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But this is not the dynamic that artificial-intelligence pioneer Pattie Maes sees when she surveys the fast-changing landscape of e-commerce. Yes, budget-conscious surfers often compare book prices at a dozen different cybershops. But when it's time to click and order, most of them still head for Amazon.com or barnesandnoble.com. "Brand matters even more online than in the real world," concludes Maes, the 38-year-old director of the Software Agents Group at Massachusetts Institute of Technology's Media Laboratory. That is something Maes would like to change. In the early '90s, her work in software agents led to customer-recommendation technology known as "collaborative filtering," which is used on many Web sites to help customers choose books, CDs, and other products. Her lab also helped spawn the hordes of shopping "bots" that let surfers compare prices on different Web sites. "She's a terrific thinker, and she has had a huge impact as a teacher," says Steve Larsen, senior vice-president at Minneapolis-based Net Perceptions Inc., which provides its own collaborative-filtering technology to CDNow, Wine.com, and other sites. STAR SYSTEM. Now, Maes hopes to nudge Net commerce to the next level by giving small businesses the ability to display objective ratings that consumers can trust. That should make it easier for tiny, cash-strapped startups to compete with giants that own all the big online brands. In February, with backing from Atlas Ventures and Media Lab Director Nicholas Negroponte, Maes and two partners launched a new company called Open Ratings (www.openratings.com). And this week, at PC Forum in Scottsdale, Ariz., the company announced its first software licensees, which include two business-to-business commerce sites, plus powerhouse Forrester Research. The business model is unique: Open Ratings licenses collaborative rating tools and expertise to Web portals, exchanges, and other online marketplaces. Using a system of stars -- numbered from zero to five -- stores, services and individuals doing business at those exchanges can rate one another on the basis of quality of service, speed of delivery, and other measures.
Weeding out false testimony is central to this scheme. First of all, before any individual can serve as a rater, the exchanges require evidence that a transaction has taken place. And malice won't fly. "You can't say bad things about the store where you have never shopped, just because you hate the person who runs it," says Maes. Secondly, all raters' opinions do not receive equal weight. You gain influence as a rater based on how much experience you have, how often you have transacted, and how closely your record of ratings predicts the average star rating that each business receives. Two of Open Ratings' new partners -- NewMediary.com and the Firm List -- act as information exchanges, connecting people who need Web site design, development, and hosting skills with people who sell those services. Open Ratings will help visitors to these sites evaluate the offerings. Forrester, for its part, plans to build the technology into its own e-commerce rating and research projects. "TASTE-MATES." Open Ratings is not Maes's first foray into the frothy sea of e-business. In 1996, she and her colleagues founded Firefly Network, a developer of early collaborative filtering programs. The software helped users explore their own tastes in music and literature. And it enabled them to locate others who shared their tastes, so that they could pool their knowledge and share recommendations with one another. The incentives, for Maes, were personal. She was born and raised in Brussels, and received a PhD from the prestigious computer science program at the University of Brussels in 1987. While burrowing into silicon intelligence, Maes also nurtured a keen interest in drawing and sculpting. Firefly's collaborative software, in a sense, sprang from her personal craving for tools that make it easier to find "taste-mates." Firefly's software won rave reviews and a loyal user community. But license revenues never kept up with development costs. At one point, according to outside reports, the company was burning through nearly $400,000 a month. In April, 1998, as Firefly floundered, Microsoft stepped in and bought the company for a reported $40 million. "INTERESTED IN THE IDEAS." The ratings business could also prove challenging. In the auction arena, eBay is the dominant player, and it wields its own proprietary rating software. And in the business-to-consumer market, a company called Bizrate has a head start on Open Ratings. But as Maes points out, Bizrate's business model is very different from Open Ratings'. Individual Web sites that wish to post ratings from Bizrate pay the company to survey their users. For Web sites that don't want to participate, Bizrate relies on its own staff of raters. "We sell to the people who host marketplaces," Maes explains. "They sell to large retailers, and they are moving toward becoming a destination site. That means they will compete with their own clients." Beyond that mild critique, don't expect any jabs at the competition from Maes. A mother of two children, aged 1 and 5, she keeps up a busy teaching schedule. That helps her maintain a certain academic aloofness from the business grind, while CEO Stanford Smith, formerly of Agile Software, handles day-to-day operations. "I'm interested in the ideas," says Maes, with an elegant trace of a Flemish accent. Once a company is up and running, "the hard work is executing a plan, selling the product, making improvements. I'm less interested in that." Not to worry, in the marketplace of ideas, Maes has the currency that counts. Senior Writer Gross covers technology for Business Week in New York |
