More newspaper info about AOL profitability and new potential partner:
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washingtonpost.com
Online, But Not Yet in View
By Shannon Henry
Thursday, April 8, 1999
Great ideas, few customers. Nobody knows better than CyberCash Inc. President Jim Condon that this image dogs his Reston-based company, keeping the e-commerce bandwagon away from its door. "The 14 U.S. citizens who used CyberCoin were wildly enthusiastic about it," Condon deadpans about one of CyberCash's earlier software products.
Clearly company leaders aren't in denial anymore. Their shop has continuously lost money by making payment systems that techies declare are important to the future of e-commerce, but that the average person doesn't understand.
Now, Condon says, what was once one of the highest-profile tech companies in the Washington area is on a mission to turn things around. "We're refocusing," says Condon. "We built slick technology for technologists. . . . But great technology that no one uses is useless," he says.
Condon, who has been CyberCash chief operating officer since 1997 and was recently named president, says he has cleaned corporate house, assembled a virtually all-new top management team -- no more academic types, he says -- and is soon to name a new chief financial officer.
He also is prodding CyberCash to figure out what normal people want.
The cornerstone of CyberCash's new image is InstaBuy, a recently launched service that lets people buy products over the Internet from many different companies with one click. The idea is that the customer won't have to type in a credit card number or shipping address with every purchase. "If it's convenient, if it's easy, it's going to happen," says Condon.
CyberCash says InstaBuy will help avoid the "abandoned shopping cart" syndrome, in which a customer gets to the point of purchase and then doesn't follow through for a variety of reasons, a big one being that the whole thing is taking too long.
Still, to be worthwhile to shoppers, InstaBuy must offer customers lots of choices. So far, through its financial services partner First USA, CyberCash has signed up companies including 1-800-Flowers Inc., Borders.com and CDnow Inc.
One of the new CyberCash executives is George Pappas, who joined a month ago as the guy in charge of mergers and acquisitions. Pappas, whose official title is vice president of strategic relationships, travels around looking for deals.
Pappas says CyberCash is talking with America Online Inc. of Dulles, which would seem to be a logical partner, though he won't give details: "We've had some discussions. There could be a tighter relationship."
America Online Inc. and CyberCash have a couple of things in common. They both have a marketing partnership with First USA. And CyberCash chief executive William Melton is on AOL's board.
Unlike could-be ally AOL, however, CyberCash is still not profitable. The new plan is designed to change that: "We will be cash-flow break-even by the end of this year," claims Condon.
Just who are the Georgetown Partners? Many people were asking that question this week as the little-known Bethesda investment house became a big telecom player overnight.
Bell telephone company Ameritech Corp., which is set to acquire SBC Communications Inc., said Monday that in order to get regulatory approval for the merger, it will divest about half of its wireless business to a venture led by GTE Corp. and Georgetown.
Georgetown has agreed to pay $230 million in cash and debt toward the total $3.3 billion purchase price. Under terms of the deal, Georgetown will have a 7 percent interest.
Chester Davenport, who runs Georgetown and will be chairman of the new venture, will in one stroke become one of the top black telecom owners in the country at a time when many regulators and businesspeople are saying there ought to be more people like him.
Davenport gives some credit for the deal to Jesse L. Jackson, whose Rainbow/PUSH Coalition promotes diversity in the business world through its Wall Street Project. Georgetown was a sponsor of the group's annual conference in January.
Jackson "opened up a mind-set" for deals like this to be done, reports Davenport. Specifically, the civil rights leader held a news conference shortly after the SBC-Ameritech merger was announced, saying he would examine whether it would be good for minority involvement in telecom. Then, after the Georgetown deal was done, Jackson issued a statement endorsing the deal.
Davenport says he'd been watching the Ameritech deal unfold, and he knew the company eventually would have to sell off some parts of its wireless arm.
Georgetown was founded in 1989 with a bit over $1 million that Davenport had made from cellular phone investments in the early 1980s. So far, it's made most of its money by putting together an auto emissions testing company, then selling it last fall for $580 million.
After 17 years of running the show at systems integrator BTG Inc., Ed Bersoff is turning over day-to-day operations to someone else.
Come May, Paul Leslie will take on the newly created position of chief operating officer, although Bersoff, 56, will still be chief executive. All BTG units will report to Leslie, 47, who had been a vice president at TRW Inc. and a senior vice president at BDM International Inc.
"We've been successful, we've had our share of lumps, and now we want to move to the next plateau," says Bersoff, who says he looks forward to having a more strategic than tactical role. "I want to let someone else be the shepherd of the main core of the business."
Send tips and tales of the digital capital's local people, deals and events to Shannon Henry at henrys@washpost.com.
© Copyright 1999 The Washington Post Company
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