On the Internet, there's no business like small business. That's the song that several online players have been singing, and now Dow Jones (DJ) and Excite@Home (ATHM) - Get Report are the latest to take up the tune.
The companies said Tuesday that they were launching a new, jointly owned company called
that aims to be a portal for small and midsize businesses on the Internet. The partners, which are forming the venture from existing operations at each company, hope to sell a minority stake to the public later this year.
The move spotlights the belief held by numerous Internet companies that for all the money that might be made by leading consumer portals such as
, there's as much -- if not more -- opportunity in creating an all-in-one site for business users that encompasses news, commerce, community tools and other resources.
Other ventures that appear to be going after the same market include
, which is at work on a
, owned by
, which is assembling services for small businesses through deals such as a recent alliance with
, a company slated to go public soon that is developing a B2B marketplace for small business buyers and sellers.
Dow Jones and Excite@Home are targeting a market they define as the 30 million U.S. companies with anywhere from one to 500 employees, which they say account for half the gross domestic product. "We think the opportunity here is certainly at least the size of
all over again," said Excite@Home CEO George Bell in a call with reporters. The shares of both companies rose fractionally on the news, with Excite@Home closing at 34 3/16 and Dow Jones settling at 62 9/16.
The bite that the two companies will be taking out of the B2B market is starting as a very small nibble indeed. Work.com launches with a total of 15 or 16 employees contributed from sites that the firms launched last year -- the
vertical portal for small business users, and Excite@Home's Work.com, an online service targeted at small and midsize businesses. The dowjones.com portal had $2.5 million in revenue in the fourth quarter of 1999, according to Dow Jones. Add Work.com, and the new venture has annualized revenue starting at $20 million to $25 million per year, says Bell. By comparison, in the fourth quarter alone, Dow Jones' news wires had $54.9 million in revenue and
The Wall Street Journal
site had $10.8 million in revenue.
The companies are hoping they'll be able to step away from the pack by combining Dow Jones' journalism and brand with Excite@Home's experience in building the Excite portal and ability to drive visitors to the new site. Along with news from Dow Jones wires and selected stories from
, they hope to offer online services such as Web-site hosting, customer-relationship management payroll and accounting services.
Competition Is 'Staggering'
The number of companies getting into the B2B portal business is "staggering," says Mark Walsh, CEO of B2B portal
. The Dow Jones/Excite@Home venture is "a great combination of content and a broadband platform," says Walsh. "Dow Jones is a great brand name that everyone trusts."
Walsh, though, says VerticalNet will continue to focus on midsize firms, which he defines as having anywhere from 50 to 1,500 employees and from $25 million to $1 billion in annual revenue. Companies focusing on smaller businesses don't appear to be as focused as is VerticalNet on transactions within specific industries, he says. "We still believe it's the industry focus that matters," he says.
But don't try picking winners and losers yet in the small business portal market. The industry is at a very early stage, points out Dan Meyer, senior vice president of business development for Office.com. "The user is just starting to understand that these sites exist," he says.
It's also likely that what these sites look like today will bear little resemblance to what they will become. That's clear lesson from the development of consumer online portals over the past few years, says Meyer. "They constantly evolved. They added new features. And they added these features on a daily or at least weekly basis," says Meyer. "So for their users, there was constant new value created on those sites. ... That's a lesson we hope to apply here at Office.com."