This week, an Internet company that started life as little more than a bulletin board for gamers announced a deal to take control of the most powerful brick-and-mortar media company on Earth. Neat trick, eh?The biggest winner in this deal may not be AOL, but Time Warner, which has exquisite brands and products but has been unable to build a credible Internet presence.
It has that now, in spades. But wouldn't it have been better -- and cheaper -- if Time Warner bought AOL outright two years ago, when AOL's stock hovered around US$15 per share, rather than the $60 to $80 range it's been in for most of the past 12 months?Hindsight. Sure.
A clear vision of the past can help show the future as well. Most dot-coms aren't in nearly as strong a position as AOL was in the Time Warner deal. Not only does AOL have a higher market capitalization, it also has profits that are four and a half times those of Time Warner's, even with one-fifth the revenue.
But by all accounts, Steve Case, AOL's boss, knew where he wanted to go. And when the time was right, he acted. The time may be right for you to move, too, before your future becomes part of your competitor's past. Rather than building an e-business, should you just buy one?The leaders in your particular market might be too covered in the gobs of money Wall Street has been throwing at them to be touchable. But the more minor players might be amenable. Not being the leader doesn't mean they don't have the technology or talent to make the grade, with help.
Look at CVS.com, which started life as Soma.com, one of two or three drugstore start-ups scrapping for share online. CVS bought Soma.com and helped turn it into one of the more successful drugstore sites. CVS used its stores and marketing know-how to extend the business, including a partnership last week with popular medical information site Healtheon/WebMD.
In the hot toy market, the parent company of KB Toys avoided the embarrassment Toys R Us has suffered by teaming up with Brainplay.com, an online kid products retailer, to build the most successful clicks-and-mortar toy operation of the season.
It only makes sense that if an online competitor is ready to eat your lunch, you join him for the meal.
If you can't buy a competitor outright, invest in one, then offer services you've built that it has to pay others for, like logistics, product development or technical support. Let the competitor make a sale online and fulfill it from your own inventory, taking a cut for the service and hopefully another one from the profits you've helped your partner make. If your partner succeeds, you may make more from the investment than from the sales.
But money isn't the only thing to be made. With an e-commerce partner you can grow your own Web talent as well. Seed your partner's staff with some of your people, whose mission is to learn how to build an online business, then bring them home to plant that knowledge throughout the rest of the company. That kind of joint development can turn independent companies working in two different worlds into a hybrid organization that can operate effectively wherever there's money to be made.
And with any luck, you'll be able to do it without giving away the store -- or at least selling it -- just to be credible online.
(Kevin Fogarty is Computerworld's business editor. Contact him at email@example.com.)