Hyunhee Choi, Indira Guzman, Rohan Belani, Majdi Eshihabi & Professor Martha Garcia-Murillo wrote this case as a basis for class discussion

Copyright Informationã 2000 Syracuse University. This case can be reproduced for teaching purposes only. Corporate users and for profit reproductions must request permission and order the cases from Professor Garcia-Murillo at (315) 443-1829 or write her at the School of Information Studies, 4-206 Center for Science and Technology, Syracuse, New York, 13244-4100. Please send your feedback and comments to mgarciam@syr.edu.

PostSyracuse.com was formed by three Syracuse University students.  Simon, who is one of three students, was looking for a second hand car by searching the school bulletin boards in each building where people post classifieds.  He realized that no bulletin board contained the same information, and that some were drastically outdated.  Thinking to himself, he came to the conclusion that the Syracuse University had no effective way for students to buy and sell products, and to find out about good supplies in the market place. Faced with this problem, Simon and his friends tried to create an online classified advertising medium.  This medium links online buyers and sellers around the Syracuse community.  The firm’s goal is to generate revenues from the advertising space sold on the site, and bridge the gap of communication between students who wish to buy and sell products throughout the community.

Company Background

On December 1, 1999, a web site was launched that enabled Syracuse University, Leymone College, OCC students and local community to place classified ads online for free.  PostSyracuse.com.com allows visitors to buy and sell their products with more ease and save time while they are at it.  Aside from these features, visitors can read the school news, weather, horoscope, and check e-mail.  This will also allow students the opportunity to learn about local companies that advertise on the web site and receive good deals on different products such as cellular phones, furniture rentals, storage, health products, and clothing.  Simon sold his idea to two other students who were close friends to him.

These three students come from different educational backgrounds.  Simon Heo is a student pursuing a Marketing degree in the School of Management.  Englebert Sarmiento just graduated with a degree in Computer Engineering, and John Gabayzadeh is focusing his academics on Finance and Supply Chain Management.
 
The three spent a lot of long hours on planning and deciding how they were going to develop a site that could provide these services.  They portrayed a website that could benefit the Syracuse University students by allowing the students to visit one web page for products that they wished to buy and sell, instead of them looking at the scattered bulletin boards on campus.  Trying to sell a product in newspaper classifieds can be costly and a web site like the one they proposed could eliminate the process.  In addition to the present features, PostSyracuse encourages students and student groups to post upcoming events and services that may occur in the local community on or off campus.

The PostSyracuse.com Website

Technical aspects of the site

Webhost.com hosts the web site for PostSyracuse, and the server is actually located in Florida.  Aaron Kim and another member of the company are responsible for managing the site.  Their duties include updating any ads, making appropriate changes to the web site, and the web sites of their sponsors.  Currently, the web site is not being updated because the new and improved web site will be launched during the first week of November.  They are now working on a new prototype that will include more of the newer technologies used on the website.

Business Model

PostSyracuse.com generates most of its revenue from advertising local companies on its website.  At the start, before PostSyracuse.com was launched the three founders had a hard time getting companies to its web site.  One problem was that they were all young college students without any experience on this type of a business, and they had no idea on how to sell their company to others.  Currently the company has clients who are not only companies in downtown, but also include small stores around campus. This results in the web site’s increase in popularity within the local community.

Comparing to its revenue, the company doesn’t have very high operating costs.  The expenses are for renting the server, office supplies, and advertising the web site.  Some of employees are paid and others are working for the company on an internship basis, which they will receive credit for.  All employees are students that are satisfied with the experiences they have, and each of them owns an undisclosed percentage within the company.  But the company is looking for more students who have enthusiasm and a good personality to work because as the company grows so does their workload.  This could include more human resources in managing the company, which includes updating the web site regularly.  Since the web site is only updated every 24 hours, it results in several users complaining about the wait for a day to post their products on the web site.

According to Simon, one of the problems the company faces is investment capital; clients as well as investors should help generate this.  They need to invest more money on advertising the web site.  The company has been using pencils, flowers, and stickers to advertise the web site, but it should develop new ways to attract more customers.

When John had left to Australia for research, the company needed a person who could handle all the finances of the company.  In turn the group drafted in two new members: Geoff Chen a student studying Finance at Syracuse University, and Op an Employee at General Electric who was assigned to help develop the web page.

At that time, the company was divided up into two main groups, a technical group and a management group.  In the management group, Simon and John were in charge of the marketing of the company and Geoff was in charge of handling the company’s finances.  The technical group which included Englebert and Op, were assigned the daunting task of creating the website.  The web site was fully operational on its projected date.

After Op left the company to work full time with GE, Aaron Kim was hired to work with PostSyracuse.com as his replacement.  As Simon stated, “You can not send a web guy to do sales,” demonstrating the need to divide the company by responsibilities into two divisions.  The employees rarely argue, but if they do the final decisions always lie with Simon, Bert, or John who are the major shareholders of the company.

Expansion Plan

In addition to the present convenient features, the future PostSyracuse.com Inc. plans to partake in e-commerce and add further features such as internship programs and job searches.  PostSyracuse.com Inc. intends to enable visitors such as college students, to be a one-stop website for their convenience.  It will then be a “College Portal” offered through the URL www.postsyracuse.com.

The three owners went through the process of making PostSyracuse.com official, they hired a lawyer and went through the paperwork to establish the company.  The company was labeled as a C-corporation·.  PostSyracuse.com can avoid possible lawsuits because they have no assets, and nothing to loose.  Since the company does not pay all their employees, most of their revenue is pushed back into the company.  The company has three official owners, and they are Simon, Englebert and John.  The majority of shares in the company are equally distributed between the three of them.

The company currently receives 1500-2000 web hits daily.  The company advertises using radio broadcasts, fliers, and posters, although their favorite method of advertising is spreading the word by mouth.  PostSyracuse.com relies on the most traditional forms of advertising because funds are limited.  Typically the costs associated with advertising are divided between the three major shareholders, with contributions from the revenue stream coming in from clients.

Actually, PostSyracuse.com has three types of customers, the students, web surfers, and corporate clients who post advertising on their site.  The business is currently focused on Syracuse community, once they have achieved success in Syracuse, they can take their business model and apply it to other universities.  The company’s ultimate goal is to apply the model successfully all over the state of New York.

Simon indicated that the decision to start locally was made after observing Ebay’s mistakes.  “Ebay started nationally and expanded internationally” and then could not control their operations, said Simon.  PostSyracuse.com would rather start locally and expand slowly.

Customers can post their ads on the web site by following a simple step-by-step process.  All ads must be first filtered and cleared by the responsible employee before they can appear on the web site.  The process is done to avoid any unsuitable content in the advertisements.  The advertisement takes twenty-four hours to appear on the web page.  When a customer wants to purchase an advertised product, PostSyracuse.com does not get involved, and require a commission for the sale.  The buyer simply calls or e-mails the seller directly, developing an informal relationship.

The employees at PostSyracuse.com rarely receive complaints, but do receive comments and suggestions.  The complaints are minor and usually involve a delay in the posting of the products to sell.  The company has not received any complaints from its sponsors for its work to this date.

Future of PostSyracuse.com

PostSyracuse.com will always be a student run company.  One of the remaining owners, Simon, may stay with the company a few more years or may simply revert the company to the control of two college sophomores, who are learning about the company at this present time. PostSyracuse.com only makes money from company advertisements.  Students will never be charged but as an extra source of revenue, PostSyracuse.com may offer the same service to individuals in the community for minimal annual fee.

Competition

When the company started out in December, its national and indirect competitors were CollegeClub.com and University.com. CollegeClub.com was a portal site that offered a great number of options for its users.  Everything from clubs to contest was on offer. University.com, on the other hand, was a portal that offered online training for company’s employees.  Neither of these portal sites offered regionally centered classified ad services. There were also smaller indirect competitors such as Sybercuse.com and Syracuse.com.  Sybercuse.com is another online portal website that offers many services and much information for residents of Syracuse including information on what to do in Syracuse. Syracuse.com is a portal website that presents daily updated information about the Syracuse community.  All these company’s products and services differed from PostSyracuse.com’s services.

PostSyracuse.com has a number of direct competitors, NightFunk.com, SyracuseAuction.com, Do.com, and Wizzle.com. NightFunk.com is a web portal website that offers its users daily information on the entertainment happenings of user’s respective cities.  It currently has operations in Rochester, Buffalo, and Cornell.  SyracuseAuction.com is an online portal website that gives Syracuse community residents the opportunity to buy and sell at locally based online auctions.  Do.com is the Daily Orange’s (the Syracuse University student newspaper) website. Whistle works in conjunction with DO.com by offering classified ads services.