Those arguments may very well prove true, says David Khani, senior energy research analyst at investment bank Friedman, Billings & Ramsey, in Arlington, Va. "Customers worry that doing business on Enron's site could be giving an edge to other parts of Enron's business," he explains. "That's not a problem with True Quote, because APB doesn't have proprietary trading. But because True Quote has a brick-and-mortar business behind it, it can leverage the flow of cash and information in a way that Internet start-ups can't." Khani points out that it remains to be seen whether True Quote can take off without cannibalizing APB's commissions, but he concedes that the idea that APB will be able to hang on to the higher-value deals "sounds good, at least in theory." (But he also says that True Quote might be late to the game -- Altrade, for example, was online a year earlier.)
The latest version of True Quote, with full trade-executing capabilities, was launched in late October. "There wasn't much revenue from True Quote in 2000," says Crum, "but I believe it will be profitable this year." And True Quote scored two major boosts to its credibility in 2000. In April, PG&E National Energy Group, the $20-billion, unregulated arm of giant West Coast utility PG&E Co., announced an equity investment in True Quote of an undisclosed amount, but which Crum says is worth "several million dollars." And in July, Enron announced that it would feed its online pricing data into True Quote. (At the same time, Enron announced an identical arrangement with HoustonStreet.com.) Crum thinks taking the Enron out-trade on the chin may have helped seal that deal.
Meanwhile, in June, APB tapped into a $3-million line of credit (thus assuming debt for the first time in its history) and acquired North Carolina electricity brokerage Chapel Hill Brokers, which specializes in energy-options trading.
But Crum is convinced that True Quote will be his big play. "I know we have the right model here," he says, "and we'll go down in flames to prove it."
David H. Freedman is a contributor to Inc.
My Other Company is a Dot-Com
You'd think that building one of the fastest-growing companies in America would provide enough entrepreneurial excitement. And yet, like APB Energy's Dennis Crum, a number of last year's Inc. 500 founders have flung themselves into the wired economy, rolling out one or more Internet start-ups.
In some cases, those second efforts are natural and even inevitable spin-offs from the mother ships. Consider Intertech Inc., for example, which holds three- to five-day hands-on workshops for Web developers and programmers. CEO Tom Salonek found that more and more midsize and small companies were looking for services to help them launch E-businesses, so he launched Go-e-biz.com (#243 on the 2000 Inc. 500 list) to provide them with turnkey Net-commerce systems. "We're getting set up with an offshore partner in Asia so that we can work around the clock on the software by sharing code over the Internet," says Salonek.
Some of the newly dot-commed moguls have found ways to build online businesses that play off their existing businesses -- but with a strong twist, as APB did in building an electronic energy exchange. InfoNXX, for example, made the Inc. 500 list (#334 in 2000) by handling directory-assistance services on behalf of wireless-phone-service providers. But president and cofounder Evan Marwell came to recognize that cell-phone customers were eager for more. So he and InfoNXX CEO and cofounder Robert Pines started up Quixi, which puts cell-phone users in touch with an operator who can look up numbers from a user's personal Rolodex, make restaurant reservations, and buy books and other items over the Internet. The seed money came from a loan from InfoNXX, and though Quixi may market directly to consumers, Marwell says the com- pany will also team up with InfoNXX to offer a complete Quixi-like service through wireless- service providers. "Quixi has the technology expertise, and InfoNXX brings the call-center expertise," says Marwell. "It's a symbiotic relationship."
Rick Kearney, founder of five-time Inc. 500 company and mainframe computer reseller Mainline Information Systems, seems at first glance to have reached into the stratosphere for his new project, Shirttailor.com, which allows customers to order custom-made shirts online. But there's a method to the madness. Even though Shirttailor.com isn't exactly turning the garment industry on its ear -- it's taking 10 or so orders a day -- Kearney claims that the site's sharp user interface and well-managed order-taking and fulfillment capabilities allow it to serve as a showcase for Mainline's E-commerce-development business. "Our customers all need E-business solutions, and this is a demo tool for our field force," he says.
As it turns out, Shirttailor.com may yet be a profitable enterprise in its own right. MyPinstripes.com, a start-up rolling out a national dry-cleaning service, is talking to Shirttailor.com about offering its shirt-making services to customers of MyPinstripes.com. After all, MyPinstripes.com will have people's existing shirts in hand for measuring. That sort of deal could send orders into the thousands each month, says Kearney. Still, he says that rushing into an Internet start-up wouldn't have made sense if he hadn't owned a solid business to back it up. "Dot-coms are sending a lot of people to the poorhouse," he says. "It's nice to have another business to pay the bills and lend you credibility. In other words, don't quit your day job."
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