March 27, 2000

Printer ready

Online Marketplaces:
Insiders Are Key For Boats.com
Industry pros in key positions lend credibility to marine marketplace

By Clinton Wilder

he executives at Boats.com Inc. see their market every time they look out the window. The waterfront office of the forthcoming marine-industry Web exchange affords a terrific view of the people the site hopes to serve: yachtsmen out enjoying a sunny California afternoon sailing on an idyllic blue bay, and boat sellers, brokers, and outfitters whose cramped offices crowd the weather-beaten dockside buildings on San Francisco's Embarcadero.

Inside the startup's second-story suite on Pier 38, construction is the order of the day. While Boats.com's business strategists and technologists are building the relationships and infrastructure they need for the marketplace's launch this summer, renovation crews are busy working with drills, jackhammers, and buzzsaws.

The journey from vision to completed construction of a Web marketplace is a challenging and sometimes treacherous one. Like many other marketplace operators, Boats.com says it wants to bring more order and efficiency to a highly fragmented industry. The $30 billion marine industry in the United States includes some 40,000 businesses, from single brokers selling a dozen boats a year to large global powerboat, sailboat, and engine makers such as Brunswick, General Marine, and OMC. And it takes a lot more than a slick Web site to change the way they do business.

Boats.com has engaged Web integrator Scient Corp. to handle most of its technology construction chores, while company management focuses on building the most important component of any vertical marketplace: credibility. "Who are we to come tell these companies that there's a better way to do things?" says founder and CEO Rolando Esteverena. "We have to get through the credibility door, and the only way to do that is by having industry insiders in our company."

Esteverena, a 56-year-old "serial entrepreneur," readily admits that he's not one of those insiders--despite being an avid sailor. That's why he has people on board such as vice chairman and chief strategy officer Stuart Johnstone, inventor of the popular J-boat racing sailboat, and VP of business development Peter Van Alstine, former operator of a yacht delivery and charter service in Maine. When Esteverena called the CEO of a major marine manufacturer for a meeting, he got an appointment three weeks later. When Johnstone intervened, the pair met with the CEO the next day.

The same lesson for marketplace operators is playing out in industry after industry. Without exception, the Web marketplaces gaining critical mass are the ones with insiders on board. "Every company believes it can win on execution and vision," Van Alstine says, "but I'd rather be part of a company with structural advantages inside the industry. This is a relationship business. If you just have five Harvard MBAs building a portal for it, that's not going to work."

Boats.com targets businesses and consumers, but the consumer side has a lot more in common with typical business-to-business transactions than with consumer products such as books, music, or even automobiles. Every boat sale is a highly customized transaction that may involve manufacturers, accessories providers, brokers, dealers, finishers, and providers of financial and extended-warranty services.

"With the typical car sale, you have two pages of specs and one page of options," Esteverena says. "With a boat it's just the opposite. Every sale is specialized and very information-intensive. There's nothing commodity-like about this business."

A boat purchase is perhaps most akin to buying a home--at least in terms of the number of players involved in each transaction. Like HomeBuy.com and other real-estate Web sites, Boats.com's goal is to bring a lot of those players together in one place on the Web, cutting transaction time and hassle for buyers and suppliers. No one expects buyers to purchase a boat sight-unseen, but Boats.com is betting on the value of a single point of entry to product catalogs and services listings.

Boats.com follows another rule of the Web marketplace game: You can't do it yourself. A self-described "congenital outsourcer," Esteverena launched the company in September and immediately began interviewing about 10 professional-services firms before choosing Scient two months later.

The company won't share many of its specific infrastructure plans at this early stage, but scalability is at the heart of them. Boats.com plans a site that can handle much more than its current traffic of 12 million page views a month. "A lot of sites get into trouble when they, in effect, plan for failure," Esteverena says. "For capacity of what your site can handle, you need to plan to succeed beyond your wildest imagination."

continued...page 2

Illustration by Dennis Harms
Photo by Alan Blaustein

Back to This Week's Issue
Send Us Your Feedback
Top of the Page

---