Chris Kitze Chairman and Co-FounderInterviewed by George S. Mack Direct e-commerce firm XOOM.COM (XMCM: research, earnings) is a pioneer in the art of profiling Web surfers' needs and interests in order to turn them into paying customers. Co-founder and Chairman Chris Kitze organized the company in September 1996, with the idea of targeting registered members with service and product offers. With free services like e-mail, chat rooms and Web pages to bring in traffic, the company now has more than 10 million registered users. But even with first quarter revenue growing 450% year-over-year and nearly 300% for the second quarter, things are just getting started. [THE INTERNET ANALYST – GEORGE S. MACK] Is XOOM.COM a portal? [CHRIS KITZE] Strictly speaking, it's not a portal. It's more of a destination point. It's a hub, a focus of community and tools to enable you to do things on the Web. For example, there's a chat room service, and there are home pages for users, as well as free e-mail. However, our merger partner, Snap.com, is a portal in the true sense. [GSM] What are your sources of revenue? [CK] Number one is advertising. The second is direct e-commerce, which is what we generate through our direct e-mails. We send out commercial messages with offers to our 10 million members once or twice a week. [GSM] Are there any other sources? [CK] Yes, there is a source that we're really not talking about yet, because it's new and still unproven. It's trans-media marketing, and it will be the next big thing. It's integrated with TV advertising, the Web and direct e-mail. The idea behind it is to help brand name advertisers complete a transaction. It's the most powerful thing we've done, and I suspect that we'll be the first to do it and actually make it work. [GSM] So, will viewers see an ad on TV and then come to the Web? [CK] Exactly. Let's say viewers see an ad for a sport utility vehicle on television. If the manufacturer co-sponsors an ad on our site, viewers can come to the site and get all the information on the vehicle. Some will sign up, leaving their name and contact information, but others will go right to the dealership for a test drive. Even if they don't go to the dealership, the dealers will be able to develop a prospect list. [GSM] How else will this information be used? [CK] Once we've captured the profile information, we can go back to our database of 13 million people (Snap.com users plus XOOM.COM users) and ask who else matches those characteristics. Wouldn't it be interesting to see how many more of those 13 million people would be interested in this same offer? [GSM] How much of a difference can that make? [CK] My guess is that you'll have a multiplier of two or three times. If you have 1,000 people come through the Web site who are interested in buying a car, you might end up with 2,000 to 3,000 more people whom we already know and have a relationship with that might be interested in looking at the car. We want to match up characteristics and get those 2,000 or 3,000 additional people motivated to take a look. [GSM] For your traditional direct e-mail solicitations, are you holding those advertised items in your inventory, or are customers clicking through to another source where you'll get a cut of the sale? [CK] Because we were so early in the market, it wasn't possible for us to do what you just described. We are actually holding some inventory. However, we are moving to what we call zero gravity where we will not hold any inventory at all. As we move forward with our merger, that business model, where we are selling our own merchandise, just does not scale. We're not merchandisers; we're actually a media company. To find offers that match the 13 million people in our database, we must go outside. We just can't merchandise everything to all those people. It's much more efficient for us to put these people in touch with the offers we think match their predilections. [GSM] Why is the NBC deal a good one for you? [CK] GE and NBC are great partners to have. First, they are made up of very smart people. Second, they have a lot of muscle and power and a great TV property, not to mention the NBC brand. [GSM] As part of your merger deal, you're getting television ads from NBC. How much is that worth? [CK] It's worth $380 million. That's $95 million per year of on-air promotion to spend during the next four years. When you look at a sweep of six commercials in prime time on NBC, you'll reach 94% of the people between the ages of 18 and 49 in this country. It's more powerful than the Internet, because while the Internet can track users, it's still not yet a visual medium. [GSM] What do you expect will be the future impact of the NBC deal? [CK] Well, it's everything. To create a brand and move the NBC peacock to the Web, we think this is very powerful. Our company is going to become NBCi. Our shareholders now have the opportunity to participate in the first true trans-media play to take advantage of the convergence of TV and the Internet, and to do it in an intelligent way. [GSM] How big can you get? [CK] Well, we like to think we'll be big.
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