The Virtual Office in Search of a Real Payoff
Special to The Washington Post
Monday, June 28, 1999; Page F13
For the past two months, Marc Wallace's new baby, Patrick, has been keeping him up nights, but he's used to it. That's because his other "baby," a new Internet company he has been building in his basement, has been the cause of many all-nighters over the past year. The 29-year-old engineer/entrepreneur sees his Arlington-based start-up high-tech company and its product, a World Wide Web site called SwapDrive.com (www.swapdrive.com), as the future of the Internet.
The concept is simple: It's like having a virtual office. Users register on the Web site and are given 20 megabytes of hard drive space for free.
"It's basically a hard drive in cyberspace so that no matter where you are, as long as you have access to the Internet, you can access your files. It's really useful if you're a business traveler; you can get your information anywhere," said Steve Birnhak, 31, the chief operating officer.
After finding e-mail too cumbersome, Wallace and his partners came up with the idea while in graduate school at George Washington University three years ago.
"We were frustrated that you couldn't send files back and forth. We had team projects and we needed to share information. My classmates and I were kicking around the idea of having a Web-based network," Wallace said.
The site has been open to the public for just a few weeks and has several advertisers. But, as is the case with many start-ups, a lack of money is hampering future growth. Birnhak says he spends much of his time looking for "angels" -- private individual investors to help fund the company.
"They're hard to find, but we've had good conversations so far and everyone is fairly receptive, but no checks yet. We think we need to raise approximately $5 million to take us through the next 18 months."
And as for start-up funding?
"The entire venture has been internally funded. In terms of hard dollars, we've spent about $50,000," said Birnhak, 31. "Our expenses have been primarily for software, hardware and connectivity. However, the opportunity costs are significant. We figure that in terms of sweat equity of all the time the five of us have put in, we're talking another $500,000 based on what we could be making at a paying position."
SwapDrive.com's ultimate goal is to be bought out. The prospect of big bucks has certainly made the all-nighters more bearable.
"Internet companies are being cashed in at very nice figures and we'd eventually like to become one of those start-up stories," Wallace said.
Any suitor would have to woo all five company partners, who have varying equity stakes. After Wallace and Birnhak, other partners include: 33-year-old Rob Duckwall, who has been responsible for the site's design and graphics; 35-year-old Clyde Kunst, who has designed the Java interface; and 37-year-old Weyburn Schumann, vice president of operations. The company has also relied on the expertise of William Money, an associate professor of information systems at GWU's graduate School of Business and Public Management. Money taught two of the founders in graduate school and is on the company's advisory board.
Wallace and his partners weren't the first ones to the Internet with the idea for a virtual hard drive. Two other Web sites, NetFloppy.com (www.netfloppy.com) and magicaldesk.com (www.magicaldesk.com), offer similar services. Wallace says aside from the vision of big bucks, the entrepreneurial spirit has been a big motivator.
"I've always wanted to work for myself, and I think my partners share that goal," Wallace said. "We have ideas we think are great ideas and we want to make them into real products. I think the environment is ripe for this."
© 1999 The Washington Post Company