Barry Diller's do's and don'ts for e-commerce success

NEW YORK -- The Barry Diller version of electronic-commerce success is filled with lessons learned from painfully expensive mistakes.

Diller, the high-profile chairman and CEO of USA Networks Inc., delivered a how-to of screw-ups and success here Wednesday at the Gartner Group Inc.'s Internet & Electronic Commerce conference.

While one may think of Diller as just a TV mogul, he's quick to point out out that there's a lot more to USA Net-works. Don't forget that Diller is the man who runs the Home Shopping Network, and USA has a major stake in Ticketmaster. It also runs the Internet Shopping Network. And it made a failed attempt to merge with Internet portal Lycos Inc. last year -- a topic that Diller conspicuously avoided in his speech.

That's not to say that Diller avoided tweaking his own company's Internet follies. Less than two years ago, USA had started First Auction Inc. It worked well, so Diller wanted to do something more. He envisioned selling things like jewelry online, and USA had a lot of money to do it. Unfortunately.

"It turns out, upon some scratching, that we made every conceivable mistake," said Diller. What did USA do wrong? Plenty.

"We said, 'Just get it ready by September'," he said. The company's best estimate for the project's price tag was $35 million. But by July, it had jumped to $62 million. By August it was $85 million. The total quickly topped $100 million once the site was launched. Diller said it stayed up for all of 8 hours.

"It crashed," he said, "to never scale again."

It's a hard-knock life
But Diller said he learned a lot from that experience, which he has turned into a handy list of easy mistakes for launching a Web site.

• Don't say a company has to be up and running by a certain date. There's rarely a "first-mover" benefit to doing that. It's better to just get it right.

• "Don't sell your soul to an integrator or contractor." Make sure you have smart internal people, too. And make sure the contractors have a definite job description. Don't let them milk the contract.

• Create open business processes. You never know when they'll need to be tweaked.

• Don't allow any individual to have more then 50 percent of the knowledge for a project. In other words, don't become too reliant on one employee.

• Avoid Christmas deadlines. They're more likely to lead to headaches than big sales.

• Don't scrimp on planning. Foresight is a lot better than hindsight.

• Re-educate middle management and make sure they're with the program. "The people who came from our old systems were so resistant," Diller said. "Our advice is to get them out of the way."

• Scale is king. Make sure a site can handle at least two or three times the amount of traffic you expect to receive.

• Don't try to be everything to everyone. Pick something and be good at it.

• Work with adults. "Try not to work with a company run by 25-year-olds," Diller said, "no matter how smart they are, because they are essentially in their first jobs."

• Don't slap e-commerce on top of legacy systems. It's a waste of time.