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Susan DeFife: founder, president, and CEO of Women's Connection
Raul Fernandez: founder and CEO of Proxicom
Nat Kannan: founder and CEO of University Online Publishing
Rob McGovern: president and CEO of CareerBuilder, Inc.
Esther Smith: founder of Washington Technology and editor-at-large
of TechNews, Inc.
Mario Morino: Chairman of the Morino Institute
part 3: Audience Questions & Answers
Mr. Stapleton-Gray: I'm Ross Stapleton-Gray of TeleDiplomacy,
Inc. I'm a regular attendee of the Hackers Conference which has been held out in the San
Francisco Bay area every year for about the last 14 years. I think we're well past the
point where people can tinker with 1s and 0s and make it a business. The real future is in
doing something a little grander. We are at the stage where a Henry Ford can build an
industry and an empire. Anyway, at one of the Hackers Conferences an engineer stood up and
commented, "When I started in this, I could program everything. I had to program
everything. I had to build the operating system. Today I can't tell what's in that box. I
can't do it all by myself anymore." What I'm interested in hearing from you is, what
are the ways you either learned to play with others in the forms of partnerships,
collaborations, etc.? Susan, you must be doing a heck of a lot of collaboration in
building what is essentially a network of networks. How did you meet up with your partners
and how did you form those relationships?
Ms. DeFife: We have, from the very beginning, sought partnerships because our
view of the Internet is that the only way that you're going to survive and thrive is by
collaboration. If everybody creates their own little area, then none of us will grow. So,
I think the first element is the philosophy that you need the partnerships.
The second thing is that we went out and looked at which corporate partnerships, which
organizational partnerships made the most sense for our audience. What could bring the
most to our community? What would be of the most benefit to the company? Which ones have
the ability to generate good revenue for us initially? That was the sort of criteria that
When we went after our first partnership, IBM, we were a fledgling Web site that few
people had ever heard of, except the loyal members of our community. We had a very, very
small traffic base. What we really had to do was to be very concise and very focused on
what it was that we were looking for from the partnership and how it was going to benefit
One of the other philosophies we have is that partnership deals need to make sense to
both partners. Everybody needs to feel that they are getting something, and that they are
giving something, or else it won't work.
Mr. Kannan: In fact, one of the very reasons that I decided to come here is to
create some deals around the table.
Ms. DeFife: I'm already doing business with two of these guys. You are the only
one I'm not doing business with.
Mr. Kannan: The Web, by its definition, is really a web of relationships. I've
found that those companies which try to do five different things very well end up doing
none of it very well. You have to partner, and the Net allows to you do that. It can
We recently signed a partnership with the whole University of Texas (UT)
system150,000 college students. That is the biggest partnership we have signed. It's
just a tip of the iceberg. What we found was that the nine campuses of UT can currently
handle maybe a million students, if the students had access to education without leaving
their jobs. We can do that with our University of Texas system without building new
campuses, new classrooms or hiring new instructors. We can take the education that's
already available, make it available over the Net, and take it into living rooms or
workplaces so people can hold down a job. Without the partnershipUT is in the
business of providing education, we are in the business of publishing contentwe
couldn't do something like that.
Mr. Fernandez: We've learned that our partnerships fall into three categories.
One is technical and strategic. We're a technology and consulting company, so we obviously
need to work with the providers of the foundation technologies. Two, is that our
competitors are sometimes our partners. It's that whole concept of co-opetition. In some
cases, you're cooperating with your competitors; in other cases, you're competing with
them. Three, and probably the most valuable one for us, has been partnerships with our
clients. In one case in particular, General Electric, it has led to an investment and more
business with them.
Mr. Hershey: I'm Bob Hershey. I'm a management consultant. I
wondered how each one of you scope the market for what you are selling.
Mr. McGovern: Well, in our case, we came up with a fundamental premise which was
that we wanted to steal somebody else's money, then try to print our own. What I mean by
that is, when we sell our product, we go in to the customer and say, "You're spending
$40,000 a month doing X, and why don't you funnel off 5% of that and give us a try."
A lot of the startup ideas that we were playing around with were ideas that were creating
whole new categories of products that have never been proven in the market and no one's
ever attempted to sell them before. We were looking for a fat, juicy target, a place where
people are already spending lots of money and where we could take advantage of the
paradigm shift created by the Webto put our product between the customer and what
they normally do.
Mr. Fernandez: For us, it really fell into two categories. In the beginning,
since this was so new, the market we were going after was whatever people would pay us to
do. Today, it's a little bit easier to quantify, in terms of resources, in terms of the
whole market space. There are very good research companies like Forrester, Jupiter,
Gartner, etc. that look at different technology sectors and put a money value on how big
it is and how big it's going to get.
Mr. Kannan: We actually went out and asked a bunch of customers that we had
previously. If you could attend UC Berkeley from your desktop in Philadelphia, would you
do it? They said, "We'd love to." Then we asked, "Would you pay $10,000 for
it?" "Maybe $7,000." I said, "Oh, I have a business now."
Ms. DeFife: In our case, when the company started, 10% of the online population
was female. I went out and asked women like me, "Why aren't you online? If you are
online, what is it that would bring you back to an online community?" We targeted
more deeply into the market of professional women and women business owners, mostly
because that was the audience I knew, but also because that was the audience within the
women's market that had the most money. I figured that was a real good bet that we could
make a business out of that.
Ms. Battis: Thank you. I'm Arlene Battis and I have a small firm
and I'm in the process of trying to design and develop a Web site. And I'd like to ask Mr.
Fernandez what he thinks I should consider when putting my Web site together. Do I want to
be like the major players in my business and have complicated Web sites with lots of
explanations and lots of pages, or do I want to make it simple and straightforward and
eye-catching and colorful?
Mr. Fernandez: I think the answer to that is to work backwards. What do your
customers want and what would they value most? Look at how you are currently communicating
with them. Look at how you are currently collaborating, exchanging knowledge. What do they
value most in that current collaboration process? Take some of those processes and use
that to guide the development of your Web site. In some cases, in business-to-business Web
sites, use minimal graphics. It's just branding for us, making sure that the logo is
visible. Everything else is about the application. Focus on what your customers value,
what the audience values. That should drive your design decisions.
Mr. Bailey: I'm Joe Bailey from MIT. We see people moving to the
Internet either because they feel threatened and they have to do something or because they
see a real opportunity. As netpreneurs, we see an opportunity and we are trying to seize
it, but we are competing against those who feel threatened, who have established
businesses. What is it about you as the upstart opportunity-seekers that gives you
advantage over the larger, threatened companies?
Ms. DeFife: I think the biggest advantage is that we move a lot faster. In our
case, we are incredibly flexible. We can spot a trend and we can move and act on the trend
within a couple of days. We've done business with some of the very large companies.
Initially, I was concerned about them coming in, putting a lot of money into the market
and just overtaking us. I learned that those companies take six months to turn around, so
we're not as concerned about the larger companies as we once were. I think we are much
more in touch with our customer base and can respond and react very quickly.
Mr. Fernandez: I think it's focus and also a mixture of fear and vision and the
adrenaline high that that gives to each of us. To change and move very quickly is
something that all of us see as a strategic advantage.
Ms. Abrahamson: I'm Peggy Abrahamson. I was a news reporter and a
Capitol Hill staffer. Currently, and for almost six years, I have been a speechwriter.
Frankly I'm tired of it. No. I'm just tired of doing the same things. I haven't started my
business yet but I have had it in my head for several years now. I don't know how to do a
business plan. I know I can contact some sources and I have to get started, but I wanted
to know what you did to develop your business plans. What went into it? I'm sure it was a
lot of effort.
Ms. Smith: We did a recent study and many of the successful companies did not
start off with a business plan. If you want to raise any money, sooner or later you are
going to have to bite the bullet, though.
Mr. McGovern: The issue isn't that you need a business plan. When you have an
idea, you need an execution plan to execute on your idea. A business plan is a convenient
transmittal tool you use with a potential investor. You first have to come up with an
execution plan that says, "How am I going to do this thing?" And, you know, not
to disappoint you or scare you, but I would bet that there's a reduction factor of about
100,000, meaning that for every idea that gets executed, there are 100,000 that are an
idea rattling around in someone's head. In fact, I get called by people all the time who
say, "Hey, would you look at this thing?" I look at it, and it might be
something like delivering pizzas through your television. And I say, "Well, that's
really interesting and, yeah, technically it's possible, but is there a market?" and
they say, "Well, you're a smart entrepreneur. Couldn't you do this for me and, like,
give me 50%?"
If I were in your shoes and I had a really good idea, I would sit down and write a
three-page execution plan that says, "Okay, the first thing I need to do is X, then
Y, then Z." Once you have that, you run it by people who have experience doing these
sort of things. I think you'll quickly find whether you are on target or not. You may be
that 1 in 100,000, so it's worth trying.
Mr. Kickenson: My name is Jerry Kickenson, I'm a data network
manager for a very large bank. My experience in procurements is that the bank gives a lot
of weight to things other than how good the service or product is. Things like: what
support do you have? are you everywhere in the world? do we know who you are? That sort of
thing. How have you approached that market? Have you avoided large companies or do you
somehow have an approach to get over the bias against an unknown?
Mr. Fernandez: It gets less difficult over time. You pick off your first Fortune
500 client and then you get the next one, and that has a snowball effect in terms of
credibility. In some cases, you may have to discount that first deal so that you can get
the marquee clients and get them to let you use their name as a referral. But the Internet
space is so new that it is really refreshing in terms of leveling the playing field.
Nobody can walk in and say they have been doing this for 20 years. It allows start-up
companies to be on the same level playing field with companies that have been around or 20
years, but not necessarily doing this.
Mr. Green: My name is Jay Green and I have had my own marketing
company for 20 years. A lot of my companies that I work with would be interested in using
the Internet. I don't really know how to help them start an Internet business. Where would
you look for case histories, education books, et cetera, on how to start an Internet
Mr. Kannan: We have a course on that. It's http://www.UOL.com.
Ms. Smith: And let me also put in a plug for http://netpreneur.org.
Mr. Sharon: Yes, my name is David Sharon and I would like to
thank the panel for an excellent evening. I work with an information systems provider that
provides solutions for the real estate industry. One of the things that I see as a content
provider is the potential for conflict between search engines and distribution channels
and content providers. For those of you who are content providers, do you see a conflict
on the horizon and how do you intend to insulate yourself against that?
Mr. Kannan: Good question. We are essentially a publisher of courses. A year ago
you didn't need to search anything. We had a total of 20 courses. Today we have 500 in six
different industrial markets and academic disciplines. We needed a search engine. We could
develop our own or license one from a third party. We quickly found out it was much easier
to license a search engine. We found that a search engine company, technically, could
create their own content, but most of them don't. We only use third-party data which you
can access free of charge and they give you a way to search for that. For our proprietary
content publishing we just use a search engine, the best one available on the market, and
allow our customers to use it to search through our database of courses to see what they
want to learn, if it's available, when it's available and through which institutional
Mr. McGovern: What the gentleman is getting to is that all the major search
engines are trying to turn themselves into portals for the Internet where you can get all
your information without leaving their site. Their objective is very simple, to drive page
turns on their site so they can put more ads on the site. The more ads they can put on the
site, the more money they can make. There is a battle going on right now in the industry
over that very issue. The most egregious part of it is that the search engines, not only
do they want to be the ultimate destination, they come to content providers like us and
say that for three million dollars we'll guarantee that we'll mention you whenever we talk
about careers, which is a little bit of extortion because the idea was that there was
supposed to be a place where people got information and now they try to trap you in their
I think the good news here is that it is going to be a good short playfor those
of you who are stock investorsbecause the Yahoo!s and Excites and all those people
have sold their portals for very high dollar values to companies which don't have the
wherewithal to actually make good on those contracts. There's a famous one that's kind of
interesting, called Cyber Meals, which delivers all kinds of meals like a Take Home Taxi
of the Internet. Cyber Meals committed to $65 million in deals to buy real estate on the
various search engines, when they have $3 million in the bank. So now the Yahoo!s, Excites
and AOLs and those people have booked it as revenue sitting on their P&L on a
go-forward basis. I think as soon as those contracts get defaulted and the stocks go down,
this insanity will probably clear itself up.
Ms. Summerall: I'm Lee Summerall and I have a small tour company
that specializes in art, garden and cuisine tours. We just started a women's travel club
and we are on your site, by the way, Susan, thank you. Our target market is women 45 and
over. We also have the Palladium tour side for couples. Most of the people are well
traveled. We are into a market with people who didn't grow up with the Internet, didn't
grow up with computers at all. What's the growth in that market? How much investment am I
supposed to make in the Internet to bring these people into my site so that I can sell
Ms. DeFife: Well, let me tell you that I think it is becoming incredibly
important and people are realizing this. Business is going to be conducted on the Web.
First, I think people understand, and women are really understanding, that if we don't
take advantage of the technology now, we are going to be left behind again. The second
thing is that the female demographic on the Internet is now 42% of the online population.
That's the fastest growing demographic on the Net. Salaried women are predicted to grow by
450% in their numbers by the year 2000. It's coming that direction.
The Internet, for women particularly, is a unique opportunity to get things done
quickly, easily, efficiently. It's going to be a real lifestyle change for women in the
way we conduct business. You should make the investment and it's eventually going to
generate returns. We spend a lot of time bringing women on to the Web, teaching them and
helping them understand. We think it is so valuable and so important. That's something you
may want to consider for helping your clients get to the Web so that you can conduct your
Ms. Richter: Hi. I'm Cecille Richter. I provide information
research, legal materials research and document delivery for hire. And I find myself
overwhelmed trying to do the work, look for work, do the accounting and keep my skills up.
So I have decided not to do a Web site because I don't think that I could do a good job
keeping it up to date, changing the content, etc. Am I making a mistake? Should I just get
something out there and not worry about keeping it up? Or must I put something out there
and find a way to keep it up?
Mr. Kannan: Do you want to make money? It's a marginal cost added for every
dollar you spend, for your time and energy, etc. If you don't make a couple of dollars on
that, it's not worth it. You must have customers who are willing to pay for that
Ms. DeFife: You are right about one thing. You have got to update it. It can be
a beast that you have to continually feed. People are not going to come back, if it looks
like your site is not being updated.
Mr. Fernandez: If you just want people to know where you are, how to reach you
and what you do, then I think you can do it with a minimal amount of effort and cost to
achieve that goal. If you want to change the way you are getting information to clients
who are paying you to get that information, then that's a different value proposition.
Ms. Richter: No, no. I just want to be out there and get more
Mr. Fernandez: I think if you set the expectation correctly, that it is simply
an informational site and not the beginning and end of all of your business offerings,
then it is probably a worthwhile investment and a small investment.
part 4: Wrap Up
Mario Morino: A Vast New Opportunity
Thank you all for coming this evening. It's been an enjoyable and inspiring session.
From bicycles to roller coasters to great white whales, we have seen inklings of what our
future holds in the experiences and accomplishments of our panelists. Each gives us
examples and clues about how businesses are going to change and function. We are going to
have to keep pace with economic transformation of enormous size and opportunities that are
These lessons are not limited to the world of business. They're having a transforming
effect on everything from health care to education, from journalism to philanthropy. When
you leave here tonight, there are five messages I hope you will take with you.
Number one, that we are in the early stages of a great economic opportunity that is not
several months or several years long, but will be 15 to 20 years in the making. It will be
one in which a broad sector of our society will be able to participate.
Number two, that we are creating a new set of rules for how business, markets and
organizations will behave.
Number three, that netpreneursleaders and innovators like Rob, Nat, Raul, Susan
and many moreare on the frontier of this economic opportunity. They are the ones
helping to write this new code for business.
Number four, that the Greater Washington region is at the core of a volcanic change.
Thanks to our concentration in telecommunications, Internet and content, we are an
emerging center of innovation and a new base of power for the new economy.
Number five, that you need to be engaged with the Net to understand its impact, its
benefits and the opportunity being creating.
With these five messages in mind, let's look at the origin of this economic
opportunity. The remarkable transformation we are experiencing today is the result of
three converging factors. The first is a growing dissatisfaction with our institutions,
whether government, education, business, health care or nonprofits. The second is a
renewed spirit of entrepreneurship that, in large part, has been triggered by our growing
dissatisfaction with the status quo. And the third factor is a revolution in
communications that brings new convenience to interaction and changes the way we connect,
communication and collaborate.
What I find most appealing about this transformation is that it opens new economic
opportunities to a very broad base of our population. In the end, it will usher in an
economic era of even greater growth than that spurred by the computer and the subsequent
PC revolutions of the past few decades. It is different in kind, as well, because it
responds to a need people have to control their own destinies and create their own
securitysomething that companies and other institutions can no longer guarantee.
The irony of the Net is that it increases our dependency on one another while, at the
same time, freeing us from many traditional intermediaries that have circumscribed our
lives and opportunities.
The context of this economic frontier is far larger than the high technology that
defined the computer revolution and that permeates too much of current discussions. You no
longer need a technology background to be part of it and, for that reason, a much larger
cross-section of our population will participate. Consider the different backgrounds of
- Susan, with a background in broadcast reporting, marketing and public affairs, is
demonstrating the power of communities of interest as a new model to engage and empower
- Raul, from a government contracting firm and Capitol Hill, now helps businesses redefine
their processes for a networked economy.
- Nat, originally a consultant and developer of interactive graphics and modeling
software, is a pioneer in the dissemination of education through Web-based courseware.
- Rob, with his software roots, is the most reminiscent of the software entrepreneurs of
the 1980s, but as a netpreneur of the 90s, he is rewriting the manual for recruitment and
They are proving how traditional industry gatekeepers will see their roles
significantly change as new business models are defined. These four represent a range of
backgrounds, yet, what is more telling, is that their innovations offer new approaches and
profound impact as a basis for larger societal change. They are defining new models for
how business, markets, and organizations must behave.
And, as I mentioned earlier, they reflect the need and the desire to control one's own
destiny. Entrepreneurship is rooted in the traditional characteristics of a sense of
independence, innovation and a willingness to overcome the insurmountable. In this regard,
entrepreneurs of the Net are the same as their predecessors. What is different is that the
world in which they operate is undergoing transforming change. That's why netpreneurs are
truly unique. They are the vanguard of a new era of business in a networked society. They
are simultaneously defining and learning new ways of doing business that will, in turn,
cascade to change how we learn, how we care for our health, govern our jurisdictions,
share news and interact with our family, friends and communities.
What's so different about the challenges netpreneurs face? I'll suggest eight
attributes and I think you have heard them all mentioned in the discussion tonight.
- Speed. The pace of change in business is faster than ever, due to advances in
computing, the impact of globalization, changing expectations of stakeholders and the
emergence of the Net. Simply put, we are experiencing a new business culture in which
speed has become one of its defining characteristics.
- Adaptability. The pace of change around the Net requires a business to be much
more flexible and adaptive. Businesses must be adept at reading, interpreting and
responding rapidly to changechanges ranging from technology, to competition, to
shifts in markets and buying patterns.
- Experimentation. The Netpreneur must be willing to experiment in the marketplace.
One doesn't have the time nor the empirical base of market research to over-study an
action. It's important to be experimental, to inject new ideas into your marketplace, so
long as you are ready to move quickly and adapt to what the market tells you in return.
- Continuous Innovation. Today, getting product to market only starts the journey.
The market's unrelenting demand for improvement insists that businesses focus on
continuous innovation. In this regard, what netpreneurs uniquely experience today will
soon confront the broader business world and society.
- Multidisciplinary. Net companies are succeeding by integrating multiple, diverse
disciplines into single solutions for the marketwhether it's the integration of news
and information components within Yahoo! or the retailing of book review databases at
Amazon.com. Netpreneurs are successfully integrating technology, content, graphics,
services and relationships to create what today is viewed as hybrid businesses, but may
well become the norm of industry tomorrow.
- Collaboration. A point you've heard over and over from the panelists: The Net is
inherently collaborative. You can't work alone in a medium which is moving this fast. The
Net enables you to engage and involve your stakeholders at every step of the wayfrom
product conception, to R&D, packaging, delivery, announcement, support and the ongoing
improvement process. The knowledge needed is simply too broad, the markets and technology
move too swiftly and the demands on the netpreneur are too great for one person or one
business to go it alone.
- Distribution driven. The real challenge in today's business world is that of
distributionthe dissemination of your brand and your identity and of your products
and services to your marketplace. In many ways, the Net lowers the barriers to entry
related to distribution, a point made abundantly clear by the hundreds and thousands of
small businesses operating on the Net today. Netscape, in particular, made this legend.
But for sustaining success, branding and distribution will likely become the paramount
concerns and objectives of your business.
- Niche-focused. The Net's reach and distribution opens up new market
opportunities. The netpreneur usually focuses on well-defined market sectors, niches,
where they can achieve dominant position or discover unserved markets. In fact, the really
exciting opportunities lie with those netpreneurs who realize that the Net may allow them
to create entirely new markets.
Speed, adaptability, experimentation, continuous innovation, multidisciplinary,
collaborative, distribution-driven, niche-focused. While you are making lemonade, riding
the roller coaster or chasing Moby Dick, these will be the characteristics that define you
as a netpreneurs.
Regardless of your background, it is important that you become engaged with the Net in
some way. It is a medium you must experience before you can understand and appreciate its
possibilities. You need to learn how quickly and profoundly the change it enables is
affecting business and society. You need to appreciate the vast new opportunities it
createsits great and unpredictable potentialbecause the Net's application is
so pervasive. Get involved because it applies to you, your career, your family, your
Tonight we've heard four exciting stories of success. There are many more. A critical mass
of innovation and successes like these is being built in the Greater Washington region.
Why here? Because many of today's and tomorrow's most exciting opportunities are coming
from a new convergence of communications, computing and content. Although computing
technologies have been a predominant opportunity engine for the past two decades, that
supremacy is being supplanted by this convergence. Greater Washington is at the center of
this convergence, because we may well own the bookends of the convergence: the
communications piece, made up of telecommunications and Internet infrastructure, and the
content piece both of which surround the computing platform.
The region is enjoying a netpreneur movement of its own, in large mass. The Potomac
KnowledgeWay and the Netpreneur Program work to create a social fabric and intellectual
infrastructure to nurture and grow this movement. We would welcome your involvement to
help you learn more about the opportunities here and to better connect you with the
exciting innovation already underway. It is through tangible collaborationjust as we
have had the pleasure tonight of benefiting from the collaboration and hospitality of the
Smithsonian Associatesthat we will realize the amazing potential this region has for
its netpreneurs, its businesses, organizations, and, ultimately, for its residents and
I would like to extend my thanks to the Smithsonian Associates, to Mara Mayor for
taking the initiative and the leadership to make this happen, to Julia Pelosi for her
great planning efforts, and Jackie Corbett, for originally bringing the Netpreneur Program
to the attention of the Associates. I also want to thank our speakersSusan, Raul,
Nat and Robfor their contribution and for the fine examples they are setting for
others to emulate. To Esther for the moderation, to Penny Lewandowsky and the Netpreneur
Program team at Morino Institute for their work behind the scenes. Most of all, I want to
thank you for your interest, attention and for making this movement possible.
The magic of this moment in time is that we each have a wonderful opportunity to
succeed in our own way in this new economic frontier. Let me leave you with the a comment
from a prominent telecom CEO who remarked with great enthusiasm at one of our recent
events, "We are at the right time in history, the right time for our markets and the
right place to make it happen."
Think back to tonight's discussion when you are on that roller coaster with those very
big highs and very low lows, when you are sailing after Moby Dick and that $12 trillion,
when it's fourth and ten. Remember that it is all about making lemonade, about execution
and about simplifying for your market and delivery.
Part 1 and 2: Introduction and The Panelists
Networking With the Netpreneurs