Hvacr Industry Not Awash in a Sea of 'Dead Coms'
But all is not totally lost. If one judges the state of the dot-com industry from the hvacr point-of-view, not all is doom and gloom.
“We’ve noticed an increase of prospective customers asking us how long we intend to stay in business, a hurdle that didn’t surface until about May of last year, just after the NASDAQ slide,” said Marc Sampson, president and ceo of Hvacjob.com.
“We have invested a lot of money in developing alliances and partnerships with some dot- coms that are no longer in business. Today, we’re much more selective and less reactive with regard to alliance opportunities.
“There are unproven e-models with enormous debt to service. The pressure is on them from Day One. By keeping our debt to a minimum, we’ve continued to fund our growth via a positive cash flow.”
Admittedly, not all hvacr-related dot-com companies contacted by The News responded. Some did not want to comment on their state of affairs. Others could not be contacted at all. Those who did respond, however, are thinking positive about their respective cyberspace future.
Hvacr Websites Coping With The FalloutChris Bradshaw, vice president of marketing for BuzzSaw.com, is optimistic, believing there is a good reason why his website is hanging tough.
“The people who invested in BuzzSaw weren’t typical venture capitalists,” he said. “They looked for long-term growth. The companies that are going to survive are offering good value proposition and solid financial backing.”
Bradshaw said it is important to have a well-defined business model and to “stick to your guns.”
“We haven’t changed what we are doing or our approach to the market,” he said. “We had a realistic view of what it was going to take to be successful, and we didn’t get caught up in expensive advertising models.”
Jeff Kraatz, president and ceo of NetClerk.com, said his website is doing well because it provides a needed service.
“We’ve been providing business licenses for contractors and updates on city licensing,” he said. “We take care of the whole process [of licensing]. Some websites on the government side are failing because their business models may have been flawed. They weren’t serving contractors as much as they were serving consumers.”
Some Are Not Internet DependentBeing a dot-com isn’t a full-time obligation for some companies, such as ACDoctor.com or Permits .com. Both companies use the Internet as part of their overall business model but don’t put all of their eggs in one dot-com basket.
“We are not a true dot-com company. We’re an Internet company,” explained Tom Bowden, president of Watsco, parent company of ACDoctor. “We are different in a multitude of ways. Because of our Watsco customer base, the relationship already exists. We already have a good name in the marketplace.
“Our strength is in the associations we have formed, e.g., an affiliation with CompUSA. We are also growing strongly in search engines. Our site got 400,000 hits in January. We have built a slow, methodical approach to building equity in the marketplace.”
Permits.com also had a strong customer base before venturing into the dot-com arena.
“We had been a permit expeditor before establishing a website,” said Saul Leopold, co-founder. “We have helped contractors get permits, which has always been a paper chase. We have all of the forms on our site, which can be downloaded or physically taken to the jobsite.
“We are trying to survive on our own revenue because the venture capital market is very tight.”
Ensuring Future SuccessSampson said his company is keeping “one eye on the marketplace and the other on doing business the old-fashioned-way, by earning it.”
In other words, “Work hard, deliver a solid leading-edge service at a fair price, and always do what you say you’re going to do,” said Sampson.
BuildNet, a provider of builder management software to the residential building industry, recently cut loose its public relations agency, opting for in-house operations. John Wagner, director of communications for BuildNet, said not to read too much into this most recent development.
“We are 11 different companies that booked over $70 million in gross revenues last year. We spend more money than our income in order to support e-commerce initiatives, the ‘burn rate,’” said Wagner. “We believe that we will be profitable by the end of 2001, provided we obtain more capital to handle the burn funding. It is a tough capital market and people charge a lot for money.
“We will undergo changes this year and get our staff down to a number of employees capable of running our businesses, which should come as no surprise to anyone in the business.”
BuildNet does not depend totally on Web-based commerce. Therefore, e-commerce is a small segment of what the company is all about, noted Wagner.
Meanwhile, Bradshaw said he believes there is light at the end of the dot-com tunnel.
“I look forward to having more competitors because I spend a lot of time educating people, convincing them that we will still be here a year from now,” said Bradshaw. “We haven’t been surprised by what has been happening, but we believe we are offering added value. With 100,000 users, we are feeling good about our business.”
Michael Hobbs, formerly with SupplySpot.com, said his former employer has cut back dramatically and cannot sustain a staff anymore. But he still remains optimistic about the future.
“The backlash against dot- coms will eventually subside and they will emerge as a viable segment of our industry,” he said. “The value proposition is still there.”
Sidebar: Meanwhile, Hughes Supply Cuts E-Commerce Site LooseNot all hvacr-related websites have managed to stay afloat.
Shortly after John Hoeschele, vice-president of marketing for bestroute.com, informed The News that “we are doing okay” and the “fallout for us was mostly sweet,” bestroute.com became a statistic — yes, another “dead com.” Bestroute.com, which had been acquired by Hughes Supply, Inc., specialized in supplying wholesale distributors with hard-to-find products — but no more.
“Our involvement with bestroute.com started two years ago, when we thought the Internet might disintermediate traditional wholesale distribution,” explained David H. Hughes, chairman and ceo of Hughes Supply. “The investment was based on the prevailing expectations at the time that the Web would rapidly evolve as a tool that our customers would use to order material and reduce costs.
“Unfortunately, we have found that this has not been the case to date. Our customers have found the content to be of value, but they are not using the website to order or buy material at the adoption rate we had hoped.
“We believe we are probably years early with this concept [but] the customer still prefers more traditional ways of transacting business. We cannot continue to incur significant operating losses waiting for the projected volumes to develop.”
Publication date: 04/02/2001