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To: gridiron 99 who wrote (560)	5/13/1999 10:42:00 PM
From: puborectalis	Respond to of 1285

Keynote wants to be Kleenex of the Net By Georgie Raik-Allen Red Herring Online May 13, 1999 "Keynote Systems could become the Kleenex of the Internet," predicts Forrester Research analyst Laurie Orlov. This doesn't mean she believes Web surfers will use Keynote's offering to wipe their virtual noses. Rather, she's saying that the site performance measurement service may become so well-branded that the name Keynote will become synonymous with performance measurement, in the same way that Kleenex has become synonymous with facial tissue. "People might say, 'Our site has been keynoted,' which would be like the Web performance seal of approval," Ms. Orlov says. Three-year-old Keynote Systems has just raised a $17 million mezzanine round of funding from VeriSign (Nasdaq: VRSN) and GE Equity, as well as prior investors such as Bessemer Venture Partners. According to Keynote CEO Umang Gupta, the company was valued at $92 million after this round of financing. The money will be used to expand the startup's network of 90-plus computers that measure the speed and reliability of e-commerce Web sites from strategic locations around the world. HOW WEB SITES MEASURE UP Keynote offers its 800 customers, which include Amazon.com (Nasdaq: AMZN), ETrade (Nasdaq: EGRP), Cisco Systems (Nasdaq: CSCO), and GeoCities (Nasdaq: GCTY), data on the performance at their site compared to their major competitors. Performance data is delivered through browser or email, although customers can be paged if speed or reliability drops to a level that requires immediate action. Ms. Orlov says the service is critical to any site attempting to develop an edge over its competitors. "Some of these companies are spending millions of dollars on their e-commerce capabilities. And when their site goes down, it can make the front page of the Wall Street Journal," she says. "That is not a good thing." Recognizing that it may need to offer more than data to some e-commerce sites, the company has developed a consultancy service to diagnose specific problems and make recommendations on how to fix them. "I expect this type of offering will become a more significant part of their business model," Ms. Orlov says. Right now, revenues come principally from the measurement service, which costs a minimum of $295 per URL. According to Mr. Gupta, Keynote generated $2.2 million in revenue last year and should exceed projections of $7.7 million for 1999. GROWING WITH THE NET A major issue for the company will be how it will evolve as the expansion of bandwidth and the improvement of e-commerce Web site performance decrease the importance of speed and reliability measurement. Mr. Gupta says Keynote's focus will grow to include other quality of service metrics such as ease of navigation, user-friendliness, and speed of conducting an entire transaction, rather than just a page download. The CEO also believes that adoption of DSL and cable modems will not improve speed and reliability any time soon, since new services and data are emerging faster than the bandwidth needed to transport then. As an example, he says the average time to download a page from the Web, seven to eight seconds, has not changed over the past two years. Surprisingly little competition has emerged to challenge Keynote in the Web performance measurement space. According to Forrester analyst Ms. Orlov, only one startup, Service Metrics, is providing a similar service to e-commerce sites. The one-year-old Service Metrics recently raised $6.5 million financing from Softbank Technology Ventures and IDG Ventures, as well as new investors Pequot Venture Partners and Nexus Group LLC. But Ms. Orlov says Keynote's first-to-market position will give it an important advantage in the race to establish major brand recognition. "There is not a big barrier to entry, but there is little competition right now," she says. "If they run like crazy, they could get there." She believes the company's biggest opportunity will be to develop a kind of watchdog role for the industry, with its measurement evaluations potentially becoming a recognized stamp of performance standards. To reach this goal, Keynote needs to protect its reputation by maintaining a high level of accuracy in its reporting and to remain an independent, and therefore unbiased, company. That should not be a problem if Mr. Gupta has his way. The entrepreneur was a Keynote angel investor before he joined the company as CEO in early 1998. Before that he was employee number 17 at Oracle (Nasdaq: ORCL); he also founded his own technology company, Gupta Corporation, which went public in 1993. If all goes according to plan, Mr. Gupta says, he will take his second startup public within the next six to 12 months.