Leaders See Big Future for E-Commerce,
Differ on Shape
700 Internet Entrepreneurs Gather to Learn from Experience
(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
"The Stars of E-Commerce" was the third event sponsored by
the Potomac KnowledgeWays 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 were 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 didnt 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.
- John Backus, president and CEO of InteliData;
- Bill Melton, president and CEO of CyberCash Inc., which is his fourth
- 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.
The spirited tenor of the evening underscored a key trait of the
entrepreneurs their willingness to buck conventional wisdom in pursuit of the
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
His company, VerticalNet, in contrast, is building communities for
business customers in extremely specialized fields. He described VerticalNets
approach as "re-intermediation," or adding value to a process by making it
easier for transactions to occur.
"The Internets 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.
"Ive seen this business grow 10 times in the past
year," he said. "If you're not using [the Net], youre going to be left
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 cant 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 thats easy to use and attractive,
they will return again and again even if its 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
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
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
These promotions, he argued, will drive traffic and also create
greater revenue than micropayments ever would because marketers want to reach a growing
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 youre in one of the most forgiving financing
environments in this history of mankind," Walsh said, speaking of the interest of
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
"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.