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November 8, 1999

FutureWeb:
Accompany Builds Buying Communities

At A Glance:

Accompany
City: San Francisco
Top executive: Jim Rose, co-founder and CEO
Year founded: 1998
Employees: 30
Amount of venture funding to date: $5 million
Business: Aggregates online buyers into groups to receive volume discounts on computer equipment, consumer electronics, sporting goods, and other products
verything about Accompany Inc. exudes "young Web startup." Its headquarters, in a barely renovated San Francisco warehouse, is reached via a loading dock and three flights of stairs. Workstations rest on makeshift sawhorse tables, there are no walls, and anyone over 30 is viewed as a tribal elder.

It's an appropriate setting for a company that's building communities on the Web. But Accompany's communities come together primarily for one purpose: saving money. Sometimes called "the Costco of the Internet," Accompany brings consumers together online for volume discounts on products and services.

Founded a year ago, Accompany launched its service in April and is building its user base on the simple incentive of buying strength in numbers. The more people who sign up to buy products such as PalmPilots, CD players, or golf clubs, the lower the price. Accompany has applied for a patent on its BuyCycle applications that handle the dynamic pricing schemes, such as a user's ability to set a desired price. If the buying volume is great enough to bring the price down that low within a specified time frame, the user has a deal. If not, no sale.

"We're not a retailer or a destination site; we're simply a network," says Accompany co-founder and CEO Jim Rose, who actually looks younger than his 25 years. "We're a lot like Visa, holding together a transaction environment."

Accompany has received $5 million in funding from the blue-chip Mayfield Fund and angel investors--and its business model was intriguing enough to lure Netscape co-founder Marc Andreessen to join its board in July. To build site traffic, Accompany has inked partnerships with portal sites such as About.com and Smalloffice.com, and plans to unveil several others this month. Its product suppliers include Chipshot.com, Electronics.net, TechData, and Philips.

Rose says Accompany's consumer-product focus is just the beginning. He envisions bringing together buying communities for group travel, and even buyers of corporate fleets of cars. Another growth area is "branded" collectives--for example, a BuyCycle group just for Stanford University students or Visual Basic developers.

Accompany's revenue model is a cut of the action--fees of 3% to 10% of each sale. If the purchaser came through a partner site such as About.com, the fee is split with that site. Accompany also sells advertising, and it's one of the few sites that sets some of its ad rates based on what time of day the ad banners appear.

Rose is already thinking ahead to his company's next big thing. The sales, marketing, and consumer-behavior data yielded by Accompany's model will become a lucrative business in itself, he predicts. "If we can tell a bicycle manufacturer or retailer that 10,000 people are willing to spend $400 to $500 for a Trek bike, that's very valuable to them."

Accompany's approach demonstrates the Web's ability to transform buyer-seller relationships. "You no longer have to have the store on the corner on the busiest shopping day to be successful," says Rose. "The Web is all about the creation of value in new and different ways."

continue on to the next company: E-Scan