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October 26, 1999


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From The Center Of The Universe

Kamla Bhatt in Santa Clara

Pavan Nigam "This is the center of the Universe," pronounced Pavan Nigam, his arms flying wide, and with a smile that hinted that the lessons he was going to share with 250 would-be entrepreneurs would be revelatory.

"This," refers of course to the Silicon Valley -- the center of the current Internet revolution that is transforming the US economy at a warp speed. Just the way Detroit has defined the car industry and Hollywood the entertainment industry, Silicon Valley will be the lead player in the American industry, Nigam said.

Nigam, the co-founder and Chief Technology Officer of Healtheon, is one of the most profiled of Silicon Valley success stories. He started Healtheon in 1996 with Jim Clark, founder of Netscape and Silicon Graphics. The two felt that the Internet, which had previously been used for e-mail, publishing and simple transactions, could be used to support mainstream commerce and complex, mission-critical transactions.

The Internet has been the largest creator of wealth in the history of the world Nigam added. "(But) most of the Internet-era wealth creation is still ahead of us," he said.

Nigam was one of the speakers at a sold-out seminar titled 'eBusiness Craze and Trends in the eMillennium', held on October 23 at the Santa Clara Marriott and organized by the Silicon Valley Indian Professionals Association.

Jennifer Scott Fonstad The event consisted of a panel of distinguished speakers from the world of eBusiness and included: Dr Pehong Chen, Chairman, President and CEO of BroadVision; Jennifer Scott Fonstad, Partner, Draper Fisher Juvertson and Emeric McDonald, Director of Research and Portfolio Manager at Amerindo Investment Advisors. That the Internet is not a fad but here to stay was the central point of all the speakers.

Nigam focused on the Internet and how it changed his life. He described some important lessons he had learnt while building and establishing Healtheon, considered as a pioneer in the healthcare sector.

The basic idea of establishing Healtheon was to connect everybody in the fragmented health-care industry and "make some money," Nigam said, adding that there was lots of money to be made in the $ 1.2 trillion health-care sector.

"Initially we met with limited success since we were ahead of our times," Nigam said. "We realized our story was complicated. We changed our elevator pitch and made it simple. We will take care of your healthcare needs," was the new story of the fledgling start-up.

Emeric McDonald 'Story' is the Silicon Valley term for the business plan and 'elevator speech' is the short talk you are allowed to pitch your idea to a potential venture capitalist or angel fund investor. The time available to make your elevator speech is often less than a minute. Constantly evaluating and assessing the business plans is one of the primary tenets in establishing a successful start-up Nigam said.

A secondary tenet is that "simple ideas have a better shot at winning than complex ones".

Every start-up eventually dreams of making an Initial Public Offering in Wall Street and Healtheon's first attempt to go IPO in August 1998 was unsuccessful.

"The market had dried up," Nigam pointed out and once again this led to despair. "The real test of leadership is during the down time," and every start-up will have a bad phase Nigam said. And in February 1999 Healtheon had a very successful IPO and was considered one of the best in Wall Street.

Staying focused and communicating clearly and constantly with the team are some of the other important factors crucial for any start-up.

Above all, a true Internet company's growth has to be tied to Internet growth, Nigam said, strongly recommending giving equity to employees.

While Nigam focused on the company, Dr Chen's central focus was the customer and the challenges and nuances faced by the e-Business entrepreneur. He pointed out that everybody is moving into the eBusiness space and cautioned that many entrepreneurs forget "the impact of eBusiness on customers".

Dr Pehong Chen The customer in the new eBusiness model is a "self-service customer," who goes to the ATM to get money and shops online, he said.

A fundamental byproduct of the Internet economy, which is growing at "warp speed", is that time has become a "rare commodity", according to Chen.

The next generation of Business to Business entrepreneurs will have "to cater towards saving time. Personalization is the key to the new eBusiness," he said. The new mantra for entrepreneurs should be "personalize, personalize, personalize" and that is about understanding the self-service customer and being able to execute whatthey want. "The customer is still the sovereign," Chen asserted.

Sometimes at the end of the day entrepreneurs forget about the customer. Who is going to use the product and why, what is the business model, what are the barriers to entry and how do you win are some of the key questions that should be borne in mind when starting a company according to Fonstad, partner, Draper Fisher Juvertson.

Fonstad spoke about building a business in the eMillennium. Fonstad's venture capital firm has seen wildly successful IPO's for GOTO, Netzero, Tumbleweed and Kana among others.

According to her, about $ 7.7 billion was invested in start-ups in the second quarter of 1999, about 1000 start-ups were funded in three months and 200 IPOs are scheduled in October, which breaks down to 20 IPOs per day. These staggering figures clearly underscore that there is plenty of opportunity and money to be made.

"The problem today is not money but the scarce resource of people. The new problem in the new millennium is finding good people," according to Fonstad.

Dr Chen noted that "India is doing a big favor," by providing good IT professionals and outsourcing facilities.

Fonstad said that while there was plenty of money available for entrepreneurs it is necessary to remember to execute the plan properly. Along with the personalization mantra that Dr Chen recommended, Fonstad recommended that "execution, execution, execution" of the business plan be the second mantra.

"Valuation of the company is how successfully you have executed your business," she noted.

"The impact of the industry (Internet) has been transformational and reshaped the economy," noted McDonald who focused on investing and the outlook for the new Internet Economy. He pointed out that new markets are emerging that did not exist before and cited the example of eBay, the online auction company.

He said about billion computers will be connected to the Internet and trillions of dollars will be made since there will be an explosion of spending to adopt Internet solutions. Like Fonstad and Dr Chen, McDonald too emphasized the importance of the customer and said there will be fundamental shift in power from suppliers to consumers in the eCommerce space. "This is a consumer focus rather than supply-focus economy," he said.

The event was co-sponsored by UPS, ONSET Ventures, Fenwick and West, Aspire Systems, Micromatics and TixToGo and supported by the Software Development Forum, Chinese Software Professionals Association and the Forum for Women Entrepreneurs.

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