EnronOnline's CEO Sees Rapid Market Growth
It wasn't the first trade conducted on EnronOnline when it debuted last
November that CEO Louise Kitchen was excited about. Rather, it was a trade
by someone who liked to handle his transactions in a casual way, what she
called a "golf course" trader." When he completed a petroleum
transaction on EnronOnline's system last year, Kitchen said she knew Enron's
new launch would be successful.
"His whole world changed as far as how he conducted his trading,"
Kitchen said. "Now, he conducts 80% of his trades online."
Kitchen, who steered the development of EnronOnline when it debuted
last November, remains involved in new growth markets for Enron, and was
keynote speaker last week at the Energy RiskTech 2000 Conference in Houston.
Disputing claims that online transactions are reducing market liquidity,
Kitchen said that in fact, online trading has expanded it.
"New players can enter the market easier," she said. "Online
trading has reduced the barriers to entry" for a lot of people who
may never have traded before, she said. There's also a growing acceptance
to conducting transactions online, too, correlating to personal use of
the Internet outside of the office.
"Internet traffic doubles every 70 days," said Kitchen. "The
pie gets bigger quicker. The market is expanding, not contracting. It's
growth. There's been no decrease in broker payments with EnronOnline. There's
been no cannibalization of the market. That's a great misconception."
Quick to acknowledge the ease of use with EnronOnline's one-click site,
Kitchen was just as quick to stress that the system is totally focused
on business and the customer - not on the platform.
"It's the transactions, not the platform," she said. "We
were logical about this. This system is about getting our product out there
through a simplified transaction process. It offers another customer choice.
I'm paid on the basis of the P&L, not how the transactions are conducted.
EnronOnline offers another distribution channel," and she said that
Enron was just as "happy" when traders used other online platforms
to access its market. EnronOnline recently set up agreements with online
energy trading systems True Quote and HoustonStreet (see NGI, July 17).
"This has expanded and extended our existing business," she
said. "But we'll trade where the liquidity is."
In fact, Kitchen said that EnronOnline doesn't make any money per se
for its parent, and it was never designed that way. Its biggest advantage,
she said, is to offer another avenue for its customers. But it also will
not remain stagnant. "We challenge existing ideas. We do that a lot,"
she said, and because of that, it was recently redesigned to offer more
real time information, including weather, maps, news, stock quotes and
There are still problems to be fixed. "We need to get better at
language," she said of the many markets that EnronOnline serves across
the globe. "We must continue to innovate."
Kitchen said that today, 60% of Enron's transactions are conducted online,
with more than 300,000 total transactions to date, and about 2,100 transactions
a day. Trades since November 1999 have totaled more than $155 billion,
and EnronOnline trades 14 commodities globally in 13 currencies. More than
1,100 products are traded every day, she said.
Still, the online platform continues to learn and evolve. "We've
learned a lot of things in the past year," said Kitchen, and most
important is that with the "right people," the technology is
not difficult. But she added that EnronOnline would continue to reinvent
itself to remain on the cutting edge.
"Nothing is irrelevant," she said. "What is relevant
is where the liquidity is."
Carolyn Davis, Houston