Kitmondo.com

Reputation

Verifying the credentials of the other party in a transaction is an important step for any buyer or seller. B2B equipment deals throw up specific challenges: deals are frequently international, time critical and of high value. Inevitably, these factors sometimes result in a buyer or seller having to take a very exposed position in order to get a deal done - usually during the grey period between payment and delivery.

Being able to assess the credentials of a buyer or seller before equipment or money changes hands is therefore extremely valuable. But other than providers of financial information (e.g. Dunn & Bradstreet, Experian) there are few resources to turn to if you want to run the measure over a new buyer or seller.

This may be set to change. Michael Arrington reviews a startup called Rapleaf who are launching an online ‘reputation management’ system. The idea is to create an open platform that will allow users to leave feedback on anyone they complete a transaction with. Over time this would become a resource for anyone looking to verify buying/selling credentials of anyone else.

I can foresee plenty of problems ahead for Rapleaf, not least the question of false or malicious feedback submissions, but if they succeed it will be hugely important.  One need look no further than eBay to see how powerful reputation management (the phrase is growing on me) can be. Arguably, its feedback system has been the most important factor in its growth. Amongst other benefits, it has enabled small-scale traders to create “brand” trust on the back of publicly viewable evidence of good service. A reputation previously developed via years and years of word of mouth recommendation can now be achieved in a short – but successful – period of trading on eBay.

However, eBay’s feedback mechanism is directly connected to transactions and exists only to manage reputation within its own marketplace. Rapleaf are attempting to create the same value out in the open. It’s going to be very tough to pull off but I wish them the best of luck.

Miro

(graphic from SiliconBeat)

Google have taken down its Miro doodle. I don’t know if this is a result of complaints made by Miro’s representatives yesterday or simply the end of the doodle’s rotation. Whatever reason, it’s a shame it seems to have caused such bad feeling.

It does seem amazing that Google wouldn’t ask permission before it used a representation of an artist in a commercial context. Especially as it displayed the artist’s work in the most viewed two square inches on the Internet.

On the other hand, Google displayed the artist’s work in the most viewed two square inches on the Internet! How many zillions of Internet users around the world have had their first glimpse of Miro’s work because of the doodle?

I can understand Miro’s representatives being a bit miffed they hadn’t been asked first but, if I was in their position, I think I might have bitten my tongue for a few days and soaked up the global audience.

Hire Education

Terry Gold has posted some good advice for startups considering taking on their first sales person. He describes two types of candidate you should be on the lookout for:

Candidate A: “the New VP spends a lot of time thinking about Positioning. They talk about Executive Selling, Leadership Alignment and Developing Value Propositions. What they probably won't talk about during the interview or after being hired is how many phone calls they are going to make to new prospects every day.”

Candidate B: “the best sales people jumped right in soon after they arrived…on the phone and planning visits pretty quickly.  If they are too afraid to make the calls then they may not have what it takes. The successful people were quick to admit that they weren't experts…and the successful sales people don't try to fake it with customers.”

It struck me these profiles could just as easily describe the “personality” of the startup itself….

Startup A: spends a lot of time at the whiteboard optimising the model, writing the business plan, identifying the target market and planning for growth. It waits until the sum of its knowledge and understanding exceeds its fear of failure.

Startup B: builds rather than plans. It achieves understanding through action. It gets something together, puts it in front of its customers and listens.

Who would you hire…?

Process

Vicki has created a great graphic to illustrate our classifieds distribution process (click on the image for a pop-up):

1. An equipment seller creates a classified advert on Kitmondo.com
2. The advert is distributed to relevant publishers and to Kitmondo.com’s own audience
3. A user completes the “Contact the Seller” form
4. The enquiry is verified by Kitmondo and non-authentic enquiries filtered out
5. A sales lead is forwarded to the advertiser who accesses the user’s contact details

A Very Exciting Day!

The first implementation of our publisher classifieds solution went live on cinamatography.com a couple of days ago and now we're all set to announce it. It looks great, works great and is already generating lead revenue (hurrah!). Thanks are due to Geoff and Jitendra at the Kitmondo end and Tim at cinematography.com for their combined efforts on getting this up on schedule.

To mark this fine day I’ll be issuing the following release:

Kitmondo.com Launches Cost-per-Lead Classifieds Solution for Online Publishers
Startup introduces online classified advertising solution for B2B publishers and announces first partner.

- 8th March 2006 - Online classifieds pioneer Kitmondo.com today announces the first implementation of its cost-per-lead classified advertising solution. Specialist broadcast publication cinematography.com has integrated Kitmondo’s solution to offer a ready-made “Equipment For Sale” section to its audience of broadcast professionals (http://www.cinematography.com/classifieds/).

Kitmondo delivers relevant classified advertising content to publishers of trade or B2B related websites enabling them to create instantly successful classified sections. Uniquely, each classified advert generates revenue on a cost-per-lead basis. When an advertiser receives a qualified enquiry they pay a fee, which Kitmondo then shares with the publisher.

“Classified advertising isn’t working for online B2B publishers. Visit the classifieds section of any major online trade publication and you’ll find few advertisers and little user activity” says Kitmondo CEO Richard Barker. “Online advertisers don’t want to pay upfront charges so classifieds quickly wither and die. By offering cost-per-lead charging, Kitmondo’s advertisers only pay when a customer contacts them, so they’re highly motivated to place adverts.”

Publishers simply choose the categories of equipment most relevant to their audience and the Kitmondo system automatically creates an appropriate XML feed containing the ads. Its cost-per-lead charging system manages the collection of payments from advertisers.

"Kitmondo has thousands of equipment listings that enabled us to create an instantly viable classified section for our specific audience of film and video professionals.” says Tim Tyler, publisher of cinematography.com. “Whenever a Kitmondo advertiser receives a sales-lead from one of our users, Kitmondo pays us a fee. It’s an easy to implement, easy to use system where everybody involved wins."

Still in its beta period, Kitmondo has attracted more than 6,500 equipment classified adverts from advertisers in 44 countries.

Lead Verification #2

The verification issue may also have an increasing impact on how advertisers (in this sector at least) value ppc advertising. With capital equipment advertisers regularly paying $1 a click on Google and applying a reasonable 5% conversion rate (visitor to enquiry), leads are costing $20 a piece. No advertiser will spend $20 a piece on leads like the one illustrated in my previous post. Not for long anyway.

Henry Blodget suggests there may be some advertisers who have already done the math.

We’ve quickly realised that our verification process is a valuable add-on for our advertisers, especially larger dealers who receive multiple enquiries from different advertising sources. The ability to focus resources on the most promising leads is a considerable benefit.

Lead Verification

Having mentioned listing verification in my previous post I thought it would be worth dwelling on the subject of lead verification as well. In many ways, verifying the leads we send to advertisers is even more important for us than keeping the listings clean. In terms of advertiser confidence, it probably takes 5 good leads to make up for a single bad one so identifying fraud, spam and timewasters is a big part of our model.

Here's an example of a bad lead:

Buyer Information:
Buyer Email:      brow****@lawyer.com
Name:      Brown adams
Telephone No.:      +44 207 882 ****
Company :      
Message :      Hi, We are a procurement concern and we specialise inpurchasing preowned goods on behalf of our clients worldwide. We however have and order for the aboveDVW-790WSP and our client is offering to buy these for the sum of € 28900 Please We will arrange to remit payment for purchase to you . a prepaid shipper will come to your home for pickup. Best Regards, Brown....

Although the email address and telephone number checked out, the message tells us enough to put this is down as a fraudulent enquiry.  The ability to pick up on text clues such as specific  shipping/payment terms or price agreement (non of which a genuine buyer would discuss in an initial enquiry) is why we think human verification is so imprtant.

Album of the Week

by Vicki

Brushfire Fairytales by  Jack Johnson

Listening to commercial radio all day kind of turns your brain to mush, but along comes Jack Johnson and he snaps you right back and into reality and out again into a space where you kinda feel like giggling and dancing and clapping. Well what can I say, his music, ah the lyrics, poetry turned to sound, well, it makes me feel, happy. Give a listen to flake, Bubblegum toes, F-Stop Blues, oh what the heck just listen to the whole album. Brushfire Fairytales is my favourite album, but I'd recommend his later works as well, On and On and In Between Dreams. Feel good, easy listening stuff this is.

On Edgeio

I’ve followed an interesting conversation between the founders of edgeio (a classifieds tagging platform), its supporters and detractors.

One of the concerns voiced by the detractors is how edgio will combat spam listings. On the surface of it, anyone with a blog or RSS enabled site can tag a posting with the word “listing” and edgeio will pick it up and publish. So anyone looking for traffic could quickly rack up some link love at edgeio’s expense (“For Sale: Boxed PS3, only $50” anyone??). 

Edgio are keen to acknowledge the importance of listings validity and are implementing various technical measures to try and reduce the level of spam. Mostly however, they seem to relying on their own users to flag any bogus adverts, a feature that is common amongst classifieds platforms. Ourselves included.

It’s a laudable philosophy to motivate the community to ensure the validity of your listings and to keep the spammers at bay. Unfortunately the motivations of the greedy will always overcome those of the fair-minded and so a self-policing strategy will only ever be a surface deep solution. Human monitoring and verification is expensive and full-o-friction but it’s the only way to ensure clean listings.  Put it this way, there’s a reason Craig Newmark is the world’s most famous customer service manager!

Good start to the year

We listed 2000+ adverts with a value of USD$15m in our PCB & Semi category in January alone.

I thought that was a pretty decent number for month 3 so I decided to put it out on a release to the electronics manufacturing press. It's been picked up here:

Online Market Majors on Assembly Equipment

Discontent with content

I picked up an interesting paper from John Battelle’s site investigating PPC advertising and CPA (written by Alexandre Douzet of theladders.com).

As far as I know it’s the first published study of the relative performance of Google search ads against Google content network ads.

I’ve always had a natural aversion to advertising on Google’s content network as it requires me to fly our ads completely blindfold. And, although I trust Google sufficiently to assume they will put my ads on pages with at least some degree of keyword relevance, I have recently decided buying ads I can’t even see is too great a leap of faith.

Is it so difficult for Google to give its advertisers some visibility of the sites they are paying to advertise on?  Without it, I suspect many happy search advertisers will continue to disable content network.

There are simply too many unknowns:

• do any of these sites undermine my brand?
• is my ad being served on pages written in a negative context?
• do I trust publishers on the network not to be clickfraud perps?
• is my ad copy relevant or optimised?

Album of the Week

by Richard   

Imogen Heap's "Speak for Yourself".

Quirky electronica. Very cool.

Keeping it in the Family

Question:
Entering dvd into google.com (from a UK IP address) returns 451m search results. Guess which company sits proudly at position no. 2?

Answer:
www.google.co.uk

Even better, entering dvd into google.co.uk returns www.google.co.uk at no. 1 position.

You've got to feel sorry for all those SEO guys trying to squeeze an extra page position or two from the algorithm....

When is a lead not a lead?

Ken Sonenclar of Desilva & Phillips has published an interesting white paper on the online lead generation industry. Although he approaches the subject from a M & A perspective his take on the sector is sound and manages to capture the essence of the opportunity we have in front of us.

The paper throws a wide blanket over the lead-gen business and interestingly includes comparison engines like Shopzilla and Pricegrabber in its assessment. As Greg Yardley’s comment suggests, this is likely to be at odds with any market definition you’d receive from the lead-generators themselves.

It does however raise the question when is a lead a lead and when is it click-thru. Although Ken is careful to distinguish between the attributes of businesses that are collecting (and reselling) sales contact data and those re-routing sales intent, I’m inclined to agree with Greg that shopping comparison engines are playing a different game.

A lead is a vendor actionable enquiry with intrinsic, potentially recurring value. Anything else is good traffic or bad traffic.

Missing Words

I can only apologise for a severe lack of posting of late. Business is developing at a gallop and some things have simply fallen through the cracks in the working day.

Huge respect to those entrepreneurs who figure out how to blog regularly while building their businesses.

Richard

$50bn by 2009

by Richard

I've just finished reading Guy Kawasaki's excellent "The Art of the Start" and, amongst plenty of other good stuff, is the following:

Every - literally every - entrepreneur shows up at Garage with a pitch that has 3 or 4 slides that "prove" the size of the market. Usually the slides contain a quote from a well known consulting firm such as Gartner, IDG, or the Yankee Group stating unequivocally that the size of the "shrimp-farming software market will be $50bn" within the next 4 years. It's a funny thing about these slides:

• Every market is going to be at least $50bn
• The forecast is 4 to 5 years in the future...short enough to make the forecast available, but long enough so that it is not provable
• No one in the room, even the entrepreneur, believes the numbers or thinks they are relevant

Having recently revisited some of the business plans I've been involved in over the years, it's uncanny how many of them feature a sweet little Datamonitor/IDG graph showing market growth hitting $50bn in a few years time. Had to laugh...

What's in a Word?

by Richard

We've moved from Alpha to Beta.

Loads still to do but I feel we've made more than just a symbolic step forward today. The site's starting to hang together well and some of the more challenging technical issues are now behind us. We aren't scaling the heights just yet but maybe we've packed our tents and are leaving Base Camp 1...

eBay and Skype

by Richard

A report on Silicon Beat suggests that eBay is talking with Skype about a takeover. It may be hot air - Skype and its investors have recently been quite vocal in denying it's available for sale (which, naturally, is a reasonable indicator that it probably is). But, assuming it is true, the obvious question is...WTF? What is the world's largest consumer auction site planning to do with the world's largest VOIP app?

Better minds than mine are trying to figure it out - see Techdirt, Rob Hof at Business Week, Fred Wilson.

Here's my take...

Although ebay wouldn’t necessarily admit it, several of their categories (mostly in the capital equipment sector) do not perform well within the auction format and are effectively used by sellers as classified advertising platforms. Sellers in these categories use eBay for distribution, hoping that buyers will find their listing, make contact and potentially close a deal outside the auction.

The cost of placing a listing/advert on eBay is high compared to other classified sites, and sluggish growth in the US might suggest they’re starting to feel some price pressure. If this is the case, they may well be anticipating erosion to listing revenue by introducing paid “call me” features to run on each listing and to be premium charged to the sellers each time a buyer makes contact. As previously posted, generating revenue from buyer:seller interaction (rather than the promise of interaction) is a GOOD THING for the classifieds business.

Paying $2-3bn for Skype would be an expensive way to acquire this technology so clearly there must be further motives at work but, as with PayPal, I would anticipate the motivation to be “what can Skype do for eBay” rather than “what can eBay do for Skype”.

Album of the Week

by Eric
The standards done with individuality - oozes class.

"his sizable voice filters Louis Armstrong through Ray Charles and Dr.John"  NYT

Back to the future

by Eric & Richard

A matter of 15 years ago, some of us at Kitmondo who were then involved in the sale of used computer equipment, had a bright idea. As with all good ideas this sprang directly from a perceived need in a marketplace we were familiar with.

Although there was an active used computer market, there seemed to us to be a lack of knowledge as to what the uniform value of the equipment being traded really was. For much of the time dealers, auctioneers and brokers in the used game literally traded on their intuition. One of the main sources of used equipment, leasing companies who were re-assuming ownership at the end of a lease or at default, were particularly exposed, as generally speaking they didn’t have a clue. Worryingly for them, this lack of residual knowledge often impacted on their ability to write good business in the first place, which in turn led to some spectacularly ugly insolvencies during the 90’s.

Thus was born a quarterly review of used computer equipment which we published and which ran a little along the lines of the guides to used car prices. The publication was sold on an annual subscription basis and covered everything from a Compaq luggable to an IBM 3090. The basic information collated and laid out showed a full description, year of manufacture, original price and, in our opinion, what it might be worth on the used market at date of publication. It was probably very primitive at the time and what was even more primitive was the work involved in publishing it. None of us involved realised how much time it was going to take up. We had formed what the modern day poll analysts would call focus groups in each category of equipment and we polled them by telephone to try to determine what prices things would be fetching at the time we were due to publish the next edition. Every piece of equipment in quite a thick little publication had to be edited on a word processor before being sent to one of the only people in London who knew how to use PageMaker.

This was our first step into the classified business 15 years ago. When we compare it to the scope of the opportunity  we are building here at Kitmondo, we wonder how on earth we did what we did all those years ago, before the wheel was invented. 

Will the ghost of Charles de Gaulle send the shivers up Google and Yahoo ?

by Eric

An interesting story is emerging from France about calls from the French President, Jacques Chirac, for the development of a new European internet search engine. It appears that Chirac believes that Google and Yahoo represent the latest of a long line of American/Anglo Saxon incursions into the culture of Europe. The response he calls for takes the form of the joint development by French group Thomson and Deutsche Telekom, of a brand new search engine.

This should not be looked upon as an isolated incident that is difficult to reconcile in this age of internationalism in technology. Since the formation of the 5th Republic with Charles de Gaulle as President, France has periodically been anxious to develop its’ own institutions to avoid what it saw rightly or wrongly as the danger of being reliant in important areas on the American/Anglo Saxon axis. So this latest attempt by Chirac to avoid what he sees as the internet dominance of Google and Yahoo has to be looked at in relation to his political upbringing in the De Gaulle presidency.

Charging

by Richard

When we were developing the charging model for Kitmondo we looked at several different scenarios:

-    no ad/listing charge but contextual advertising (e.g. indeed, oodle)
-    fee for posting an ad/listing (ebay, monster, loot)
-    monthly subscription fee (labx, powersource)
-    fee for enhanced membership services (alibaba)
-    transaction fee (ebay)
-    cost-per-lead (reply, autobytel)

From time-to-time we’ll use the blog to take a closer look at each model and monitor the success of some of the businesses involved.

The companies in the first line would, on the surface of it, appear to be in the weakest revenue position. As aggregators of ads from other websites, they have no direct relationship with the advertiser, relying solely on reselling traffic to Google and Overture. This clearly restricts their ability to upsell services to advertisers and exposes them (theoretically) to the whims of the sites they index.

Paradoxically of course, the lack of a direct relationship with the advertiser is the very reason these businesses can achieve a competitive advantage. Since they can aggregate the listings of several sites at once, they can create sell side liquidity virtually overnight. This enables sites like Indeed to focus their energy on attracting buyers (in their case jobseekers) to a site that already has a very liquid supply of sellers (employers). Additionally, because their sellers often don’t know they’re even listed, they don’t suffer from advertiser fallout if there is a lack of buyer activity.

A compelling proposition in the classifieds business….

(The investment industry appears to agree with this. Fred Wilson posts about why his firm has invested in Indeed).

Nevertheless, the barriers can be pretty low in the aggregation business so, beyond winning the race for traffic, these businesses will presumably need to develop more defendable sources of revenue in the long-term. An interesting consequence of this might be that sites turn their attention to the buy side of the classified equation e.g. a job site earns its money selling enhanced search and cv management services to jobseekers. Undoubtedly, persuading buyers rather than sellers to part with cash represents a heck of a flip to the classified model but, if the market is telling us anything at the moment, it is this...expect the unexpected.

On Timing

by Richard

In the last few days I’ve been considering the timing of our ‘go live’ date. It’s a difficult question to answer. On one hand we are chomping at the bit to start talking with our advertisers and to find buyers for their listings. On the other hand we are super conscious that the site will be less than 100% complete when it does go up.

Kitmondo depends so much on creating and keeping buyer:seller liquidity that the timing of when we become visible to our market is possibly the most important decision we have to make in the early stages. Go too soon and we risk losing credibility with our customers. Wait for perfection and we risk losing momentum and competitive advantage.

I suspect the answer, as ever, lies somewhere in between the two. A couple of sleepless nights and I hope to have it cracked…!

Album of the Week

Maeve's choice...                  

   

Gang of Four's classic post punk album Entertainment!

Countdown

by Richard

Today we got a look at the first few "plumbed in" pages of the Alpha site.

Man, this thing's good...!

Who does it, with what and to whom?

by Eric

Press speculation on the continued positioning of some of the big players in and around the classified field continues to fill the financial columns.

When Google explained somewhat disingenuously that the reasoning behind its’ new $4 billion share issue was “to obtain additional capital”, most people would have been more than a little cynical about the motives when the company was already sitting on over $3 billion of unencumbered cash.

As Times Business points out, there would seem to be no way that $7 billion would be needed for increased revenue and capital expenditure. So there is much conjecture as to what else.

Baidu could well be a target for some of the cash, especially now that Yahoo has shown their cards in China by hooking up with Alibaba. However, it seems fairly clear that they will not let their battle over “who has got the biggest” (search engine of course) rest at that. An extension into other theatres of war seems imminent.

The Sunday Times reports both companies as flirting with Trader Classified Media owner of a wide range of traditional classified newsprint titles, for a tie-up/acquisition. The newspaper goes as far as to say that its’ own parent, News Corporation, had been interested but considered the price too high. Whether this could be considered just “knocking” copy is not particularly clear, but the waters continue to be very muddy.

And where there’s muck there’s brass…

It's complete plants

by Eric

During the early stages of the development of the Kitmondo site it was noticed by an eagle eyed office boy as he made the tea for the really clever people in the office, that they had overlooked the fact that they were, albeit unwittingly, creating a category for buyers and sellers of “used and surplus electronics pants”.

Of course, the really clever people immediately fired off a strong but understanding instruction to their Indian site developers to get their fingers out, pull their socks up and change their used pants.

Alibaba

Each day brings more evidence of China’s arrival as an Internet superpower. The latest hook-up between Yahoo and Alibaba is particularly interesting to us, as we keep a pretty keen eye on Alibaba’s B2B business and see it as something of a bell-weather for our market.

On Alibaba.com they’ve built a large, global community of dealers, wholesalers and small manufacturers who use their platform to list products and generate sales leads. Which is precisely what we are hoping to achieve at Kitmondo, albeit in a different market.

Unusually, they’ve managed to develop a strong consumer brand at the same time. The question is…will the integration of Yahoo’s Chinese consumer websites shift the balance of Alibaba’s focus away from B2B? They have a big battle looming with ebay if they want Taobao to keep a hold on the auction space (and one has to presume a big factor in Yahoo’s investment is their expectancy that Alibaba can replicate Yahoo’s defeat of ebay in Japan). Will this have an effect on their focus on B2B?

It'll be fascinating to see what happens next!

Logo

We have a logo...

 

We asked a UK design agency to work on this for us initially but they didn't produce anything that worked so, running short on ideas, I asked our developer in India to have a go. They came up with some good draft ideas and we refined one of them until we ended up with the above, which is simple and clear as well as eye-catching.

It's interesting that my/our perception was that, happy as we were to let a non-Western team build our site, we couldn't rely on them to interpret our design ideas as well as a Western designer. Wrong. Not only did they come up with better draft concepts and interpretations (and of course final product) they did it in a third of the time at a fifth of the cost.

Dotcomplement

By Jeff

When Richard and I worked on a startup in the dotcom boom years, all our friends and colleagues were enthusiastic. They had to be - they didn't know if we were going to become billionaires and give them some money. But then anyone launching a startup post dotcom crash got laughed at - or very poor VC deals.

Now, when we talk to friends and explain that we have left our jobs to form a dotcom business, the fact that it's dotcom doesn't matter. It's just a business. They don't care it's online. They just want to know: what's the product? Who will use it? Who else is doing it? And all the questions you would ask about any other business. Dotcom is no longer an issue; it's an advantage. It means viral growth, inexpensive, targeted marketing, and is something that everyone understands.

Kitmondo is our Purple Cow.