Ever wonder what happened to those Microsoft millionaires and there are at least 3,000 who quit the corporate rat race after collecting their riches?
|Eric Johnson, a software developer, is one of the founders of imandi.com.|
Are they truly spending more time with their families, or did their entrepreneurial zeal naturally pull them back into the high-tech fray?
Raghav Kher, a seven-and-a-half-year alum of the software giant, intended to get some much-needed R&R.; But he now sits at the helm of a promising Internet startup all by default he insists.
After leaving Microsoft in 1998, Kher said his wife gave him a list of household chores painting, cleaning, that sort of thing.
While pursuing those tasks, the 40-year-old who used to direct Microsoft's strategic business decisions, couldn't find a comprehensive list of vendors and prices. That got him thinking about the need to ease home improvement tasks for solution-oriented folks such as himself.
Kher collaborated with software developer and fellow Microsoft alum Eric Johnson to start imandi.com, an online service that matches consumers and small businesses with contractors and vendors in a reverse auction model.
The name imandi joins "i," as in Internet, with "mandi," which means bazaar in Hindi, one of the languages of Kher's native India.
Essentially, imandi.com lets consmers solicit bids from local businesses for goods and services such as landscaping, plumbing and house painting, through its Web site. The company also serves as a one-stop shop for small businesses looking for similar services.
|Johnson, left, teamed with fellow Microsoft alum Raghav Kher, right, to start the online services firm that matches consumers and small businesses with contractors.|
Free For Now, But Contractors Will Be Asked to Pay
The service is free, but imandi.com plans to start collecting a referral fee from contractors this spring. The Web site now covers 87 percent of the country's area codes, with a roster of 180,000 merchants and 65,000 customers.
The online consumer services market is now estimated at just under $100 million, according to Forrester Research. But whether imandi.com can carve a significant portion of this sum in an already competitive landscape is unclear.
Imani.com would not disclose its revenues, but like most Internet companies, it admits it has yet to earn a penny, although Kher hopes that will change by 2002. The company also faces an uphill battle not just attracting customers, but convincing technology-shy contractors not to just join the Web frenzy, but pay to do so.
Still, analyst Michele Pelino of the Boston-based Yankee Group believes imandi.com is headed in the right direction.
"...it's certainly the next step on the Internet this move from the sale of products to the sale of services," she said.
The company initially was self-financed. "We made some money at Microsoft and could afford to take risks," Kher said.
However, imandi.com raised nearly $15 million last October from Menlo Ventures, Bertelsmann Ventures, Northwest Venture Associates and Madrona Investment Group. Now, it's gearing up for a $20 million advertising and marketing blitz, aimed at increasing traffic. It also is likely to go public, although no date has been set.
Paying Users for Referrals
Of the $20 million in marketing funds, half will be used to pay $5 for the first 20 people a consumer or merchant refers to the site, and $2 for each person after that for a total up to $25,000.
Kher said such incentives are necessary in the low-tech world of home improvement services, because most vendors would rather advertise in their local newspaper, than reach out to customers on the Web. The challenge remains convincing vendors, despite assurances that they will benefit by coming aboard.
"We're talking about a lot of local-based, mom-and-pop contractors who can't necessarily compete on product, but can in service and cost," said Melissa Shore an analyst at New York-based Jupiter Communications. "By going with a company like imandi.com, [they] can scale back on acquisition costs."
Imandi.com has several competitors with similar business models, but slightly different areas of expertise. These sites include Respond.com, BizBuyer.com and buyersedge.com.
Kher said his firm's strength is that it offers more than 350 categories of services, and that the site is simple to use.
After consumers define the work that's needed, provide measurements and the desired completion date, imandi.com searches for local vendors. Consumers then can compare the vendors' quotes.
But the numerous types of vendors imandi.com deals with could add confusion, analysts said.
"It is a challenge, but imandi.com can afford to do it if they focus on specific regions where specific things are popular," Pelino said.
Reach Too Broad?
Of more concern for some analysts is imandi.com using the same site to address the needs of individual consumers, as well as small businesses.
"The two are fundamentally different and have different needs." Shore said. "Ideally, they should use two separate areas on their Website. You can't use the same marketing dollar to address both segments. Besides, it would be an over-extension of resources as has been proven in the offline world."
Nevertheless, Kher is confident his company will lure a million users by the end of the year, and bring the merchant total to 250,000 lofty goals perhaps, but in the explosive world of the Internet, anything seems possible.