Kozmo's Rapid Growth Challenges Service Providers

Interview... Paul Mas is a Senior Managing Director of Colliers ABR in New York City. In recent years he has become increasingly focused on new economy companies and currently handles the international rollout of Kozmo.com. Mas responded to three e-mailed questions on July 13, 2000.

Pike: What are "new economy" companies and how are they different?

Mas: When I think of a New Economy company I think of an enterprise that is trying to bring Internet speed and efficiency to their product, service or industry. Right now, it's characterized mostly by young venture-backed companies, although it can also apply to traditional companies that really make an effort to change their organizations to this new style of running and building a business. From a real estate perspective, they are different because they can be difficult to focus, generally lack real estate experience and creditworthiness, require unprecedented speed, growth and flexibility, change business strategies "on the fly" and usually need to procure in tight, competitive markets. It's almost everything that real estate is not!

Pike: What services do you provide to Kozmo.com?

Mas: My group's goal is to provide high-speed, high-quality turnkey execution and fulfillment in any geographic market under any market conditions. With kozmo.com, which delivers to its customers within an hour, we mobilized 85 brokers and delivered 43 sites within a 3-month timeframe. We administered a team that also provided project management, architectural, legal and other services so that we could provide due diligence once a site was located, sign a lease in 2 to 3 weeks, then build the facility and turn the keys over to kozmo.

Pike: What tools were most effective in coordinating multiple players?

Mas: For competitive reasons, kozmo wanted a stealth campaign so we used NDA's for everyone. E-mail was used for primary communications. To us, the key was educating everyone in the field and being visible and responsive to them. [Peter's Note: Mas told me that his team did not use an extranet project management system because of security concerns.] ... Two of us administered everything outside of New York. I don't believe you need a "cast of thousands" in the central office, if you have a good team in the field and a good client.

[Editor's Note: By way of full disclosure, under the headline "Delivering Red Ink," The Industry Standard (July 31, 2000) writes about the difficulties that "last-mile" services like Kozmo and Webvan will have reaching profitability.]

--Peter Pike