Internet euphoria may be calming down a bit in the US (the shares of leading companies like Yahoo and Amazon are 30% to 40% below their peaks), but in the UK it is still in full bloom. Once the tag "dot.com" is attached to a corporation it becomes today's equivalent of the philosopher's stone, turning baseline companies into gold. The trouble is that hardly anyone seems to be making any profit out of selling to the consumer (most of the money is being made by providing the infrastructure of the information highway and in business-to-business deals). For the rest it might as well be dot.communism, since they aren't making money (except in capital gains). One problem is that the new companies are cutting out the middle person only to find that the savings are offset by the increased cost of marketing to tell people they have cut out the intermediary.
The latest start-up, HomeFreeHome (announced yesterday), aims to put the traditional estate agent out of business by offering sellers the chance to advertise their homes on the web for free. Since polls show that estate agents vie with journalists (among professionals) to be foot of the table in public esteem, this might be a shrewd move. But will it succeed? A spokesman for estate agents yesterday claimed that "nothing can replace the interpersonal skills which the estate agent brings to the transaction". Not everyone would agree - though, left to themselves, people might find it tough to fix prices for their houses.
In the US the equivalent of estate agents have survived by ganging together to produce their own web presence, on the basis that there is safety in numbers. HomeFreeHome hopes to recoup its investment by attracting advertising for services associated with house purchase from conveyancing to kitchenware. They may succeed. But they will have to overcome the problem of so many startups which look terrific from all angles except one: the bottom line.
