236 ENTREPRENEURSHIP
ing system for buyers and sellers. At each transaction, buyers and sellers rate their satis-
faction with the other party, and this rating is made available to other buyers and sell-
ers. Trust and security are the keys, but how important is branding? It is important, but
it is not enough to overcome the other things that can go wrong in e-commerce.Organizational Resources. Customers are looking increasingly for timely responses,
informative content, clear displays, and if needed, real people to talk to. It takes coordi-
nation, commitment, and leadership to meet these needs. Internal communication capa-
bilities are essential. A critical organizational capability is a knack for using and organiz-
ing information to create and capture value, exploiting what the Web does best and most
cheaply: collect, arrange, manipulate, and send massive amounts of data. Value creation
and capture on the Web require low-friction distribution, interconnectivity, and viral
marketing—all organizational elements.Financial resources—cash, credit, and access to capital markets—have not proven crit-
ical in e-commerce success or failure. Individuals and institutions may invest billions of
dollars, but the amount invested appears unrelated to survival in the marketplace. In
fact, it has sometimes seemed that an entrepreneur needed only the idea for an Internet
company to generate start-up money. At other times, it seemed that even more money
was needed.
For example, while an undergraduate at Yale, Michael Stern and his colleagues raised
$1 million in commitments to invest in campus Internet ventures. He was a campus ven-
ture capitalist who burned through most of that money with no winners in his portfo-
lio. “I wish we had had more money to put into companies. Ultimately, we would have
done really well.” Or would he ultimately have lost even more?
“Maybe we were fools to give them the money in the first place. They were bright
kids with ideas. We were all suffering from a mania,” lamented Ben Karp of Dagim
Consulting, who was the Yale students’ original backer.
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Of course, financial management skills and financial resources endowment are two dif-
ferent things. With financial skills e-entrepreneurs can competently handle endowments
and manage the “burn rate.” Good financial management can enable a company that is
short on cash to survive long enough to turn a profit or find a partner or investor, while
poor financial management can destroy any company, no matter how large its cash pool.Intellectual resources and intellectual property are the intangible property, knowl-
edge, and skills of an e-venture. As valuable sources of sustainable competitive advan-
tage, they are well worth defending. The leading online auction site, eBay, aggressively
defends what it considers its intellectual property. Smaller auction sites have challenged
eBay, but in doing so some have violated the agreement between eBay and its buyers and
sellers. Auctiva, for example, links eBay’s postings with its own listings, and eBay has
gone to court to stop the practice.
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Other e-commerce businesses also protect their intellectual property. For example,
Amazon.com has patented its “one-click” buying process. Priceline.com has the rights
to the “name your own price” business model. There is even a Web site that will help
investors use statistical tools to value intellectual property.
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One interesting sidelight of the dot-com bubble’s deflation is the devaluing of the