It's been seven years since then, which can seem like a century in Net time. Now, San Francisco-based Organic plans to take the ultimate step for an online company, boosting its competitive edge in the dense market for Web services by raising money through a public stock sale.
Next week, the firm is expected to offer 5.5 million shares, priced at an estimated $12 to $14 each, according to a recent filing with the Securities and Exchange Commission. But success is by no means guaranteed: Organic competes in a $100 billion Internet and technology services industry that includes giants such as EDS, CSC and IBM Global Services, along with smaller firms Agency.com, iXL, Scient, Viant and Razorfish.
Unlike the larger firms, Agency.com, Razorfish and Organic are focused on Net services only--a segment of the market that research firm International Data Corp. expects to grow 59 percent annually through 2003. They have a unique advantage in the market, as they aren't burdened like older firms to revamp their services strategies for the Internet. Yet they still are faced with huge demand from clients to cover all aspects of a company's Net strategy.
"I think (our job) is a lot harder than people think," CEO Nelson said in a recent interview. "We're really cross-disciplinary. There are elements of an IT shop, high-end consulting, design, branding, media and logistics."
New York-based EdVenture Holdings analyst Kevin Werbach said Organic should fare well because of its well-known name, established reputation and client list.
"Right now, there's more than enough business to go around," Werbach said.
Because of the high demand, analysts say nascent firms such as Scient, iXL and Razorfish are particularly appealing to investors.
The stock performance of many of these Web design firms has reflected analysts' bullish comments on the industry. Viant today blew away its fourth-quarter analyst estimates, posting earnings of 14 cents a share. Viant's shares were up to $107 today, a jump of 7 percent.
Razorfish, which recently split its stock and announced strong third-quarter earnings, has continued to watch its stock rise since its April IPO and is trading today at nearly three times its offering price of $16 a share.
Not all digital media firms have had immediate success. Organic rival Agency.com has watched its shares jump to $98 shortly after its blockbuster December IPO only to plummet to their current run in the 40s. The company is expected to announce third quarter earnings Feb. 14.
In in a recent report, however, Hambrecht & Quist analyst Dirk Godsey called the weakness in Agency.com's stock unwarranted, noting the company is trading at about a 30 percent discount of others in the sector--despite enormous demand for Net services and expected strong fourth quarter earnings.
Although Organic has plenty of new business, the firm has yet to turn a profit. Net loss for the first nine months of 1999 totaled $15.7 million, according to a recent SEC filing. During that same period, about 41 percent of the company's $51.8 million in revenue came from its top five clients, including auto manufacturer DaimlerChrysler and video rental firm Blockbuster.
Early work by the firm included the development of the Apache Web server and the Big Book online yellow pages directory. In 1996, Organic drew attention for its Nike Web site that offered real-time information about the summer Olympics in Atlanta.
The company has 681 employees, and added offices in London and Singapore last year. It is now part of a team working on DaimlerChrysler's $500 million technology push dubbed Customer Connect, a project aimed to help the auto maker better communicate with dealers and customers.
Organic is backed by giant holding company Omnicom Group, which also has invested in Razorfish and many other interactive and advertising agencies. The company claims more than 250 clients, including Tommy Hilfiger, Blockbuster, British Telecommunications, Washington Mutual and Barnes & Noble. Start-up clients include Boo.com, CDNow and Textbooks.com.
Before founding Organic, Nelson, who studied art history in college and has worked as a sound engineer in New York jazz clubs, started Accrue Software, a Web measurement and analysis company that Organic helped launch in 1995.
Organic plans to trade on the Nasdaq under the ticker symbol "OGNC." Lead underwriters for the offering are Goldman Sachs and Donaldson, Lufkin & Jenrette, and co-manager Thomas Weisel Partners.