money wasn't as available as it is today. Also, our concept of buyer ratings was a little ahead of its time. Consequently, we had to bootstrap for almost two years (June 96 - May 98) before getting our first round of VC money.
Once we had engaged VCs in discussion, the hardest part of securing money was getting them to actually submit a termsheet. This was accomplished by getting multiple parties involved and letting each side know that there were others interested and "moving fast."
BK: What kind of advice would you give aspiring entrepreneurs in trying to start their own Internet-based startup?
FM: Most important of all: Do it! The hardest part is simply taking the plunge.
My second advice is to leave yourself no back-up plan. This sounds dangerous, but I firmly believe that it increases your odd of success on two fronts: 1) By putting everything / risking everything, you will have all the incentive in the world to make it work. When things don't go exactly the way you plan them, you'll stick it out and find a way through.
2) When you hedge you are likely to be devoting some time to keeping your hedge alive (i.e. the typical version of this is to keep your job and try to be an "entrepreneur by night." Well, guess what: This most likely won't work, because you are drained from your regular job and because you are competing with thousands of people who have risked everything and are working 24/7 on your idea!
Lastly: I would say that right now becoming an Internet entrepreneur isn't even taking such a big risk. I mean, the worse thing that can happen is that your business doesn't succeed right? Well, even in this dismal outcome, more than likely you're left with a ton of Internet knowledge and learning under your belt and are now in position to join another promising Internet start-up!