@LARGE
Dot-com death pool

By Scott Kirsner, Globe Staff, 6/26/2000

A celebrity death pool is the macabre game of guessing which well-known showbiz personality will expire next. Will it be Bob Hope or Robert Downey Jr.?

Now emerging are the dot-com death pools. Which over-hyped, over-staffed, revenue-deficient Net start-up is the next to go cloudy-eyed and float to the top of the tank? Will it be SmarterKids.com or Espanol.com? (You can see an example of a dot-com death pool at a URL that I can't print in this paper. Take your favorite four-letter profanity starting with `f,' make it past tense, and add `company.com' to it.)

While we're all playing that game, it's easy to forget that thousands of real-world businesses run by non-MBAs - businesses that have never sucked in a cent of seed funding or a few million bucks of venture capital - have cracked the code and figured out how to run Web sites that cut their costs and increase their profit margins. While everyone else has been spending heavily to try to lure customers, these entrepreneurs have been counting their pennies, building relatively modest Web sites, and enhancing them as they figure out what makes customers buy.

If Web businesses like Toysmart.com and Furniture.com are the Roman candles of summer, burning brilliantly for a brief moment and leaving only blackened cardboard carcasses behind, these small businesses are citronella candles. They may not be spectacular, but they work just fine.

You can find great examples all around New England. But in late June, why not go to Martha's Vineyard to look?

Wendy Forest grows 200 different varieties of day lilies on the three-acre Seaside Daylily Farm that she and her husband, Phil, own just outside of West Tisbury. Last week, the first small patch of bright yellow Stella D'oro lilies were blooming, and the pale pink French Pastry lilies were preparing to make their appearance.

Forest started working on her Web site, www.daylily.vineyard.net, in fall 1996, and went online in March 1997 with a rudimentary catalog that let customers browse through some of the plants Forest sells by mail order. She spent $1,000 with Martha's Vineyard Online, a local Web development firm, to build the first version of her site; hosting it runs less than $30 a month.

''By the end of the second year online, I'd recouped what I'd spent,'' Forest says.

''After that, we decided to expand the varieties that we offered. Our third year was great, and the number of or-

ders we were getting made it clear that this was a good mechanism for selling.''

Not only is the Web site less expensive to produce than the printed catalogs Seaside distributes, but it's more environmentally sound. (The Forests are organic farmers, and their two-story home is built mainly from salvaged materials.) The Web site can show more flowers in color than they can include in the catalog, and there's no postage involved when someone visits the Web site. At this point, customers still have to call, fax, or mail in their orders, but Forest plans to add an online ordering system soon.

As Seaside's Web sales have increased to make up about 30 percent of its overall business, the farm's marketing expenses have been slowly decreasing. Forest expects that, in another two or three years, more than half of Seaside's business will originate from the Web, with the rest coming from the catalog, wholesalers, or tourists who stop by the farm during the summer.

''Profit is a difficult thing in farming,'' she says. ''We want to be as efficient as possible, and the Web is a more cost-effective way for us to show our flowers to a lot of people.''

Owners of inns and bed-and-breakfasts on the island have also found that Web sites can strengthen a business where profit margins can shrink unpredictably, because of bad weather or spiking labor costs. Julie Drinin Galgay of the Inn at 148 Main Street in Edgartown reports that, this year alone, she has seen a 25 percent increase in total bookings, all because of the Web site.

''We don't have a big ad budget, and we're looking for a way to reach a huge number of people economically,'' Galgay says. The Web site is bringing in so many customers that Galgay doesn't plan to advertise in newspaper travel sections at all this season. They're more expensive and generate fewer bookings than her Web site, she says.

In gingerbread-laden Oak Bluffs, Jane Lofgren of the Narragansett House says that while she doesn't have trouble filling rooms on the weekend, the Web site helps bring in customers during the week. Says Lofgren: ''A lot of times, people will e-mail me asking for a weekend stay in July, and I'll suggest days during the week, or a weekend visit at the beginning or end of the season, when it's quieter.'' And when the island's inns tend to have higher vacancy rates.

''The Web has definitely helped our shoulder season,'' says Lori Arnold of the Beach Plum Inn in Menemsha. ''And it's bringing in so much new business that we're rethinking when we're going to open next year. We may do March instead of May, and stay open until Christmas.''

Arnold explains that 60 percent of first-time guests discover the Inn on the Web. Since they can see color pictures of all the Inn's rooms online, their calls to the Inn's reservations line tend to be shorter. And many questions come by e-mail, which has saved Arnold from having to add a second person on the phones. ''Penny for penny, it's much less expensive to get a guest in the door using the Net,'' she says.

Also in Menemsha, Eric Carlsen runs a kayak rental business that has had a site up for four years. Carlsen says about half of his customers find him through www.menemsha.com. His online brochure has helped to increase bookings, but mainly it has helped Carlsen reduce the amount he spends each season on advertising in newspapers, guidebooks, and free tourist maps. He built the site himself, and the only recurring expense is the $20 a month hosting charge.

''I work on the site in the off-season, and on rainy days,'' Carlsen explains. He has also supplemented his income by building sites for a number of local inns and bed-and-breakfasts.

None of these small businesses are good candidates for the dot-com death pool. Why? They've built their Web sites incrementally, stuck to tight budgets, and added to them only after discovering what worked and what didn't. Though none of them are in the vanguard of e-commerce, their conservative approaches seem pretty smart to me.

''Smaller businesses don't have the resources to do everything at once,'' Lori Arnold says. Seems pretty obvious. But too many high burn-rate Boston-area dot-coms have imagined that they play by different rules. They were wrong.