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To: Sai P. yandamuri who wrote (1039)	8/16/1998 5:41:00 PM
From: ztect	Respond to of 40688

Sai, Regarding your questions. These are just my "theories", thoughts and other questions <<(1) What prompted PNLK with a great concept not to approach Venture capitalists?>> Let's start with a rhetorical question. Were all IPO's, internet or otherwise started with Venture capital? Private businesses that go public grow to a point where they decide it is advantagous to go public for additional sources of money primarily for growth and expansion. If venture captilists are involved, they are involved because they provide the seed money that is unobtainable via conventional sources (conventional lending institutions or personal /partners's assets). The company growth and subsequent public issue is the consequence of the strenght of their business plan and not the source of their start-up money. Venture Capitalists also exact significantly higher rates of return on their investments because these types of investments are considered to risky for normal lending institutions. (2) If PNLK is really for LONGTERM (as suggested by several of this thread members) Why did n't they wait(like Inktomi,Double click etc.) until their website is operational & have some revenue stream before going to Public ? Why wait? Because unlike Inktomi, double click, Digital River, and many internet portal, search engine and software sites which provide the infrastructure for the Internet, PNL is user driven without any precedent. The faster the product is brought to end- users, the more input can be derived from the end users to make the site functional . Plus the faster the site is brought to market, the greater head start over competitors the site will have. A publically traded company has investor interest as a marketing tool that a privately held one does not thus a publically held company will be exposed to more end users. Plus with the internet, these chat boards et cetera, the number of end users is also increased exponentially. This head start and the recognition of being the "first" means a lot in the context of internet companies if they can get the site functional. Look at Amazon, for example. Now the risk, as we have seen, is if they are pre-mature. Can the negative attention PNL has received be offset by a successful release of P2.0? Was the site launch pre-mature? Or was this a calculated gamble to draw attention to the site to get greater user input to help further define what is exactly needed for an internet import/export tool? Honestly though their site hitherto could have reflected greater knowledge as to what was needed without additional user input. Though now only subsequent implementations of Phases 2, 3, 4 et cetera will answer these questions either affirmatively or negatively despite whatever spin bashers or pumpers want to place on these queries. (3) PNLK could have gotten wider recognition had they chose to start trading as IPO on NASDAQ instead of settling on OTC. What prompted them not to do so ? The attention PNL has received for a BB issue is unprecendented. If the information is correct about the CNBC spot after the the Phase 2.0 implentation, then hopefully all of the attention can once again become postive. Besides many of the recent internet IPO's in this volatile market have been having some difficult receiving attention (COOL, Driv). Many of the high flying internet retailing companies (CDnow, Ktel) have fallen back closer to earth. IMO with so many internet IPO's in the pipeline, only the most recognized ones will rise significantly soon after their initial offering. Anyway these are just my positive "spins" on PNL's decisions. I don't necessary believe that any of my above postulations are correct, and that is why I refer to them as "theories". z (spelling not checked)

To: Sai P. yandamuri who wrote (1039)	8/16/1998 7:02:00 PM
From: ztect	Read Replies (1) \| Respond to of 40688

Sai, Below is an excerpt from an article that directly pertains to the issues you've been raising. The entire article can be reviewed at. "...The challenges of being a public company certainly are different from those that faced Olim and his twin brother, Matthew, when they were launching the CDnow music retailing site. The twins, now worth more than $70 million combined, four years ago were operating the company out of the basement of their parents' house. Mom and Dad even got a chunk of equity in the company when they agreed to pay off $80,000 in credit-card debt racked up by the brothers during the early days of the company. "After all they spent on college and braces and everything else, they joke that they're just now getting their return on their investment in us," Jason Olim said. But whether tapping their parents' bank account was business savvy or merely a matter of survival, the Olims latched onto one of the key ingredients in the recipe for creating personal wealth in today's market for Internet stocks. Executives who can find favorable financing early in the life of their company without handing huge chunks of ownership to outside investors are in a better position to reap the rewards of Wall Street's Web fever. In companies where venture capitalists and outside investors fund much of the early growth in exchange for equity, executives forfeit much of the stock that would otherwise propel them into the ranks of the megawealthy. Take the case of Verio Inc., a company that has embarked on a broad consolidation of regional Internet service providers. The three prime company backers - Brooks Fiber Properties Inc., Nippon Telegraph and Telephone Corp. and Norwest Equity Partners - each hold stakes in the company worth more than $100 million. The two top executives in Verio, in contrast, together hold stock valued at less than $10 million. Verio CEO Justin Jaschke is worth $4.7 million, and the estate of Marc Johnson, the Verio president who died earlier this year, is worth $3.3 million. Compare Verio's fate with that of MicroStrategy Inc.- a 9-year-old developer of decision-support software used mostly to pull information from databases for delivery via the Internet. More than 90 percent of MicroStrategy's stock is held by employees, including the 75 percent stake owned by company Chairman Michael Saylor that is now worth $770 million. But those types of payoffs do not come without assuming some level of risk. Saylor, for instance, personally guaranteed a $10 million loan prior to the company's stock offering to fund continued growth earlier this year rather than turn to venture capitalists for pre-IPO financing. In hindsight, Saylor's decision looks like a no-brainer as the company's stock has nearly tripled in the months since its offering at $12 per share. But, at the time, Saylor found himself on the hook for a loan that could have wiped out his net worth had Wall Street soured on the Internet, forcing MicroStrategy to pull back from its offering. "We took on a lot of risk," according to Saylor. "If the IPO had crashed, I would have been in big trouble." But with aspirations of building a company over the long haul that carries the same kind of clout now enjoyed by an Intel Corp. or a Microsoft Corp., some risk is warranted, Saylor said. "When you start to hedge your bets, you lose your nerve," said the 33-year-old Saylor. "I'd rather lose dismally than hedge my bets and be a mediocre winner." Stock Options For Talent More and more Internet companies are betting on themselves and their employees, increasing their reliance on stock options in recruiting and retaining key employees. Technology firms last year issued employee options to buy shares equivalent to 4.5 percent of the companies' outstanding stock. The comparable median rate for 1996 was 3.3 percent of company equity issued in stock options, according to iQuantic Inc., a Chester, N.J.-based human resources consulting firm. The trend means that more and more companies are relying on the tactic of paying top talent with stock options, possibly instead of using cash raised from venture capitalists. But while today's Internet workers may be grabbing stock options by the bushelful in the hopes of becoming the Web's next paper millionaire, they also run the risk of killing the goose that laid the golden egg...."