Ten Internet Startups to Watch

SAN MATEO, CALIFORNIA (09/13/2000) - Corporate IT managers can look for new Web search and navigation tools, content syndication software and managed network services from start-ups that were showcased at a conference for venture capitalists and Internet entrepreneurs held this week.

The Internet Outlook conference provides a forum for 100 CEOs from emerging companies to give short presentations about their business plans. The audience and a panel of venture capitalists select the 10 most promising start-ups at the end of the conference.

This year's list of winners features eight companies planning to offer enterprise applications and services. These startups are:

GuruNet, Octopus.com, DoDots and Google Inc. all offer search and navigation aids for enterprise portals.iSyndicate offers content syndication services.

Vitessa provides managed e-commerce services.

Firedrop and Responsys.com offer marketing-oriented e-mail software and services.

Only two consumer-oriented Web sites were selected: Kmart's BlueLight.com, which offers free Internet access and online shopping; and Vividence, which pays consumers to conduct Web site testing and sells the results back to Web site operators.

The lack of interest in business-to-consumer Web sites and business-to-business Internet exchanges at the conference corresponds with a dramatic decline in stock market valuations for these types of companies over the last six months.

"It's hangover time," says Alex Baluta, a principal with investment banking firm Robertson Stephens who specializes in enterprise applications. "The investment community is much more cautious, but they are willing to invest in enabling technologies.'" The trend is good news for corporate IT managers, who will benefit from the innovation and investment in enterprise-oriented products and services.

Venture capitalists also like enterprise applications because they have a reliable customer base and revenue stream vs. the advertising-driven model used by most consumer Web sites.

"The eyeball gathering game has gotten old," says Steve Jurvetson, managing director of Draper Fisher Jurvetson. He says he's interested in start-ups where the "mere act of using the product generates revenue."

One of the startups that Jurvetson and other conference attendees were most excited about isGuruNet, which offers a free desktop software application that gathers information from across the Web such as dictionary definitions and maps to answer end user questions. End users merely click the Alt key while pointing to a word such as "Luxembourg," and instantly information pops about the country's history and location pulled from reliable sources across the Web.

"GuruNet is the coolest application, and it demos great," says Stewart Alsop, a general partner with New Enterprise Associates. "It's really cool to see the integration between what's happening on the computer and the Web. I just haven't figured out how they're going to make money."

That's where the enterprise market fits in, according to GuruNet CEO Eric Tilenius, who says a corporate version of the software for use in intranets and extranets is due out soon.

Another Web navigation tool that intrigued conference attendees was from Octopus.com, which offers software for putting together personalized metaportals pulled from information sources across the Web. Octopus.com has a consumer service but is eyeing the enterprise market via integration with Oracle and SAP.

Baluta sees value in Octopus.com's ability to create a one-to-one relationship between an end user and the Web, but he questioned the company's ability to sell into the enterprise market. "This idea won't necessarily carry over into the enterprise application integration area," he says.

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