The online listings business is a crowded, ruthless, money-losing proposition for most players. So why is Mike Simon jumping into that snake pit with his LocalEyes Corp. directory service? "If you build the best technological solution, the Web will find out about it," says Simon. "We nailed it."

That's to be decided. In fact, some analysts are already wondering whether LocalEyes, which launched May 12, is looking through rose-colored glasses. "I don't see a whole lot of difference between them and their competitors in general," says Patrick Keane, an analyst at Jupiter Communications in New York City. Analyst Bill Bass, of Forrester Research Inc., based in Cambridge, Mass., agrees. "This is very crowded space and I don't see the quantum breakthrough," he said.

But CEO Simon thinks LocalEyes (www.localeyes.com), of McLean, Va., will win out by offering a better business search engine for consumers, and a better story for advertisers, who will be able to target audiences online as never before, according to the company.

Simon has a track record of making improbable sales. As a student, he went door-to-door convincing young brides-to-be to fill up their hope chests with his china, cookware and crystal. He later worked in sales at Data General Corp. and Convex Computer before co-founding AIB Software, which was acquired in 1995 by Platinum Technologies.

Although LocalEyes has big ambitions, the current service is much more modest. To find a business in their area, LocalEyes users select the region of the country they live in and then type in a category of product to look for. LocalEyes sifts through some 11 million companies.

The search kicks out not only listings of companies, but a link to the Web sites of some, and map directions. But that's not too much different from what competitors including BigBook Inc. and Big Yellow perform -- although Simon argues his product covers much more territory across the United States, produces searches with better results and provides many more business Web links.

Web links could prove key. That's because businesses with Web sites want to start capitalizing on that investment, and Simon says he can help them. Simon believes that when he is able to link to 1 million home-pages by the end of the year, (LocalEyes has 300,000 links today), that will be enough critical mass to convince retailers that "we will be the place to register your business on the Web."

But analyst Bass thinks that's not enough. "The stuff they have is relatively interesting, but a lot of companies don't have Web sites. [Competitor] CitySearch builds them for companies, so does Microsoft Sidewalk. So where is the business model here?"

Ultimately, Simon wants to turn LocalEyes into a service that provides enough information for consumers to make purchase decisions, then helps them conduct that business online. "You're not about to go to CitySearch if you want to buy an Amana refrigerator or select a local attorney," says Simon.

Simon envisions a day when someone needing, say, a set of tires, will use LocalEyes to look up nearby tire dealers, E-mail them with their request, receive quotes back from the retailers, then schedule an appointment with the best bidder. Another idea: dynamic coupon creation, where users are presented a discount coupon as they research merchants.

Simon's approach has recorded some early payoffs. Midas International Corp. is doing its first online advertising with LocalEyes. Other initial advertisers include Avis Inc., Coldwell Banker Corp. and CBS SportsLine USA, Inc.

LocalEyes will depend on ad sales to local and national advertisers. While basic business listings are free, enhanced listings will be sold.

Simon also helps to distinguish his company by making alliances with what might be considered competitors. LocalEyes recently inked a deal with search-engine maker InfoSeek Corp., and co-branding deals with new big-name partners will be announced over the next few weeks, according to the company.

And investors have put in $1.5 million in two rounds of financing. The company is now seeking $10 million in a third round to close in July.

It will need every penny to raise awareness against such well-known entrants as Microsoft Corp., the Regional Bell Operating Companies, a number of large newspapers, and Yahoo! Inc., to name a few.

There are so many players because the potential payoff is worth going after. Forrester Research predicts local advertisers will shift $1.5 billion of their spending online by the year 2001 -- about $649 million coming in the directory and retail advertising that LocalEyes is targeting.

Will LocalEyes be able to collect its share? It's a long shot. But Simon has had plenty of experience peddling household goods to the masses. With luck, he'll be able translate those door-to-door selling skills to cyberspace.

This document was taken from ZDNet News