Another tough year for Internet start-up firms by BusinessWorld Yearend Report Jan 2001 The year 2001 will be another tough year for dotcoms or start-up firms which rely solely on the Internet to boost their bottom line, especially so due to projections of a bleak year due to a protracted political and economic crisis. Just as electronic commerce (e-commerce) has suddenly broadened the horizons of small and medium - scale enterprises - which most dotcoms are - so has this revolutionary medium also suddenly exposed them to all the risks even big companies face when conducting cross-border transactions. Dotcom players, a venture capitalist and an analyst interviewed by BusinessWorld Online all agreed that the first half of the year will be a time to be conservative and more deliberate in carrying out business plans. TAKE STOCK OF DEMAND, BUILD ON STRENGTHS And just as in any other predicament, flexibility is key. Chief executive officers (CEOs) of a dot-com conglomerate which has a strong base in traditional sectors believe that opportunities like hidden, even amid current uncertainties. The dot-com conglomerate of the Yap family, the Yapster e-Conglomerate, Inc., still sees a bullish 2001 - but much depends on being able to discern openings in the market. The 20-something CEOs of various dot-com businesses under the conglomerate said they will proceed with their plans to offer new services by the first quarter of this year although they are "slowing down" on expansion plans for existing businesses. The Yapster conglomerate is a holding company of at least six Internet businesses of various interests: online trading (2TradeAsia.com), e-learning (2StudyIT.com), insurance (2InsureAll.com), e-marketplace (SourcePilipinas.com), consulting (ActiveBizness.com) and Internet data services (Ysharedservices.com). "There are still certain companies (under the conglomerate) which are still very bullish and more independent of economic situations," Abigail K. Yap, CEO of the e-conglomerate and the eldest niece of Felipe U. Yap, chairman of the Philippine Stock Exchange. One example is e-learning for corporations. Specifically, there has always been a need to upgrade the skills of IT professionals. "Companies still want to train their people and there is still a shortage of IT skills worldwide," Ms. Yap said. "Upgrading IT and business skills will always be a need that will last," Arlene K. Yap, CEO of 2StudyIT.com and a sibling of Abigail. "Companies also feel the need to be a forefront of training their people". HOLDING THE FORT The stock market, however, is one area that has been hardest hit by the crisis, the Yaps admit. The bearish sentiment hit the market hard in the wake of the BW Resources price rigging scandal early last year, making it one of the worst performers in the world. "What we are doing right now is we are just creating awareness for the product and creating partnerships," said Christine Yap, CEO of 2TradeAsia.com and daughter of Ms. Yap. While the e-conglomerate's marketing and promotions plans will continue, the Yaps have deferred expansion plans to offer online trading services to foreign stock market players by one to two years. But for the Philippine stock market plans to improve services for the local investors will proceed. Aside from e-learning, the other services that the conglomerate offers will not suffer the same fate as its online trading services: - There will be a market for travel management and call center support. - Insurance services will be needed with or without a crisis - and perhaps even more so at times of crisis. - Companies will still require consultancy services to automate their back-office systems, and that is why ActiveBizness.com will still have a market, said Abigail Yap. Clearly, big opportunities and correspondingly big risks seem to be the dot-com's fate. The lesson that Nasdaq taught is that Internet-focused firms have to mind business basics or perish like the rest, the advantages offered by this new business medium notwithstanding. But one will have to take a second look at these basics, especially amid a crisis. It is not just a matter of identifying just any available market, but a niche within that market; which products and services will sell now, which ones will sell when the crisis blows over a year or two later, and which ones may not have a market here but abroad; and of seeing the silver lining even behind current difficulties, i.e. the sagging peso makes the Philippines an attractive option for foreign firms seeking to outsource services. When a firm has taken care of the fundamentals and has gained a foothold in a market niche, it may even be enough for it to just hold the fort for this year. It would be nice to be in place when the market does take off.