Streamline Delivers the Goods

About once an hour, a bell rings inside the headquarters of Streamline Inc., a Web company based in Westwood, Massachusetts. It signals that yet another family has subscribed to the company's ever-more-popular home-delivery service. Every time that bell rings, Streamline's employees stand and applaud - not just because the company got a little bigger, but because one more family got a little saner.

"I want to simplify people's lives," says Tim DeMello, 39, Streamline's exuberant founder and CEO. "That's what I'm passionate about. That's what I believe in."

Most outsiders who try to understand DeMello's company misunderstand it - at least at first. Here's how the service works: Customers pay a $30-per-month subscription fee. In return, the company installs a Streamline Box in the customer's garage. The box has three parts: a refrigerator, a freezer, and a set of dry-storage shelves. Next a Streamline field agent, equipped with a bar-code scanner, visits the home and records what the customer already has in the fridge, the pantry, the medicine chest. The agent then creates a first draft of the customer's "personal shopping list."

Streamline posts the list to its Web site, where the customer can edit the list and place orders as often as once a week. Customers select from more than 10,000 grocery items - everything from diapers and cereal to fresh seafood and custom-sliced pastrami. They can also order prepared meals, rent videos, arrange for dry cleaning, and ship UPS packages. As the standard list gets more and more refined, the ordering process gets more and more simple. Eventually, Streamline estimates, the process requires only 20 to 25 minutes per week.

The obvious conclusion: Streamline is an online grocer that competes with rivals such as Peapod and NetGrocer. Right? Wrong! "We are not in the grocery business," DeMello insists. "We are in the lifestyle-solutions business. We're not a product business, and we're not a service business. We're a relationship business."

It's a distinction with a profound difference. Plenty of Web companies operate on the cutting edge of technology. Streamline operates on the cutting edge of service. It makes a stark promise to its customers: In return for $30 per month, it will save them three to five hours per week - hours that they now spend on routine chores. And it will perform those chores with such attention to detail that customers will never consider going back. "We have taken the characteristics of the grocery product - necessity, frequency, reliability - and leveraged them into a home-based relationship with customers," says DeMello. "That's the asset we're creating."

The idea is so simple that it sounds obvious. The market potential is huge - and largely untapped. But how does a startup like Streamline, which unveiled its service less than two years ago, turn such an enormous opportunity into an enduring business? By creating a set of operating principles that defy conventional wisdom both on and off the Web.

Consider the people behind the company. Streamline's CEO started by assembling a dream team of executives - not one of whom had ever worked for a grocery company. DeMello himself spent six years as a stockbroker before he started a computer-game company. Tom Jones, 53, Streamline's CIO and technology wizard, is a database-marketing guru who has been a professor at the Harvard Business School. Kevin Abt, 42, the senior vice president, founded Takeout Taxi Inc., the nation's largest multi-restaurant delivery service. Mary Wadlinger, 38, vice president of customer quality, was director of process reengineering at Melville Corp., a retailing giant whose companies then included CVS, KB Toys, and Marshall's. Frank Britt, 32, vice president of marketing, and Gina Wilcox, 29, director of strategic relations, both came from Andersen Consulting, where their work focused on the consumer-products industry.

"When you're inventing a new business model, one critical question is, What kind of team do you put together?" says Britt. "We're pursuing a 'best available athlete' strategy. It's like when a pro football team drafts a college sprinter and turns him into an All-Pro receiver. It's not about what you've done. It's about what you can do."

The same logic applies to Streamline's strategic partners. DeMello's major investors include Intel, SAP, and GE Capital. These allies add money, technology, and clout to Streamline's homegrown ideas and passion. "GE Plastics is redesigning the Streamline Box," says Britt. "We could never do that ourselves. What startup could?"

Like most Web entrepreneurs, DeMello and his colleagues have huge ambitions. By 2004, they plan to have 8 operating regions, to be in the top 12 metropolitan areas, and to serve more than 1 million homes. (At which point, given current revenues per customer, Streamline would boast sales of more than $5 billion per year.) But unlike many Web entrepreneurs, the leaders at Streamline are patient and persistent. Forget "Get Big Fast," the current mantra of the online world. Streamline wants to Get It Right First - and then to grow like gangbusters.