Making Money in Technology
After the Bubble, page 17

The Ecology of Sectors: B2C, B2B, and Infrastructure, continued

As a business model, B2C is dead. You’d be very hard pressed to fund a new B2C company today. Most of the B2C companies that did get funded during the boom have been purchased by brick- and-mortar rivals, are bankrupt, or are on their last legs. Those that remain that are in relatively good shape—for example, Amazon—at best can hope to become a kind of shopping center of the Web, substituting Web pages for dead-tree catalogs. The sole exception is eBay, which promotes a model that is essentially C2C—consumer to consumer—and takes a piece out of the mother of all yard sales.

B2B—companies that promote or facilitate transactions between businesses—started with great promise, but have taken almost as much of a hit as the B2C companies. There’s reason to think, however, that in the future companies will be conducting most of their business electronically using automated processes and agents. This being the case, the current slump in B2B should be regarded as a pause for digestion. In the long run, B2B players that offer value to their customers will be viable. (However, the idea that some B2B companies had that they could insert themselves into transactions as a new middleman seems naďve.)

This implies that some B2B start-ups could get funded, and also that many B2B players probably do have residual salvage value.

The Internet software infrastructure companies provide tools for building enterprise Web sites—Art Technology Group (NASDAQ: ARTG), Broadvision (NASDAQ: BVSN), Vignette (NASDAQ: VIGN), etc.—and tools and services for speeding Web delivery—for example, Akamai (NASDAQ: AKAM), Inktomi (NASDAQ: INKT), etc.

Continued next page

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