Net Buzz

BOSTON (06/12/2000) - Once all the IT work gets outsourced, anyone left with an IT job must be working for an outsourcer, right?

Then what? Do the outsourcers start outsourcing?

The silly syllogism dawned last week after an interview with executives from SiteSmith, a Santa Clara startup that provides dot-coms and bricks-and-clicks with ongoing Internet site services on an outsourced basis. Despite having launched only last October, SiteSmith already boasts 90 customers, six branch offices - one in London - and 260 employees, according to Dan Rasmussen, a company co-founder.

SiteSmith positions itself between the huge Web-hosting companies and the project-oriented site developers. Aberdeen Group predicts this slice of the outsourcing market will be worth $14 billion annually by 2002, Rasmussen says, which explains why he has a half-dozen fledgling competitors, including Marc Andreessen's Loudcloud.

It's no secret why online businesses are turning to the SiteSmiths and Loudclouds: As Web operations become bigger and more complex, hiring, training and retaining Web site professionals becomes ever more maddening. Failing to keep pace can prove disastrous, especially for a young company.

But why don't the outsourcers have the same problems?

"This is a dream job for most of these guys," Rasmussen says of his company's engineers. They get to play with the latest and greatest technology in a workplace that truly values their contributions because, in essence, they are the product. Moreover, these people are treated so well by their employer - pay, benefits, stock options - that one story about SiteSmith likened them to rock stars.

Rasmussen laughed politely when I suggested that must mean they abuse drugs and sleep until noon.

There was also this rather odd exchange about the company's plans to go public:

"So when's the IPO going to be?" I asked near the end of our chat.

"I didn't mention anything about an IPO," Rasmussen shot back, apparently suspecting that I had tried to snooker him with one of those "When did you stop beating your wife?" questions.

Not me. SiteSmith's being "pre-IPO" had indeed come up earlier during the discussion about employee recruitment and retention. Besides, it's downright rude these days not to ask a startup the IPO question.

"We really can't talk about that," chimed in Richard Dym, vice president of marketing. "Interpret that as you choose."

I interpret that to mean SiteSmith's IPO will be sooner rather than later.

In November we introduced you to the Meshkin brothers, 19-year-old Alex and 23-year-old Brian, who were launching a portal called along with a handful of grown-up Coca-Cola expatriates. Users of the portal were to accumulate BuzzPoints by doing everyday Net stuff such as e-mail, chat and checking stocks. In turn, BuzzPoints would be the only currency of realm when auctioned off goods and services provided by advertisers and partners.

While finding much to like about the entrepreneurial Meshkins, Buzz did say of Surfbuzz: "The pitfalls are not difficult to spot."

Last week the Meshkins toppled into one of those pitfalls and pulled the plug on Surfbuzz. They explained in an e-mail to customers that "unforeseen circumstances have constrained our operational abilities and required financial resources beyond our current means."

Translation: They weren't making money and didn't see that changing.

Here's hoping Alex and Brian take solace in the last line of that November Net Buzz item:

"Of course, if they fail, they'll have plenty of years left to try again."

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