eCircle AG

Case Solution

Thomas Hellmann, Christopher S. Flanagan
Stanford Graduate School of Business ()

eCircle, a German Internet-based corporate communications company, was founded in 1999 with half a dozen employees and several hundred thousand users on its new C2C platform. By early 2001, the co-founders had created the eCircle technology platform, reached 4.5 million users and 90 employees, and launched two rounds of funding. It seemed that the company had overcome the initial challenges of a startup, had cash, advertisers for its C2C business and two clients for its new B2B business. However, despite their initial success, the co-founders faced a number of challenges. Could you use a relatively successful C2C group communication platform for other profitable business areas, especially B2B offerings? Could they avoid new competition in Europe and the United States? And were they able to manage their cash flows to survive the financial market crash? The tense economic environment and the struggles and failures of numerous Internet startups in early 2001 made eCircle’s growth strategy even more challenging. The error rate in such an environment was lower than when the company was founded.

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