<nettime> "it'll be a particularly good year for bankruptcy lawyers and auctioneers"

[geert lovink <geert@xs4all.nl>]

from: www.washingtonpost.com
And a Happy New Economy To You!
By Shannon Henry

Thursday, December 28, 2000

Technology "incubators" became a bad word in 2000, "layoffs" a common one.
The gleeful, easy, everyone-is-getting-funded attitude has been replaced by
skepticism, gloom and massive reversals of fortune.
People are still creating new companies and inventing technology. But stage
one of Internet business is, well, so over. It's not that the "new economy"
will cease to exist, it just isn't new anymore.
"The jig is up," says Marc Andreessen, who co-founded Netscape, briefly went
to work at America Online when it bought his company and then founded
Loudcloud, the Sunnyvale, Calif., seller of Web software and services, "We
are now in a time of great seriousness. It is much, much harder to build and
grow a company than it has been in past years. This will be a tough year."
I asked 15 or so well-connected people in the local tech community to talk
about what trends, people and companies we should watch in 2001. Most are
resoundingly pessimistic these days, opining that we haven't hit bottom yet
and that the shakeout will continue until many companies' pockets are
completely emptied. So much for a happy new year.
Trends
. Fewer companies will go public; fewer companies should. In January,
Varsity Group of Washington is scheduled to be delisted from the Nasdaq
National Market. The company, whose stock closed yesterday at 16 cents per
share, didn't have proprietary technology, but did have an idea to market
books and other products to college students. What's so bad about being a
good private company? Or Varsity could have become a division of a larger
company. It still could, of course -- it's quite a bargain these days.
. Venture capitalists' stars are falling back to earth. When things were
great and the money flowed, everyone wanted either to be a VC or be near a
VC. Some of the most experienced venture firms, especially Baltimore-based
New Enterprise Associates, which sits on a new pile of money and has unusual
clout, will always be revered in tech and financial circles. But some of the
newer funds will have trouble raising money and won't be able to invest in
as many deals because their current companies are struggling. Some funds --
like the dogs they invested in -- will not only lose their rock star status
but could even go out of business.
. There will be fewer "Internet" companies but more advanced uses of
technologies in all sorts of businesses. It will probably be a while until
the Internet is as ubiquitous as electricity, but it's starting to become
more of a utility to many. "The Internet won't be looked at as a stand-alone
industry or business, but as a set of tools and technologies to allow for
any company to become faster and stronger and more consumer-focused. . . .
It will be like Cable News Network becoming CNN," says America Online
executive Ted Leonsis.
. Cash will be king. A start-up company's employees, suppliers and investors
will be less interested in equity or stock options and more interested in
real money. All those law firms and real estate companies that took equity
in lieu of money aren't going to fall for that again. You can just see the
old-economy partners at a legal practice saying "I told you so" to the
new-economy ones who argued that they should take equity or deferred fees
for dot-com clients.
Andreessen says he's now thrilled that Loudcloud never took equity in its
technology customers instead of dollars. "We'd have an equity portfolio that
would be worthless," Andreessen says, if he'd gone that route. But he also
says the best companies won't casually offer stakes in their companies
anyway, because the business is more valuable to them than cash.
. There will be more serial entrepreneurs. Despite the carnage, some people
can't help but start companies again. And again. Those people -- whether
they passionately love what they do or have something to prove, or both --
will always be hardest to beat.
. Wireless Internet access on handheld devices is a perennial one-to-watch.
This year enough people started carrying these things that Miss Manners will
soon need to intervene with a dictum on proper social usage. Aether Systems
of Owings Mills, Md., is our local big player in this field.
People and Companies
. Mark Warner. The Democrat is raising tech money from Democrats and
Republicans alike for his bid for the Virginia governorship in 2001. If he
wins, he'll be the first in his crowd to take public office. Reggie
Aggarwal, chief executive of Cvent.com, says Warner's ability to span the
worlds of technology, finance and politics -- and bring them all together --
may be a new model to follow.
. Michael Saylor. His name kept coming up as an answer to "companies" to
watch. Clearly people think of the chief executive as synonymous with the
business of MicroStrategy, the Vienna data-mining company that recently
settled a fraud lawsuit with the Securities and Exchange Commission. "Can he
turn around MicroStrategy's bad-boy image with investors and the SEC, and
convince people he's got a sound business model that can generate profits
and strong growth?" asks Jonathan Shames, a partner at Ernst & Young who
works with technology companies. Many others are wondering, too, and
watching to see how WorldCom Vice Chairman John Sidgmore's role as chairman
of Strategy.com, an online personal information subsidiary of MicroStrategy,
will affect the company's future.
. William Schrader. The chief executive of PSINet and one of Washington's
Internet pioneers, he recently lost his stake in his own company -- which
he'd put up as collateral for a $25 million personal loan -- when its share
price fell below a certain point. It's a tragedy for Schrader, who had many
chances to sell PSINet but refused them all. "Can he pull PSINet back from
the brink?" asks April Young of Imperial Bank. Others wonder who will take
over the company.
Indeed, many said the people to watch in 2001 will, unfortunately, be on
their way down. "No heroes this year," says Jack Biddle, general partner of
venture-capital firm Novak Biddle. He predicts more high-visibility
"flame-outs" to come.
. The opportunists. Turnaround artists, image consultants and others who are
jumping in to save troubled tech companies and capitalize on their pain.
Many think it'll be a particularly good year for bankruptcy lawyers and
auctioneers.
. Companies ready to seize business opportunities created by the unraveling
of the human genome. "Will 2001 result in actual product ideas or just more
mapping?" wonders Northern Virginia Technology Council chairman and Draper
Atlantic managing partner John Backus.
. America Online. Has Washington lost its most powerful technology company
to New York? The answer, of course, is yes. But more fundamentally, we
should be wondering how the marriage of AOL and Time Warner (assuming it
goes through as planned early in the new year) will affect the way we use
the Internet. And that is entirely unpredictable.



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