A 10-year-old has a great idea for an Internet business. He's not about to drop out of the fifth grade to run the company. So where does he (well, really, his mom) take the concept?
To the Washington area's first idea incubator--VenCatalyst Inc.--which might create a company around the boy's brainstorm and give him (or his mom) a cut of the revenue.
VenCatalyst is actually considering such a proposal as it prepares to open for business. Like the famed Idealab of Pasadena, Calif., which since 1996 has launched 20-some companies, including eToys.com and WeddingChannel.com, VenCatalyst aims to identify a strong proposal, hire a management team, and give the company working space and advice on how to make the idea fly.
Some who come to VenCatalyst will simply want to sell their idea. Others will want to run a company, and still others may wish to be the technologist while someone else deals with pesky budget stuff.
VenCatalyst's managing directors are Andrew Stern, 28, who founded a local Web services company, Logex International, and then sold it to AppNet Inc. of Bethesda in April 1998; David Bohigian, 29, a former director of Washington venture-capital firm Jefferson Partners; and Richard Powell, 32, who was chief knowledge officer of Burson-Marsteller. Stern says the group is seriously considering the idea from the 10-year-old, but he won't say more about it just yet.
If all goes as planned, the incubator will have six technology start-ups working under its roof in the next 18 months. The location of the roof is uncertain: The partners are set on downtown, but they are still looking for the right spot.
Bringing more technology companies to the District "is important to us," Stern says.
He figures many new local millionaires will have an idea but not the management experience--
or patience--to make it work. "You've got so many people from AOL and MCI WorldCom who have vested," Stern says. "Everybody's interested in trying their hand at a start-up company."
Each company will get up to $300,000 in seed money. That will come from a fund--Stern won't say how big--raised from "angel" investors. Obviously, they're not getting all this for free: VenCatalyst will own about 30 percent of each start-up.
Stern is a second-generation local techie. His father, Paul Stern, is the former chief executive of Nortel Networks Corp.
It's got Talk. But what about buzz?
Many people looking for the Web site of the new Tina Brown-edited magazine Talk have been landing at www.talk.com--which happens to be the site of the long-distance telephone company Talk.com of Reston.
The telecommunications company, formerly known as Tel-Save.com, recently acquired the domain name as part of a turnaround effort led by company chairman and chief executive Gabriel Battista. Because of the confusion, the Reston firm went ahead and put a link on its page to the magazine's real Web site--
www.talkmagazine.com--even in the absence of a marketing deal with the publication.
Battista engineered his company's name change and bought the new domain name from Wired Digital Inc. as part of a $1 million deal that includes a one-year contract for banner advertising on the Wired site. It's one step in his plan to create a buzz before a possible change next year in a deal with America Online Inc. of Dulles that brings in 99 percent of Talk.com's business.
Battista has also moved the company from New Hope, Pa., to Reston, replaced senior management and is adding people to the board, beginning with New Enterprise Associates' Arthur J. Marks and former FCC chairman Mark S. Fowler this month.
Daniel Borsilow, the previous Talk.com chief executive, made a smart move by signing on to be the exclusive long-distance provider advertised on AOL, at a time when "no one saw the value of that real estate," Battista says. The deal officially runs until 2003. But next July, AOL can choose to take less money from Talk.com in exchange for dropping the exclusivity.
Battista says he has no idea what AOL will decide. If AOL takes away Talk.com's exclusivity, though, according to the contract, it also has to give up annual payments of $60 million.
In the next 60 to 90 days, Talk.com plans to add local service, wireless and Internet access, and to sell the services through its Web site, not counting on the AOL ads, Battista says.
Battista himself has a three-year contract. He has a track record of leaving other jobs--running Network Solutions Inc. and Cable & Wireless USA--for something that gave him more "butterflies" in his stomach.
Regardless, Battista is personally set: In addition to a $500,000 annual salary, he received $3 million upfront plus 650,000 immediately vesting options at $7 per share and 1 million options that vest after three years, at $10 per share.
At the end of the month, Ultraprise Corp., one of the largest employers in Shepherdstown, W.Va., and an online auctioneer of mortgages, will finally decide where in the greater Washington area to move the company.
As Ultraprise, which now has 92 employees, grew, management maintained that it would keep its headquarters in the picturesque town. They said so even when Arlington-based Friedman, Billings, Ramsey Group Inc.'s two venture-capital funds invested $9 million in the company in July. It's well known that VCs like close-by investments.
Then, reality hit.
"It's funny what will happen when you start recruiting real senior people," says Ultraprise chief executive David Levine. "We can't convince everybody that we live the perfect idyllic lifestyle."
It looks as if Leesburg or Frederick will be Ultraprise's new home, though Levine and many of the original staffers will continue to live in West Virginia.
West Virginians talk about Washington as "over the mountain" the way Marylanders and Virginians talk about "across the river," Levine says.
There's another reason for the move, he admits. An adviser told him that it would be better when the company goes public not to have a Shepherdstown address.
Send tips and tales of the digital capital's local people, deals and events to Shannon Henry at email@example.com.
CAPTION: From left, VenCatalyst managing directors Andrew Stern, David Bohigian and Richard Powell offer a warm reception to good ideas.