(WASHINGTON, DC -- June 4, 1998) A panel of business leaders shaping the fast-moving world of electronic commerce drew hundreds in Washington on Wednesday evening and many more via a live webcast. The reason was clear: the future of the field is as enticing as it is contentious.

The five-member panel included seasoned entrepreneurs who have launched multiple start-ups, and made and lost millions in their quest to innovate electronic transactions.

"The Stars of E-Commerce" was the third event sponsored by the Potomac KnowledgeWay’s Netpreneur Program to spotlight exemplary entrepreneurs in the Greater Washington region.

If one thing was clear from the two-hour evening, it was that the future of electronic commerce is open to multiple visions. There was also little agreement over who the current winners are.

"We may find that this industry is going to be 180 degrees out from what we’re doing now," said William Gorog, Chairman of InteliData Technologies Corp., a leading provider of home banking software.

But whatever its eventual shape, the panelists made clear that e-commerce is going to take off sharply.

Moderator Gary Arlen, president of Arlen Communications Inc. and a noted commentator on the Internet, said estimates of future e-commerce sales range from $6 billion to $300 billion, admittedly a large differential. "But no one says it will be zero billion," he added.

The Need for Patience

Gorog advised that entrepreneurs need to be patient, since technology is often far ahead of the market and inertia among businesses is strong. On the long road to adoption, companies could fail, be taken over or simply lose the stamina to stay in the race.

In previous ventures, Gorog said, he often didn’t have the capital to grow the start-up to the point where the market finally caught up with it. LEXIS-NEXIS, for instance, which he founded in the late ‘60s, recently sold for more than $1.7 billion, long after he was gone.

• Gorog, who also served as an adviser to President Ford and was chairman of an investment firm, was joined by four other online commerce heavyweights. They were:
• John Backus, president and CEO of InteliData;
• Bill Melton, president and CEO of CyberCash Inc., which is his fourth entrepreneurial venture;
• John McDonnell Jr., president and CEO of Transaction Network Services, which runs a network to link credit card companies to the Internet;
• Mark Walsh, president and CEO of VerticalNet Inc., which is creating Web-based communities for business-to-business commerce.

Amazon.com Success?

The spirited tenor of the evening underscored a key trait of the entrepreneurs — their willingness to buck conventional wisdom in pursuit of the customer.

Walsh, for instance, questioned the attention that companies like online bookseller Amazon.com have been getting, saying that the model of disintermediation — selling at the lowest possible price by automating the role of the middleman — was limited.

His company, VerticalNet, in contrast, is building communities for business customers in extremely specialized fields. He described VerticalNet’s approach as "re-intermediation," or adding value to a process by making it easier for transactions to occur.

"The Internet’s about accelerating and facilitating leads that connect buyers and sellers," he said.

McDonnell, however, when asked to name a "star" of e-commerce, pegged Amazon.com. Although he was the only one among the panel who is now making a profit, he emphasized that e-commerce would only grow.

"I’ve seen this business grow 10 times in the past year," he said. "If you're not using [the Net], you’re going to be left behind."

Indeed if there was one area of agreement, it was that electronic transactions are catching on quickly, even if the ultimate killer-app is still obscure. And the panelists said consumers were driving the phenomenon.

"The consumer is, in my view, more ready to accept this change than a lot of institutions serving them," Gorog said.

Walsh also said it was the consumer who was leading the business customer to the market. An executive doing online banking and shopping at home, he said, may go to work the next day and wonder why he can’t do business in the same way. That's what will spur him to get the business online.

Lowest Price vs. Ease of Use

Many of the panelists were intrigued by shopping agents — software that searches the Net for the lowest price on a product — but Backus said that price was not always the driving point for a sale.

If consumers finds a site that’s easy to use and attractive, they will return again and again even if it’s not the lowest cost.

While Walsh supported the idea of shopping agents for commodity-like goods, he also said there was room for the middleman who would bring people with specialized needs together, creating, as his business does, a community of businesses with like interests. The gathering itself — the list of community members — is where value resides, he said. Walsh has already seen that happen in the complex requests for specialized parts and contracts that pop up repeatedly on his sites from industrial customers.

The panelists also gave examples of missteps they have made, the hiccups and costly lessons that are the war stories of entrepreneurs.

When asked by an audience member about the concept of "micropayments" — paying pennies to read an article on a Web site, for example — Melton replied: "I spent millions trying to answer that question."

He has jettisoned that model, since viewers fall off rapidly as soon as you begin to charge for access to a Web site. Now he sees online promotions as an attractive revenue model, which amounts to offering visitors an incentive to look at marketing information.

These promotions, he argued, will drive traffic and also create greater revenue than micropayments ever would because marketers want to reach a growing audience.

The Wisdom of Experience

With all the various discussion threads, one thing was clear: that e-commerce is alive with plenty of available capital to back a good idea.

"I think you’re in one of the most forgiving financing environments in this history of mankind," Walsh said, speaking of the interest of venture capitalists.

Summing up the evening, Mario Morino, chairman of the Morino Institute, a founder of the Potomac KnowledgeWay, and a veteran entrepreneur himself, said that what he heard from the session was "wisdom."

"Entrepreneurs, like yourselves," he told the audience, "are taking the chances and redefining how business will be done in the New Economy. We have successful people who have blazed a trail, like the members of our panel, who are willing to share what they have learned. This number is growing as the major successes in this region continue to occur."

Morino stressed that what is occurring in e-commerce is more than a market, it is a growing shift in how business is conducted. "The numbers and projections," he said, "belie the significance of what is occurring. It is nothing short of transformational. To ignore it is fundamentally to underplay the economic opportunity that lies ahead."

"As we continue to develop and succeed," he said in closing, "as the private financing increases, as the IPOs continue, as our companies make names for themselves in their markets, and as netpreneurs continue to build up those stunning net worths, the world will notice. Succeed and they will know."

Copyright 1998, Morino Institute. All rights reserved.