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 (see Daily GPI, Oct. 27, 1999), and remains involved in new growth markets for Enron, was keynote speaker yesterday 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 Daily GPI, July 13).
"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 trade publications.
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."
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