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Boom or bubble? | page 1, 2
At a poolside auction led by eBay's Meg Whitman that raised $351,000 for a nonprofit called Schools Online, the bidding was sprightly for such "unique items of unclear value" (eBay argot for "tchotchke") as John Doerr's tie ($12,000) or the dress CEO Katrina Garnett wore in her ads for Crossworlds Software ($10,000) -- both of which wound up in the hands of CyberCash founder Dan Lynch. But the item that sparked the fiercest bidding -- and that eventually sold for a cool $89,000 -- was an executive search by conference sponsor Korn/Ferry International. When not struggling to recruit executive talent, the Net's moguls are struggling to attract users. One speaker after another bragged about how obsessed they were with customers -- from Bezos' claim that Amazon is "earth's most customer-centric company" to EarthLink founder Sky Dayton's plea for Internet companies to make their customers more "Net-savvy" instead of "dumbing down" their services. But figures presented by Media Metrix president Mary Ann Packo suggest that sites are doing a better job of capitalizing on their existing users than attracting new ones: According to Packo, in the past year, Web page views have increased by 48 percent and hours of usage by 44 percent, yet the overall number of Web users has increased by only 15 percent. Some Internet leaders have decided to worry about amassing users and figure that the money will then take care of itself; others have chosen to worry about fattening a war chest that they can then use to attract users. Either way, the ultimate goal is, in industry parlance, to "monetize" these users -- somehow or other. When making money is at war with making users happy, though, Net companies may run into big problems. For instance, a panel of venture capitalists expressed doubts about a recent deal in which the search engine Google received $25 million in funding from traditional rivals Sequoia Capital and Kleiner Perkins -- with the deal rumored to value the company "pre-money" (i.e., before adding in the additional funding to the company's total worth) at $70 million. Scott Rosenberg's column appears once a week in Technology Afterward, Kleiner's Doerr explained that Google is already getting 4 million page views a day: "We'll figure out how to monetize that." He also pointed out something that the other VCs didn't seem to grasp -- that Google searches actually work a lot better than those on most other search sites. Of course, one of the things users love about Google is that its home page isn't cluttered with ads and promotions; once the "monetizing" begins, who knows how long that will last. One company that used to top Net entrepreneurs' list of worries stayed strangely off the radar at the Industry Standard conference. While participants pondered whether AOL or Yahoo would triumph in the portal wars, or whether AOL or Excite@Home would prevail in the effort to control home Internet access, nobody seemed terribly concerned about Microsoft, the industry's former No. 1 nemesis. Microsoft's Brad Chase, who recently assumed the head of the company's consumer and commerce group, provided a warm and fuzzy, low-key view of Microsoft's Net presence: "There are a lot of urban legends and myths about working with Microsoft -- we're very interested in setting up win-win partnerships." Then he handed out his e-mail address. Other speakers barely mentioned the Redmond giant. Asked to assess the likelihood of Microsoft leading the portal market a year from now, the crowd voted 71 percent for "0-25 percent chance." Chase showed up on crutches (after a basketball injury), and while the symbolism was coincidental, the company's concurrent announcement of its retreat from the Net content business with the sale of its Sidewalk city guides added to the image of a hobbled giant. Of course, at the same time, Microsoft announced the latest in a long string of profit-laden quarters. The company is rumored to be thinking about issuing a new "tracking stock" to represent all of its Net businesses, and perhaps its unloading of Sidewalk was an effort to improve its bottom line in those areas before such a move. But it might also be that Microsoft is no longer obsessed with dominating the Internet media, and is happy to leave that war for eyeballs to others while it continues to rake in high-margin software profits. Either way, it no longer seems to loom quite so large in the dreams and nightmares of the Net's business leaders. In the end, all the executives, analysts, bankers and investors didn't seem to have any better clue than the rest of the world about the biggest question facing the Net economy: Is the '90s boom an aberration or a fundamental change? A speculative mania or a "paradigm shift"? EarthLink's Dayton said that his company's customer service reps spend a lot of time helping new users who call to say, "I'm on the Internet now -- what do I do?" A surprising number of businesspeople seem to be asking the very same question.
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