eSociety: Getting Burned, Lessons Learned It was the first dot-com portal builder to target associations, and it appears eSociety.com, the Bellevue, Wash. - based Web house, is the first to flame out. A letter was posted on its Web site on November 8 telling visitors they've gone out of business - and that should sound some alarms for associations partnered with dot-coms or considering it.
It was a case of investor panic, says former eSociety CEO Anne Gordon. "With our business model, we were still at a position where we needed another nine months of money to run the company," she explains, "but investors wanted a faster profit turnaround. Lots of companies are in the same position we were in."
Translation: No dot-com running on other people's money is immune. The business model eSociety employed - a 50/50 revenue-sharing arrangement in which the Web site was typically built for free and revenue was generated through e-commerce - is a loser, says Kevin McDermott,' Web columnist and founder of Major Scale Technology Management, a Chicago-based consulting firm specializing in e-business strategies for associations. "Revenue sharing fails every time," he observes, "and I've never once seen a company pull off building it for free and making money off the members."
Part of the problem, McDermott says, is that dot-coms are out of their milieu when it comes to business and marketing. "It's not to say revenue sharing can't work," he says, "it's that it hasn't worked. I suspect the dot-coms know their technology pretty well, but revenue sharing isn't a tech play, it's a pure marketing and sales play, and these companies are out of their league."
Keep On Truckin' One of eSociety's last clients was the Farmington Hills, Mich. - based National Truck Equipment Association (www.ntea.com), but its eSociety-built Web site was short-lived. Two weeks after it was up and running, eSociety went bust. According to David Lee, NTEA's director of information technology, the warning signs that something was not right were there all along.
"They threw the whole package at us - PR, technology, marketing expertise, strategic planning," says Lee. He adds that the association's new Web site was 90 days late in getting up. "We were careful about how much money we gave them, we monitored their investor funding, and we thought we had ahold of it. I was the project manager on NTEA's side and in the back of my mind, I saw red flags." Lee says, as an IT person, he knew enough to double-post information to both the new site and NTEA's old Web site, which turned out to be a good move.
"We had a soft launch that had the site up for two weeks when we heard the news," Lee says. "We went out to Bellevue to do some damage control, wondering if the new site was something we could take on ourselves. But after meeting with Anne, we decided we just couldn't take this monster on - it was never complete; it was hugely expensive and complex."
In the end, NTEA lost $7,500 to eSociety, tore the new site down, and relaunched its old one. The only saving grace, says Lee, is that NTEA owned its URL. "That's very important for associations to do, and you'd be surprised how many don't. We transferred the site to our server and made a decision to walk away."
It was a relatively costly venture for NTEA, but Lee says the lessons learned were worth it. His advice: "Make sure your dot-com partner's technology is rock solid; make sure your revenue-sharingis signed and detailed down to the last penny; and keep a small team of people on the association's side of the tech partnership - don't hand it over entirely."
Meanwhile, all was not lost for at least one of eSociety's first clients. Rosemont, Ill. - based International Housewares Association (www.housewares.org) Director of Marketing, Trade, and Development Perry Reynolds says he was pleased with eSociety.
"One of the wonderful things about it is that when eSociety was gone, we still had a great Web site. What we miss most, though, is what a great marketing partner they were."
IHA, which last year changed its name from National Housewares Manufacturers Association, decided to keep its site,the hosting and doing Web maintenance and posting in-house, but Reynolds admits IHA, unlike NTEA, had the staff and finances to do so.
Reynolds, who declined to say how much the eSociety relationship cost IHA, has his own theory of what sunk the dot-com: "I suspect it was becoming increasingly difficult for them to move their customers down the development path."
In an effort to take the hassle out of paying and tracking meeting-related expenses, American Express has launched a credit card specifically for meetings and events.
The Corporate Meeting Card can help planners on the front-end by identifying them as the "corporate" meeting planner and eliminate the need to complete multiple credit applications - and on the back-end by consolidating meeting bills onto one statement. Planners can receive an electronic file to feed into their accounting software to manage and track spending.
Association meeting planners can use the card if they have an established relationship with American Express, which is working with the major hotel chains to get the new card accepted for unlimited meeting charges. It currently has more than 80 hotels and resorts in the program, which means that credit applications are not necessary for those properties. For more info, visit www.americanexpress.com.