To all - another NYT article, this one about "bluemountain," the Internet greeting card company.
January 23, 1999
60's Messages in a 90's Medium
Feel-Good E-Mail Cards Emerge as a Web Powerhouse
By LESLIE KAUFMAN
BOULDER, Colo. -- It somehow comes as no surprise to learn that the
headquarters of Blue Mountain Arts, a greeting card company that set
up shop here in 1971, used to be a hot tub palace. The tubs are gone,
but it is not hard to imagine the company's founders, Stephen Schutz and
Susan Polis Schutz, kicking back in the buff in the steaming water. The image
fits nicely with their self-proclaimed mission: to help people communicate
their deepest emotions.
What is surprising is that this
touchy-feely principle has
helped propel Blue Mountain to
the very top of the fierce world
of E-commerce: its site is now
the Web's most popular
"shopping" stop.
Moreover, at a time when
E-commerce companies attract
loads of venture capital and
promises of through-the-roof
stock offerings, Blue Mountain
is the rare case of a site that
has rocketed to the top tier of
the Internet without cashing in
-- yet. Instead, the company is
trying to pull off a truly tricky
feat: staying true to its original
mission to serve the cause of
heartfelt sentiment while
starting to be serious about making money.
And in doing so, the family that runs Blue Mountain reflects the twin impulses
that rule the Internet: an openhearted, free-wheeling, spread-the-word sort of
place that has also been profoundly altered by the temptation of potential gold.
Until two years ago, Blue Mountain was a small card and book publisher,
featuring for the most part the inspirational art and poetry of the Schutzes and
a coterie of like-minded contributors.
Full of bald announcements of emotion and feel-good pep talks -- card titles
include "Believe in Miracles!" and "To My Daughter, With Love" -- the cards
captured a loyal but limited following. The company is privately held, but
according to its own estimates, Blue Mountain, with about 100 employees,
accounts for just about 1 percent of the $6.3 billion greeting card market.
Hallmark, by comparison, accounts for 42 percent.
In September 1996, the Schutzes, both 53, started a Web site. Less
concerned with possibly cutting into their own paper card sales than with
reaching out, they decided to give the E-cards away. They were an instant hit.
Blue Mountain cards began popping up in e-mailboxes all across the country,
with colorful animated greetings for just about every occasion, from
embracing polar bears for Hugging Day to an unfurling rose for Robert Burns
Day.
Even though the company has never paid to advertise its Web site
(www.bluemountainarts.com), its growth has been staggering, even by
Internet standards. In November, it passed Amazon.com as the most- visited
shopping site, according to Media Metrix Inc., the leading Internet audience
measurement firm. (Yes, even though Blue Mountain gives its cards away,
analysts still count it as commerce.)
In December, it became the
10th-most-visited site on the whole
Web, putting it in a league with America
Online and Yahoo. Blue Mountain has
now reached 21 percent of the entire
Web audience, or some 12.3 million
people.
When it comes to E-commerce, the
company is so far out in front of Hallmark and American Greetings, both of
whose Web sites charge a fee for E-cards, that Jared Schutz, 24, the
founders' son and the company's vice president for business development,
calls them "irrelevant."
Yet even as Blue Mountain's Web site has flourished by giving cards away,
the need for money has grown. For starters, competitors, backed by big
venture capital dollars, are using advertising and professional-quality graphics
to cut into Blue Mountain's lead.
There is also the question of cost. Right now the Web site is being carried by
the Schutzes' publishing business, which has experienced 20 percent annual
growth since the company went online, but it is definitely a drain on both
finances and management energies.
Finally, there is the lure of loot. Mention making a profit and Susan Polis
Schutz sounds a bit annoyed. "Frankly, I don't care about that," she says
curtly. Her ambition is for the site to become the "poetry and emotional center
for communications on the Web."
That explains, in part, why the Schutz family has turned away a steady stream
of interested buyers and investors. Still, the opportunity to go commercial has
piqued at least the second generation's interest. "When you constantly have
New York investment bankers beating down your doorstep," Jared Schutz
said, "it doesn't require too much of a leap of faith to realize that we have
something enormous on our hands."
The question now, somewhat paradoxically, is
what, exactly, the most formidable merchant on the
Web can sell. Not cards. Users now expect those
free. At the end of November, Blue Mountain
started experimenting with taking ads from 10
partners -- the biggest are Discover Card,
barnesandnoble.com and Qwest. Ms. Schutz calls
the ads, which are small and not featured on the
main page, "the least obnoxious way" to support the
enterprise. Still, they are not without risk.
Blue Mountain has developed the kind of personal relationship with its
customers that most merchants -- including those on the Web -- can only
dream of. For a surprising number of Blue Mountain's users, the warm
feelings they feel when sending an E-card have spilled over to their electronic
messenger. They have sent letters of thanks and also of a much more
personal nature.
Craig in Canada, for example, recently e-mailed: "Tonight, I chose the words
of Susan Polis Schutz to ask the woman I love to marry me. Tomorrow, she
should pick up her e-mail in Jakarta, Indonesia, and give me her answer. What
joy this will bring to my life if she consents to be my wife." (She said yes.)
But this intimacy also carries hazards. James McQuivey, senior analyst for
online retail strategies with Forrester Research Inc., said: "It is an extremely
delicate community. Advertising is O.K. with them as long as it is perceived
as an extension of the original service. The minute it goes from a
serendipitous 'I am just thinking of helping you out' to the hard sell, they will
lose trust."
So far the job of advancing bluemountainarts.com's business side has fallen to
Jared Schutz. Though close to his parents, he appears to be cut from different
cloth. A recent graduate of Princeton, he has the pallor and stoop of Bill Gates
and a hint of the same ambitions. While his parents spent their early 20's
traveling around the country selling artwork from their beat-up van, Jared, at
a similar age, was busy co-founding and selling several Web businesses --
including American Information Systems, Stardot Consulting and Sportscape.
Someday, he said, he would like to run for public office.
In his view, Blue Mountain has enormous commercial potential. "The future is
electronic greeting cards, and we have a 70 percent market share," he said. He
outlines a plan for expansion that would do any Silicon Valley charger proud:
teaming up aggressively with other Web sites, hiring a chief executive with
experience in expanding a business rapidly, recruiting top programmers to
improve the site's graphics and developing his own synergistic enterprises.
One example of Jared's initiative has been persuading his parents to invest in a
start-up he created called Proflowers.com. Proflowers, which gets free
advertising on the Blue Mountain site, allows customers to order fresh-cut
flowers directly from growers, eliminating the flower shops. He says the point
of the flower company is to provide efficiencies to the customer. But if it
takes off, it will also provide a way for the Schutzes to profit from their Web
site without tarnishing its name.
Such commercial game plans may sound slick for Blue Mountain, but the
competition plans to go much further. Tony Levitan, co-founder of
E-greetings Network, No. 2 in the field, said his company, which used to sell
some cards but made all of them free in November, will catch and pass Blue
Mountain by the end of the year. As Levitan sees it, his rival has done him a
great favor by raising awareness of E-cards. He says that the venture capital
that has poured in has helped him to create a more sophisticated site
(egreetings.com) than Blue Mountain's and to attract cards featuring name
brands like King of the Hill and Star Trek.
Levitan, a recent Stanford M.B.A. with
no do-good pretensions, has a clear plan
to exploit his free site. To use
E-greetings, a user must register and
give up information like birthday, gender
and address (none of which Blue
Mountain asks for).
He says he can package these data with
information about a visitor's emotional
state garnered by the choice of card
(grief, celebration) and sell them to
advertisers so they can channel their pitches more accurately. After sending a
Valentine's Day card, a 30-year-old man will be shown an ad for a bouquet of
flowers in the $60 range. A 20-year-old man sending the same card would see
an ad for a $20 bouquet. A new parent sending birth announcements would be
shown a banner for the Pampers site. And so on.
"We have proven that we can affect the next click after sending the
E-greeting," he brags.
Blue Mountain is not shy about defending itself, of course. Convinced at
different times that high-profile corporate rivals were engaged in unfair
practices, it has sued and prevailed. In 1983, it won undisclosed damages and
a cease-and-desist order against Hallmark for copying Blue Mountain's designs
and trying to exclude its cards from retail outlets. Last month, a California
judge handed it a temporary injunction against Microsoft, whose junk mail
filter had been tossing unread Blue Mountain cards straight into the trash.
For Blue Mountain, however, the looming decision is not so much about
fighting the competition but deciding whether to join it. And if it does, what
will happen to the company?
"On the Internet," said Howard Rheingold, author of "The Virtual Community"
and a longtime Web watcher, "it is assumed people are in business to sell out,
not to build something they can pass along to their grandkids."
Copyright 1999 The New York Times Company |
