Subject: Start-Up City: www.beta.sparks.com moves toward www.sparks.com Sunday, November 8, 1998 Welcome to Betaville! By Scott Burns Start-Up City, part 1: San Francisco. Inside a stark metal warehouse in Potrero Hill there are long rows of metal shelves. Greeting cards are stored in carefully labeled boxes on those shelves. Not a few. Not a few hundred. Thousands. Far more than the largest greeting card store would have on display. But this is not a store. Customers don’t visit and browse. And there is no cash register. What is here? Some thirty computers, a scanner, a satellite dish, a harried crew of twenty-somethings, and an idea. Inputting images and card descriptions, building their inventory and testing their software, they are hustling to get Sparks.com out of beta, working desperately to make it a "fast load" website. Also here: Felicia Moore Lindau. The 31 year old former ad agency marketer for big companies like Compaq, Levis, Novell, and Microsoft, has formed Sparks.com to sell greeting cards on the world wide web, using computers and communications to make buying greeting cards easy even for the worst workaholic. Felicia, a Dallas native, is the daughter of a friend, Susan Moore. Several months ago I introduced Felicia to my son Ollie, a former CNET computer graphics geek now working as a freelancer. The younger Burns is in charge of imaging for Sparks.com. I’ve come here hoping to learn something about the next wave of retailing--- the death and binary rebirth of the store. Ms. Lindau gets to the heart of things quickly: "My original focus was direct marketing, including direct mail, where there is a lot of emphasis on return on investment. The Nirvana of direct marketing is to customize your message to the individual customer--- to market one-to-one. "When the Web was born it was a joining of both things: you could get close to the one-to-one ideal and you could market on the data collected. After helping launch Excite and then Amazon I got interested in start-up work." I asked why. "Because Amazon represented that Nirvana. Their vision was perfect: it was one-to-one selling to individuals on a mass scale. They built a brand around it and never dropped the ball. "Building a brand is like creating a person--- a celebrity. It’s someone with character, someone you identify with and want to associate with." I asked where the idea for Sparks.com came from. "It has everything to do with my mother. It was her birthday in 1997. I was working on the Amazon account, working every second. I love my mother. I wanted to send her something real. With Amazon I could send something very personal. What I couldn’t do was send her a card and I knew that was as important to her as the gift. "I kept wishing I could buy a card at Amazon… and then came the inspiration--- sell cards on the net!" What can you do on the net that is unique? "You can create an address book. You can pre-order, arranging for a card to be sent to you in advance. You can have a corporate account and be certain that all your cards will go out. We can mail it for you or mail it to you. Eventually, people will be able to do a digital signature." What made you think the idea could work? "I did a lot of research. Greeting cards are a $7.4 billion industry. A lot of people buy cards--- 65-70 percent of all adults. But most, 90 percent, are sold to women. The average woman buys 30 cards a year. The average man buys three or four. "The sweet spot (in the market) is women 25-54 who have Internet access. "Then I did some focus groups in Dallas and San Francisco. The women all work. They don’t have enough time. They were absolutely time-starved. They feel cards are a ‘have-to’ purchase. They feel badly if they don’t buy cards, particularly in social groups or for friends. They walk around feeling guilty and obligated. "Images of the industry are filled with frustration. Basically, it’s a problem that needs to be fixed. First, it takes too long to get to the store. Then, it takes a long time to buy. And, finally, the card ends up as a "will-do" card, a lesser of evils. "We solve this problem. The average store has 300-600 cards. A large store has 1,000 cards. We’re starting with 5,000 cards with the intention of having 30,000 in a year." What about competition? "It’s a very concentrated market. Hallmark, American Greetings, and Gibson account for 80 percent of all cards and have most of the retail space. But we’re playing an awareness game, not a shelf-space game. In a conventional store, ninety percent of the traffic is time sensitive and need-driven." As this is written, Sparks.com is still in beta but expected to be going live in days. Will they succeed? I don’t know. What I do know is that San Francisco is bursting at the seams with start-ups. That distant roar you hear is a Digital tidal wave, rolling toward retailing. Questions about personal finance and investments may be sent to: Scott Burns, The Dallas Morning News, P.O. Box 655237, Dallas 75265; or faxed to (214) 977-8776; e-mail to scott@scottburns.com. Check the website: www.scottburns.com. Questions of general interest will be answered in future columns. File Name: 981108SU Dallas Morning News file date: 11/08/98---SUN Universal Press Syndicate file date: same Ó Dallas Morning News, Universal Press Syndicate, 1998