Tucows president and general manager Elliot Noss is particularly user-friendly where the Internet is concerned. He believes in the Internet as a meritocracy, which is how he manages his company, believing that the better it is for the user, the better it will be for Tucows.
In accordance with this concept, Tucows is attempting to improve its position, both with customers downloading software from its global site and with software manufacturers. This week, Tucows jointly announced with Israeli start-up Cydoor a deal, which seems to promise a new and interesting way of building a revenue base for the perpetually money-losing companies of the Internet era, while also financially benefiting Internet surfers.
Tucows is one of the most important Internet software distributors, the chief competitor of C-Net, with five million users and 100 million pages of exposure each month. The company was sold a year ago for $40 million to a group of investors, which included Yossi Vardi and the Steinmetz group. Rumors already existed at the time of an impending issue. "That is clearly the direction", Noss confirms. "We have not yet, however, presented a prospectus to NASDAQ".
Tucows has a network of 750 sites, most of which are outside the US and serve surfers from all over the world.
The next step is to start making a profit. In contrast to most Internet companies, which quote the history of Amazon.com to investors and wait patiently to see which way the wind is blowing, Noss wants to start seeing profits as soon as possible.
Iri Zohar of Cydoor offered him a route to get him there: creating connections with customers, suppliers, a flow of information and initial construction of a more profitable setup. Cydoor has developed a system that fits within other software that facilitates the presentation of Internet content within the other software. The content ranges from advertising to simple textual and graphic information, as well as forms that can be used for surveys of customers, e-commerce, or any other subject.
Tucows's choice was almost automatic. "We see ourselves as an infrastructures company. We looked for partners mostly from content providers, Iri Zohar explains. "Tucows is one of the most important distribution tools on the Internet, and their business models suit us well. They are well connected to Internet access providers, software developers, and surfers. For us, their users are the most important".
Zohar suggests moving the surfer-at-the-center model several steps forward. "We go to software companies and talk about change. In the current situation, software with millions of users is unprofitable, since no one pays for anything. We tell them to wake up and change their way of thinking. Their asset is their user base, but it has to generate revenue".
Another change suggested by Cydoor in current solutions is more efficient exploitation of computer use time. "Most companies appeal to the Internet surfer, who is exposed to everything the company has to sell him only while he is using the browser. When he's online and using e-mail instead of the browser, or when he's not online, they can't get to him. The combination of Cydoor's technology with the software allows the transmission of information in these "dead" times, through extensive use of embedded memory".
Exposure to advertising and information is only a small part of the possibilities created by Cydoor's technology. It can also be combined with part of an e-commerce shop. A purchase can even be completed while the computer is not online. The next time the computer is online, the software communicates with the server and automatically completes the buying process. One of the most common problems with shareware and freeware software commonly found in Tucows is non-payment for software. The sums involved are small, which most users don't pay simply because of the inconvenience involved. Cydoor's system enables them to use an online payment system, which is easy and intuitive to use. "If you can pay $0.70 for using ICQ by pushing a button, you'll do it", Noss says confidently.
Tucows found these possibilities especially attractive. The company has no regular contact with the majority of customers downloading software from its sites around the world. Combining Cydoor's system with software distributed through Tucows will enable Tucows to preserve the connection with surfers and offer them software in fields related to software that they have already downloaded from the site, as well as innovations, software upgrading, and so forth.
Tucows will contribute to Cydoor by giving it initial contact with its large clientele of software companies, and by suggesting to those companies the use of Cydoor's technology. Small software companies, which comprise the infrastructure for Cydoor's business, will improve their position.
All this benefits practically everyone, but another Cydoor deal completes the circle: Internet surfers also benefit. Cybergold is a site that pays users for some of their Internet operations. Cydoor has contacted Cybergold, and together the two are creating the perfect service for the Internet surfer: through Cydoor's system, it will be possible to measure the length of time during which a surfer uses software downloaded from Tucows. After a given length of time, 30 minutes for example, the surfer will earn $0.75 for using the software. During this time, he will be exposed to advertising in a Cydoor window, and each additional use and download will accumulate a little more cash for him.
According to Elliot Noss, value is the most important word: "In order for freeware to exist, value must be created from it - knowledge, money, service. Here we get to the customer in the right context. Cydoor helps us discover the customer's needs and give him what he needs, so that we don't bother him with useless announcements".
"We don't conceive of ourselves as Internet announcement sellers", says Iri Zohar. "We are an entity that brings Internet to the offline user".
See also: Start-up Review: Cydoor
Published by Israel's Business Arena on December 22, 1999