NerveWire pins success on "ehubs"

Former Cambridge Technology Partners executive Malcolm Frank is confident his Net venture, NerveWire, will rise above the services din.

3 min read
Ex-Cambridge Technology Partners executive Malcolm Frank figured he had a better way to run a services company.

So Frank headed for the door, following a clan of other Cambridge execs who have left over the past year to hatch start-ups.

In a crowded pond of small services companies with slick names, shiny young faces and all-star casts, Frank is confident his Net venture, NerveWire, will rise above.

His ace in the hole? That the company's business model--as well as its meat-and-potatoes integration experience--will set it apart from a slew of boutique firms that offer Web design, but don't get their hands dirty with the behind-the-scenes work required to build networks of a customers' buyers and suppliers.

"If you're doing [just] the cosmetic stuff, it's OK to not have the deep industry understanding--but what we're doing here is completely altering the way [our clients] do business," said Frank, a Yale alumnus who spent time on Wall Street as a commodities trader.

But setting oneself apart from the boutique firms doesn't mean eliminating competition. Stan Lepeak, an analyst at Stamford, Conn.-based Meta Group, said NerveWire has picked a lucrative but competitive space to launch its business. Business to business services is a lucrative niche that is projected to reach $1.1 trillion by 2003, according to market research firm International Data Corp.

By targeting the business-to-business market, "they're setting themselves up for long-term competition from larger, more established organizations like the Andersens and the IBMs," Lepeak said.

For its part, NerveWire is connecting businesses online to their partners and suppliers within what Franks calls "ehubs." Using templates NerveWire is building to suit specific industry needs, the company is promising to complete projects in weeks, intead of the months it takes more traditional firms.

Frank said the company plans to partner with e-commerce software makers--such as Ariba and BroadVision--to build trading communities that customers will use to buy and sell goods and services online. Their goal is to build an "eBay on steroids," where a company can bring buyers and suppliers of items--such as circuit boards, for example--together to bid on parts, Frank said during a recent interview.

For now, the company is limiting its work to larger, global corporations and dot-com start-ups in the high technology, financial services and chemical industries. The company, which launched about a month ago and recently nabbed $60 million in funding from Thoma Cressey Equity Partners, said it is now working on about 10 projects.

The company is also accepting several methods of payment from start-ups: equity, which it will share with its employees from a start-up. NerveWire also offers a plan under which it takes a percentage of each transaction made on a company's site--so as the company's business grows, so will NerveWire's revenues.

Marianne Hedin, an analyst at IDC, said NerveWire is taking a unique approach with its payment model.

"They're a little bit more radical in this respect," she said.

Frank wasn't the first to leave Cambridge after its star faded as the company failed to meet Wall Street expectations for several quarters.

Frank followed a group of ex-Cambridge executives, who have since started or joined start-up services ventures, several which have enjoyed great success. Alumni include Bob Gett, who runs Viant; Bill Seibel, chief of Zefer; and Gordon Brooks, leader of Breakaway Solutions.

Meanwhile, Cambridge founder Jim Sims, who left the company in July, is reportedly working on a start-up company with Michael Tracey, head of a small Boston-based firm called Tracey & Company.

NerveWire is based in Wellesley Hills, Mass., and has about 21 employees. Frank's senior management team also was lured from Cambridge and includes Sanjiv Gossain, senior vice president; Gajen Kandiah, senior vice president of operations; Raj Mistry, vice president of operations; Ben Taylor, vice president of innovation and services and Veronica Zanellato, director of corporate communications. Combined, the group spent about 36 years at Cambridge.

The company plans to open offices in San Francisco and New York soon, and is recruiting heavily.

"We saw a whole new model for consulting," said Frank. "Having the ability to build that new model with a blank sheet of paper is just an extraordinary opportunity."