"Entrepreneur Summer Camp" to kick off events with look back at Infonautics and what grew from it


Tom Paine


Life can be slow in the summer if you're in the city and looking for interesting tech events. Two business incubators/accelarators, though, Novotorium of Bucks County and Seed Philly of Philadelphia, are joining together to present Entrepreneur Summer Camp, consisting of a moderately priced series of weekly events featuring topics of interest to area entrepreneurs, plus the opportunity to opt into additional programs and
services the incubators offer.

The first event, to be held on the morning of June 12 at The University Science Center's Quorum, features a retrospective look back at Wayne-based Internet startup Infonautics, the people who came out of it, and the impact the resulting ecosystem has had in growing the Philly Tech community. Infonautics was co-founded in 1992 by Josh Kopelman, then a sophmore at Wharton, along with founder Marvin Weinberger, an entrepreneur who had previously co-founded Telebase Systems Inc., an online media company in Wayne. Weinberger was CEO and Kopelman was Executive VP with responsibility for sales & marketing. One of Infonautics' early investors and advisors was Howard Morgan, the former computer science professor at Penn turned VC who later co-founded First Round Capital with Kopelman and is a managing partner of the firm today.






Infonautics set out to become an online resource for children, providing curated content that helped young students learn and study. Its products included Homework Helper, delivered primarily via early online service Prodigy, and Electric Library, delivered via the Web. Infonautics did an IPO on the NASDAQ in April 1996 and raised close to $30 million, an offering that would be difficult for such a small early stage company to pull off today.


The company had difficulty selling a subscription-based service to a mass market, particularly as so much information was beginning to appear for free on the Web. In terms of technology, Infonautics also had to scramble to convert from the closed garden world of legacy online services such as Prodigy to the open Web, which really took off in the 1994-95 period. That transition, Novotorium GM Mike Krupit (who served as Infonautics' Director of Technology ) told me in a phone interview, spurred a period of tremendous innovation at the company. For example, Infonautics pioneered an early business model and developed related technology for managing affiliate marketing programs. And at a later stage of the company's history, in an effort to pivot, it developed an online service called "Company Sleuth", which I remember using. Company Sleuth allowed you to track several sources of records and information about a company that at the time were difficult to put together from one single email signup. And since the web was like a frontier then, with only slightly defined and rapidly evolving standards, Infonautics' staff was constantly looking for fixes or new ways of doing things.

Founder Weinberger, who Krupit described as a visionary, was a somewhat unorthodox businessman with penchant for dressing informally for meetings (not as common then as now), usually wearing an Infonautics baseball cap.




Infonautics posted 1996 results of $1.4 million in revenue and an operating loss of nearly $14 million. Its stock, which opened at $14, went down 19% during its first week of trading and was down to $2.38 by early 1997. The company was able to grow revenue to $23 million by 1999, but continued to have large operating losses. At the time, the technology infrastructure needed to run an online Internet service required significant fixed costs that were difficult to scale down. Employment at one point exceeded 130; a company 10-K indicated it reached about 80,000 paid subscriptions.

Josh Kopelman left Infonautics to start Half.com in mid-1999. Weinberger left in 1998 and started other ventures, some that worked and some that didn't. Also in that year, Infonautics began to sell parts of the company, selling its Education products group to Bell & Howell, gaining net proceeds of $18.5 million, and also ending up with a 20 % stake in bigchalk.com, the rest of which was owned by Bell & Howell. Infonautics intended to focus its resources on its Company Sleuth offering and other targeted personal information tools marketed under the Sleuth brand. The pivot to Slueth did not pay off financially fast enough, and in 2001 Infonautics merged with Tucows Inc., with the combined firm taking on the Tucows name. Toronto-based Tucows, which still exists today, specializes in domain registration and other Internet services.

Other pieces of Infonautics' product and IP portfolio ended up in different places; for instance, patent firm BTG acquired a portion of the patent assets of Infonautics covering navigational tracking on the Web and online affiliate programs. In fact, in 2004 BTG sued Amazon.com, BarnesandNoble.com, Netflix and Overstock.com over their alleged infringement of the patented Infonautics technologies. BTG apparently reached settlements with each of the four, with Netflix agreeing to pay an undisclosed sum (said to be millions of dollars in one report) in return for a non-exclusive license. BTG subsequently sold the web patents in 2006 for $5 million plus profit sharing, as it decided to focus on Life Sciences.

The event on the 12th, titled "After Infonautics: A Generation of Startups", will feature a panel of former Infonautics execs and employees discussing how their experiences there led to a number of other startups in the Philly area. Participants scheduled to appear include Kopelman, Weinberger, Lucinda Duncalfe (who went on to Destiny, TurnTide, Click Equations, and now Real Food Work), Krupit (who ended up running CDNow after Bertelsmann acquired it, and now runs Novotorium), Rick Mosenkis (VerticalNet, WorkZone), Ram Mohan (Afilias CTO and a member of ICANN's board of directors), Andrea Michalek (1800CTO, Topular, and a new startup, Plum Analytics), and Ed Watkeys (Half.com, Transmogrify, ActionX).

You can register for the event here. Additional Entrepreneur Summer Camp events will run through July 27.



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Could These Start-Ups Become the Next Big Thing? (New York Times)
Of the nine named in the article, four (Path, Uber, Square, TaskRabbit) are ventures in which First Round Capital was early investor.

3 things to know about IPv6 as World IPv6 Day approaches (ZDNet Blogs)




DirecTV's White downplay Apple TV hype: Comcast's Robert applauds Apple's ingenuity
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Wi-Fi and Amtrak: Missed Connections (New York Times)


Daily Links 5/31/2012: Comcast gets it from both sides at shareholder meeting



Comcast CEO Hears Labor, MSNBC, Other Criticism at Annual Meeting (Hollywood Reporter)

Cable still beating telcos at the broadband game (Gigaom)

T-Mobile pits its math against Verizon’s; The loser? Common sense (Gigaom)

Ellison 'to tweet' announcement of new Oracle cloud-based products
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Ellison Says Oracle Looked At Buddy Media Before Vitrue (Bloomberg)

Oracle CEO Larry Ellison: Dog Fight in the Cloud (All Things D)
Ellison on Léo Apotheker: "Then they brought in Leo. Then when we subpeonaed him, he went on the lam!
They sent him to Bolivia to talk to customers. And then they sent him to Mongolia to talk to customers, just beyond the reach of the federal subpoena. They should have left him in Mongolia, because when he got to California, it got bad."

The Ariba Fallout — How the SAP Procurement Partner and BPO Ecosystem Could be Shaken Up (Jason Busch/Enterprise Irregulars)


Two Years Ago, VC Said Change Was Due — He Was Right (PYMNTS)
Josh Kopelman was the VC.

Looks Like Pinterest, Takes On Evernote: Clipboard Launches Its Web Clipping Service To All (TechCrunch)
First Round Capital was a seed investor in Seattle-based Clipboard.

Philly Startup Leaders adds Gabe Weinberg, Josh Kopelman (Technically Philly)

Amazon to build warehouses in N.J., collect sales tax (Philadelphia Inquirer)

How We Founded myYearbook (Inc. via Yahoo)

Two Architects of Library Discovery Tools Launch an Altmetrics Venture (Library Journal)
On Philly area startup Plum Analytics.



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Daily Links 5/30/2012: Salesforce reported ready to buy Buddy Media for over $800 million



Salesforce Set to Snap Up Facebook Friend Buddy Media for More Than $800 Million (All Things D)

For a pair of big local companies, shareholders gather (Philly.com: Philly Inc)

SnipSnap: How a Newspaper Vet Aims to Remake Paper Coupons For the Mobile Era (ReadWriteWeb)

Oracle prepares to enter PaaS wars
Oracle's platform as a service strategy may take center stage at an event with CEO Larry Ellison next week
(Computerworld)

SAP-Ariba Deal Goes Beyond the Cloud (Jeffrey M. Kaplan/Sandhill)

People, Process and Technology – is IT the new HR? (John Appleby/People Process & Technology)

Top that, cable! Verizon offers 300 Mbps home broadband (Gigaom)

Where Will Comcast's X1 Land Next? (Light Reading Cable)
Philly region slated for late 2012 or early 2013, article says.

Who Knew What When at Universal Display? (CNBC)

AT&T: Telecom consolidation 'logical,' inevitable (ZDNet Blogs)

Systech Acquires Apostrophe Systems: Strengthens Position in Cloud Services Market (PR Newswire)
Apostrophe Systems is based in Philadelphia, and Systech is based in Cranbury, N.J.

iBoard Unveils Family iBoard, First Private Social Network for Families – Securely Connecting Families For All Generations (Business Wire)
Sounds a bit in concept like Joanne Lang's AboutOne.

CenTrak, Provider of Healthcare's Most Accurate Real-Time Location System (RTLS), Accelerates Market Adoption by Offering Gen2IR™ Over Wi-Fi (PR Newswire)



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Highlights: Last week on Philly Tech News (5/21/2012 to 5/27/2012)



Center City-based healthcare payments processor InstaMed raised another $14 million, bringing its total funds raised to date to at least $36 million. The company said most of the new round came from existing investors, although there was one unnamed new investor.

I followed events at The Cable Show 2012 in Boston, including some major announcements from Comcast.

SAP announced another major acquisition last week. The target this time was Ariba, a California-based provider of a cloud-based business to business procurement and collaboration platform. The price was $4.3 billion, a 20% premium over the previous day's close.

SAP also moved to fully integrate its Sybase subsidiary into SAP, eliminating the current role of Sybase CEO John Chen. Also a (possibly intentionally) leaked internal memo from SuccessFactors CEO and SAP Cloud chief Lars Dalgaard may shed some light on his strategy for going forward.

Google finally closed on its $13 billion acquisition of Motorola Mobility after getting clearance from China. However, Google indicated it hasn't decided what its going to do yet with Motorola's Horsham-based cable technology business.

NJTechWeekly.com's Esther Surden contributed an update on AT&T's wireless coverage upgrades in New York City, New Jersey and Philadelphia.

Newtown-based EPAM Systems made its first acquisition since its IPO in February, buying Toronto-based Thoughtcorp for a total consideration of $17.4 million.

And an innovative healthcare IT startup that grew out of UPenn's nursing program, RightCare Solutions, won the $100,00 prize awarded by the inaugural Janssen Connected Care Challenge.

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SAP's Ariba acquisition brings back memories of Verticalnet


Tom Paine







SAP's $4.3 billion acquisition of SaaS business commerce exchange Ariba, announced this past Tuesday, brings back memories of one famous (perhaps infamous to some) Philly area startup, Verticalnet.

Founded in 1995 in Horsham as Water Online by Michael Hagan and Michael McNulty and later boosted by an investment from Internet Capital Group (which in turn had backing from Safeguard Scientifics), Verticalnet set out hoping to be what Ariba eventually became; a portal connecting buyers and sellers in different business to business vertical markets to streamline procurement and electronic transaction processesing between them. At the time, the idea of applying the Internet to B2B commerce was very new and exciting to investors, although few had more than the vaguest idea of what it actually might involve.

Verticalnet went public in February 1999 and its shares rose from $16 to over $45 in the first day of trading, giving it a market value of $738 milliion. At that time, I think Verticalnet had little more than a rough roadmap of where it was going; its website as I remember it from that period consisted of little more than a collection of online trade pubs aimed at various verticals. There were few tools that actually helped automate buying and selling. The company went out after the IPO and made several acquisitions, none of them huge, and even though it was still a rather tiny business its market value continued to soar, reaching over $12 billion at the height of the Tech Bubble in 2000, even though its revenue at the time was only slightly over $100 million with huge operating losses. But its share price, which briefly exceeded $130, was in the $1 range by 2001 after the bubble burst. The company lost its main currency, a high stock price, for acquiring other companies to build out its strategy, as well as its ability to raise significant capital. A deal with Microsoft help keep it above water for awhile, but Verticalnet was soon fighting for its survival.





Internet Capital Group (now ICG), which at one point during the bubble was valued at over $80 billion, also saw its share price collapse, as did its backer Safeguard Scientific and many other prominent investors, several with Philly area ties (this Fortune article from 2001 tells the story well.) While Verticalnet wasn't the sole reason for the collapse of those firms' value, it was, to me at the time, the epitome of the bubble: a startup with a $12 billion market cap with few real assets, a vague strategy, and limited technology.

To get an idea of what happened to Verticalnet after the crash, I turned to Jason Busch, Executive Editor of Spend Matters, probably the leading website covering the procurement and what is referred to as "spend management" spaces. A Philly native now based in Chicago who is putting his degrees from UPenn (undergrad and MA History) to good use, Busch knows the industry. He once worked for a competitor acquired by Ariba, and covers the business with a passion for detail that's reflected in his extensive analysis of the SAP/Ariba deal. He also writes about how Ariba came back almost from the dead (it was caught up, though not quite as severely, in the same market collapse that hit Verticalnet) to become the leader in cloud-based collaborative commerce applications.

Verticalnet, Busch said in a phone interview with Philly Tech News, did ultimately produce some solid technology, much of it gained through the acquisition at the end of 2001 of Atlas Commerce, a Malvern-based company backed by Safeguard Scientifics that made Verticalnet a competitive private e-marketplace software provider. Busch also said Verticalnet had some very talented people who contributed considerably to the "thought leadership" of the industry. But the constant lack of financial stability hindered its ability to win large enterprise deals.

Utlimately, while Verticalnet developed some credible offerings it was never able to gain the scale it needed to compete with Ariba and other larger, growing competitors. It was finally acquired in 2007 by spend analysis vendor BravoSolution SpA, a subsidiary of Italcementi, SpA, the world's fifth-largest cement make, for $15.2 million. Verticalnet gave BravoSolution an entry point into the North American market. BravoSoution, which has global revenue of about $80 million, has its US headquarters in Chicago now and still has an office in Malvern, although that is a relatively small part of its operations today, Busch tells me.

Verticalnet had many good and talented people; quite a few of them still contribute to the Philly Tech scene (see Verticalnet alumni page on Facebook). I am not trying to disparage the people who founded and funded Verticalnet, because obviously there was a market to go after there. Safeguard, which back then dominated the Philly venture capital scene through a keiretsu-like network, has recovered as a more focused firm with bright people making what appear to be intelligent, farsighted investment decisions. ICG is still around, although with a much smaller footprint. But back in the bubble days there was almost a "Masters of the Universe" atmosphere around Safeguard & ICG, a belief they could create enormous wealth out of almost nothing. And it took Philly's tech ecosystem years to recover from the aftermath of the bubble bursting.

If you are concerned about a new tech bubble forming today, that might be happening in some areas. But we are nowhere near the type of irrational exuberance that was reflected in Verticalnet's market capitalization.

Any feedback?



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Commentary: Shifting the balance (Washington Post)
Kenneth C. Wisnefski, chief executive of WebiMax, an online marketing agency based in Mount Laurel, on why he supports the Cyber Intelligence Sharing and Protection Act (CISPA).

Q&A: Philadelphia Fed President Charles Plosser (Wall Street Journal: Real Time Economics)


Amazon will install air conditioning in warehouses (Internet Retailer)