How to Stay on the Move ... When the World Is Slowing Down

The company also tried to avoid the blanket free-shipping policies that cost many e-tailers millions. "We'd see other sites where customers would go in and cherry-pick the cheapest products, and the sites would wrap them up and ship them out for free," David says. "We decided that it would be very hard to build a business and cover our costs that way, which is what we had been chartered to do. So we offer free shipping if people order more than $100 -- to get customers to put together a bigger shopping basket. We've also offered a flexible return program, which allows returns to be made by mail or to a store and which helps people worry less about making a purchase. And flexible returns mean less of a margin hit than free shipping."

The Target.com group and the executives who oversee it don't seem at all downcast about the disappearance of so many startup e-tailers (and maybe this shouldn't be surprising). "All the stupid stuff had to burn away," says David. "Now you have the makings of a stronger fire. At our last meeting with our chairman, his message was, 'Don't slow down at all.' "

You (Don't) Say You Want a Revolution

Like a teenager reminiscing about prom night, Mike McCue revels in the stories of his chow-down at the Internet-venture-capital banquet. Those were brilliant times. "You could walk into John Doerr's office at Kleiner Perkins and say, 'I'm going to change the way people use telephones,' " recalls McCue, 33. "And he'd say, 'That's great. Let's do it.' "

Investors, customers, and employees all seemed more willing to enlist in revolutions back then. "There was a sense of optimism and possibility two years ago," McCue says. His company, Tellme Networks Inc., of Mountain View, California, raised $238 million before the optimism evaporated. McCue has kicked off a crusade to change the world. He wants to reinvent the corporate call center and help Tellme's clients deliver services and information through a sophisticated, speech-driven telephone system. But he's discovering that the world around him, which until recently couldn't get enough of change, has suddenly turned change-phobic. But he's not willing to put his cause on pause. "You have to keep the drumbeat going," McCue says. "Momentum is everything. Before, companies could use hype and buzz to disguise a lack of momentum. Now it's all about deals that generate revenue. Your mistakes show more now, and lack of momentum is more apparent to everyone. You can't stagnate."

But there's a flip side. "One thing we learned very fast is that a revolution for revolution's sake is nothing," concedes McCue, who cofounded Tellme after selling an earlier company that he'd founded, Paper Software Inc., to Netscape. "We honestly believe that what we're doing is converging the Net, telecom, and voice recognition to create the next-generation dial tone. You might call that a revolution, but we've tried to avoid calling it that. Rhetoric doesn't get you anywhere. You have to focus on the benefits that you can deliver to customers."

Call 800-555-TELL, and you can sample Tellme's technology, which enables you to navigate information services like weather forecasts, traffic reports, and news headlines by using voice-prompted commands. The service is based on what Tellme calls "Voice XML," a programming language that makes Web content available over the phone. Selling advertising on the 800-number is just a tiny piece of Tellme's anticipated revenue stream, though. The company also wants to develop speech-driven services for clients (such as rental-car companies, brokerages, and utilities) that provide automated, user-friendly account information, reservations, and customer services. Already, for example, Jiffy Lube has a Tellme-powered system that allows customers to schedule appointments.

Tellme also provides hosting services, which offer customers the use of services by any of Tellme's other client companies. For example, someone calling in for a weather report might be enticed into checking prices for a trip to Hawaii or perhaps into buying a new raincoat from Lands' End. Originally, Tellme had focused on providing its automated phone services to dotcoms such as eBay and priceline.com. Callers would have been able to bid on auctions or to name their own price (by phone) for hotel rooms or airline tickets. "For much of last year, we were thinking that the perfect customers for us were the Amazons and eBays of the world, so we had big deals cooking with all of the major Internet companies," McCue says. Those deals stayed unannounced. "We looked at our business and said, 'These dotcoms are going to have trouble. This is scary. It's not going to work,' " he recalls.