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E-Minds was food for thought

Howard Rheingold is feeling good but a little pensive now that Durand Communications will acquire the company he started, Electric Minds.

    Howard Rheingold is feeling good but a little pensive these days now that Durand Communications will acquire the company he started with venture capital funds, Electric Minds.

    During a joint press conference today held in the empty E-Minds offices in San Francisco's China Basin, Durand executives spoke about the intangibles of spirituality, human interaction, community-building, and the challenges of continuing the vision of Electric Minds.

    "We have technology," said Durand chief operating officer Casey Hughes, who like other company brass was decked out in a yellow polo shirt adorned with the words "just hitched" below the Electric Minds logo. "That technology isn't going to create a sense of human interaction."

    People create that vision, he added.

    Hughes explained that he could not purchase the community, but that he would have to work to earn the community's trust. When asked directly how much Durand paid to buy the business, he replied: "It's no one's business, period. We did not buy Electric Minds the community; we secured only the assets. What the terms of the deal are are nobody's business."

    E-Minds faced closure when the venture capital arm of Softbank withdrew an investment promise of $500,000. Rheingold was faced with two prospects: selling the company or going bankrupt.

    The sale to Durand, an Internet messaging and communications company, was made final only after the E-Minds online community gave Durand and the offering a thorough inspection. Members quizzed Durand about details until they were finally satisfied that it would do a good job, and Durand was satisfied that at least a core group of E-Minds members would migrate over once the deal was done.

    In the small scope of things, Rheingold said he was quite happy. "The fact that Durand and the community have been able to work out an agreement is fantastic." In the larger scope, though, he is pretty reflective about his foray into the business world of start-ups and venture capital.

    "It was a very painful educational experience. I would do it again. I had to do it." But, he added, "Running a start-up is not what thrills me.

    "The main mistake I made was taking a million dollars because that put us on track of building a company worth $10 million. Then I took another $10 million and that made it on track to build a $20 million company. When you take $2 million from a venture capitalist, they want $20 million in three to five years."

    Just a year ago, when Rheingold announced E-Minds, his talk was heady and philosophical, full of the promise of the new medium. "There something happening out there," he said at the time. "There's a real fervor for many-to-many communications--grassroots communication, not just Time Warner or Microsoft giving us their slick version of communication...We want to bring that grassroots social community to the Web."

    These days, Rheingold is settling back into his home office in the hamlet of Mill Valley, California, and do what he does best: build online communities on a small scale without the need for big money.

    Rheingold will consult with Durand for a few months and will probably continue consulting with others about the social aspects of virtual communities.

    But when it comes to building new enterprises, he's keeping it small. He said he'll be buying a conferencing system and will then see if he can get a few people to subscribe to his Web site for about $10 a month. "Maybe I can get a few subscribers and maybe I can bootstrap something," he said.

    As far as the E-Minds sale goes, Rheingold declined to give precise figures. He did say that the money will cover some but not all of E-Minds' debts. "I can't disclose the amount of cash, but anything more we can pay our creditors is worth the trouble."

    Durand, which runs the CommunityWare site, will acquire E-Minds' trademark and logo (which Rheingold said cost in the neighborhood of $25,000), as well as its domain name.

    It also has the right to send one email message to all who registered with Electric Minds, Rheingold added. "I'm really adamant that we are not selling our database. It's really a sacred trust."

    As far as equipment goes, suffice it to say Durand won't have to worry about moving costs: It will take possession of E-Minds' server, which was on loan from Sun Microsystems and move it to its Santa Barbara office.

    Other than the server, there is no more in the way of hardware to take away. E-Minds liquidated its assets when it ran into financial trouble, according to Rheingold. Most of the staff, which underwent layoffs in April, have already found new jobs.

    Rheingold is also encouraging E-Minds' president, Wendy York-Fess, who he said has gotten all sorts of job offers, to consult with Durand as well.

    After all that is done, he said, the future is a bit up in the air.