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WebEx: Making Money From Sharing

WebEx was founded in 1996 by two veterans of the high-tech industry: Subrah Iyar and Min Zhu. Iyar had stints at Apple, Intel and Quarterdeck. Zhu was a developer for IBM and the deputy to the chief technical officer of Price Waterhouse. He also founded Future Labs, which was purchased by Quarterdeck in 1996.

Both wanted to use the Web to make business much easier. The result has been a sophisticated suite of interactive tools - all powered through a browser. With WebEx, companies can engage in virtual meetings, share information from a virtual office, and communicate with customers in real-time. WebEx is capable of one-to-one, one-to-many and any-to-any interactions. All this is done in a secure environment.

Now, the company is going public. The lead underwriter is Goldman Sachs and the price range is $12-$14. The proposed ticker symbol is WEBX.

The company has an impressive board of directors. Members include Jan Baan, the pioneer of ERP software and founder of Baan in 1979 and Vivek Ranadive, the founder and CEO of TIBCO. WebEx also has an impressive technical advisory board: Dr. Larry Smarr, a world-renowned astrophysicist and the former director of the National Center for Supercomputing Applications (NCSA) and Dr. Arno Penzias, a Nobel Prize Laureate (in Physics) and the former chief scientist at Bell Labs.

Although, this is not to imply that the company is managed by stuffy high-brows. After all, WebEx hired the drag-queen RuPaul as the company spokeswomen (or spokesman?) Interestingly enough, the tagline is: "Meetings don't have to be a drag." Apparently, she has been using the service to maintain contact with her stylists.

WebEx has been effective in getting sales results. There are about 1,100 customers, including Juniper Networks, Legato Software, Oracle, Hoover's Online and WR Hambrecht. A big part of the success for the sales has been deals with resellers and distributors (over 130).

For the first six months of 2000, revenues $6.7 million, which compares to $1 million in the same period last year. Although, losses were $35.1 million in 2000.

But the marketplace for collaboration services is growing rapidly. It is expected to grow to $42.8 billion by 2003. Over the past four years, WebEx has done a great job creating the tools to make this marketplace a reality. Expect this to be one of the week's hottest IPOs.