Silicon Investor (SI) -- The First Internet Community

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To: DiViT who wrote (37231)	11/13/1998 1:08:00 PM
From: .com	Read Replies (2) \| Respond to of 50808

The clip below is from briefing.com. Note the reference to SI and how "dead" it is compared to Yahoo. Guess they don't read those posts on Yahoo! INTERNET BRAND NAMES. With Internet names, and particularly weak Internet names, on a tear again today, it is worth giving some thought to the importance of brand names on the Net. In terms of technology, the cost of entering most Internet businesses is quite small, so the only real barrier to entry is branding. Yahoo! (YHOO) became one of the strongest brand names on the Internet because it was one of the first and the best, but to enter the Internet navigation business now would be unthinkable (even with the best technology) without a formidable cash hoard, and even then, it would be an uphill battle. If brand name is 90% of the battle on the Net, then we must look skeptically on Yahoo-like valuations being accorded non-Yahoo brand names. AOL, Yahoo, and Amazon.com are among the only Internet brands with broad public awareness. Then there are theglobe.com (TGLO), eBay (EBAY), EarthWeb (EWBX), and so many others that few people outside of the arena of finance or the Net have ever heard of. For these companies to win price/sales ratios above the already mind-numbing Yahoo ratio is ludicrous. While it is true that it would be difficult for a new company to enter into these businesses and compete effectively, it is folly to ignore the risk that the true brand names in the Internet group will not eventually steal the businesses of many of these Internet upstarts. Case in point: Silicon Investor (SI) was the site for stock chat just a year ago. They dominated this niche business, but they also lacked a strong brand name. The result was that Yahoo entered this business and, in less than a year, they now own it. The SI message boards are still popular, but they are dead relative to Yahoo (we counted 676 DELL posts since midnight on Yahoo boards versus 296 on SI, and this dominance is repeated for virtually all stocks). We mention this SI/Yahoo anecdote because SI is now a unit of Go2Net (GNET), one of today's many second/third tier Internet darlings. GNET is soaring today (+18 1/2 at 48) on good earnings news, but the reality is that Yahoo and other "real" Internet brands (AOL, AMZN, XCIT, etc) can commandeer the business of GNET and other no-name Internet companies in short order. For those who are buying no-names like TGLO, EBAY, and EWBX at valuations that exceed Yahoo's, you should treat this threat seriously. Just as the Ciscos, Intels, and Microsofts have owned their respective sectors and relegated competitors to the scrap heap, the Yahoos, AOLs, and Amazons own the Net. If you're going to pay up dearly for Net stocks, you had better get a brand name for your money. Theglobe.com? That's not a brand name, that's a bubble.