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Bigstep takes first step, enters crowded territory

The investment community darling, set to debut its Web hosting services for small businesses next week, could be tripped up by well-heeled competition.

Investment community darling Bigstep.com, set to debut its Web hosting services for small businesses next week, could be tripped up by well-heeled competition.

The San Francisco-based start-up's plan--which is to build and host Web sites for small businesses that want to sell or provide content--is nothing new, analysts say, despite that the company is touting a unique approach to the market.

"Have you heard of the Yahoo store? Have you heard of CitySearch? Have you heard of the thousands of companies in this space?" said Melissa Bane, analyst at Boston-based Yankee Group. "That's a tough space to break into right now."

"Everyone has a different spin but it's going to be tough to compete," added Cormac Foster, analyst at Jupiter Communications.

Bigstep is targeting companies with less than 100 employees, estimating that less than 5 percent of more than 35 million U.S.-based small businesses currently have an e-commerce Web site, creating a ripe market for picking.

The company, which launched a bare-bones corporate Web site last month, believes it may be able to build a community fast by offering a unique price model. This includes free Web site construction, easy site setup, and tiered offerings, which may include network services or a plan for accepting credit cards online, analysts said. Details are expected to follow next Wednesday, when the company launches the service.

Bigstep, in its mission statement posted on its Web site, is promising customized "e-business in minutes." It plans to build and host sites, communicate with customers and visitors, market the site to attract surfers, and analyze site traffic and trends.

This plan is nothing new, said Bane, who questioned Bigstep's profit model and if it simply intends to build up a customer list quickly and sell the company to a portal or established market player.

Foster said Bigstep could be successful if it drives traffic to the site, though offering a cheap or free service isn't necessarily the key. While Yahoo offers free listings on its auction site, eBay, which charges, is still the No. 1 place to list.

Bigstep has said it plans to work on its strategy with partners, including First USA and Oxygen Media. With 40 employees, Bigstep has also grabbed heavyweight attention and funding by US Venture Partners, Mayfield Fund, Partech International, Draper Richards, Angel Investors, Argus Capital, Staenberg Private Capital, and private investors.

In June, the company, which was founded in June 1998 and led by chief executive Andrew Beebe, got its second round of VC funding--$10 million from US Venture Partners, the Mayfield Fund, and Angel Investors, to follow-up a first round of $1.5 million.

Bigstep has also lured executives from Adobe, Andersen Consulting, Disney, Hotwired, NetObjects, and Netscape.