In the past two years, Jeeves has inked deals for its search services with more than 75 companies, including Barclays, Dell, Ford, Microsoft, Nike, Office Depot and Radio Shack. The b-to-b side of the house brought in $10 million in the first quarter of this year and now accounts for more than half the company's revenue. "I got full return on my investment in one year," says Ed Campbell, a senior official at Interact Commerce Corp., maker of SalesLogix software, which spent more than $1 million on a Jeeves search package.
But happy clients won't ensure the survival of Ask Jeeves. The company has been burning money at a rapid clip: Last year Jeeves' revenue grew to $97 million, but losses ballooned to $188 million. And for a few days in April its stock dipped below the dreaded $1 mark.
First-quarter results reported on April 25, however, suggest Jeeves is at least moving in the right direction. CEO George "Skip" Battle said revenues reached $19 million, up from $18 million the same quarter a year ago; net losses were down to $39 million, from $47 million. With $87 million in the bank, he predicted pro-forma profitability (which excludes stock-based compensation, amortization of good will from acquisitions and one-time items such as restructuring charges) by the fourth quarter of this year. But as advertising revenue continues to decline, survival will depend on signing up more corporate clients - and on more cost-cutting, which Battle claims will save the company $50 million this year. "I'm more optimistic now even than when I came here as interim CEO in December," he says.
Maybe so, but the market doesn't agree. Jeeves' stock has traded at or below $5 for the last five months.
In 1998, as it became clear Yahoo and AOL were winning the portal wars and Ask Jeeves was going to be an also-ran, Jeeves executives began questioning their ad-based business model. Worrying that the bigger brands would capture the lion's share of advertising dollars, they debated whether to add b-to-b services to their offerings. They never resolved the issue or developed a plan. Instead, board member Dan Miller and then-CEO Rob Wrubel "just went out and got some customers," notes Battle, a board member at the time. "There were customers before there was a business plan."
What execs realized was that the company's natural-language search technology - which allows surfers to ask straightforward questions rather than use keywords - was ideally suited to business customers, many of whom were Net newbies. If you ask Jeep.com, "Does the Jeep Cherokee come in purple?" the site comes back with "What colors are available for the Jeep Cherokee?" and then lists the current range, from silverstone to patriot blue.
Throughout 1999, as big business hurried to catch up with the Internet revolution, Ask Jeeves found clients willing to pay up to $1 million a year for customized service. When the company went public July 1 of that year, most of the buzz was about the search engine. But big brands like Compaq and Dell had become Jeeves clients that summer and helped push the IPO to stratospheric heights, with a first-day close of $65. Corporations began flocking to Jeeves, in most cases hoping to improve customer relationships and cut call-center costs. "The particular product we're selling, brokerage services, depends on speed and efficiency," says Dave Whitmore, senior VP of customer experience at Datek Online, a trading service that's one of Ask Jeeves' most enthusiastic clients. "If a potential customer comes to the site for the first time and fishes around looking for answers, all the while getting more frustrated, then that undermines the message my marketing guys are sending out every day, that we do this well."
