Thanks for the response. I cribbed the following from the BIDS thread. Could you please comment on this article with respect to where NSI is headed...TIA
7 Key Things For Internet
Value Creation
Date:
Thu, 06 Jan 2000 00:42:10 -0800
NetStock! By Steve Harmon
chairman & CEO
e-harmon.com, Inc.
Internet Investment Provider
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7 Key Things For Internet Value Creation
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Despite the mainstream belief that Internet companies are valued on a
virtual basis, and in spite of the blind investing in Internet stocks that
sends many of the high-speculation stocks to ridiculous highs, there is a
sane way to evaluate if a Internet company of any stage has the ingredients
for success.
This applies to start ups, post-IPO and technology companies that have or
plan Internet ecommerce efforts. For the center of value creation is
ecommerce, buying and selling. Not browsing, surfing or other recreational
uses of the medium.
1) The better investments in the Internet have ecommerce as the center
piece, primary markets (this includes investing as probably the best method)
2) If not ecommerce the next best companies aggregate buyers and sellers of
other products, market makers for others (this includes firms like eBay)
3) The company's marketing must be viral in nature and not just traditional.
Example: ICQ (the instant message platform) won 40 million global users by
the nature that to use ICQ one must encourage others to use it. That meant
sending an email to someone who then downloaded ICQ and the communication
channel grew biologically without a single print, radio or TV ad.
HotMail also grew this way. Pagoo (which enables single-phone line homes
online to know when someone is trying to call them while online) may be the
next big winner here (it's still privately held).
4) The more attractive companies are based on outsourced services and not
software on its own or selling software licenses. This is how DoubleClick
(DCLK) and Commerce One (CMRC) have gained an edge. Earlier examples are
Yahoo vs. Netscape. Yahoo is a service while Netscape was software. The
irony is that Yahoo employs probably just as many software programmers as
Netscape but look at the valuation gaps. Yahoo north of $100 billion vs.
Netscape's sale to AOL at $10 billion. Ditto for Amazon.com. Lots of
software programmers. In fact, founder Jeff Bezos has a software programming
background. Its value is built on service, not software. Software enables,
service creates value.
5) Management team must be flexible, embrace the scalable models and not
solely the offline way of doing business. Offline models don't port easily
to a digital environment, like square pegs in round holes. Most of the
businesses on the Web are weighted too heavily to doing business the old
fashioned way. That's why Fatbrain's eMatter may be more important than
Amazon's paper book selling. eMatter scales digitally without paper, makes
markets and is a new way of doing business for authors, readers. The new
fashioned way incorporates commerce, communication, community, , content,
continuity.
6) The better Internet companies combine vision with implementation. Jerry
Yang and Jeff Mallett (Yahoo's president) provide a nice example. Or
Broadcom's Henry Nicholas, both visionary and implementer.
7) The market for the services or goods needs to be global, dynamic,
portable, and large enough to sustain at least three or four substantial
firms in significant revenue and earnings potential. Firms that are able to
garner market share of two or three slots should command a premium. First
movers and market leaders are known by their marketshare, revenue, growth
and how fast they grow.
entrepreneurs ONLY!
For the entrepreneur in you, get the book that
CBS.Marketwatch co-founder Thom Calandra says could be worth a cool billion
...in the right hands
"Zero Gravity" for sale at Amazon.com, bn.com, borders.com
-----------
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________________
about us:
e-harmon.com, Inc.
the internet investment provider
Hummer Winblad Venture Partners is the primary investor in e-harmon.com,
Inc. Other investors include Netscape co-founder and Internet pioneer Marc
Andreessen, GeoCities founder David Bohnett, Quote.com (now part of Lycos)
founder Chris Cooper, Go2Net founder and chairman Russ Horowitz, XOOM
founder and NBC Internet CEO Chris Kitze,
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En Linea CEO Arturo Galvan.
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(c) 2000 e-harmon.com, Inc.
the internet investment provider
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