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Defragmentation Featured

9:35am EDT July 22, 2002

Kevin Lacamera went to graduate school in English, but before completing his dissertation he had a shocking revelation -- he didn't like books.

Instead, Lacamera discovered he was fascinated with technology and devoted his spare time to building Web pages and reading up on the latest software.

So when Lacamera left Case Western Reserve University's grad program in 1998 -- just short of completing his Ph.D. -- it was with no regrets. He met Rick Ferris, a Cleveland real estate broker, and in March of this year, they founded Rentjungle.com, one of the first dot-coms to try to bring a bit of order to the highly fragmented apartment rental industry.

Earlier this summer, Rentjungle.com opened as a search vehicle for prospective tenants seeking apartments. But realizing that targeting consumers only has led to many a dot-com's downfall, Lacamera quickly abandoned that idea. The company now uses a business-to-business model and targets apartment managers and product vendors.

It's a place, he says, where managers can bid on refrigerators and buy tape or carpet, track orders and do their accounting. That made it easier to secure funding. Lacamera and Ferris also found that demand for such a service was untapped.

Says Ferris, "Throughout the apartment management profession, the purchasing procedure has historically been a poorly controlled, heavily paper-based activity."

Lacamera adds that buying and selling supplies for apartments is normally a long process of calling, using catalogs, tracking purchase orders and getting them approved.

"With Rentjungle, the process becomes very efficient," he says.

So while the current operations aren't exactly what Lacamera and Ferris envisioned when they drafted their business plan, such is the way today as fledgling dot-com companies learn to adapt to the emerging business world on the Net. Here's what they've learned.

Pair up with powerful allies

According to Lacamera, Rentjungle's entire concept would have cost about $100 million to build from scratch. Knowing that type of funding just wouldn't be possible today, he and Ferris sought out a partner to design and maintain their site.

They partnered with PurchasePro.com Inc., a designer of browser-based e-commerce marketplaces whose client list includes companies such as America Online, Office Depot and Sprint.

"PurchasePro brings customer support, sales and an aggressive campaign," says Lacamera. "I think they picked Rentjungle because it brings them access to a great market. After all, we'll have 100,000 potential buyers in the United States alone," as large a market as the other companies PurchasePro manages.

Keep it simple

"One of our primary concerns was making Rentjungle easy to use," says Lacamera. "So it's not only user-friendly, it's idiot-friendly."

Buyers are free to use the same vendors they're already buying from. Rentjungle will even post existing catalogs if they're available from vendors. This way, buyers can have that extra comfort level.

"We understand that people are being asked to change the way they do things, but we offer a support system," says Lacamera.

The support system is extensive. PurchasePro will e-enable any client that is not already so enabled. Additionally, buyers are assigned an assistant who will call clients every three days to make sure the system is working.

"If they need hand-holding, we will provide it," says Lacamera.

Ensure profitability

Many big name dot-coms -- from Amazon.com to eToys -- are struggling to make money. Most of the rest have watched their market values plummet. So Lacamera and Ferris built in a safety net to ensure a reasonable level of profitability and make their investors feel comfortable.

They've set up a traditional membership fee system to create a continuous revenue stream. But, they also recognize that if the real estate market shifts and the fee suddenly becomes difficult for clients to come up with, they can obliterate it and still make money through other means.

First, there is a vending transaction fee. Rentjungle charges a fee to vendors to fill a purchase order or bid request.

"For example, a vendor will pay $3 to fill an order for 10 refrigerators," says Lacamera.

The fee is small compared to the thousands of dollars in business the vendor gains through exposure to Rentjungle's users. Lacamera's research shows that the acceptance rate for this charge is 100 percent.

The other fee is the $9 transaction fee assessed vendors who want to respond to bid requests. After vendors are notified that buyers have bid on their products, they pay this fee if they choose to respond to the bid request and pursue the transaction. Lacamera's research shows this response rate to be about 80 percent positive.

Whether clients take to the concept remains to be seen, but with such high demand for rental units and supplies in place like Silicon Valley, Lacamera is banking on its acceptance in the Northeast Ohio community.

"We like being in Cleveland," he says. "It shows you don't have to be from Silicon Valley to be successful." How to reach: Rentjungle.com, (877) MY-NEW-PLACE

Courie Weston (cweston@sbnnet.com) is a reporter for SBN.