Information Age (IA): Can you give us an overview of how Egg has developed as an online operation since its launch in October 1998?
Dana Cuffe (DC): It's been an exciting three and a half years at Egg. We've had three major events – one was the launch, one was the initial public offering [IPO] and then the most recent one was in November 2001, when we went into profit. The most recent one was the most significant for us. The past six months have been tough in both banking and IT so we were really excited when we managed to go into profit in the fourth quarter of last year. We think we're now at the end of what we call our teenage years – we're growing up.
During that time, we've built a reputation of using innovative, small- to medium-sized suppliers and partners, which we hope will continue. A lot of that has to do with the fact that when we invest in technology we look for people like us – companies that do stuff a little bit differently.
IA: Can you describe the key elements of Egg's technology infrastructure, and how these young, innovative suppliers fit into your larger IT operations?
DC: We have a very large IT operation. We probably have one of the largest hardware footprints of any online company in the UK. We have more than 400 servers and we manage them all ourselves. We've not outsourced an awful lot. Part of that is because, I believe, in order to be a low-cost digital provider you need a lot of direct control over the infrastructure you're managing, so you can continually bring in innovation and control that innovation at a fast pace. It also gives you more control over making changes with technology, which we do a lot of internally.
Some of the big stuff is not that exciting – we run a combination of Sun, Microsoft and Dell machines. We're now moving to Windows XP on the desktop, and feel we've built quite a profitable relationship with Microsoft. We run an Oracle database. We run the GT-X application from [emerging UK-based vendor] Graham Technology in our call centre, and we use a [young] company called Lost Wax to do some of our more innovative development work around things like agent technology.
One company we use, that was small when we started but isn't anymore, is Vignette for our content management. We were Vignette's first customer in the UK. Vignette's a good example of how a company that's small can grow big off a couple of contracts. They admit their whole business in the UK and Europe is basically thanks to the fact they got Egg as their first customer.
IA: How do younger companies such as Graham Technology and Lost Wax get a foot in the door when you've already established relations with large companies such as Sun and Microsoft?
DC: Graham Technology is a good example of how we work. At the time we were looking at them we thought we were going to be a phone bank and that the Internet channel would be a nice back-up, so we were looking for a company that had merged both phone and online capabilities in the technology they offered. Like us, they were at the point of realising the time was right for an Internet offering. The fact they had the same sort of vision as us was the key factor that got them in the door.
Even now, the companies that are getting our attention are still small. One is [mobile software provider] Mobilistics. What they have done is do a little bit of research into the areas we're looking into, such as online payments. They put together a proposal and came to us with it, which is a lot different from what many of the other companies are doing. One of the things that are dangerous at the minute is, because things have dried up a bit, CIOs are getting a huge and increasing amount of calls from sales people. Everyone's calling everybody, and I don't have the time to meet up with everyone, so I don't imagine anyone else does either. So doing a bit of research to find out what the organisation that you're targeting is actually doing can help immensely.
We also have a new technologies group that looks at companies that are doing exciting things, but more often than not – probably more than half of the time – the companies that we're working with have found us rather than the other way round.
IA: Do you think you are unusual in your willingness to use technology and services from young companies?
DC: I think my experience from working with larger companies is that they have a predisposition to work with other large companies. Larger companies tend to be less innovative and more ‘in your face' in terms of stating, ‘This is what we offer'. We only invest in technology that is going to allow us to better touch our customers, so if you can make that technology part of your product vision, then you'll get a good match.
IA: What due diligence do you do on these companies? You've invested time and money in small companies that ultimately might not have turned out to be financially stable. How do you ensure you're not putting your operations at risk?
DC: It depends very much on the technology. We wouldn't want to bet our whole environment on one piece of technology. And I don't know that any of the larger companies are actually any more stable than the smaller ones. With technology changing every three years, you're looking at changing your infrastructure every three years, and, in the case of some components, every year.
I don't know that there's any risk built into such decisions as long as you're able to support them. We've been in situations where we've taken a contract out with companies and some of them have got into trouble but we've protected our investment. In some cases, for example, we have access to the source code in case anything happens to the company. I don't think we're creating any more risk by dealing with these small companies.
IA: So if a company approaches you saying it has a great new technology it thinks would be perfect for your business and offers you a free trial for three to six months, what's your attitude to that?
DC: I think it depends on how ‘free' it is. There's no such thing as getting something for free. Even if they give you the software or the hardware for free, you have to use up your own resources to implement it, analyse it and decide how it fits with the business. It's a shot in the dark. It has to be linked to this idea of ‘You're looking for this, this, and this, and we can do that for you'.
IA: Does the venture capital community ever come to you as part of its research? Do you find they actually listen to what the customers want before they invest in certain companies?
DC: It's surprisingly frequent the amount of visits we receive from either venture capitalists or the owners or brokers of these businesses. I think this is probably unusual though, and we have probably had more visits because we've done a lot of joint ventures with small, emerging companies.
IA: Young companies are often advised that the first thing they should do is get on the radar of industry analysts rather than potential customers. What role do the analysts play in your selection of technologies?
DC: The analysts are obviously part of our process of gathering information on products. I'd put them in the same category as our other sources of information – we talk to key people in our network who are doing interesting things. They know what you're doing and names of companies just start coming up. Mobilistics, for example, approached us with two other companies with a joint proposition. We don't call on people just because Gartner or Forrester have written a report on them.