Internet Strategies That Work (Maybe)

By Miranda's reckoning, corporate ventures have three to six months to get their act together after the first entrants announce that they are up and running. That's hardly a lot of breathing room. At LevelSeas, eVolution sought input from BP Amoco, Cargill, and Shell along the way, but it established ground rules for the interactions. Every week or two, parts of LevelSeas's operating system would be kicked back to the shareholder companies for feedback. The short cycles of building and learning helped LevelSeas to incorporate winning features without falling behind schedule.

More than once, the process threatened to spin out of control. But eVolution anticipated a tug-of-war among shareholders over LevelSeas's capabilities and created a powerful central figure -- the design director -- who is responsible for brokering all of the competing claims on the evolving system. "We've become religious about the design director," says Miranda. "Every startup we're involved in has to have one. If he's not a very strong character, he will get ripped in different directions by the shareholders."

Miranda has come to think of the design director as an Internet counterpart to the chief designer for a new automobile. It's an analogy that springs partly from his consultant's admiration for the focus and clarity of the design team at Ford's Jaguar unit, which fought off the many committees that were attempting to water down the design of the popular XK8 and make it cheaper to build. Thanks to their perseverance, Jaguar wound up with a winner. "The design directors at LevelSeas and at the other companies that we're involved in have the same authority," Miranda says. "That person makes the final calls after taking input from all directions. It sounds far-fetched, but these are complicated technologies to build. Like an automobile, they have so many pieces that have to work together."

Strategy on a Whiteboard

There's another benefit to clear lines of authority: They make it easier for a complex venture to change direction. Originally, LevelSeas envisioned that it would make its money from commissions it earned by matching cargoes with ships and setting prices on a Web-based exchange. But with the arrival of eVolution and its focus on aiming at the most-profitable opportunities, LevelSeas shifted its strategy. "Very soon into the first demos," Miranda says, "people started saying to us, 'The matching capability is interesting, but when will I be able to track all of the events and documents that occur after the ship has been chartered?' If we hadn't been listening carefully, we would have had the best matching engine out there that people weren't waiting for."

So LevelSeas changed course to become an online platform where many different parties can convene to manage the entire life of the voyage, from contracting with a shipowner to determining who pays if the cargo is late. It developed a system for managing the wave of documents that a charter generates and provided tools such as an online voyage calculator. "A lot of the benefit comes from creating a collaborative environment where lots of people can work together in one place," says Stuart Gent, 29, an eVolution partner who was design director at LevelSeas until Hext came aboard.

At the same time, eVolution was pushing to make the shareholders of LevelSeas more representative of the shipping industry, with a balance of big charterers, brokers, and shipowners, from the "dry" side (grain and coal) as well as the "wet" side (oil). The all-important strategy for building the technology also shifted from outside contractors to internal resources as the founders' names and eVolution's backing helped the company to attract top developers.

It is, all told, a blue-chip way to build an Internet company. But James Allen argues that few of these innovations could have happened if LevelSeas had been trapped inside the big companies that sponsored it. "Not only do you lose the ability to recruit great partners, but corporate decision making doesn't create enough good, strategic, out-of-the-box opportunities," he says. "The independent approach lets us make strategy on a whiteboard -- and in the Internet environment, that's the best way to make strategy."