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To: H James Morris who wrote (22857)	10/24/1998 10:04:00 PM
From: Glenn D. Rudolph	Respond to of 164685

Silicon Valley: Plaza Suite and Sour: The Mood Is Somber at Volpe Brown's Internet Conference By George Mannes Staff Reporter 10/24/98 3:39 PM ET If you wanted a perfect example of the chastened mood among young Internet companies, all you had to do was spend a few minutes this week with Fernando Espuelas. The youthful Espuelas, speaking at a conference organized by investment bank Volpe Brown Whelan at New York's Plaza hotel, quietly explained how the company he heads, StarMedia Network, is establishing itself as the world's leading online destination for Spanish- and Portuguese-speaking Internet users. It wasn't hard to be impressed, especially since he'd just raised $80 million in new funding from various venture capitalists. (Flatiron Partners, a minority shareholder in TheStreet.com, is also an investor in StarMedia.) But unlike the case with other companies in previous months, the money didn't translate into swagger. Asked by an audience member about the size of his "burn rate" -- the amount of cash it was losing each month in its preprofit stage -- Espuelas sighed. "It's enormous," he said, adding that it was a multiple of millions of dollars a month. The audience laughed. "At least you're honest," a woman volunteered. Now that even the hottest-looking startups are humbled, the cultlike air of Internet investing has officially worn off. Amid the global economic slowdown and worries about possible economic reversals in the U.S., investors are still optimistic about the Internet's future but cautiously so. One example of public skepticism at the conference came from Howard Anderson, managing director of the Yankee Group, a research company that has allied itself with Volpe Brown. In the conference's lunchtime speech, Anderson cited the three big lies told by the high-tech firms that regularly show up at the company's Cambridge, Mass., headquarters to show off new products. The first lie? "We have no competition," said Anderson. The second: "What little competition we have, we're kicking the living bejesus out of them," he said. The third, he said, was when companies whisper conspiratorily that their technology has been selected by major companies such as Dow Jones (DJ:NYSE) or Dow Chemical (DOW:NYSE). Anderson exploded in mock protest that those companies buy one of everything; the state of New Jersey, he said, existed only as a storage area for products companies like these bought and didn't use.