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To: H James Morris who wrote (30568)	12/20/1998 9:40:00 PM
From: Glenn D. Rudolph	Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 9 have filled out detailed information and said it is ok for advertisers to send them email). This database is probably the company's crown jewel and it is continuing to spend to make it even more valuable (for instance, the ability to target only people who have already made purchases online). This data and the technologies that will successfully mine the data play an extremely critical role in the Internet's development. As we have heard (and seen) again and again in the last two weeks, the upside to these data-mining technologies is huge (and we will explore in more detail in future editions of The Internet Capitalist). Much of what we heard at the MatchLogic meeting and recent news (Fred Siegel, new SVP, Marketing from QVC, the home shopping network) involve products, partnerships, relationships and technologies that should start to pay dividends to Excite in 1H99. Observations Industry Value Chain Reorganization: Real Estate and REITs As regular readers of The Internet Capitalist know, the purpose of this reorg observation is to inculcate a sense of the Internet's underlying importance to the business of allocating capital. To illustrate to institutional investors how broadly the Internet will impact many large and important parts of the US economy and therefor impact substantial parts of their portfolios, even if they aren't investors in traditional technology or Internet stocks. Increasingly, as we market to buy-side institutions (as we did throughout Texas this past week), we are finding new faces in the crowd. No longer do we expect just technology specialists, but rather, we are seeing an increasing portion of retailing, advertising, and traditional media (cable, print, etc) buy-siders attend these meetings. And who can argue with their logic? As a holder of Barnes & Noble, of the New York Times Company, or of Disney, these analysts must consider the impact that the Internet can and will have on their holdings. In this edition of The Capitalist, we turn our attention to yet another derivative play on the Internet; real estate. If you believe, as we do, that foot traffic at retail stores will ultimately be negatively impacted by the growth in popularity of online shopping (say even a 10- 15% reduction in this figure with time), then one must conclude that retail stores' financial health could deteriorate rapidly (recall that most retail businesses are fixed-cost, low-margin operations), which, among other things, could result in a lower overall ability to pay those fixed costs (read: rent). And if the retail stores are likely to feel operating margin pressure thanks to the Internet, we can assure you that these companies will look for cost relief in one of their biggest cost items: lease costs. Though we harbor no yen for the real estate or REIT business (though we did work on a deal with Richard Rainwater in a former life), we can't help but feel that the value of certain real estate and the companies that are most leveraged to that value (or rent revenue), must decline, all other things being equal. We're not being as aggressive as to state flatly that you can't have a rise in the value of virtual real estate without a commensurate decline in physical real estate values, but we do believe that the idea merits investment consideration. Economic cycles, real estate pricing, the general retail environment, and demographics may all trump the potential negative impact of a meaningful decline in foot traffic and its inevitable economic results, but it may become important on the margin. How one plays this possible trend is somewhat more difficult to determine with any precision