RealTime IT News

Ventro: Out of Focus

Earlier this year, I saw the thirty-something David Perry on a PBS special. It was a great interview. After all, his B2B company, Ventro , was selling at a huge market cap, making him a billionaire. He was even named the Entrepreneur of the Year by Ernst & Young.

But as is often the case, such publicity is the precusor to a fall. And, in the case of Ventro, it was a fall of epic proportions. Not long ago, the stock was selling at $243-1/2. Now, the stock trades at $10-1/2. The market cap $479 million.

Actually, Perry had been a co-founder of Virogen, a biotech company he dreamed up while a student at the Harvard Business School. His experiences in the biotech industry were sobering. There was lots of waste. And he thought the Internet could be a solution. So, he created a B2B marketplace for the biosciences industry.

But in order to justify the escalating market cap, Perry had to find ways to expand his services. Why not enter other verticals? After all, the technology would be seamless, right?

Well, reality is often much harder then theory. Perry launched a myriad of verticals and also got top players. Examples: Industria, which involves CMGI, Dupont and IBM; Broadlane, which involves Tenet Healthcare; and MarketMile, which involves American Express.

The strategy was to spin-off these marketplaces. In a way, Ventro would be a B2B incubator.

Unfortunately, the IPO market turned hostile. In other words, it has been extremely difficult to provide any tangible results to shareholders.

Yesterday, Perry announced that his company is changing strategy. Although, he was vague. But, from what I can divine, he wants to become similar to Commerce One and Ariba; that is, becoming a provider of the software and services to launch B2B marketplaces. Of course, this would be great. Both Commerce One and Ariba are selling at tremendous valuations.

However, in the fast-paced environment of B2B, it is a difficult challenge to make a radical change in midstream. Also, it appears that Ventro has been shopping itself to potential bidders. But interest was, apparently, mild. So, don't be surprised if Wall Street interest is likewise mild.