Homestore.com CEO Stuart Wolff says the dot-com shakeout has left him feeling like a contestant on Internet Survivor -- there are only a few contestants left on the island, and Homestore is one of them. The Los Angeles company, which posts real estate listings on the Internet and provides Web tools for realtors, recently turned profitable. BusinessWeek Los Angeles bureau correspondents Chris Palmeri and Arlene Weintraub caught up with Wolff and asked him to reflect on Homestore's evolution and the current harsh environment for dot-coms. Here are edited excerpts of their conversation:
Q: How does your company's model differ from some of those that didn't make it?
A: The companies that had models that showed there was a new way of doing business are the ones that have gone by the wayside. Our model was always to partner with our industry. It was our intent to use technology to help make realtors more efficient, not to put them out of business.
Q: What did the investment community think about that initially?
A: We took a lot of arrows at first. Some people asked why we weren't coming at it like eToys vs. Toys 'R' Us. They told me they thought the Internet would cause the population of realtors to drop from 730,000 realtors a few years ago to 250,000. They said if we partnered with them, we would go out of business. Guess what? Today there are 750,000 realtors.
Q: What have we learned from the business-to-business shakeout on the Internet?
A: A lot of companies naively thought, "I'll just cut this middleman out and make a $1 billion." But there is constant tension between manufacturers, wholesalers, and retailers that has been going on for decades and that can't be ignored. The Internet is just a tool. It won't massively change those power relationships.
Q: So was it all just hype, or is the Internet really going to change our lives?
A: I believe it already has. But what happened here is no different than what happened in the radio, PC, and auto industries. It's very historical and very biological. If you put deer on an island and give them food, the population of deer explodes. When winter comes there's a crash, and only the strongest survive. The Internet isn't revolutionary, it's evolutionary. It doesn't rewrite the basic rules of business.