From: Adam Rifkin (adam@KnowNow.com)
Date: Thu Nov 23 2000 - 23:09:36 PST
> Walker Digital claims to have invented "more than 150 new Internet
> business systems and received 67 patents on over 450 patents it has
> filed to date."
In the words of Dr. Evil, "Riiiiight...."
http://www.redherring.com/vc/2000/1122/vc-walker112200.html
Walker Digital loses its glow
By Richard Byrne Reilly
Redherring.com, November 22, 2000
Walker Digital, the incubator that gave birth to Priceline.com, is
struggling to stay alive.
The company, based in Stamford, Connecticut, laid off 100 of its
115-member staff Monday after failing to raise capital.
Walker Digital was unable to secure $35 million to $50 million to keep
operations going, according to a former executive who was laid off. The
company previously raised and presumably burned through more than $100
million, he says.
The apparent collapse of the high-profile incubator again raises
questions about the viability of the plethora of startup factories that
have sprung up over the past year. Other high-profile hatcheries that
have fallen from their once lofty perches include Idealab, CMGI, and
Internet Capital Group.
Company spokesman Kevin Goldman says the layoffs at Walker Digital were
part of a "restructuring" that resulted in the closure of three Walker
Digital companies -- High Circle, Pulse-123, and Atlantis Interactive.
Mr. Goldman insists that Walker Digital has no plans to close its doors
or file for Chapter 11.
DIVIDED THEY FALL
Jay Walker, the founder and chairman of Walker Digital, did not return
repeated phone messages. "Jay's not talking to anybody," Mr. Goldman
says. "We're a privately held company."
Mr. Walker has been stung by a raft of bad news. His crown jewel,
Priceline.com, has been battered by Wall Street. Its stock price has
fallen sharply from a 52-week high of $104.25 per share in March to
$2.31 per share Tuesday. That decline has made Priceline.com the target
of two class-action suits.
And that's not all.
Just last week, Atlantis Interactive, the technology arm of Walker
Digital, said it would shut down, putting 52 people out of work.
Last month, Webhouse Club, which also was spun from Walker Digital, said
it would shut down. It had undisclosed backing from Vulcan Ventures
(Paul Allen's venture fund), Wit Capital, and Goldman Sachs, according
to one published report. Webhouse allowed consumers to name their own
price for gas and food through its Web site. It cut 40 full-time and 100
contract jobs in September; Mr. Goldman says he does not know how many
employees in total lost their jobs.
Meanwhile, Perfect YardSale, another affiliate of Priceline.com,
announced last month that it would close. Mr. Goldman declines to say
how many employees were let go.
FUTURE UNCERTAIN
The future of Walker Digital itself remains uncertain. Reached at his
home Monday, Steven Denning, managing partner at General Atlantic
Partners, one of Walker's principal backers, confirmed that Walker
Digital failed to raise a third round of funding.
Mr. Denning added that General Atlantic would not provide further
funding to Walker Digital at this time, but that "[General Atlantic
would] support Jay Walker 100 percent. The final story hasn't been
written yet."
Company spokesman Mr. Goldman insists that the layoffs will help Walker
Digital get back on its feet in the long term.
Walker Digital claims to have invented "more than 150 new Internet
business systems and received 67 patents on over 450 patents it has
filed to date." Its three best-known companies are Priceline, RetailDNA,
and Synapse.
Walker Digital's site still says the company is "preparing to launch
additional Internet companies that are in various stages of
development." It is unclear how Monday's "restructuring" will affect
those plans.
For Mr. Goldman, the last couple of days have been ones he would rather
forget. "It was painful," he says of the layoffs. "Some people came up
to me and said, 'If this ever winds up again, give me a call, because
I'd certainly come back.'"
---- Adam@KnowNow.ComSince [Google is] a private company, it's not necessarily a bad thing that people are skeptical about our business model. Doubts about the viability of this kind of business probably discourage others from jumping in as competitors. But we don't have any skepticism. Our traffic is growing nicely -- about 20 percent monthly. We answer 40 million queries a day, including 15 million at Google.com. That's a very significant number. Very few Web businesses have anywhere near that scale. I won't say exactly what we make per search, but most search companies, if you dig through their financial reports, are making about a penny per search from advertising. You can do the math: 15 million queries a day is about $14 million in revenue per quarter. I am not saying we make that much currently. We've been reluctant to do a normal ad deal because we feel we do a better job by providing a highly targeted ad. By the way, if we signed a deal with a Web advertising network like DoubleClick, we would be profitable right now. But we are in this for the long term, and we want to do the right things for our business. Being profitable immediately isn't the right thing. We have other revenue sources besides ads. We provide search to about 80 sites, including some very big ones: Netscape, Yahoo! and Cisco; that's a lucrative market. -- Larry Page, http://www.techreview.com/articles/nov00/qa.htm
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