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IPO-bound Software.net gets CEO

The e-commerce pioneer will announce that it has hired a new CEO from bookseller Amazon.com, bolstering management as it prepares to go public.

Software.net, an e-commerce pioneer, tomorrow will announce that it has hired a new CEO from bookseller Amazon.com, bolstering management as it prepares for an initial public offering.

The hiring of Mark Breier, former vice president of marketing at Amazon.com, comes as Software.net spins off a sister unit, e-commerce service provider CyberSource, as a separate company. (See related story.)

Software.net also will announce tomorrow that it has struck a deal to be the exclusive software vendor on Excite (XCIT). The latest deal follows Software.net's earlier announcement of similar deal with America Online (AOL).

The AOL deal, a three-and-a-half-year commitment, calls for Software.net to pay $21 million. Neither Excite nor Software.net would disclose the size of their respective multimillion-dollar deals, but sources close to the companies value them at under $9 million.

Excite has signed similar e-commerce deals with Intuit (also an Excite investor); booksellers Amazon.com and BarnesandNoble.com; music stores CDNow and N2K; and Preview Travel.

"One of the key ways you go about building a brand on the Internet is locking up some key real estate," said Bill McKiernan, a Software.net cofounder who is now the company's chairman. "This is consistent with our strategy and locking up the key real estate."

Breier will take over as Software.net CEO next week, reporting to McKiernan, who will remain as CEO of CyberSource, a provider of back-end e-commerce services for Software.net and for some 250 clients that distribute digital goods. Its services include credit card processing, fraud control, export control, a license clearinghouse, and downloading services.

"We want Mark to make Software.net the Amazon of software," McKiernan said. "We want to be the category-killer in that space. He understands merchandising and the Internet."

"The opportunity here is in many ways parallel or maybe even bigger than at Amazon.com," Breier said. "The computer match to software purchases is a one-to-one match, and the size and growth of the category over the next five years is potentially real strong."

Breier's strong consumer marketing background may provide a hint to Software.net's future directions. Before Amazon.com, he was vice president of marketing at several consumer companies, including Cinnabon World Famous Cinnamon Rolls and Dreyer's Grand Ice Cream. He also held product- and brand-management positions at Kraft and General Mills.

Software.net posted 1997 revenues of $17 million and expects 1998 revenues of between $40 million and $60 million. The AOL and Excite deals, however, could push that figure even higher.

McKiernan cited a recent report by Jupiter Communications that estimated total online software sales for last year at $69 million. The report said software sales are expected to reach $2.3 billion in 2002.

"This space today is very small by any relative metric, but we think online software sales and electronic distribution will grow dramatically in the next two or three years," McKiernan said. "In order to participate in that growth, you have to create a very strong brand."