Lee Hancock doesn’t think it unreasonable to expect his 2-year-old startup to become bigger than Yahoo! Inc., more useful than the yellow pages and maybe even the boldest contribution to navigation since Magellan circumnavigated the globe.
He’s a long way from realizing those lofty ambitions, but his business, Irvine-based Go2 Systems Inc., is a bit closer to getting there, thanks to deals forged with two of the nation’s largest wireless phone service providers, two more signed but unannounced agreements and three more in the works.
Go2 runs a service that acts as a phone directory, map and compass wrapped up in one. Using a Web-connected wireless phone, customers can find the nearest auto shop, movie theater, restaurant or businesses from a multitude of other categories based on where they are at the moment.
Thanks to deals with Sprint PCS and Verizon Wireless, Go2 pops up as the default directory for those firms’ customers, providing an almost guaranteed audience. With its signed and pending agreements, Go2 will have access to up to 70% of the nation’s wireless phone users,depending on how quickly current users adopt their carrier’s wireless Internet services, a big caveat.
Though anyone with an Internet-ready phone can log onto the Go2 service, it’s easier to get to when a wireless carrier adopts it as a default service, which gives it a presence on customers’ opening screens and easier access through automatic log-ons.
Like a yellow pages directory, the company makes money by offering premium listings to real-world businesses, which unlike many of their e-commerce counterparts are making money with tried-and-true brick-and-mortar business models.
“It revolves around driving traffic into their store,” Hancock said. “Not to their Web site, their store.”
Go2 has set up a network of co-branded Web sites that allow Internet users looking for a nearby business to type Go2 plus the business name to find it; people looking for the nearest, say, Jiffy Lube would direct their Internet browsers to Go2jiffylube.com to find a site listing the oil-change firm’s nearest locations and an advertisement. Similarly, people looking for any oil change center, would go to Go2oilchange.com. Eventually, location-tracking phones could make it possible to give turn-by-turn directions to any location.
Several other prominent chains have signed on to use the service, including Cinnabon, Johnny Rockets, Century 21, Diedrich Coffee and Days Inn.
Despite the small number of wireless subscribers who use the Internet through their phones now, analysts expect their ranks to grow quickly over the next few years as Internet service becomes standard fare for wireless calling plans. Market research firm Cahners In-Stat Group estimates that 25 million people will use the Internet over their phones in 2003, compared with about 1.7 million now.
Some analysts predict that within five years, people will use the Internet from their wireless phones, handheld computers and other devices more often than they do from desktop PCs. That, Hancock hopes, will give early players a head start in becoming to wireless Internet users what Web portal Yahoo! has become to millions of Web surfers today.
The service, Hancock said, is well-suited to mobile phones, since,by definition,users are on the move and trying to get somewhere. And, as he points out, traditional printed yellow pages represent a $12 billion-a-year business in the U.S.
The prospect has lured $10 million in venture financing so far, and Hancock said he’ll close a bigger round soon. The venture has attracted the attention of at least one well-known Orange County financier, Walter Cruttenden, who sits on the company’s board of directors.
The company is growing quickly. It employs about 100 people now, up from eight at this time last year.
The company has a long road ahead of it. Only a small fraction of wireless phone users have Internet access now, and it’s not clear how quickly the new technology will be adopted. Go2’s system, meanwhile, works best when using a new addressing system that takes some getting used to.
Go2’s biggest challenge will probably come from established Web portals such as Yahoo!, which offer similar services and have their sights set on the wireless arena.
Another issue could be protection of its brand name. Though Go2 Systems claims a trademark on the name “Go2,” a multitude of other online ventures have some combination of “Go” and “to” in their name, including Pasadena-based online directory GoTo.com Inc., Disney’s Go.com and Seattle’s Go2Net. Hancock said he is “in discussions” with some of those companies on how to avoid brand confusion.
Until two months ago, Disney and GoTo had fought over their trademarks, too. In a May settlement, Disney agreed to pay $21.5 million and stop using a green circle logo that resembled GoTo’s.
Meanwhile, Go2 also faces competition from so-called domain-name squatters, people who register Internet addresses in hopes that businesses with similar names will buy them at a premium. Even if Go2 can wrestle its name from the copycat Go2 sites, having to take legal action could slow business. As a precaution, Go2 has reserved all sorts of brand names with the Go2 prefix without announced agreements with those companies,Go2mcdonalds and Go2dennys are among them,but it isn’t clear whether that move brings up trademark problems of its own.
Still, Hancock is counting on Go2 becoming a strong stand-alone brand.
“It’s a great brand, and our goal is to have Go2 everywhere,” he said. n
