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Movers & Shakers By Neil Gross April 28, 1999


Bo Peabody: It's a Wonderful Day in the Neighborhood -- for E-Business
The founder of Internet community Tripod is fostering a culture of small shopkeepers and auctioneers that could yield big returns

Bo Peabody, 28-year-old founder and president of an Internet community called Tripod, made his name and fortune by knowing what young people want -- before they wanted it. As a student at Williams College in 1992, Peabody somehow sensed that college students would flock to a hip alternative to America Online, if such a site existed. So he built one. Before there was even a Web to surf, Bo sold a slew of investors on his concept, starting with friends, teachers, and the chairman of the board of trustees at Williams.

Peabody had the right instincts. Within a month of launching, in 1996, Tripod signed up 10,000 members. Over the next two years, thousands more set up home pages in Tripod's eclectic "pods" -- virtual neighborhoods organized around themes that range from extreme sports to organic gardening. In January, 1998, Peabody and his partners sold Tripod to Lycos, an Internet portal, for $58 million.

So what do kids in the communities want now? To be Bo, of course. Internet culture, according to Peabody, has become a cradle for new forms of entrepreneurship. Homesteaders at Tripod, Geocities, Xoom, and other online communities can already set up links from their home pages to online book and music stores. All they can really earn, for now, are credits when either they or their visitors purchase goods through such links. But the next big boom, according to Peabody, will be auctions held on individual home pages, followed by all manner of small shops and stores run by individuals or families who are just now getting bitten by the entrepreneurial bug. As this happens, community sites will take a small cut. "We are all seeking ways to monetize communities and make them profitable," says Bo. "Tripod is in the forefront."

"HE TOTALLY GETS IT." Investors perk up when Peabody starts making predictions. "He totally gets it," says David S. Wetherell, chairman and CEO of the sprawling CMGI Internet Group, which has investments in dozens of hot Internet startups, including Lycos. Never mind that the two men stand on opposite sides of a struggle over the future of Lycos. Peabody quietly supports a plan for Lycos to merge with portions of USA Network, Barry Diller's media empire. Wetherell took a dim view of that merger after the announcement sent Lycos' stock into a tailspin last winter. Nevertheless, he says, "Bo is one of the most impressive entrepreneurs I've ever met."

Peabody thinks the USA/Lycos marriage could dramatically enhance life at Tripod and sister site Angelfire. The deal would forge tight links between the communities and two USA properties that matter to Bo: TicketMaster Online-CitySearch and auction site First Auction. Right off the bat, he says, "You'd get a better eBay." Adding a whole other layer, Diller's Home Shopping Network could begin to channel toward the communities millions of eyeballs that were once glued to the TV screen.

 

The trouble for Tripod is that sites calling themselves "communities" are proliferating geometrically
 

Whichever way the USA/Lycos deal swings, Peabody is committed to a concept he calls "organic revenue streams." While portals such as Lycos, Excite, and Yahoo! spent millions branding their sites to boost traffic, communities like Tripod and Geocities attracted mobs of visitors just by the content spawned on their home pages. "We get members involved in generating revenues, which is the whole concept of auctions, affiliate programs, and stores," he says. And though Bo doesn't volunteer any numbers, he says that Tripod is generating "a tremendous number" of stores every day. "Stores are one of the biggest things the communities will add to E-commerce," he says. "And members get a piece of the upside."

Analysts who cover E-business tend to wish Bo the best. "Small shops are an untapped market," says analyst Emily Meehan of Yankee Group in Boston. If communities start catering to small businesses, "they should stand to do very well. These are brand-new business models, they're very innovative, and I'd like to see them work."

"AN UNTAPPED MARKET." The trouble for Tripod, as Meehan notes, is that sites that call themselves "communities" are proliferating geometrically on the Net, and all are competing for the same pool of homesteaders. Geocities, Tripod, and Xoom boast the greatest brand awareness. But lately, the sites that seem to draw the most homesteaders are carefully targeted communities such as iVillage, which caters specifically to women. Others, such as Microsoft's MSN.com, have a unique ability to link proprietary content, making life easier for members who browse their sites. "You may log on at travel site Expedia, but you're really looking for a house," Meehan explains. "Wherever you enter, MSN.com logs you into all its entities and brings you the content you're looking for."

 

Peabody doesn't see corporate sites as a threat because people won't say "Wow, I want to hang out at Citigroup!"
 

Microsoft isn't the only giant corporation drawing a bead on communities. Most Net-savvy companies, from Citigroup to Gap, are searching for ways to hold onto traffic passing through their Web sites. And all of them can deploy standard community-building tools, such as chat rooms and message boards, free E-mail, home-page development, news, and other personalized services. Big companies can also toss in all kinds of commercial incentives, starting with significant product discounts.

Peabody, however, doesn't see corporate sites as much of a threat. "I don't think people will say 'Wow, I want to hang out at Citigroup!' or even at Amazon. com," he says. The New York Yankees could be a different story, he concedes. And big media companies are a natural draw, as Warner Brothers Online demonstrated with its hopping ACMEcity community.

But in the world according to Bo, young Netizens will find it a lot more compelling to create their own businesses from scratch, rather than buying into the cyber-ambitions of big, impersonal corporations. "The Web has created an incredible sense of entrepreneurialism," he says. "Just walk into any high school and you can feel it." In the old regime of bricks and mortar, if you wanted to be in the media business, "you needed access to spectrum, a TV license, or newsstand distribution. On the Web, all you need is a PC and a home page on Tripod." The subliminal message: Anybody can be Bo Peabody. It's not too late. In fact, on the frontiers of Internet-style capitalism, the landgrab has barely begun.

Senior Writer Neil Gross covers science and technology for Business Week


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Bo Peabody, founder and president of Tripod




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