Adaptation nation

Which dotcoms will survive the shakeout? Our third visit finds SimplyDone - formerly Handshake - repositioned and hanging on.

Barely a dotcom.

That's the latest from the Internet start-up the Monitor began following a year ago.

The company, then called Handshake.com, was formed by four guys in their 20s eager to make it big at a time when dotcoms were Wall Street's golden child.

When it debuted on the Web last year, Handshake's concept was to revolutionize the way consumers buy services.

Times have changed. So has our dotcom.

Los Angeles-based SimplyDone Business Solutions, as it's now known, still relies on the Web for its success. It maintains a public presence online. But its central purpose is no longer serving everyday consumers there. It's all about selling e-commerce software to the service industry - everyone from caterers to pet groomers.

Businesses use the technology on their own Web sites to allow customers to log on and schedule appointments.

No doubt, for the company to still exist at a time when plenty of Internet entrepreneurs have been shown the door is a major accomplishment.

The fact that SimplyDone, at least for now, is a business-to-business dotcom says a lot about the state of Internet start-ups.

"Just because I'm in the dotcom world doesn't mean I ever believed those stock valuations were really sustainable," says Michael Barton,

SimplyDone's chief executive officer, who joined the company earlier this year. "It was a dream phase that had to come to an end at some point."

"The market today is more rational and more reasonable and one that is grounded in good business practice," he says.

Wall Street's change of heart toward Internet start-ups was no doubt a factor in SimplyDone's revamped business strategy. When the company first launched, the idea was to connect consumers to local merchants. Need a caterer anywhere in the US? Fill out an online request form, watch the bids roll in, and schedule your service. The site had almost 30 service categories to choose from.

The problem was that it took a lot of customers (at least 100,000 by some industry estimates) to generate any revenue. And building up that kind of traffic can take years - not to mention big bucks.

Yet while the original business struggled, the company learned a lot about how people use the Internet. It also discovered that the average service merchant didn't know much about technology or how to profit from the Web.

So in June, SimplyDone Business Solutions was born. It quickly started peddling its software to merchants. The company also sells its technical and marketing expertise.

"We saw this opportunity as almost an offshoot of what we were doing before," Barton says. "The real reason we changed the business model was speed to profitability."

While the consumer dotcom site (www.simplydone.com) is still on the Web, "it is not even relevant to our business now," Barton says.

Since the change, the company has scaled down its marketing, recruiting, and business-development departments and ramped up sales and product development. So far, SimplyDone has landed Maid Brigade as a client. But it declined to specify sales projections or total number of clients to date.

It has already acquired one technology company, and has partnered with a half a dozen others. SimplyDone anticipates "positive cash flow" by the middle to end of next year. So far, it has been able to survive without a third round of financing.

The dream of going public and cashing in as an IPO, however, has become "one of a string of options," rather than the goal the company was originally driving toward.

Barton concedes that it will be more difficult to raise money given the current climate among funders toward Internet start-ups. Still he says he has "complete confidence" in SimplyDone. "It's not that dotcoms aren't able to raise money," he says. "It's the ones that don't have good businesses that aren't able to. Those are the rules that every business in the world has operated under - dotcoms are not any different."

At the same time, Barton concedes that perhaps the pendulum has swung too far in the other direction. "We've gone from drastic over-excitement and over-expectation to a little bit of exaggerated underexpectation and cynicism [toward dotcoms]. Where the market will end up ... is somewhere in the middle."

To take SimplyDone to the next level, the company continues to bring on more-seasoned talent, which has bumped up the average age here to about 30.

To date, SimplyDone has assembled a seven-person management team (only one member is from the original start-up days). Most sport MBAs and have had previous careers at such companies as Andersen Consulting, AT&T, Valvoline, and Ticketmaster Online-CitySearch.

This more-experienced crowd has brought a more mature demeanor to the office. They've helped focus the team on the new business plan. People for the first time are talking about quarterly sales goals. Everybody seems to know exactly where the company is headed.

"We used to start every sentence with, 'Wouldn't it be nice if...,' " says Dan Sommer, one of the four original founders, whose title has changed from chief operating officer to vice president of people to director of business development. "Now it is: 'What have you done for me lately?' "

The new high-tech - rather than dotcom - business strategy has also helped with recruiting. "[Candidates] see stability now" in SimplyDone, says Graham Beatty, director of recruiting. "Suddenly it was no longer appealing to say, 'We are a dotcom.' People had seen so many fall."

Surprisingly, a considerable number of employees (some 18 or so) from the original start-up team are still on board. But one key member - the original CEO, Ajay Shah - left last month to start another technology company. Yet he still remains active at SimplyDone.

"At some point I may decide I want to see one of these things all the way through," says Mr. Shah, talking on his cellphone from Phoenix. "Right now, as an entrepreneur, I really like the start-up phase."

On the money front, CEO Barton has also instituted a more conservative view toward spending. For the first time everyone talks about "burn rate" - how quickly the company burns through its cash holdings.

Sales trips are scrutinized. ("Stay with a friend if you can" is the motto.) The company has revised its staffing projections from 100 people by the end of the year to its current count of about 50. (That means the echo is still pretty loud in the company's retro office space, which resembles an airplane hanger.) It also has let go of at least seven people over the past six months. And the company outsources some work, contracting with some two dozen programmers in Russia and India.

In addition, some of last year's perks, like gym memberships and buying breakfast for the entire office, are gone. "We haven't cut it off completely," Barton retorts.

Still, that's not to say people don't have fun. Workers still shoot baskets in the plastic hoop at the back of the office. Occasionally a loose-ball fight breaks out involving the entire office. And the new vice president of human resources just spent a recent weekend skydiving with co-workers.

"Sure there are things I miss about the old days," says Matthew Ruzz, who's been with the company since its inception. "But if I had to choose between now and then, I'd take now in a heartbeat."

(c) Copyright 2000. The Christian Science Publishing Society