Business.com a Bargain at $7.5 Million

Jim Seymour looks at Jake Winebaum's latest acquisition, along with other tech happenings.
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Whew! What a week! Lots of news about ways to make -- and lose -- money in technology. A quick sweep:

Talk about business.com on our

Tech Savvy board

Let's stop knocking Jake Winebaum for stepping up and buying the URL "

business.com

" for a reported $7.5 million. Come on -- dozens of other Web entrepreneurs would have done the same if they knew that URL was available and if they had Winebaum's smarts and, umm, let's just say nerve.

The idea that buying such a strong Web "trademark" indicated Winebaum's naivete or lack of business savvy is just nuts. Corporate assets are corporate assets. Who's to say the business.com URL may not someday be so valuable as, say,

Coca-Cola's

(KO) - Get Report

URL or

Exxon's

(XON) - Get Report

? We're reinventing business these days in many ways, most small but a few large, and building for the future. This was a great investment in the future.

Winebaum's company plans to use the name for a new business-to-business company, about which details were not available.

The money spent is going to look like peanuts after Winebaum and his

eCompanies

partner Sky Dayton (founder of

EarthLink

(ELNK)

) bring this baby to market, then run what will almost certainly be a big-dollar IPO exploiting that name. (

Cramer

says it could lead to a $3 billion IPO. I think that's too high -- wanna put five bucks on this, Trader? -- so let's say it's only a $1 billion IPO. Doesn't that still make $7.5 million for the company name a screaming bargain?)

Winebaum, who came to eCompanies from top jobs at

Disney's

(DIS) - Get Report

online universe and at

Ziff-Davis'

(ZD)

Family PC

and other magazines, is one of the savviest managers in cyberbusiness. Just another sign of that with the business.com buy.

I'd watch closely for IPOs of any start-ups spun out by Winebaum and Dayton, who have a knack for turning great ideas into great businesses. No one knows whether business.com will be one of those great businesses, but it's off to a bright start with that URL.

(

Graham and Dodd

value investors who write me harsh emails about this being the epitome of Net madness -- posting a positive view for a company not yet even in business, to say nothing of revenue and profits -- will be treated gently in replies ... but I will tell you now that I think "getting" the rightness of Winebaum's move is a litmus test for smart investing in the Internet age.)

By the way, lots of legal action lately on so-called cybersquatting, or registering URLs solely for later sale to others. While Congress has passed what looks like a fairly strict cybersquatting law, in fact the case-law decisions lately have been going the other way.

Last week, Virginia Web-site developer

Virtual Works

beat

Volkswagen

(VLKAY)

in a U.S. District Court action begun after the German automaker started sending threatening letters to the tiny Virginia firm, then also turned to domain-controller

Network Solutions

(NSOL)

to try to stop the company from using "vw.net" as its online address.

U.S. District Judge Clauyde Hilton found that Volkswagen had made "no showing of irreparable harm," and thus had no basis for its action against Virtual Works. William Bode, the Washington lawyer representing Virtual Works, gave us a great example of lawyer huff-and-puff in his comments after the trial: "This demonstrates that the mere fact that a company holds a trademarked name doesn't mean it can necessarily preclude others from using that mark as an Internet domain name." The

mere fact

?

But, you know, he may be right. Consider:

  • Three months ago, a Federal court in Boston found against plaintiff Hasbro (HAS) - Get Report, which of course owns a registered trademark for its game Clue, in an action filed against clue.com, a one-employee consulting firm. The court said explicitly that owning a trademark does not necessarily preclude another from using that name in a URL.
  • Earlier this year, tiny companies using the Web URLs Avery.net and Dennison.net were sued by giant office-supplies provider Avery-Dennison (AVY) - Get Report. But a Federal appeals court ruled they had not transgressed on Avery-Dennison's trademarks with those names.

I'm not offended by the idea of speculators buying and trading not-yet-implemented URLs. They had the idea; they acted before anyone else; they paid their money just like thee and me. If you're among the many folks who've stashed away potentially valuable URLs, good luck.

(By the way, one quick example of how this game is still open to the clever: You've probably heard about

Dell's

(DELL) - Get Report

rollout this week (and read about it in my

column here on Nov. 14) of its new high-style, compact

WebPC

. The company wanted a Web site with that name. Earlier this year, it searched, found and registered "webpc.com." Are you as amazed as I am that such a great -- and obvious -- URL was still available this late in the game? All the good names are gone? No way!)

I should say that I have a modest personal interest in this: My wife owns a valuable (and uncontested) URL and regularly receives fat offers for it. Someday, I think, she's going to say yes to one. If it makes an interesting story, I'll write a column here about the experience.

Much dead-tree (mis)reporting this week about the revelation, in an

Securities and Exchange Commission

document, that

Microsoft

(MSFT) - Get Report

CEO Bill Gates has invested an undisclosed amount of money, and become a limited partner, in San Francisco venture capital firm

Hummer Winblad

.

Some writers treated this with the kind of astonishment better reserved for the first landing on Earth by Martians. In fact, very many high-tech names have investing relationships with VC firms: Practically every Silicon Valley VC firm maintains one or more "side funds," in which they invite high-profile players with whom they want to curry favor to invest.

Yes, that's a little different than becoming a limited partner -- but that anyone should be surprised that VC firms find it profitable to open the opportunity to make gobs of money to high-tech panjandrums whose friendship they find useful is naive in the extreme.

In yet another smart move -- one of many lately --

America Online

(AOL)

has announced a bounty program similar to

Amazon.com's

(AMZN) - Get Report

, offering to pay Web-site owners $15 for every new AOL customer referred from a button on the cooperating site's home page.

Compared to its other customer-acquisition programs, this one's dirt-cheap for AOL. And could be a nice little cash flow addition for Web sites, too.

When I wrote a

three-part column here in early September, saying that AOL was doing fine, and a great stock to own -- though it was then down in the dumps, trading in the 80s -- I made a big mistake: I said it might stay down for a while, and it could be a year or more until it regained its mid-150s share price.

Half-right, half-wrong -- as a lot of jovial

TSC

readers have written to say. Yes, a great stock to own -- but it soared back to previous highs a lot faster than I thought it could. This afternoon, AOL was trading around a split-adjusted 159.

Well, at least I got the right part correct.

DeRemate.com

, the Delaware-based Latin-America-focused auction site, announced Thursday that it has drawn $12 million from new investors eager to ride along in its fight to become the leading Latino auction site.

Citigroup

(C) - Get Report

and

Merrill Lynch

(MER)

were among the venture investors which jumped on board.

Yahoo!

(YHOO)

and

MercadoLibre

are fighting for this Spanish-language auction market as well, but DeRemate looks strong. With country-specific sites up now in Mexico, Argentina, Brazil and Venezuela, DeRemate expects to expand into Colombia in the first quarter of next year.

Take a look at DeRemate's very professional home page. And watch for an IPO from DeRemate next year.

StarMedia

(STRM) - Get Report

was only the first big winner in what I think will be a gold rush for Latino Web sites. I expect to see DeRemate near the top of the list.

Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in any securities mentioned in this column, although holdings can change at any time. Seymour does not write about companies that are current or recent consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at

jseymour@thestreet.com.