July 24, 2000

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The Wilder Side:
E-mail Marketing Smartens Up

E-marketers who capitalize on innovation will score best mail response rates

By Clinton Wilder

ne of the Internet industry's greatest rallying cries is "No government regulation." Whenever the specter of federally mandated privacy protection rules or (gasp!) taxation of E-commerce sales rears its head, dot-commers quickly close ranks. "You'll kill the golden goose of the New Economy," they cry. "What has government ever done for business except screw it up," they plead. Then there's everyone's favorite, "Most politicians don't even use the Internet, so how can they be trusted to make decisions about it?"

It's been so far, so good for the advocates of laissez-faire in high tech (unless you happen to work for Microsoft, but that's another issue). The House of Representatives passed a 5-year moratorium on new Internet taxes, Congress seems far from passing new privacy laws, and Al Gore and George W. Bush clearly want to be seen as friends of E-business. The Internet industry has plenty of reasons to feel confident about continuing to get its way on Capitol Hill and in the statehouses.

But that confidence also stems, I fear, from assumptions born of arrogance and hubris. It's not only the arrogance and ego of great financial success common to any era. A new form of haughtiness unique to many of the New Economy mavens has emerged.

Silicon Valley culture has always viewed entrepreneurship as more than creative vision and hard work; it's an almost religious sense of mission. When Steve Jobs lured John Sculley from PepsiCo to Apple in the 1980s, he did so with the legendary question, "Do you want to sell sugared water for the rest of your life, or do you want to change the world?" Many of today's Net workers honestly believe they're changing the world--beyond Jolt cola and double lattes, it's what helps sustain their 18-hour workdays. And collectively, the startups and 5-year-old "mature" E-commerce providers really are transforming how the world buys, sells, and communicates.

The problem is that those who are changing the rules of business can easily slip into a sense that other rules--the rules of society and fairness--shouldn't necessarily apply to them. It's no coincidence that many fans of Ayn Rand's objectivism live in Silicon Valley.

Within the industry, E-commerce is almost universally assumed to be a good thing--a view with which I happen to agree. But E-commerce industry leaders are misreading the depth of support for their positions among the American people and the politicians who represent them. The fact is, the tide of the public and media love affair with E-commerce is starting to turn.

Just six months after Amazon's Jeff Bezos was named Time magazine's Man of the Year, Intel chairman Andy Grove told a Congressional panel that he's not opposed to an Internet sales tax. A grassroots lobbying effort in support of Internet taxes is growing, reports the Wall Street Journal, from such traditional business people as an Oklahoma apparel seller and a Texas shopping-center developer who has considerable clout in Congress. And the Federal Trade Commission voted 3-2 to recommend new Internet privacy legislation. Finally, concerns about personal data on the Net are polling off the charts as an election-year campaign issue.

In this atmosphere, industry arrogance could be suicide. I've laughed with everyone else at Sun Microsystems' chairman Scott McNealy's deadpan wit, but his infamous crack, "You have zero privacy anyway--get over it," isn't going to sit well as an industry policy position.

Two months ago in San Jose, the Better Business Bureau of Silicon Valley hosted a half-day Summit on Ethical E-Commerce, the first of its kind. As speaker after speaker sounded the theme of opposition to privacy legislation, an aide to a California state legislator spoke from the audience: "People in the industry continue to define themselves by what they oppose," he said. "When you do that, you're opening the door for legislators to define the issues for you."

That's what many Internet companies fear the most. Will industry executives turn out to be their own worst enemies? Without a little dose of humility, they will. The recent political and public-opinion message to the E-commerce industry is clear: You're doing some very, very good things, but you're not the saviors of the world economy, entitled to a free ride. Get over it.

Clinton Wilder is InformationWeek's editor at large, covering E-business. You can reach him at cwilder@cmp.com

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