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In March 1996, disaster struck Lorne Ray, who was hit head on by a drunk driver. Ray broke most of his bones (from the waist up) and spent two months in the hospital. But it was in the hospital that Ray developed a new Internet business. He ordered America Online and started to surf the Web. "Whenever I visited a site," says Ray, "I would never get a 'thank you' for visiting. It was then that I saw an opportunity."

You see, Ray spent six years working in the incentive promotion industry. For example, suppose you visit a company. You might leave with a mug, cap, or pen (which, of course, has the company logo imprinted on it). But there was nothing like this for websites. So, Ray started InternetPerks.

Here's how it works:

Let's say you have a financial website called WebFinances.com. You have spent lots of money on banner advertisements to drive traffic to the site. But you want to find a way to create repeat business. Well, you can use InternetPerks' IncentiveWare technology. Basically, you will put an icon, which is in the form of a gift, on WebFinances.com's front page. The user will click the icon and see a list of gifts he or she can download, such as:

1.Personal Journal: This lets you record notes, to-do items, appointments, and phone numbers. 2.NetWords: This is a dictionary of the jargon for telecommunications, computers, networks, and so on. 3.Picture Cards: This is an electronic card file sorted by name or company. 4.Date Calculator Plus: This calculates the number of days between dates. The program also does loan amortization. 5.Golflet: This is a tutorial on how to play a number of golf shots. 6.Memory Jogger: This will track your personal dates on a calendar and remind you of appointments. 7.TollFree Directory: This is an alphabetical listing of toll-free numbers. 8.Financial Toolbox: This has a tuition, retirement, and net worth calculator. 9.NBA Schedule: This is a listing of National Basketball Association games by team or date. 10.Convention Central (will be released shortly): This is a program for those who go to conventions. You can get directions to airports, hotels, restaurants, theaters, workout facilities, etc.

The programs are known as "droplets." Each will have the logo of your company, thus extending the brand. It takes about two to three minutes for a droplet to download. The application will then install itself on the user's desktop and place an icon on it. So, whenever the user clicks the icon, he or she will be taken to your company's website. "This helps to create repeat traffic," says Ray. "What's more, people are more inclined to deal with the company, because they are getting a valuable gift, which they can use frequently. This is something a coffee cup can't do." There is also InternetPerks' Post Office. This lets the employees of the website send a gift to a potential customer via e-mail.

Revenue Model

A website will sign a three-year licensing agreement with InternetPerks, which amounts to $6,000 per year. There is also a 5 cent charge for every droplet that is downloaded. The software is hosted on the InternetPerks' servers. However, this fee structure is flexible. If the site does not have much money, it can pay a higher amount for the download fee (such as $1 per download).

InternetPerks has signed many top-notch companies, such as U S West and Office Depot. "When I did a demo for Office Depot," says Ray, "it only took 30 seconds." Actually, Office Depot will employ an AOL approach. Suppose a customer at Office Depot cannot find a product because it is out of stock. An employee will go to a computer, which has a Net connection, and do a demonstration of the InternetPerks software, which lets the customer purchase office supplies online, as well as keep track of expenses. The employee will then hand over a disk to the customer.

Conclusion

InternetPerks is self-financed and has 15 employees. There are two full-time programmers and a variety of contractors. The chief technology officer is Jim Galley, who was in charge of Ziff-Davis PC Labs for seven years. "When he saw IncentiveWare," says Ray, "Jim said it was the best use of push he had ever seen." In a sense, the philosophy of InternetPerks is to "give before you take." So far, it has been a winning combination.

See for yourself, and download a droplet (http://www.interprise.com/).

Commercial: Readers interested in IPOs may want to check out The Investor's Guide To New Issues: How To Profit From Initial Public Offerings, available in our bookstore.