Captive Market.

Venezuelan dot-com puts a new spin on its strategy.

TROMPO.COM STARTED OFF TWO YEARS AGO AS A VENEzuelan local content portal but like its namesake toy--a spinning top--it soon came clattering to the ground, a victim of competition from an onslaught of similar local-content portals. This time around, however, Corporacion Trompo is up and whirling with an innovative new business model that might just keep things spinning.

Trompo now develops Web sites for educational institutions, professional associations and non-governmental organizations but without the barrage of advertising that has turned off users before in closed Web communities. While advertisers love these groups because they can custom-target their ads, the groups' members generally don't like to be pinpointed for such blatant commercialism.

Things like spamming and subscriber-list sales are strictly out of bounds at Trompo. "We don't want to turn the sites into junk heaps," explains Enrico Giancarlo, president of Trompo. "Our real interest is that the communities really feel benefited by the Web site."

A noble aim, but as Giancarlo found out in Trompo's first spin, the business still needs to turn a profit and pay dividends to the 27 investors who have ponied up some US$1 million so far. To do that, he and Director Antonio Aldazoro are relying on a recipe of low-key Web site advertisers and old-fashioned brick-and-mortar retail sales, seamlessly blended with content generated by the community itself. "We're not really e-commerce. We're using the New Economy through the old economy,"' says Aldazoro, a former consumer goods marketing executive.

Trompo, which has signed up an impressive roster of Venezuele's leading higher educational institutions, and their tens of thousands students, promises to limit to seven the number of advertisers on each Web site. Every advertiser gets a button that, when clicked, triggers the sponsor's promotional item. Ad revenue is split 40-40 between the institution and Trompo. The remaining 20% goes as a sales commission to whomever reeled in the catch, be it the university or Trompo.

The old economy part of the business model revolves around on-campus Trompocenters, which are hybrid cybercafe computer shops. Hewlett-Packard has signed on as a partner and provides all the cybercafe hardware. In return, it gets exclusive rights to sell computer products in the shop. As the company is selling directly without intermediary distributors, it can offer goods at an attractive discount, even counting a 10% sales commission, split 50-50 between Trompo and the institution.

Sales pitch. The computer giant believes it has a winning formula that will encourage Internet use and, by extension, PC purchases. "We couldn't say no when Trompo approached us," says Nelson Telleria. HP'S marketing manager for small and medium enterprise. "The company's technology is all oriented toward the Internet, and this is a way to give incentives to use the Internet."

As for content, Trompo thought the best and clearly cheapest way to offer what a specific group wants is to let the members provide the bulk of the material. Trompo, meanwhile, supplies the technological platform, as well as generic content that can span numerous sites, such as cinema listings, a beach guide and even music-Radio Trompo.

On one of Trompo's first sites, for Simon Bolivar University, there are chat rooms, a survey on the school's cafeteria, classified ads, job and internship postings, as well as general information about the university, university events and news and administrative tasks online--all in an informal language laced with college slang. Professors can post lecture topics, notes and homework assignments. Students get a free e-mail account. "I was pleasantly surprised when I saw the portal," says Simon Bolivar Rector Freddy Malpica Perez. "The style is geared toward the community. It's not at all like an institutional portal."

Students say that's exactly why they like it. "It seems more personal, like it's directed to the student," says Maria Eugenia Guerra, a 17-year-old freshman. "We have our own area."

Aldazoro says the next phase will be implementing online classes and establishing inter-university links for forums and seminars, all the while expanding the range of products sold at Trompocenters to include books, cell phones, and cameras. He figures the company should be turning a profit within a year.

That might be optimistic, but the partners see huge growth potential for this type of combination retail and Web business. While Trompo's main target is educational institutions--it would like to reach out to high schools in the future--the firm is also talking with professional organizations such as medical and pharmaceutical societies and some nonprofits. "The model is real communities who have common interests," says Aldazoro.

Trompo also sees international expansion ahead. Giancarlo says he has held preliminary talks with universities in Guatemala. Mexico and Spain. He wants to solidify his hold on the local market first but acknowledges he'll have to move fast before imitators move in.

After having his first Internet venture peter out when the nascent Venezuelan market suddenly became overcrowded with local-content portals, Giancarlo knows that just staying alive in the Internet business is a neat trick these days. Trompo now has to show it can thrive.