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ASIAN AMERICAN BUSINESS Pehong Chen returns Broadvision to profitability after it lost 99.87% of its $29 billion peak valuation. |
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ECOMMERCE VISIONARY
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n March 9 of 2000 Pehong Chen's 7-year-old Broadvision was worth an astronomical $29 billion. His personal share amounted to $6 billion. Having been first off the block with an ecommerce portal platform called One-on-One, Chen had been deified by the net-crazed investment world.
Two years later investors decided the internet wasn't real. The ensuing NASDAQ meltdown forced Chen to take his company through a humiliating 9-for-1 reverse stock split on July 24, 2002 just to return share prices above the $1 threshhold. By that October Broadvision's valuation had plummeted to a puny $37.7 million, essentially the amount of cash and liquid assets on hand. In one dizzying fall, one of the tech boom's brightest stars had lost 99.87% of its brilliance. At the age of 45 Chen had been reduced to a mere millionaire. It would have been easy to throw up his hands and find some tropical island on which to lick his wounds.
But Pehong Chen had never learned the concept of leisure. He stayed and continued the brutal cost-cutting begun in 2001. By the end of 2002 Broadvision's workforce had been reduced to 449 full-time employees. Chen's reward came in the very next quarter: Broadvision reported a $1.3 million profit on $24.5 million in revenues. The numbers were humble, but they proved that, even in a post-bubble economy, the company and its enterprise portal software were real. Its client list had grown to 1,200, including 8 of America's 30 largest companies, the State of California and the U.S. Air Force.
Just as Broadvision had led the tech boom and the ensuing bust, its modest turnaround helped point NASDAQ out of its funk. By late May Broadvision shares had climbed to the $5.60 range. That's a mere 0.67% of its $838.79 (adjusted for the reverse split) high, but over 5 times its October 2002 low. This time the world may see more than stock-market killing in Chen's decade-old vision of fully-automated and personalized business transactions on the internet.
That vision of how business should be done, on and off the internet, was born back in 1992 as media giants began mulling the potential for interactive TV. Chen knew it went beyond video-on-demand. He saw its potential to be a completely personalized home shopping network where businesses around the world could plug into every home on a one-to-one basis. What was needed was the software to eliminate the need for time-wasting browsing through thousands of pages of irrelevant information that search engines and hierarchical directories can turn up and establish an individualized digital dialogue. Chen has poured 100 man-years into completing what he hopes will be the internetÕs long-awaited killer app. It's called One-To-One, designed to reside on a server and create for each customer a unique database of only those products, websites and information of interest.
"Our company had a very unique position in that we started early, before this whole Internet craze happened," said Chen. "We were able to spend the time on extensive market research and put together a very solid foundation."
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Broadvision spent 2 1/2 years developing the first version of One-To-One. By the time version 2 shipped in October, 100 man-years was poured into perfecting the application.
One-To-One let businesses create what amount to personalized homepages for each customer based on answers given to an initial profile questionnaire. Selected links then led the shopper to the pages that relate to those interests.
The consumer was given a shopping cart icon where he or she can place items of interest, compare and continue to browse before deciding on the items to buy. Two icons are always accessible -- Profile and Electronic Wallet. Profile displayed all the information the shopper had given about herself. She could update, delete or add information at any time. The electronic wallet let the customer hold coupons, check purchase receipts and account balance, and check the shipping status of purchased goods yet to be received.
"The Web is a very effective place of business," said Chen. "If youÕre smart about it, you can create a distinct personalization that will allow visitors to derive a value that is very unique and individualized for them, ultimately accruing a great deal of loyalty and driving repeat business."
The One-to-one marketing concept was introduced by Don Peppers and Martha Rogers in their book The One to One Future. It counsels the importance of getting to know customers as unique individuals, winning their trust and loyalty through satisfying needs on a personalized level and keeping them coming back for more. The one-to-one concept underlies the whole vision of Broadvision -- sustaining active interest in a rapidly changing world.
In a nutshell, Broadvision's software did four things -- profile the customer, catalog the contents of the client's site, bring the two sides together via a matching engine, and close the transaction.
"You could find some merchant solutions from Microsoft or Netscape, but they didn't really handle the front end -- the effective marketing, targeting and matching," says Chen. "They're more of a point solution, handling bits and pieces of these four points."
"One-To-One was really good at being able to develop a very deep and long-term knowledge of the valued customer, providing corresponding timely developments, content, information and products that make them feel like they are being specially taken care of," said Chen.
In 1992 Chen was vice president of multimedia at Sybase when the concept of interactive television (ITV) began gaining currency. It would let you pick what you wanted to watch, when you wanted to watch it from any source in the world. Chen saw its commercial potential and took to the road, speaking to cable companies, content providers like QVC and Time-Warner, and Thomson Sun Interactive who would be putting the technology to actual use. Chen wanted to create the software to get ITV going, but Sybase was more interested in developing the application tools, the infrastructure behind it.
Chen convinced Sybase to let him out of his three-year contract two years and formed Broadvision in May 1993 with some of his own money and investments from venture capitalists and corporations like Olivetti, Ameritech and Itochu.
Broadvision's first customer was Thomson Sun, the joint venture between Thomson, RCAÕs parent company, and Sun Microsystems. Together, they were looking to put together an end-to-end service platform for interactive TV. RCA would provide the DirectTV set-top box and Sun would provide the technology that allows a graphical environment to be overlaid on the broadcast system. BroadvisionÕs One-To-One would add transaction capabilities. So while you're watching a rock concert on television, you can buy the CD or t-shirt from home. For the necessary broadband capability Thomson Sun has turned to satellites to enable DirectTV. PAGE 2
| "Our company had a very unique position in that we started early, before this whole Internet craze happened." |