Fame and The VC Game - Company Business and Marketing

Industry Standard, The, Sept 18, 2000 by Jonathan Rabinovitz

Menlo put itself in the camp of supporting ideas, not entrepreneurs, when it backed out of funding Arzoo.

"It was quite devastating," says Bhatia. "They could have said, 'We believe in you' and trusted me to get it on the right track."

That, in essence, is what Softbank has done, ultimately kicking in $9.5 million in July. Scott Russell, the Softbank investor who backs Arzoo, explains, "We decided that we wanted to do this based on Sabeer alone."

Time will tell whether it was Softbank or Menlo that made the right choice. As for Bhatia, he shifted Arzoo into what he believes is a more promising market.

Last spring, after many sleepless nights, Bhatia made what he says was the toughest decision of his business life: He pulled the plug on Arzoo's online shopping service only days before it was set to debut.

The math became clear to him - pure-play e-commerce companies weren't making enough money to pay him for Arzoo's service, and consumers weren't likely to pay extra for help in figuring out how to spend their money.

But Bhatia had also decided that the company's technology could be reshaped to become an advice service for large companies needing quick answers to relatively routine high-techn questions. Arzoo already had the technology to bring together a befuddled information technology manager at say, Coca Cola, and a consultant in Bangalore, India. It could hook them up online in real time, just as it would have done with a group of shoppers.

Arzoo also had a system that allowed consultants to bid on questions posted to its site, and then let the customer choose one consulting programmer based on his initial response and Arzoo's ranking of his work, just as Arzoo would have done with shopping advisers.

Other companies like Keen.com were conducting similar expert matching online, but the new Arzoo would be distinctively in the corporate infotech space. And it would make its money by charging big companies a monthly subscription fee that would enable its employees to ask an unlimited number of questions.

What gives Arzoo its strongest advantage over others crowding into the online-expert niche is Bhatia's reputation. Just ask Rajiv Grover, the husband of a cousin of Bhatia, who left a tenured position as business school marketing professor with an endowed chair at the University of Georgia to join Arzoo as the executive in charge of marketing.

Grover says he's looking for experts from all over the world, but India will be the logical place to start. "Sabeer's going to say to the 400,000 programmers there, 'I want you to register with my site,'" Grover says. "And the desire to be like Sabeer is going to bring us thousands" of programmers. Grover estimates that Arzoo will have a panel of at least 50,000 experts by March.

It certainly doesn't hurt that Grover is setting aside much of his marketing budget of $75,000 a month to pay registered experts until the corporate customers begin paying for the service. That's $75 a question -- roughly a couple days' pay for a programmer in India.