REPORTER’S NOTEBOOK: VCs, Entrepreneurs Do the Demo Dance

Quick, what’s been the most popular place for Silicon Valley startup
companies to be this week?

    A) The Demo 98 conference in Indian Wells, Calif.

    B) Anywhere but rain-soaked Silicon Valley

    C) Both of the above

The answer, to judge by the hundreds of entrepreneurs who have kept a
ballroom and its assortment of tributary-like meeting rooms buzzing so far
this week, is C .

Like the Demo conferences of years past, this year’s has been one part
technology showcase and nine parts schmoozfest. Yes, you come to the
beautiful desert resort where Demo is held, if you come at all, to
introduce your products (assuming your products meet the requirement of
never having been shown publicly before, and assuming they pass muster with
Demo’s Executive Producer, the newsletter editor Chris Shipley).

But mostly what you’re hoping to find at Demo are:

    1) bigger corporations who can help you get distribution for your promising
    but unknown product

    2) bigger corporations willing to acquire you and put you out of your
    startup misery, or

    3) funding from venture capitalists (VCs).

Indeed, to judge by the conversations around the hotel this week, the names
on badges, and the attendee list, the denizens of Sand Hill Road in Menlo
Park, Calif.–the VC capital of the world–all seem to have abandoned their
inundated headquarters and come to Demo.

VCs are a jaded bunch, conditioned by experience to look for the things
that can consign a startup to the ranks of the non-starters. Still, the
prospect of being judged harshly doesn’t seem to be especially worrisome to
the scores of hopeful entrepreneurs who have spent the last few days in
Indian Wells showing their products.

“It’s a good place to get your valuation up for the next round,” said
Sharam Sasson, the president and CEO of Extensity, which was showing a
Java-based application that handles expense reports.

Seemingly two-thirds of the new products on view this week have been
Internet products (the other third are products for which, if you were to
ask the question, the CEO would harumph and sputter and assure you that
yes, of course, it can be used on the Internet too).

Internet devices are big this year. Data General struck a chord Monday by
showing early-stage technology it referred to as a Network Utility Box,
which it hopes will one day sit in consumers’ basements and beam signals to
all sorts of Internet-enabled devices around the home.

And Sun Microsystems has a pavillion where it is showing off a few spiffy
Internet devices of its own. (Alas, there is only the merest
trace–namely, a video–of Sun’s ultimate Internet device: the
e-mail-sending, Web-browsing, applet-spewing vehicle it demonstrated at
Comdex to so much fanfare.)

For the rest, the Internet products released this week at Demo have shown
no single theme. There have been Java applications for enterprises (like
one from a company called AlphaBlox,
which has already gotten $16M in VC funding, thank you very much); e-mail
systems designed to improve a company’s ability to interact with its
customers (from Aveo and Roving Software Inc., among others); even
content-oriented products, like CMG
Information Services’ Password
, which is setting out to do for
categories of “enthusiasms” what Yahoo does for categories of information.

But if there have been a lot of bright ideas on view at the show that ends
today, little of it seems destined to produce a killer app in 1998–or
1999, for that matter. Then again, a show like Demo probably wouldn’t be
the right place to debut a killer app, which might reasonably be defined as
something the whole world was waiting for even though it didn’t know it.
You exhibit at Demo when you still, er, need the world a little more than
the world needs you.

Indeed, for some of this week’s presenters, the value has consisted largely
in finding out whether the world needs them at all.

“This is the first time we’re talking to anyone besides ourselves about
what were doing,” conceded J.B. Holston, the president of Colorado startup
Netsage, which has developed a
variation on the avatar theme. “I feel like I’m right out of the coal
mine,” he added. “I can finally breathe some fresh air.”

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