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.
