Network: How a little bribery can get you in a sticky situation on the Web

Charles Cohen tried politics and PR before launching Beenz.com, so he knows the value of a freebie.

Polly Sprenger
Sunday 19 September 1999 23:02
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In the carpeted halls of Silicon Valley these days, the word on every Web merchant's mind is "stickiness". It's easy enough to get punters to arrive at your site (a few million pounds in advertising should do the trick), but how do you get them to stay? A "sticky app" is what's needed, something to get them stuck, and once stuck, get them to spend.

The favoured sticky app of the moment wasn't born in Silicon Valley but in the faintly eccentric, Oxford-educated mind of one Charles Cohen, founder of Beenz.com, a company born of the inherent understanding that consumers will do almost anything to get something for free.

Beenz are Web scrip, given out by sites in exchange for some action by a consumer. If a site wants to know more about its users, it offers 20 Beenz to those who will consent to fill in a questionnaire. If it wants to send people to a certain under-visited part of the site, it offers an additional 10. Consumers can horde their Beenz, or spend them, trading the virtual cash for free goods, discounts and special offers. The killer app of the new economy, as it turns out, is bribery.

But for Cohen, now the chief technology officer of the company he founded six months ago, the idea is so much more. "It's good for everybody," he insists. "There's nothing exploitative or vindictive. The consumers are happy. They're getting something for nothing."

There is an element of idealism in Cohen's plan. Web companies need to work hard, and spend plenty to get eyeballs to their site. Rather than see the money line the pockets of direct marketers, why not hand a portion of it to consumers themselves? And consumers are more than happy to spend a few moments giving away data in exchange for a 20 per cent reduction in the price of their next holiday or pounds 10 off a Louis Vuitton bag.

Beenz.com, in return, monitors these exchanges, and charges the websites a minuscule transaction fee as the Beenz change hands. The company charges sites $.01 for every Been issued, and pays websites $.005 for every Been redeemed. Cohen said 125,000 Web users currently have active Beenz accounts.

Cohen says that the Beenz scheme takes advantage of an underlying imbalance on the Web: today, there are some six million sites out there, with only 120 million Web users. This means that, on average, there are only 20 viewers per page, and sites, he says, need to do something to differentiate themselves. Beenz gives consumers that extra incentive to visit, and revisit, a site that otherwise looks much the same as the next.

Silicon Valley seems to have developed a taste for the Beenz business model. Last week Cohen secured about $20m in new funding, including $4m from Larry Ellison's Oracle Corporation.

It's difficult to predict today just what the pitfalls could be for a scheme that seems to have winners on all sides, but Cohen said the company is prepared for the unknown. "We will have problems," he realises. "But we will deal with them in an adult manner." Despite the name, and the concept, Cohen was no bean counter himself. At 29, he started his professional life as a speechwriter for Robert Maclennan MP, then president of the Liberal Democrats. This position of power enabled Cohen to strong-arm Lib Dem MPs into making frequent use of e-mail and electronic bulletin boards.

After three years in politics, Cohen did some soul-searching and decided to enter commercial life. "I did my duty," he said. "[Then] I decided to make some money. I didn't want to go into lobbying, and I didn't want to be prime minister."

Having summed up his qualifications as exactly none, thanks to his degree in philosophy and physics, which he says "prepared me for absolutely nothing", Cohen decided to pursue a career in public relations. "I was good at dinner parties, but I'm not a very humble person, which is not good for PR," he said. "You have to be polite, respectful, diligent. I was a workaholic, but not inclined to agree, when I didn't."

Lack of humility proved fateful for his PR gig, but Cohen said the founders of the agency, Band & Brown, stood by him through thick and thin. "It taught me a lesson in loyalty," Cohen said.

PR gave way to Web design, and, finally, to an idea that Cohen says just wouldn't leave him alone. "I would buy Wired every month, and scan the index, waiting for someone to do it," he said. "It seems to have fallen into that `I wish I'd thought of it' category. That's kind of a weird feeling."

The beauty of Beenz as an economic model is its purity, Cohen says. Because the actual currency is virtual, it can be totally controlled by the company. They can experiment with scarcity, seeing how demand rises and falls relative to the supply at hand. They can measure consumer reaction to large offers of Beenz as well as small ones. Cohen said the thought had even crossed his mind to slow the transaction speed, to see how this effected usage patterns of Beenz account holders.

Monitoring the transactions can be entertainment in itself. The company keeps tabs on one bulletin board, known for the predatory way its contributors capitalise on every possible Beenz offer. Cohen said it's amusing to watch them learn of a Beenz offer, and return to sites again and again to collect as many Beenz as possible.

But if watching a server box tick away calculations isn't everyone's idea of a good time, it's important to know Cohen's roots. A self-described "secret geek" who spent his teenage years hacking computer games on the classic Sinclair ZX81, Cohen is well-suited to his role as the Beenz technology executive - politics and PR notwithstanding.

"Like many men in their late twenties now, [the Sinclair] got me hooked," said the man whose teenage handle was MorrisMinor, a pseudonym which gave way to WebGod in more recent years.

"We had crappy little computers with no power. That's why the best games programmers come out of the UK. We know how to squeeze a pint out of a lemon."

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