June 1 , 2002
Internet Mavericks: Still Working Out of the Garage?
e-Commerce is consolidating, but there's room for the little guys too.
Thomas Edison built the electric utility industry virtually from scratch out of his workshop , so can Internet mavericks do the same for e-commerce? Or has the moment passed for the garage startups, leaving it to the big utilitiesor better yet, the large conglomerates and multi-company joint venturesto attract capital and introduce the new ideas?
Perhaps there is still room for both. Or at least that was our take, here at the Fortnightly. On that assumption, we interview four chief executives of new e-commerce startups: two from large, well-funded industry giants, and two from smaller, niche-type ventures.
"We are connecting suppliers and buyers over the Internet," says Joe Zelechoski, interim chief executive officer of Enporion, a business-to-business e-procurement exchange and industry alliance that has been attracting new utility members recently. We also interview Andy Patterson, vice president for strategic analysis at American Electric Power. AEP was one of a group of electric utilities that announced plans in July to launch a web-based exchange for arranging transmission capacity, a venture that heads boldly into the unsettled earth of regional transmission organizations.
These projects suggest that e-commerce is consolidating, with the venture capital migrating to the larger, more established enterprises.
But don't tell that to Cody Graves of Automated Energy Inc., or Jason Ambrose, of Plurimi Corp. They are attempting to carve out their own niche as crucial players in the race to energy deregulation and competition.
For Graves, a former state utility regulator, that means providing both utilities and electric customers with Internet-based software to analyze usage and billing information in real-time. At Plurimi, Ambrose also offers real-time data over the Net, but in his case, it's pricing information, allowing electric customers to halt usage when prices reach a conceivably predetermined level.
"How do you balance supply and demand without knowing what's going on on the consumption side?" asks Cody Graves. "The traders all know the supply side. Go to the various trading boards and look at what Enron and Williams and those people are doing. They know what's going on on the supply side. But nobody really knows what's going on on the consumption side...."
Interim CEO, Enporion
Enporion ( www.enporion.com), billed as an open global procurement exchange to help the energy industry cut costs, follows on the heels of the energy trading platforms (such as HoustonStreet.com) that emerged in 1999. Enporion was formed in August by a consortium of Allegheny Energy Inc., New Century Energies, Minnesota Power, Northern States Power, and PPL Corp. Later, in early October, Enporion added Ameren Corp., CMS Energy Corp., KeySpan Corp., and UGI Corp. to its list of founding members. It announced that it would start operations later in 2000.
The spoke with Enporion interim chief executive officer Joe Zelechoski, about the future of procurement exchanges and the danger of antitrust regulation for large, multi-company e-ventures.
Why is the innovation from energy e-commerce coming from utilities partnered with technology companies rather than from single entrepreneurs with seed money?