Local dot-coms find ways to survive in an ailing industry
By Rebecca Ray
Customers who call IQ Commerce may be surprised when personnel no longer answer the phone, "IQ dot-com."
Earlier this year, the Saratoga-based digital marketing service bureau reverted back to its original name, IQ Commerce. The company assists customers with digital marketing campaigns.
It had changed its name to IQ.com in 1998, when dot-coms were the rage, business development Vice President Paul Gustafson said. But when dot-coms started to go bust and the phrase "dot-com" began to have a negative connotation, the personnel at IQ Commerce threw out the dot-com part of the company's name.
IQ Commerce isn't the only Internet-related company in Saratoga that has felt the effects of the recession. FastTree, which also changed its name, began to focus on developing a different product.
When FastTree was in its infancy, the founders called it Support123.com. It was a virtual technical support exchange marketplace that matched customers with engineers who could solve their computer problems.
But the company's employees needed to raise a lot of money to get the company off the ground, and venture capitalists and angel investors--private individuals who invest in the early stages of companies--were harboring their money. These investors had poured money into start-ups that were going bankrupt, and the investors wanted to focus on helping these companies get back on their, said John Whitney, who founded FastTree.
Companies trying to attract capital were given less consideration in this economic environment. Given this situation, Support123.com changed its direction. Six to nine months ago, the company's employees stopped looking for capital and began to focus on launching a new product for relatively little money.
Although the Support123.com website still exists and customers can access its services, the company has been putting all its energy into launching FastTree, which serves customers who send group email messages. FastTree provides services such as omitting copied headers and the characters in the left-hand margins in forwarded messages that ensure the messages aren't sent to the same addresses more than once, and tracking which messages spread the farthest and by how much.
Although Whitney said FastTree was a viable product and that users promoted it whenever they used it, since its name always appeared at the bottoms of their email messages, it was too early to gauge it success. Its employees have just begun to market the month-old service and are still negotiating deals with other companies, Whitney said.
Gustafson said that, although IQ Commerce had strong growth through the end of last year, it certainly wasn't growing as fast as company personnel had predicted. The company has had to be more conservative and readjust its growth plans.
KickFire CEO Ken Toren said companies have taken longer--60 days, rather than the previous 45--to decide whether to sign contracts his company, which is located in Saratoga. KickFire, a web-based software company, provides an online project management system, or virtual workspace, for marketing departments and companies. The system allows the users to communicate with their staff members and other agencies assisting them with projects.
Although the recession has affected IQ Commerce and KickFire, it hasn't affected them as much as most other Internet-related companies, said Gustafson, Toren and KickFire media relations director Jim Graham. According to Gustafson, the Internet-related companies that failed didn't pay enough attention to converting brand awareness to revenue.
While these companies focused on attracting customers, they didn't focus enough on motivating customers to make purchases or take actions that could lead to purchases, such as subscribing to a newsletter, Gustafson said.
Gustafson and Graham attributed their companies' successes to their realistic budget and profit goals. During the dot-com boom, IQ Commerce experienced modest growth compared to other companies, Gustafson said. But, he added, a lot of the companies that experienced skyrocketing growth no longer exist.
According to Toren, KickFire has remained successful because it didn't "hire like crazy" during the dot-com boom, and because it has managed its investments wisely and prudently, while still aggressively pursuing new customers.
Surprisingly, the recession has benefited KickFire in that, with the increased number of layoffs, there have been more qualified applicants to choose from, Graham said.
Toren added that the recession has also given companies opportunities to develop partnerships. KickFire has recently partnered with Artmachine, a virtual library of video clips, and Marketfirst, which assists companies with email campaigns. When companies work in tandem, they can combine services and create more attractive products, and customers will make quicker decisions about using their services, Toren said.
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