From: Rohit Khare (Rohit@KnowNow.com)
Date: Tue Jun 27 2000 - 01:34:27 PDT
[I leave it as an exercise to the reader to enumerate the assumptions
embedded within. My email client is up and running 95% of the time,
but it surely doesn't have my attention. And DHTML email still
doesn't make sense as a "platform". It's just emailed bookmarks! What
am I not seeing here? --Rohit]
THE RED EYE: It's the email, stupid
In late 1994 Kleiner Perkins Caufield & Byers (KP) venture
capitalist Vinod Khosla (also a founder of Sun Microsystems
[Nasdaq: SUNW]) hinted to the Red Herring that the band of
20-somethings he had just funded out of Stanford University
reminded him of the original fab four that started Sun. The
company he was then referring to was called Architext, and
the founders were still operating out of a rented house in
Cupertino and living on burritos. Well, we were so
enthralled we put the gangly team on our March 1995 cover,
and Architext went on to become Excite, and then eventually
Excite@Home. In a meeting at the Kleiner offices last week,
Mr. Khosla introduced us to his new hot deal, Firedrop, a
stealth startup that merges email and the Web. Read on to
learn about the company that just may become Mr. Khosla's
next multibillion dollar deal.
-- Tony Perkins <tony@redherring.com>
VINOD KHOSLA'S NEXT BIG THING
MENLO PARK, CALIFORNIA -- Kleiner Perkins partner Vinod
Khosla introduced the Red Eye to one of the coolest new
companies we've seen in a long time, called Firedrop. During
this meeting at KP's offices in Menlo Park, Mr. Khosla and
Firedrop's cofounder David Roberts explained why the Redwood
City-based company is going to revolutionize the way people
communicate.
Before we get into why we think Firedop has so much
potential, allow us to provide a little background. Computer
users spend 96 percent of their time in their email accounts
(there are about 150 million total), according to Jupiter
Communications. That customer base is Firedrop's target
market for zaplets, which are email messages with features
previously confined to the Web and to instant messaging.
Zaplets are dynamic in the email inbox, updating as
recipients reply and add more information. Vinod says they
are meant to pave the way to seamless Internet
communications.
"If you look at the fundamental problem that has not been
solved, [it's communication]," he says. "The real problem,
where you spend your time, is collaboration, coordination.
This solves the group communication problem, across
disparate systems, using the most common multiple, which is
html email."
Mr. Roberts, along with cofounder Brian Axe, showed Vinod
their Zaplets in July. Mr. Khosla says, "I looked at it for
15 minutes and fell in love." He then backed the company
with $5 million, a figure three zeros higher than what Mr.
Roberts had originally proposed. Mr. Roberts says they have
received another $11 million -- some of which came from the
likes of Bill Joy, Esther Dyson, Andy Grove, Michael Dell,
and others -- and are about to close on another $50 million
from an as yet undisclosed partner. And it shouldn't be a
surprise to learn that one of the founders of Excite, Joe
Kraus, came in as one of the company's three founding board
members along with KP's initial investment.
"It's very hard to imagine that we can realize the full
potential of this thing," Mr. Khosla says, "because it's so
large. Because there are so many areas of applicability,
it's pretty unlikely we'll be able to do it ourselves. In
fact, I'm positive we won't be able to."
So how will Firedrop make money? Mr. Roberts admitted that
Firedrop will continue to lose "big money" for the immediate
future. But Firedrop's business model ultimately is twofold.
First, the company plans to license the platform to
companies with active Web sites, so their customers can send
and receive zaplets. These sites will be charged a per-month
fee for each user. The other plan is to offer site licenses
to companies that want to use the Firedrop platform to build
custom applications to facilitate better collaboration
between employees. This model is more like the typical
software licensing deal we have seen for years. Both models
offer the kind of margin potential that the Red Eye likes to
see.
AND OF COURSE, MICROSOFT
As the animated discussion drifted to potential competition,
the almighty Microsoft (Nasdaq: MSFT) name naturally popped
up. At this point, we couldn't help but ask the long-time
computer industry veteran Mr. Khosla for his two cents on
the case.
Very interestingly, Vinod thinks the government missed a big
opportunity to really get at the root of the Microsoft
problem: "I thought the government was kind of stupid to
divide the operating system business up from everything
else," he says in his typically straight-talking style. "The
remedy really should have been to separate their client and
server products, because that's where the collusion can
happen."
Vinod ultimately contends that if the client-side and the
server-side were forced to develop independently, the market
would experience more innovation, because developers would
no longer feel Microsoft was able to control the entire
environment. But the government "didn't figure it out."
But like any participating member of the free-market system
in Silicon Valley, Vinod really doesn't spend much time
trying thinking about what the government is doing right or
wrong. He's too busy trying to help build the next Excite or
Firedrop. We predict Vinod has another big winner with
Firedrop. As Redherring.com's own SVP, Michael Millikin,
said when we passed him the Firedrop product information,
"If this stuff works, it could be very cool. We definitely
believe that in the future, the Web will be coming more to
the user, than the user will going to the Web." And that is
something you can bet on.
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