Exclusive Interview with ICGE's Walter Buckley
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While investors were racing to put their money into the latest etail, auction and e-brokerage stocks last winter, Walter Buckley, chief executive officer of Internet Capital Group (ICGE) was busy executing his company's business plan.
The plan is to identify and acquire market leaders, integrate them into the network of partner companies, providing direction, business services, finance and business development. Operating on a keiretsu model, ICG allows its companies to share best practices throughout its network. It's easy to see why the holding company is often labeled as an incubator. There is a catch though...and what a catch.
Internet Capital Group invests exclusively in business-to-business (B2B) e-commerce companies. A "worth"-while approach; Forrester estimates B2B e-commerce will be worth $1.3 trillion in the U.S. alone by 2003, 10x the size of the business-to-consumer (B2C) market. Analysts and investors often overlook the fact that this widely publicized figure only accounts for domestic B2B e-commerce. Just as in the B2C market, enormous market and growth opportunities will occur across International borders.
Buckley and Ken Fox founded ICG in early 1996 after leaving Safeguard Scientifics (SFE). At the time B2B e-commerce was in its infantcy, if not at ground-zero. Buckley and Fox held two convictions in 1996 that drive ICG's vision today:
Well, investors have certainly caught their vision...and a little of the B2B bug. ICG debuted on Aug. 5, pricing 14.9 million shares at $12 per share, worth $1.3 billion. Four months and one stock split later, ICG sports a market cap of $30.1 billion. Reporter@Large had the opportunity to sit down for an exclusive interview with CEO, Walter Buckley.
Reporter@Large: What is ICG really about?
Buckley: ICG is about building the world's leading business-to-business (B2B) e-commerce companies. Our strategy is focused and simple: We are identifying, acquiring and building the leading B2B e-commerce companies across the top 50 global markets.
Reporter@Large: What is ICG looking for in its B2B investments?
Buckley: Well, ICG only acquires interests in B2B ecommerce companies that are capable of obtaining the number one market share in one of the top 50 global markets. When acquiring a stake in a business we take into account the size of the market opportunity, the quality of the business model, the capability and track record of the management team and the stage of deveopment of the company.
Reporter@Large: I know you only invest in exchanges and infrastructure service providers. Why only these two sub-sectors of B2B?
Buckley: 28 of the companies in our network are market makers that focus on 24 of the top 50 global e-commerce markets: online marketplaces aggregate buyer and sellers that conduct transactions and automate the workflow of their respective industries. The other 19 companies are infrastructure service providers: companies that provide software or services to enable e-commerce. These two promising sectors of B2B feed off each other and really provide a harmonious balance within our network.
Reporter@Large: Can we see some examples?
Buckley: Sure, PaperExchange, an online exchange which helps business trade pulp and paper, is one example of a market maker within the network. CommerceQuest, a software developer for e-commerce e