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Copyright 1996-2003 Morino Institute. All rights reserved.

Statements made at Netpreneur events and recorded here reflect solely the views of the speakers and have not been reviewed or researched for accuracy or truthfulness. These statements in no way reflect the opinions or beliefs of the Morino Institute, Netpreneur.org or any of their affiliates, agents, officers or directors. The transcript is provided "as is" and your use is at your own risk.  

Panelists:
Susan DeFife: founder, president, and CEO of Women's Connection Online
Raul Fernandez: founder and CEO of Proxicom
Nat Kannan: founder and CEO of University Online Publishing
Rob McGovern: president and CEO of CareerBuilder, Inc.

Moderator:
Esther Smith: founder of Washington Technology and editor-at-large of TechNews, Inc.

Closing Remarks:
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 we used.

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 the partner.

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 create partnerships.

We recently signed a partnership with the whole University of Texas (UT) system—150,000 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 partnership—UT is in the business of providing education, we are in the business of publishing content—we 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 Web—to 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 business?

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 partner.

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 space.

I think the good news here is that it is going to be a good short play—for those of you who are stock investors—because 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 them tours?

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 business online.

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 additional effect.

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 customers.

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 only beginning.

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 netpreneurs—leaders and innovators like Rob, Nat, Raul, Susan and many more—are 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 security—something 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 tonight's Netpreneurs.

  • 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 professional women.
  • 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 staff development.

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.

  1. 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.
  2. 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 change—changes ranging from technology, to competition, to shifts in markets and buying patterns.
  3. 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.
  4. 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.
  5. Multidisciplinary. Net companies are succeeding by integrating multiple, diverse disciplines into single solutions for the market—whether 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.
  6. 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 way—from 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.
  7. Distribution driven. The real challenge in today's business world is that of distribution—the 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.
  8. 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 creates—its great and unpredictable potential—because the Net's application is so pervasive. Get involved because it applies to you, your career, your family, your community.


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 collaboration—just as we have had the pleasure tonight of benefiting from the collaboration and hospitality of the Smithsonian Associates—that we will realize the amazing potential this region has for its netpreneurs, its businesses, organizations, and, ultimately, for its residents and families.

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 speakers—Susan, Raul, Nat and Rob—for 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.

Happy netpreneuring.

Part 1 and 2: Introduction and The Panelists

Networking With the Netpreneurs



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