Date: October 16, 1999

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The Industry Standard's "Net Returns 2000" conference was
held Sept 29-Oct 2, 1999, at the St. Regis Hotel, Aspen, CO
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Dear Readers and Fellow Internet-Economy Wealth Builders:

So here we were, on this drop-dead-gorgeous fall morning at the base of Aspen Mountain -- some 600 information-hungry web zealots all gathered inside, like kids in a candy e-commerce store awaiting Sweet Enlightenment.

The Net Returns conference program was about to formally begin, with a kickoff keynote from an industry legend, who had something new up his virtual sleeve to tell us all about.

Jim Clark doesn't do much speaking, we learned. But the locale, the quality of the audience, and some sweet-talking by The Industry Standard folks were enough, it turned out, to get him to drop by for a couple hours and hang out with some of his fellow digerati.

[His buddy Mark Andreesen, who'd also been listed on the program, dropped out at the last minute. Didn't want to talk about AOL, he said. The Industry Standard folks told him he didn't have to--but he thought that's all people would want to ask him about. So, it seems Mark prefers layin' low these days.]

Anyway, back to Jim. Not only does an entrepreneur need passion and an instinct for the market, he said as he opened his talk, but an "intense drive to succeed, a strong will, and an ability to be highly adaptive."

He should know. After SGI, Netscape, Healtheon, and now myCFO.com, he is arguably among the most prolific entrepreneurs of our generation, having created companies with many billions in market cap.

The problem with SGI succeeding, Clark pointed out, was that it didn't pursue a low-end strategy. "Sun had a better strategy, and SGI just never got there." He alluded to the difficulty in getting a large organization to change, citing as a recent example the traditional brokerages, who have shown a fear of cannibalizing their business.

"A common theme in big companies," he said he's observed over the years, "is a fear of going down-market."

But luck also played a part in Jim's life. "I saw the web ahead of others, because I had the good fortune to meet Mark Andreesen," he said. "And I got it -- I got it big!" After thinking a lot about how the web would be used, he decided the web would be to data networking what the PC was to computing.

Netscape's revenues went from $75 million in year one to $325 million in year two. But the mistake of Netscape, Clark said, was that the company "got seduced into thinking the main opportunity was B-to-B," ignoring the consumer side.

Following Netscape, Clark continued his quest for web opportunity and founded Healtheon, "because that was the biggest market I could think of getting into." The company focused on the benefits business and spent a year and a half developing an application before deciding it was the wrong direction. Clark brought in Mike Long to run the business and switched the focus to the interaction between the patient and the physician and other institutions involved in healthcare.

Fast forward now to Clark's latest passion: myCFO.com, created out of his own personal experience in learning how difficult it was to manage his financial life. "But it's not just for guys like me," he said. "There are 8 million high-net-worth individuals with complex financial lives in the U.S."

The idea with myCFO.com is that you can manage all your mutiple brokerage accounts, all your bank relationships, real estate holdings, asset management accounts, tax returns, etc, etc, in one place: on Jim's web site. No more paper--those pesky statements piled up on your desk waiting to be filed. No more wondering what the hell you are actually worth. [It would seem you just click on the "What's My Net Worth Today?" button, and you are, like, totally up to date, bunky!] And when you need real human interaction, you just call up one of their *live* CFO types -- they'll have a cadre of CPAs on staff.

[Okay, now a whole paragraph of commentary: And you thought the web was only for the masses? Starting to get the picture? Eight million folks paying fees to Jim Clark and friends...heck, even one million, two million of them...is no mom-and-pop operation. Assume a clientele of that size with an average of just $1M each in assets under management, let's say, times a very conservative 1.25% annual management fee...and, what do you get? Well, it's so many zeroes, my calculator just zoned out. Let's put it this way: it ain't ChumpChange.com. So what does it all mean? That you should break the news slowly to your current CPA, who up till now was all but certain he had a lifelong gig. And your money manager, poor guy, had the same idea. All together now, everyone: can you say "changes everything"?]

Clark liked this market a lot when he discovered that financial services spending now tops $250B -- just from the top 6.7 million households alone. And a slice of this -- the one million top households -- have an astounding 50% of the wealth in the country ($27 trillion). Another way to look at it, Jim said, is the top 10% controls 80% of the wealth in the U.S. Thus, market size was a major attraction, to say the least, for his latest startup. [Call the strategy "BecauseThat'sWhereThe Money Is.com."]

And just whom does a web entrepreneur like this recruit to his new company's board? Oh, just a few buddies he knows in the Valley: John Chambers (Cisco), Tom Jermoluk (Excite@Home, and the richest surfer in the world), Jim Barksdale (his former CEO at Netscape), and John Doerr (Kleiner Perkins). A relatively modest $20M is all that's been invested in myCFO.com so far, he said. The company started up just four months ago, and they've developed most of the application in-house, Clark noted. They have only 50 clients so far, which have come simply from word of mouth, he said. [Over the back fence in Woodside?]

How will he acquire customers, he was asked? Well, certain "key advisors" as he called them (he named one such partner, Goldman Sachs), will "feed clients in." He said "we'll be an aggregator of products for many financial services companies." But Clark admitted that "it's not exactly easy to get these high-net-worth people to switch" from their current advisors or money managers.

So -- tah dah! -- here's the unique twist here, friends: he's aiming for the newbies. Those *without* the baggage of those messy, established relationships.

"We will acquire them as they acquire the wealth," he said.

That's right, it's a play in large part to pick off a good share of those new Internet millionaires, as they propagate across the New Economy. [You have to love the strategy: where else would these guys want to go to manage their fortunes but to the place that made it for them -- the web! And who they gonna trust but an Internet Master himself, Jim Clark.]

"It's all keyed to 'wealth creation events'," Clark said, not specifically defining the term. [But it's safe to say that IPOs would qualify.] Showing supporting slides at every step, Clark said their were 18,000 of these individual wealth-creation events in 1988 totaling $50B, while in 1993 that jumped to 33,000 totalling $117B. [And God only knows what it will be in '99--the idea being, the growth rate is hardly slowing.]

So a guy asks at the end: "How can you succeed against the traditional players, like the Big 5 accounting firms?" Clark's simple answer: "They're encumbered by legacy businesses."

"Startups are unencumbered," he said. "But of course the objective is to *become* encumbered." Laughs and applause all around....

Stand by for more reports from subsequent sessions.

yours in the New Age of Encumberment,
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Graeme Thickins, Founder & Principal Consultant
GT&A Strategic Marketing Inc.
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