BabyCenter: Causing a Cyberbaby Boom

 

Matt Glickman and Mark Selcow raise BabyCenter.com into a hot place for parents and profits

 

Ever since their days at Stanford University, Matt Glickman and Mark Selcow had thought about starting a business together. In those days, the two business school chums threw around a lot of ideas. However, nothing seemed compelling enough to warrant such a risky endeavor as a start-up company. So they took their degrees and headed out into the post-collegiate world, separately, to work in corporate America.

 

They both found themselves working at various jobs through the years that ensued. Eventually, Glickman ended up at software developer Intuit, where he managed the popular Quicken business platform. Selcow found his way to Amgem, a large pharmaceutical company.

 

Fast forward to 1996 ... Glickman, while still harboring residual thoughts of running his own business but comfortable in his job at Intuit, turned his attention to even greater aspirations. With his wife, Susie, he was thinking about starting a family. That's when the young couple found themselves cruising the Internet searching for information on babies.

 

"We were looking for all the things we didn't know but needed to know," Glickman recalls. "We were looking for products we'd need to buy, stores we'd need to know about. We thought the Internet would be a great way for new parents to get information."

 

Alas, for all the information available on the Web, they couldn't find any resources that offered information on prenatal and newborn care, child-care expenses or anything else involved with starting a family. Suddenly, a great idea for a new business popped into the young man's head, and he immediately got in touch with his old college buddy.

 

"What do you think about the idea of an [online] baby center? One place you could go for everything you need as a new parent," he probed. Even though Selcow was single, and the business of babies never really occurred to him, he agreed with his friend that the idea was a gem. After pondering the idea some more, the two men became confident that they had identified a hole in cyberspace, believing "this is what the Web is all about -- empowering people through useful information."

 

In the years since college, they had each gained valuable experience that complemented each other's skills beautifully. Glickman's time at Intuit had afforded him a strong consumer-marketing background. Selcow's time at Amgen had provided him with a solid base in the healthcare and pharmaceutical industries – vital cogs in the care of newborn babies.

 

In a matter of months, BabyCenter.com was born. And soon after, Glickman's first daughter, Emma, also made her debut. Since that time, both productions have matured wonderfully. In fact, BabyCenter.com has become merely the flagship product of BabyCenter, Inc., a highly profitable corporation that has piqued the interest of many industry investors. While still privately owned, estimates of the company's profits have been more than double expectations that Glickman and Selcow laid out in the original business plan. Additionally, the Web site already attracts approximately half-a-million visitors each month. 

 

From Conception to Birth

Glickman and Selcow had finally conceived an idea for a worthwhile startup. But raising a newborn business is hard work. It requires a great deal of time and money, as any business owner – and parent – knows. Time was not a problem, for the energetic men were enthusiastic about their new venture. Money, on the other hand, was harder to come by. Glickman says that the two men financed the original start-up capital on their own. They got the money wherever they could find it, including their personal credit cards. "We were financing everything ourselves," Glickman says. "That was our preferred venture capital source. We did it 'on the cheap' as much as we could."

 

No strangers to HTML, the pair set up shop in a spare bedroom in Glickman's Palo Alto, Calif., home and began to design the original BabyCenter.com prototype. They also laid out the initial business model in that room. "We wanted to provide [parents] with answers to the thousands of questions that they had," Glickman says of the original vision. "We also wanted to provide a place to conveniently buy the products they needed."

 

The products, however, would come later. The first order of business was to establish an effective means of parlaying information – and quality information, at that. Glickman and Selcow knew they already had the venue by which to distribute such information. "[On the Internet], you can put everything into one place," Glickman says. "There's no limit for space or page counts like in books. You can keep it up-to-date. You can personalize it. The power of the Internet and the computer make it easier for people to get what they want."

 

But who would provide the information? Although Glickman, who now serves as the company's CEO, and Selcow, Baby.com's president, had the technical knowledge and business know-how, neither was a professional journalist. Yet they wanted the information on BabyCenter.com to be professionally written, so they easily determined what to do next.

 

"We really needed to get expert editors," Glickman says. "So we went to Parenting magazine, which at the time was based in San Francisco but relocating to New York. We were able to convince a crew of [their staff} to come over and join us."

 

Among those joining BabyCenter.com was Deb Mignucci, Parenting's associate publisher, who became vice president of advertising for Glickman and Selcow. The two men also found themselves an experienced editor-in-chief when they hired Clare Ellis from Disney's Family Fun magazine. Additionally, they hired Andrew Neuschatz, founder of Infobahn, Inc., one of the earliest Web development companies, as director of technology. Finally, they turned to Jonathon Tuttle, also from Parenting, to serve as design director and turn the prototype into a first-rate Web site (BabyCenter.com recently won a Webby award for its design.)

 

Glickman and Selcow also recruited an advisory board of pediatricians, midwives and counselors to make sure the information on BabyCenter.com was accurate.

 

Quickly, the staff filed in, but the company had outgrown Glickman's spare bedroom. In addition, the new daddy needed to provide Emma with her own bedroom, so BabyCenter.com was on the move both figuratively and literally. The founders decided to invest in an office to house their new staff, and the company moved to a suite on Bryant Street in downtown San Francisco. According to Laura Hoyem, BabyCenter, Inc.'s marketing associate, the company is already outgrowing its new digs with its current 70 employees. But like most parents, it seems Glickman and Selcow don't mind investing in the upkeep of a healthy baby.

 

Making a Name

The problem with all babies is that they grow up before you know it. That is exactly what has happened to BabyCenter. In just two years, the company grew from a wide-eyed child to an adolescent filled with potential. And word of this rising protégé has spread quicker than diaper rash. According to Hoyem, most of the company's marketing success has come from its grass-roots efforts. "We wish we knew [how we did it]," she muses. In a nutshell, BabyCenter has spread the word through the medium in which it found it success, the Web. "We buy banner ads," she says. "Especially on a lot of smaller parenting sites."

 

That has led to a great deal of word-of-mouth promotion. Ask anyone who's been on the site, and they'll probably tell you they heard about it from someone who had a baby earlier. That fact only confirms Glickman's and Selcow's belief that people look to the Internet immediately when they get the news that the stork is on the way.

 

"A lot of people come to us before they even go to a doctor," Glickman says.

"That's the great thing about new and expectant parents – they talk," adds

Hoyem. "In fact, 28 percent of people find out about Web sites from another person."

 

Hoyem admits that company representatives do a fair share of spreading the word themselves, particularly by making themselves visible. "We do influence our marketing," she says. "We attend conferences for OB/GYNs and midwives. We exhibit and talk to them about our site."

 

Of course, it doesn't hurt that BabyCenter has been the subject of a lot of press lately. Articles on the company have been printed nearly everywhere, from The Los Angeles Times and The Wall Street Journal, to Forbes and Business Week, to this publication. Recently, BabyCenter.com made headlines again in the national press with its list of the top-100 children's names for 1998.

 

Growing up Fast

Maybe it's the publicity; maybe it's the profits. Whatever has caused BabyCenter.com's boom hasn't been lost on the financial world. Glickman and Selcow have long recouped their early expenses and profits continue to grow, although the private company won't reveal exactly how much they've grown.

 

Now other investors are looking to get in on the baby boom. According to Hoyem, the company has been able to raise more than $13 million in funds from investors, and those funds have helped BabyCenter, Inc. grow even faster. One round of financing came in October 1998, to the tune of $10 million. The money came from Bessemer Venture Partners, which has a history of investing in early-stage technology, retail and healthcare companies, Intel Corp., and Trinity Ventures, known for its successful backing of retail ventures such as Starbucks and Jamba Juice. 

 

The new money was earmarked for expansion into e-commerce. Until then, BabyCenter.com made most of its profits off advertisers such as Procter & Gamble, Johnson & Johnson and Clorox. But e-commerce has opened the door to a new world of profits for the company.

 

"It's something we really wanted to get into, and it makes sense for our audience," Glickman says. "It's already taken very well."

 

According to Glickman, the parents of 4 million babies born in the United States spend about $7,000 annually on car seats, rattles, teething rings and other baby gear. More than 35 percent of those parents are currently online, and as home computers continue to penetrate homes, that percentage will rise rapidly.

 

That is why, in October 1998, Glickman and Selcow used their new financing to open the BabyCenter Store, an online shopping center for new parents that hocks everything from diapers to toys to clothing. "We have everything you'd need for a new baby," says Hoyem. Currently, the store has 2,000 products, but Hoyem expected the SKUs to rise to approximately 10,000 products by the end of the first quarter of 1999.

 

At present, all of the site's products come from outside vendors, but Hoyem says the company is looking into developing it own line of products in the future. "We looked into developing BabyCenter T-shirts and things like that, but the products are the kinds of things you'd find in a store like Toys R Us," she says.

 

"You can get resources and products in ways that are convenient like they've never been before," Glickman says of his company's e-commerce venture. E-commerce and the Web let BabyCenter, Inc. take advantage of a multitude of options, according to Hoyem. "It's hard for some people to understand why the Web is so well-suited for this," she says. "[The information] can be personalized, you can be sent information that's relevant, everything's all in one place, and it's open 24-hours-a-day."

 

In addition, the e-commerce strategy has added other dimensions to the business. Now, the company has developed three distinct divisions. The first being the original "magazine-type" informational business, the second being the BabyCenter store, and the third is called Consumer Health Interactive, where the company takes products it developed, such as customized e-mail newsletters, and sends them directly to expectant mothers. "The newsletters consist of information on developmental issues, work-and-family issues – things that people want," Hoyem says.

 

The Future

BabyCenter.com has its share of skeptics, most of whom question whether the Web is a good fit for this particular business model. However, the numbers so far speak for themselves. Likewise, the numbers for the future seem promising, mainly because the Internet seems to be on a path for even more growth, and new-parent market is replenished on a continual basis. But the growth won't come without some gentle nurturing and hard work.

 

"We're growing quickly, but we still have a long way to go," Glickman concedes. E-commerce seems to be the catalyst of the future for BabyCenter, Inc., and more financial backing can be anticipated in the future, but whether it will be in the form of private investors or the sale of stock to the public is yet unknown. What is known is that now all new parents have a place to help them raise their newborn children.

 

Company Snapshot

Company: BabyCenter, Inc.

URL: www.babycenter.com 

Founders: Matt Glickman and Mark Selcow

Industry: E-commerce and online information

Location: San Francisco

Founded: 1996

Employees: 70

Revenues: undisclosed

 

Copyright © 2000 by Virtual Advisor, Inc. All rights reserved.