Start-up bets on Web-based software

Founded by an engineering veteran of Apple Computer and Excite@Home, Laszlo Systems this week secured $1 million in seed financing from General Catalyst and Sofinnova Ventures, which the start-up will use to beef up its development team to complete work on its software.

Laszlo is entering a crowded market for Web-based applications. Microsoft's CEO Steve Ballmer said he is "staking the company" on its .Net initiative for providing applications and services over the Web. Sun Microsystems and IBM are also heavily invested in Web services schemes, and legions of start-ups have bet the farm on plans to provide applications over the Web.

While any number of these applications already exist on the Web today, Laszlo is hoping to capitalize on the conventional wisdom that they pale next to their desktop predecessors.

"Everyone has been saying for a long time that the future is in networked applications," said David Temkin, founder and chief executive of the start-up. "But how do you deliver great networked applications? At @Home we never really answered that question. The answers out there then and the ones out there now are lacking. This is an answer to that question."

Laszlo, which abandoned an initial attempt to build its application with Macromedia's Flash technology, is keeping mum on the specifics of its new approach. But Temkin said it was server software the company would license to companies hosting applications, whether consumer-oriented portals or businesses offering applications to their employees. Temkin also said the technology was applicable to business-to-business applications as well.

But industry analysts expressed skepticism that a start-up the size of Laszlo could eke out a place for itself among the titans now vying for eminence in the field, at least initially.

"They have a very long road to go down," said Matthew Berk, analyst with Jupiter Media Metrix.

Temkin, 35, managed the consumer software development group at Excite@Home. Before that, he was a manager for Apple's failed Newton handheld computer. He was also editor and publisher of the magazine In Formation, which took a jaundiced view of the high-tech world.

Though the Newton failed in the marketplace and Excite@Home is lingering at death's door, Temkin said his experience with those two efforts did not hurt him with investors.

"This is a horrible funding environment, and we were subjected to more due diligence than I imagine Excite was when @Home acquired it," Temkin said. "We have a very well thought-out plan with a very well-defined market need, and if that wasn't the case we wouldn't have gotten our funding."

Laszlo's software will be complementary to Microsoft's .Net initiative and Sun Microsystems' Java programming language, Temkin said.

Incorporated late last year, Laszlo employs eight people and plans to release its software in 2002.