Helping People on the Move Keep Addresses Up to Date
Peter DaSilva for The New
Masonis and Cameron Ring, two of Plaxo's founders, say they do not fear
competitors in the contact information market.
By LOUISE STORY
Jennifer Cahill changed jobs a few weeks ago, one of the first things
she did was spend a few minutes "Plaxo-ing" her new contact information
to 400 friends and business acquaintances.
"You just go down the
list of people'' in your address book, said Ms. Cahill, who now works
in the marketing group at Muirfield Capital in New York, "and you
click, click, click who you want to send it to."
become the next ubiquitous Internet verb, like Google? That is the hope
of the founders of Plaxo, an online service that helps computer users
keep their address books updated with the latest postal addresses and
phone numbers of everybody in their circle.
Plaxo's free software onto either the Outlook or Outlook Express e-mail
program, a PC user can choose which friends to ask for current contact
information. Recipients can provide new contact information, decline
the request or ignore it. They can also click a link in the message and
join Plaxo themselves.
Plaxo then automatically inserts any new
information provided into the sender's e-mail address book. As people
join Plaxo, their contact information is inserted into the address
books of other members who have given permission for such updating. The
program also automatically transfers any future changes they make in
Outlook to the computers of other members they have listed as their
Even though Plaxo is free now, the company plans to make
money by selling a premium version to business users this summer.
1.8 million people have subscribed to Plaxo since the company, based in
Mountain View, Calif., began offering its software online in November
2002, and the company says it is gaining about 10,000 to 12,000 members
But for all its success at attracting a following, Plaxo
has an Achilles' heel. It is just the kind of Web-driven business that
fits perfectly with the ambitions of Microsoft
and others aiming to incorporate a wide array of business and personal
services into their software products.
executives say they are not worried. Their success may attract
competition, but they say their rapidly expanding network gives them a
"What we're essentially building is this
network, because it has no value to me unless everyone I know is on the
network," a Plaxo founder, Todd Masonis, said. "You can't just go with
another network because you wouldn't have the value of so many users."
Masonis compared Plaxo to instant messaging systems. "It's very hard
now to go about starting a new I.M. network," he said, "not because
it's technically difficult, but because you have to get everyone in
Plaxo was founded in 2001 by Mr. Masonis along with a
fellow Stanford engineering student, Cameron Ring, and Sean Parker, who
was a co-founder of Napster, the music downloading site. The company
has received $12.3 million in investor financing and has 27 employees.
company says that about 18 million people responded to e-mail update
requests but did not become members; 27 million neither replied nor
joined - possibly an indication of privacy concerns, even though Plaxo
has pledged never to sell any information from the network. Some
nonmembers, tired of receiving update requests, say the messages have
become like spam e-mail.
At the moment, Microsoft is being
supportive of Plaxo, which has chosen to integrate its software with
Outlook and Outlook Express, two of the most common e-mail programs and
both Microsoft products.
"We offer links to Plaxo from our Web
site," a product manager for Microsoft Outlook, Simon Marks, said. "We
very much believe in the idea that third parties can add value to our
products. We're very happy that there are customers who can get value
out of Plaxo and Outlook."
But Plaxo's plan to sell a premium
version may put it in more direct competition with Microsoft.
Microsoft's recently released Outlook 2003, for example, has an address
management feature that helps corporate users keep track of customer
contacts. The question is whether Plaxo can survive if Microsoft or
another technology giant starts to move into this market.
Jim Carlisle, a managing partner at Graystone Capital
Advisors, a venture capital firm in New York, said Microsoft and others
were probably waiting to see if Plaxo could expand its membership into
the tens of millions -- and generate profits -- before they jumped into
this kind of network service.
Peter Lester, Plaxo's vice president for business development, said
that ''ubiquity'' was crucial to its business strategy. While some
Plaxo members say they would stay with Plaxo because their friends
belong to the network and because they would prefer not to give their
contact information to Microsoft, others say a more advanced and
convenient product would tempt them to switch.
''I've been struggling for years with the idea of contact management,
and I really, really am thankful for Plaxo,'' said Vladimir Cole, a
project manager for the Scholastic Corporation in New York who is a
Plaxo member. ''But I'm sorry to say as much as they've brought me, I
have no loyalty. I'd switch to Microsoft.''
Still, other products, like Intuit's Quicken software and Google's
online search site have fared well against competing programs from
''No question that it's a stiff challenge,'' said Dan Sheeran, senior
vice president for marketing for RealNetworks, which accused Microsoft
of blocking its RealPlayer media products from the market by bundling
its Media Player in its operating system. ''One of the ways we have
succeeded'' in competing against Microsoft, he said, ''is to develop
products and services that have brand loyalty for consumers.''
The European Commission ruled two weeks ago that Microsoft must
decouple its Media Player from the Windows operating system. Microsoft
is appealing that decision.
Plaxo executives said they expected competition but were not concerned
even if that competition comes from Microsoft.
''A problem of success for any business is that at some point there
will be competitors, and we will have to deal with them,'' said Ram
Shriram, a member of Plaxo's board who was an executive at both
Amazon.com and Netscape during those companies' early years. ''Our job
is to focus on building the best service for users as we possibly can.''
It may not be the big companies that Plaxo should worry about, at least
for now. A start-up company called miniFILE Inc., based in Weatherby,
Conn., has a similar product, also free. Instead of installing a
program on their computers, users can put their address lists on
miniFILE's Web site, and the company maintains them. A miniFILE
member's information is automatically updated on other members' address
lists, but the service does not contact nonmembers to ask them for new
MiniFILE's network has about 30,000 members. But the company filed a
patent application for its network method before Plaxo filed its two
patent applications. Peter Kostka, miniFILE's founder, said that if his
patent was approved, Plaxo could not operate without violating it.
Plaxo executives said they had never heard of Mr. Kostka or of miniFILE.