New Net firms grab veteran talent

As Net firms battle for high-tech talent and angle to keep on top of a rapidly shifting marketplace, a new generation of Web start-ups is making significant inroads on both counts.

Paul Festa Staff Writer, CNET News.com
Paul Festa
covers browser development and Web standards.
Paul Festa
5 min read
As Internet companies battle for high-tech talent and angle to keep on top of a rapidly shifting marketplace, a new generation of Web start-ups is making significant inroads on both counts and attracting the attention of their more established competitors.

Silicon Valley is experiencing a corporate baby-boom of sorts as individual beneficiaries of four-year stock option agreements become fully vested; early pioneers such as Netscape Communications, America Online, Excite, @Home, and Yahoo become consolidated; and the industry sharpens its focus on e-commerce.

As these and other factors converge, so-called second-generation Web firms are siphoning off the same talent that built the first generation.

The latest example is an e-commerce start-up that has rounded up some of the hottest technical talent and venture capital backing in Silicon Valley.

The nascent firm, known by the code name Round One, is keeping mum about its plans until a projected launch later this summer. But the start-up's founding team boasts tech and business talent from Yahoo, Netscape, and @Home, as well as funding from Benchmark Capital and August Capital.

The firm's site says only that it is working on a consumer e-commerce solution. Sources knowledgeable about the firm, including board member and Benchmark VC Bill Gurley, declined to be more specific about its product plans. Based in Mountain View, California, the company formed in April.

Round One and its siblings in this new generation of Web companies are poised to take advantage of a vast opportunity, according to analysts. In addition to their ability to lure technological talent with pre-IPO stock options or equity, they have the mobility to create their business models around new trends that older, larger, and more established companies don't.

"There's an incredible opportunity in the Net for these new businesses," said John Robb, analyst with Gomez Advisors. "The business model for the Net's second-generation strategy is to go where the big portals can't follow. Now we have a whole new set of players focused on e-commerce, on niche segments. They're not trying to be everything to everybody."

One way portals and other established companies can follow the lead of the new-generation firms is to acquire them. Amazon, for example, which increasingly advertises its desire to sell everything from books to Amish quilts, recently snapped up a trio of smaller firms, including Alexa Internet and Accept.com.

Round One is the first company to coalesce out of Round Zero, a monthly gathering of approximately 100 Internet entrepreneurs and venture capitalists.

In an economy with far more jobs than programmers to fill them, Round One has attracted an all-star team of tech talent, much of it from AOL's newly acquired Netscape division.

Players include some of Netscape's star engineers who have recently left the company. Ramanathan Guha, who Round One confirmed will be its chief technology officer, was principal engineer at Netscape, where he created the Resource Description Framework, now a key World Wide Web Consortium recommendation.

Round One confirmed another handful of Web veterans: The start-up's chief executive will be Naval Ravikant, who was manager of strategic planning at @Home. Nirav Tolia, an early employee at Yahoo and founder of Round Zero; Dion Lim, formerly director of business development at Quote.com; and Mike Speiser, from McKinsey, are also founding members.

Lou Montulli, a founding engineer at Netscape who wrote the text browser Lynx and also the "blink" tag, will join the Round One team, the company confirmed. Aleksander Totic, another founding engineer at Netscape who was responsible for creating the Mac version of the Navigator Web browser, and Garrett Blythe, another early Netscape employee, have joined the start-up.

Second-generation Web firms also have been very successful in grabbing venture capital and technological talent over the past year. Round One joins Web start-up plays including TellMe.com, founded by former Netscape employees; Responsys, staffed by Netscape, Banyan Systems, and Mentor Graphics veterans; and Accept.com, whose founding members include Netscape and PointCast veterans.

Beyond e-commerce, search technology start-ups also have done well. Search firm Google.com last week announced a $25 million venture capital win and said Kleiner Perkins Caufield & Byers's John Doerr and Sequoia Capital's Michael Moritz had joined its board.

Responsys, which automates email-based marketing campaigns, won a personal investment from Mike Homer, former general manager of Netscape's Netcenter. While the investment does not imply any formal relationship or active role with the company, second-generation Responsys trumpeted the investment by one of the industry's leading first-generation marketers as a ratification of its business model.

Responsys also solidified its administrative team with the appointment of Jim Lodestro, formerly with Hyperion Solutions, as vice president of sales.

Companies like Responsys, which provide services to e-commerce firms, are expected to do well in the next-generation Internet economy.

"It's a parasite strategy, and it's great," said Robb. "Nobody can do everything. E-commerce sites need help to stay ahead of the curve, and companies that can plug in their services have a fantastic business model."

Yet another Web start-up founded by departing Netscape employees is going by the code name iTixs. Led by Chris Misner, formerly director of strategic development and acquisitions at Netscape, and Tim Hickman, former senior product manager at Netscape and more recently head of products at Tibco, the San Francisco-based start-up's Web site promises "a consumer Web service that will greatly improve the way users interact with the Web."

iTixs president Hickman said it is well-funded with backing by "a well-known VC and prominent Silicon Valley angels"; he declined to name them. Hickman also declined to describe his company's product except to say that anyone who employs a Web browser and a search engine would be able to use it.

Hickman described a heady atmosphere among Web entrepreneurs, especially those with the advantages of first-generation experience.

"Coming from Netscape we definitely have some advantages," Hickman said. "We saw what worked at Netscape and we saw what didn't work."

Moreover, Netscape experience means added credibility, not to mention contacts and leverage.

"Everyone's busy in this valley at this stage. With our experience it's easier to knock on consultants' doors and get their time. That's tough stuff to get," he said. "The other angle is having the right contacts in the venture and investment communities, and business contacts for both fundraising and talent.

"It really helps in getting quality engineers, who want to know that you know the Internet, that you get it, and that you've pulled off this sort of thing before," Hickman added.

Another start-up launching with seasoned Web talent is eVite, an online events organizer whose team includes former employees of When.com, Jump, Hotmail, Phillips, and WhoWhere, according to the company.