Bjorne Espenes, CEO of Infopia sits down with Brad Baldwin from Rocky Mountain Voices and shares the Infopia story and highlights the business problems Infopia solves.

The following interview is a transcription of a vidcast published on RockyMountainVoices in May 2008.

Brad Baldwin: I'm here with Bjorn Espenes, CEO at Infopia. Glad to be here; it's a beautiful office. Bjorn, tell me a little bit about Infopia. When did it start? What was the idea behind it all?

Bjorn Espenes: Infopia was started in the fall of 1999; it had a very simple premise. At the time, it was the peak of the dotcom insanity and the average customer acquisition cost online was about $250. The average transaction size was $42. So that explains a little bit about why this didn't quite work at the time. The economics were that you had a dozen or so portals that had all of the traffic and then you had tens of thousands of companies bidding to get the traffic back to their site to drive a transaction out of it. That's why the metrics didn't work. What we did at the time we had eBay, Amazon, and other marketplaces where they had the traffic and they have the category infrastructure where you can place products in and drive the transactions on their sites. We started out as a service where we would do all this for the customers, manually, and we build software to automate the process to get products out to the marketplace. And over time the product would evolve from pushing products out there to handling picking up the order, taking the payment, integrate it with the shipping providers, managing the inventory, and managing that customers. They all wanted to build websites of the their own and drive customers back for repeat transactions. It's been over these years that we've done this, we've worked with a lot of online merchants, and as they become more and more successful we've built more software to add more functionality and to help them optimize their business. At the end that's what it's really all about.

Brad Baldwin: So e-commerce platform for existing marketplaces and in your own website. That's kind of the nutshell of it?

Bjorn Espenes: That's how it all started. We have a business operations platform today that deals with all of the inventory management, all of the feeding of the inventory out whether it's to their website or its other marketplace and search engines, etc. We have a website that we host for most of our customers, and we have connectivity with most of the big marketplaces so Amazon, Google, eBay, and all of these places. We also have CRM functionalities, how our customers manage their customer inquiries that come online that comes a lot faster than the brick-and-mortar world. They want a lot faster response now, and we've done a lot around that. A lot around loyalty pool programs, and we finally have a professional service organization. This isn't just about getting software in place that you can run your business on. You really need to take the business operations and fit what the software so that you can get the most out of it. There are endless examples of companies that buy software with hopes of changing their business and if you don't really know how to work it, chances are you're not going to. It's the standard example of people knowing 5% of the functionality of Microsoft Word. What we do impacts business: their profit margins, their sales, their employee satisfaction, all those things are impacted by what we do as a company. So it's important for us to not only provide the software but have the service level where we can integrate our customers business into a software platform that we have.

Brad Baldwin: I don't want to put you on the spot, or gets you scared, but I called a couple of your customers. I wanted to hear from them and hear how it's going. Both people I talk to happen to really, really love Infopia.

Bjorn Espenes: Which is how it should be, if we are doing our job right.

Brad Baldwin: These are both real big eBay sellers which have reached a peak where they couldn’t manage their inventory and shipping, and a lot of issues there. They are trying to sell into multiple marketing places which is a very manual process. Infopia automated their lives, with 50% return over last year using your tool. So something is good there.

Bjorn Espenes: Our business model is working with our customers over time. The worst thing that happens to us is that when we sign up a customer that decides to leave us for whatever reason: sometimes they go out of business, sometimes they are bought out. Occasionally, we screw up and we pay for that. Those are becoming very rare instances because for us the continuation with our clients is where the real value comes in. We want to work with them over time to grow their business. Make no mistake about it, there is one reason our customers come to us: they want to grow their business. They want to grow their Amazon business, their eBay business, their website business, their operational efficiencies, their profit margins, but there's always growth behind it. Whatever we do here, whether its product or service, we’re always looking at growth as the driving factor.

Brad Baldwin: One of the things that you highlighted here with all of these different marketplaces, is that you've got a pushbutton system or an integrated system where a merchandiser has the ability to show their product in a lot of different markets. Is that visibility one of the ways that people are increasing revenue?

Bjorn Espenes: Sure, there is this internal joke in the company where we chase after the green button. You know, push the green button and you will make money. The world is really getting more and more complex, as is selling online. There are more marketplaces and the bar has been raised. Customers expect more. If you ask a question, you want an instant response and want it to be on target. You don't want to ask a question and get different answers. You expect the checkout process to be flawless, there are all these expectations. The friction in the process of is expected to be at zero. In all of the Web 2.0 technologies, it is starting to get more interactive, more dynamic, where you leverage current history information in that process.

For sellers to build this on their own is becoming increasingly difficult. It's about getting the traffic to your product, it's about converting them, but it's also about creating a business foundation which you can execute from. The way that we have done this--which has dramatically changed the way software has changed over the last years--we've done a software service model. We host everything, so that there's no code running on any of our customers’ platforms. There's no big setup fee, you sign up with us and we’ll charge an implementation fee where we will map your business into the software and you load your inventory and set your selling terms and conditions and policies and off we go. You just pay us as you go.

Our revenue model is aligned with our customers. Our customers will pay us a small monthly fee just to get platform access for basic. And they will pay us a percentage of their sales for running their software, getting access to all of the channels, to get help from our account management team and our professional services team. This also puts them in front of a blueprint that will work as a way for them to follow to grow their business on.

Brad Baldwin: From my friend's perspective, she told me that this was somewhat of a business hurdle at first because she was thinking she had to pay you, then pay eBay, then pay Google, and pay all the people. By the time she pays her percentages should have no margin. But magically, her sales have increased, through whatever you guys have done, and she's actually seeing a growth versus a negative.

Bjorn Espenes: If you take the alternative of running this on your own, you should have more money left in your pocket at the end of the day. We’ll make the fee management with different marketplaces more effective and this will optimize your business operations. It will free up time for you to focus on growing the businesses and to free up financial resources to put back into the business. So if we do what we are supposed to do--and most of the time we do that--then our customers have a very positive event for their business.

Brad Baldwin: What does the customer look like? At what point do they come to Infopia? How do they find you? Where did they find your service or product?

Bjorn Espenes: Infopia is really built for a high volume seller, so what is a high-volume seller? We're looking at businesses that have to five employees up to hundreds of employees. Typically doing from half to $1 million a year in revenues to $60 million a year in online revenues. And we have customers in that whole specter. They typically are customers that are already selling online and have hit what they consider the glass ceiling with inventory challenges, optimization challenges, getting into more marketplaces and channels. They may have pain around how they service their customers and pain in having the same data in different places and different applications. They don't have a business environment where they can grow in and that’s when they reach out and we have a pretty effective and quick way to make their lives a little bit easier to manage.

Brad Baldwin: So it's not necessarily topline revenue as much as it is the volume, that is the challenge.

Bjorn Espenes: That's right. For us, to have a client that does less than $500k a year in online revenue, doesn’t make sense. There are other solutions out there that can really help people get started. But then you graduate from them. If you look at it from a market standpoint, half of revenue is being generated online is coming from the top 100 retailers online. And then you have the midsection that we focus on and then you have the micro-merchants, where it is a hobby. EBay has 700,000 part-time sellers on their site, which is a great business and a great opportunity, but our software is not for that.

Brad Baldwin: You guys have just launched some new products. Are there any secret things that are going on at INFOPIA that you want to share?

Bjorn Espenes: We have a new product that's coming out in early June 2008, we've had some new product releases over the last couple of months.  We announced a new website platform, and integration with Amazon for our sellers. We’ve been selling on Amazon for almost 8 years with our merchants but we really put an integration with Amazon that is way above and beyond what we've never done before. We are excited about it and our customers are very, very excited about it. We also just released a Web service which is another way of saying that we opened up the platforms. Our customers can have their own applications that they've written or other tools that they are using in their business. They can now move data in and out of our business easily. It will also allow them to manage their data in multiple locations without creating issues.

Brad Baldwin: Lots of exciting things to come. What is happening with online commerce, in your opinion? Is it good, is it bad, do you see it getting better?

Bjorn Espenes: It is very good. We track a lot of metrics here, internally. One of the good things about online businesses versus brick-and-mortar businesses is that you have all the information right there in front of you. Since March 1, 2008, we've recorded five or six top 10 eversales days in our system. We are counting holiday season with these days, which is big for online retail. People are talking about recession, but I'm not seeing it online yet. We may see it at some point, but it's good times for e-commerce.

Brad Baldwin: I think that the convenience factor is big. Searching and finding the product that you want and having the mail truck drive up and deliver your product is so much easier than fighting weather, traffic, whatever might be at the mall.

Bjorn Espenes: Absolutely. Personally, I buy everything online. You don't have to go anywhere. From a market standpoint, what we're seeing is that the online buying population is growing at a certain rate, but the wallet share that goes from online commerce versus brick-and-mortar is growing quite dramatically. So the existing online buyers are spending more and more dollars and that fuels the overall growth more than the new buyers coming online. Which is always an interesting data point for us to look at, because it emphasizes the importance of taking care of your online customers the first time. They will come back and they will spend more and more money online.

Brad Baldwin: I've been listening to a podcast recently from Business Weekly and the person was saying how the Johnson & Johnson CEO has found that Amazon.com is one of their top reseller of disposable diapers. It's mostly from grandparents and family and friends that don't want to trudge around to get it, you can have it delivered, have it be a gift. There's a lot of power in it.

Bjorn Espenes: There's not much to not like about it unless you like to go to the mall and do the touching and feeling. But the way the buying experience is defined and built these days is that you go and buy whatever you want, get it to the office or delivered to your home. You look at it, and if you don't like it, there is a preprinted label already there: put it back on the package and send it back. It doesn't get any easier than that.

Brad Baldwin: I’m glad to meet you.  Thank you so much, can't wait to hear more from you in the next year.