Date: October 9, 2000

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The Industry Standard's Second "iB2B" Conference was held
October 2-4, 2000, at The Palmer House Hilton, Chicago, IL
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Dear Clients, Partners, Friends, Market-Share Bandits,
Liquidity-Seekers, Consortia-Watchers, and Assembled
Throngs of Obsessed e-Market Makers:

Okay, I'm gonna try to be more straight with this report, in honor of all you *downright serious* B2B folks out there, many of whom are traditional company players whom I'm sure still wear...ties? And rarely laugh on the job, I suspect.

But, after all, we *are* talking trillions and trillions of dollars here, I know. So I 'spose the least I can do is sit up straight and act respectable when I'm addressing such a professional, learned bunch.

Okay, ahem, I'm ready now. Below is my first report, much as I filed it to Conferenza.com over the weekend. But first a message from our sponsors....

As Winds of Change Blow Big
in B-to-B, Where Better to
Be Than 'The Windy City'?

by Graeme Thickins
grt@gtamarketing.com

Yes, Chicago was the center of the universe for business-to-business commerce this week -- if it wasn't already, in light of its claim that more data travels through it than any other city. But more than wind was blowing as some 450 executives, investors, founders, and top thought leaders converged here to talk strategy, technology platforms, and predictions of every sort about where this fast-emerging juggernaut called B2B commerce is headed.

Hot topics included metrics, business and revenue models, neutrality, liquidity, independence vs. industry consortia, execution, and those ever-present forecasts -- starting with one that David Evans, The Standard's VP of events, pointed out in his introduction: B2B commerce will reach $2.7 trillion by 2004, according to Forrester, less than three short years away.

Noted strategist and friend Narry Singh, who was asked by The Standard to produce and host the iB2B conference several months ago, drew a stellar cast of players to present a broad overview of the state of e-marketplaces -- almost more than one could take in over the course of the crowded agenda. The frustration, if any, was too much content, and not being able to attend all the concurrent sessions. iB2B No. 2 was structured as a mega-learning experience, a firehose of knowledge -- like a graduate course (or two, or three), crammed into less than two days. Yet, Narry Singh and his team of distinguished speakers and moderators did a commendable job of keeping most of it in context to what's happening today, in relation to generally identified trends and issues.

Though tech stocks were having a downright dismal week, the mood here was upbeat, with the group's intense focus seemingly making the current stock market doldrums a minor annoyance. The attendee count was surprisingly large (boosted by strong last-minute signup, The Standard said), with representation by senior execs from many of Corporate America's big-name traditional companies. Speakers and panelists included Ray Lane (until recently No. 2 at Oracle and now a partner with Kleiner Perkins), several noted B2B strategy consultants, CEOs from key B2B infrastructure and technology platform companies, top academics from leading business schools, and (for a first at any Standard conference) a Nobel Laureate in Economics, Myron Scholes. A brief recap follows.

Predictions:

We're still in the very early days of this business. Proliferation of e-markets is accelerating, though not as much currently in the pure-play segment in light of the slowdown in Internet-related funding. Consolidation is already happening, and more is inevitable.

Industry consortia:

By one count, some 70 have already been announced in response to independent markets trying to grab market share. But many have yet to leave the launchpad, and most (80% according to one expert) will not succeed because they're moving too slowly or will become mired in management problems. Place bets on those with strong leadership who can act independently.

Metrics:

All that matters now is volume of transactions and, to investors, revenues and meeting expectations. But new metrics are being identified, and many will come from the financial marketplaces, which--in a point made more than once--B2B exchanges are closer to than anything else. This business is more about contracts and options, we learned, and much is to be learned from traditional exchanges -- some of whom are already partnered with new B2B exchanges.

Execution:

If pure-plays have the edge, it's because they can go faster. But finding further funding now is a challenge. "The VC money froze," said one noted e-market founder. Yet technology providers are busy with more than the pure-plays now, as they're seeing enterprise buyers step up big. "Almost every player in the Fortune 1000 is making moves to create their own e-marketplace," noted one technology platform company CEO.

Business/revenue models:

Basic transaction fees for order-matching are trending to zero, so e-markets need a plan to differentiate with value-added services, and earn most of their revenues there. "Benefit-based pricing" is where the business should be going, as one panelist stated.

Other major points made at iB2B:

Neutrality is overrated. "It will not work," said Nobel Laureate enonomist Myron Scholes. Others noted it's generally not possible to achieve, anyway, at least in pure form. As in the investment or financial services business (again, close relatives to B2B e-markets), the experts seem to agree you have to be either on the buy side or the sell side. The term "market maker" was used, with references to firms such as Enron, who saw $15 billion added to their market cap within two days of announcing their exchange.

Liquidity:

To get the critical mass of buyers and sellers that makes an e-market work can take a long time. "I've never seen one that worked like the business plan said," said Harvey Seegers, CEO of GE Global eXchange. It's difficult, time-consuming work to build trust, get suppliers to sign on, and develop trusted, ongoing relationships that will ensure future trading volumes. We're only in the early stages of the evolution of B2B marketplaces, as the event host and several speakers repeatedly noted.

Other observations:

The event was well run, mostly on time, and the venue (meeting rooms, etc) was quite good. The well-placed exhibit area (about 10-15 firms) was continuously active, and schmoozing/networking seemed in full throttle throughout. At least one heretofor "stealth company" showed its face briefly (Consilient), and the event even brought out two of The Standard's print and event competitors this time: a senior reporter from the venerable Red Herring, and a few "analysts" from new-kid-on-the-block Line 56.

Some negatives we noted:

A lack of followup questions by some moderators left several good comments by panelists without substantiation or facts to back them up. But this seemed due mostly to rushed sessions, trying to squeeze too much content into too little time, rather than any laxness of the moderators.

The breathless agenda also seemed to make for shorter breaks and less time for networking -- and even resulted in a panel being added *during breakfast* on the second morning! (Cutting into one of the best networking times at any conference.) One easy solution would have been to make the event a full two days, instead of only a day and a half.

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That's it for now, but look for a followup report right after this, with much more in the way of specific insights and quotes from this great event.

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your faithful, unstoppable, Midwest-based but
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Graeme Thickins, Founder & Principal Consultant
GT&A Strategic Marketing Inc.
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