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By Jason Chervokas January 6, 2000 Last week, we named the Top 25 companies in Silicon Alley for 1999. But what about the year ahead? Who are the comers in New York new media for 2000, and what are some of the business models with a chance to succeed? In previous years, we've names only 10 companies to watch. This year, wth an explosion of fascinating start-ups, we've expanded the list to 25. We present them in no particular order In a year in which everyone was chasing the incubator model, no company was more ambitious than Online Retail Partners, potentially one of the biggest plays in Silicon Alley. Led by Henry Nasella, former president and COO of Staples, Online Retail Partners plans to form e-commerce joint ventures with offline retailers, investing money and services to help those companies build out online stores and strategies. The company already has raised $62 million from partners including Liberty Digital, Comcast Interactive Capital, Pequot Private Equity, Oak Investment Partners, Global Retail Partners and recruiter Ramsey Beirne Associates, Inc. Already the company has launched Web ventures with Zany Brainy and cosmetics retailer ULTA. Next year will bring more money, bigger brands, and possibly an IPO. Remember when content was king in Silicon Alley? Well, these days with Internet content companies gaining infamy for their cash burn, many investors have turned their focus to infrastructure plays. Screaming Media -- formerly Interactive Connection -- provides the virtual pipe to connect content from partners like The New York Times Syndicate with online publishers like AOL.Com and About.Com. And with $30 million in investment and new management the company is poised to explode in 2000. The Web is a database-driven world. But to date that's meant Web publishers have had to build and host their own database publishing systems or buy a high priced solution from a vendor. Flashbase is an online database application that can be used by Net surfers for everything from managing a cocktail party RSVP list to, ultimately, large-scale content publishing. A model whose time has come. The suburban start-up has positioned itself as the eBay of unsold inventory -- the place where buyers and sellers of everything from an old pallet of sneakers to office furniture can find one another efficiently. The company has competition from publicly-traded Pittsburgh start-up FreeMarkets, but with fascinating plans to make money on things like shipping and escrow services, and with a recently raised $22 million from investors including Morgan Stanley and EBay itself, the company is ready to advance. We love the application service provider business model; and the model is particularly apt in the cash of video and multimedia. From college students to proud parents, everyone would love to be able to created digital multimedia files but digitizing them, editing them, hosting them -- this all requires big-time computing power. Armed with patented technology developed at Cornell, Javu and its Videofarm.Com site are turning this into a service. It's a killer app for the looming broadband world. Another ASP, LivePerson provides e-commerce companies with software to manage chat-based customers service and live sales, but the company has all sorts of ambitions from launching an online shopping destination site to possibly completing strategic deals with call center companies. And with heavy duty investment from Goldman Sachs, Hambrecht & Quist, Allen & Co., and the Scully Brothers, can an IPO be far off? It's a longstanding Silicon Alley dream -- build an Internet content development studio based on the film and TV production business. Combine that with a services-and-cash for equity Internet business development incubator and you've got KPE, brainchild of Mark Patricof, a former employee of Hollywood uber-agent Mike Ovitz. With a recent investmentfrom Wasserstein Adelson and others the company is set to fund and/or develop 30 companies or studio properties in 2000. Billing itself as the "world's largest original net television producer," Pseudo's streaming media programming always seemed one-part interesting entertainment and four-parts hallucinatory fever-dream of founder Josh Harris, the Silicon Alley gadfly and Pseudo's founder. And the company's struggle for traction hasn't come without bumps. But traction it has. We knew it when the Pseudo-produced 88HipHop.Com got a shout out on Price Paul's excellent Prince of Thieves album this year. And, $17.4 million from Prospect Street and others gives Pseudo the resources to grow on. The Internet is an advice-generating machine. Wanna know what Curtis Mayfield album best summed up his 1970s work? Ask someone over at rec.music.funky. So, can you build a business by creating an information exchange, a marketplace where people post prices they're willing to pay for answers to questions, and other folks come along and answer the questions? That's what InfoRocket hopes to find out. There remain two huge problems for e-commerce -- customer retention and the problems with deferred gratification. YouNetwork hopes to solve the customer retention problem with an elaborate system through which buyers accrue value through buying, group buying or referrals, and redeem that value for cash, products, or stock in the company. We're not sure how well YouNetwork.Com will do as a destination site, but there are lessons being learned here that will effect all of consumer e-commerce. Starting your own currency is pretty much the biggest play you can make. I mean, your chief competitors are the United States Federal Reserve Bank, the Bank of England, etc. And it remains to be seen whether the world need a new, Netcentric currency. But beenz and Flooz, two online currency players -- one a UK import to Silicon Alley and one the brainchild of iVillage co-founder Robert Levitan -- are making real inroads in the Net's highest stakes gamble. These local start-ups that deliver all sorts of consumer products to Net buyers within an hour of order have a tangled history with one another involving a passel of now-settled lawsuits over intellectual property theft. And in fact the companies may have a hard time if all the do is sell their own ice cream, cookies, CDs and videos. But already their very existence has pushed Barnesandnoble.com into one-hour delivery experiments, and other e-tailers are sure to follow suit, making these start-ups ripe targets for acquisition at the very least. Can they catch on elsewhere? When it comes to marketing pop culture products, fashion, and accessories, teens and young adults "rool, dude." And already, three local start-ups are in a pitched battle to sell and market to the group. Alloy is in the lead to date in terms of annual revenues; and both Alloy and iTurf are already public. But watch out for Bolt which is planning a public offering in early 1999 and has more than one million registered members with an accumulated deficit of only $6 million. Still, all these players are standing around waiting for a great payment method through which kids can make online transactions. The data being collected by Web publishers and online retailers from their server logs, from ad serving companies from DoubleClick, from traffic rating services like Media Metrix, is the primordial ooze of the Internet. But evolving a meaningful lifeform out of this stuff may require the hand of an outside intelligence. That's because there are few data points that connect all this raw stuff and few tools that help glean meaningful knowledge from the ooze. That's the data mining and reporting service Primary Knowledge hopes to provide. It's a daunting task and only time will tell how effective Primary Knowledge is. But the need is enormous. Dispute resolution online is a beautiful thing. Just as people on Usenet will flame each other in ways they never would face-to-face, lawyers, insurance adjusters and others will negotiate over the Net in ways they never would face to face and that will lead to faster, easier, and more equitable settlements for all. And lucrative business for these two local players, which are looking at IPOs. Dash is basically a shopping agent and discount finder in a 130K software client, and despite early software problems the company appears to be gaining traction. Basically the company provides buyers with discounted purchasing opportunities and gets a piece of each transaction, a bounty on new customer acquisitions from certain merchants, and of course places advertising in its client. That kind of business model usually requires vast numbers of users to make money, but that kind of client business has always been attractive to buyers like AOL which has shelled out millions for things like ICQ and Spinner.Com. Either way, there's a nice play for Dash.Com. The Yahoo of broadband? That's what the folks over at On2.Com hope they're building -- a series of destination sites to provide a guidepost to content in the looming broadband future. A nascent but ambitious play. The coming wireless and broadband content booms are going to require software platforms to support content distribution, ad serving, ad tracking, and the like. And those products are exactly Thinking Media's bag. There has long been a theory in some sectors of the Net business that someday Net service will be like cellphone service -- providers will give away hardware and make money on service contracts. But the PC-based players in this space have failed to find traction. IAN is predicated on the notion that new-fangled interactive appliances, not PCs per se, will be the freebie devices of the Net's future. Maybe, just maybe, the company is right. Huh? Come again? Have the AtNewYork.com editors been in the bug juice too much? Sure, theglobe.com was last year's big IPO story and this year's flameout. But that doesn't mean that its radical reinvention plan -- turning users into affinity club members based -- won't work. It's a major gamble for a public company, basically and entirely new content play executed on the fly. It's dangerous, but with the current stock price under $10, what's the company got to lose? |
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