I do not know if you guys are receiving the gg digest but anyway Geoff has commented on ICGE last night.
One way of interpreting/restating his comments is that the company will try to transform itself in a way that follows the Technology Adoption Cycle. At the point when the B2B was at the early market it made sense to invest in small start-ups that had attractive business plans and technologies and I guess the criteria for selecting and helping those companies to manage themselves had a "Crossing the Chasm" touch. But as the B2B market enters the tornado now the strategy changes and we are aiming in establishing clear winners (winner takes all approach). This would require to spin off existing holdings that did not make it to a leadership position and invest in others -that might already be public- and have the potential to become leaders. As we reach mainstream the synergies among those leading companies will be so great that no one will easily compete in offering products based on price/service.
This IS the GE model. You either going to be No 1 or No 2 in the markets you serve or look for an investment banker for your IPO. Given that in the new economy the winner takes all has an even more prevalent effect I am really very optimistic about the future of this company.
Panos
P.S. Since this is my first post I would like to THANK all the G&K community for your insightful comments.
Thank you.
Reply-to: "Gorilla Game discussion list" <gg@webcom.com>
From: "Geoffrey Moore" <geoffmoore@chasmgroup.com>
To: <gg@webcom.com>
Subject: ICGE and CMGI
Date: Wed, 12 Jan 2000 20:46:19 -0800
Gang,
I can speak with some familiarity about the Internet Capital Group Business model (and perhaps some of the same attributes apply to CMGI -- I do not know these guys well enough to comment). ICG makes venture investments in B2B start-ups and, now that it has done a secondary offering raising an additional $750M, is making later stage investments, with a view toward public company acquisitions too downstream. They have both a short term and a long term business model that is novel. On the short term, where they compete with VC firms, they have staffed up way beyond any VC firm I know in support functions for their portfolio companies, which they provide to them for free. Second, they are very active in pulling together their
companies to share insights into the dynamics of emerging digital markets and other hot topics, and the dialogs that occur at these get-togethers are among the best in the industry. As a result, the market development strategies of their portfolio companies are among the best I see. Long term, ICG has a vision of becoming the General Electric of the Internet. The idea, which is just getting formed now, is for ICG to act like a holding company and get its various partner companies to merge into a giant mega-billion market cap entity. This would make sense, potentially, once the Internet digital
markets reach Main Street. Already there are enough synergies among ICG's portfolio companies to give the notion credence.
>From an investor point of view, I think the competitive advantage they propose for themselves is that they will generate more winners in more digital markets earning higher market caps than all their competitors combined. That's a pretty tall order, but it is not in my view a
preposterous one.
Geoff
Geoffrey Moore
Chairman, The Chasm Group
(650) 312-1946
Venture Partner, Mohr Davidow Ventures
(650) 854-7236 |
