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Satyen Kothari, Trapezo: Middleman ASP ties companies together
InfoWorld - October 20, 2000
by Katherine Bull |
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THE ONLINE partnership business is soaring. With revenues projected to reach $111 billion dollars in 2003 and the average number of online partnerships per site growing to 28, the numbers show the importance online partnerships are gaining.
San Francisco-based Trapezo has figured out a way to help e-businesses by providing services via an ASP (application service provider) platform that manages all the different aspects of online relationships.
InfoWorld Executive Producer/New Media Katherine Bull talked with Trapezo President and CEO Satyen Kothari about the state of the online partnership industry and how companies should evaluate potential partnerships and maintain those they sign.
InfoWorld: What does Trapezo do, and how did it get started?
Kothari: We recognized that every e-business out there needs to partner with other people and there's no infrastructure in place for that. The Internet is enabling all these relationships; so there is a huge opportunity to help companies manage e-business partnerships across the Internet.
So we built a hosted solution that sits in the middle of two partners' infrastructures and can manage these partnerships.
InfoWorld: What kinds of issues did you have to take into account to put together Trapezo's infrastructure?
Kothari: We really had to understand the problem itself; so we took a step back. And before we did anything, [we] talked to customers. What we were hearing was that all of them had content partnerships but there was no universal format for making these partnerships work and be useful to both partners.
XML has the potential to be a universal format but is not totally there yet. And there were technologies that were still missing that needed to be put in place for partnerships to really work.
InfoWorld: What kinds of technologies were missing?
Kothari: What we figured out was many of the technologies in place were tuned to work within an enterprise. What needed to be different was making these enterprise technologies work with other technologies in an enterprise. XML helps a lot, but exchanging the data is only one piece. The other is what is being done with the data and who owns it.
InfoWorld: So would you call Trapezo a middleman ASP?
Kothari: Yes, that's right and the advantage is that we sit in the middle and manage all the relationships a business might have so that they don't have to worry about issues such as the data format exchange and who owns what content. We just do that for them.
InfoWorld: Can you give me an example?
Kothari: Sure. A good example is MyFamily.com, which has multiple partnerships but doesn't have the resources to manage those partnerships themselves.
For example, in the health section of MyFamily.com, they have a partnership with PlanetRx, but they can't deal with all the changing prices and products that PlanetRx has on its site every day.
MyFamily.com could put a static banner on the site that links to MyFamily.com, but that doesn't do much in terms of optimizing the partnership. So PlanetRx provides an XML or a flat file feed in real time and gives that to Trapezo and the feed goes into our database. Trapezo then provides MyFamily.com a live link to PlanetRx products and are available for viewing at MyFamily.com. MyFamily.com can also pick which products that we want from a particular category on PlanetRx, such as Vicks cold medicine from the health category, and then Trapezo delivers that particular information to MyFamily.com's site.
InfoWorld: What is the most important thing that e-businesses should consider when signing on to partnerships?
Kothari: Partnerships have always been important, but in the past you have always had to put a lot of resources in place to support your goal.
Then the Internet lowered the barriers to forming partnerships because it was easy to make partnerships and then just publish a link.
For example, people would have a link on their site to America Online. Initially, people were thinking that it was a big deal and cool that you have a partnership with AOL, but now they realize that it's worthless. Having a link to AOL just directs people to another Web site, when you want there to be a bidirectional sharing of that customer. You lose customers when you have such a link to another company.
Also, people were signing partnerships with everyone, so there were a slew of bad habits that came about -- there was no tracking of traffic, no return on investment models being explored -- and that certainly wasn't providing companies with the necessary information to evaluate their partnerships.
What has also changed has been the slowdown in the money going into dot-com companies.
Since the slowdown started in March, everybody is now questioning whether these deals are worth it.
People are starting to consider partnerships where they can form and disband deals if they aren't working. People are beginning to realize that making partnership deals that allow both partners to get something from the customer is key and that building traffic is the ultimate goal.
InfoWorld: Besides contractual issues, what are some of the other issues people should consider when signing a partnership?
Kothari: Common sense is the key. You have to ask what you're trying to do as a company and figure that out.
For example, if you want to be in the health-industry content business, figure out what you want to accomplish, and then think about who you need to partner with to meet your goal. In this case, you want to partner with companies such as HMOs or drugstores, but you have to be careful about partnering with companies that are just going to take away traffic from you.
InfoWorld: How do you figure out who those companies are that you don't want to partner with?
Kothari: You really have to figure out if they are going to help drive more customers to your site. And you have to look at the hard-core traffic and revenue numbers to figure that out.
On top of everything, you have to have the ability to make decisions in real time about whether the partnership is working or not working.
InfoWorld: How would you structure a partnership deal so that you can get out easily?
Kothari: Most of it is contractual, and its important to structure your contract so that it's not initially tying you to another company for a long period of time.
You have to be able to evaluate all the time whether or not the partnership is providing you with the traffic and revenue dollars.
The best thing you could do is use software that would allow you to track traffic at the customer's and at your site. This will help you manage the nature of the partnership relationship and change or tweak the relationship as needed.
You need all those tools between you and the partnership to make that fit.
InfoWorld: If you had to recommend the number of partnerships a company should limit itself to, what would that number be?
Kothari: It totally depends on the size of the company and space you're in.
If you want to be a portal, the more partnerships the better. If you're focused on a vertical [model], anybody outside of your vertical area is a distraction
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