Date: January 18, 2000

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Line 56 Magazine's "Line56Live! New York" conference was
held December 19-21, 2000, at the Hilton in New York City
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Dear Clients, Partners, and *Shag-a-delic!* B2B Fans:

In a bitch of a snowstorm at 7:00 a.m. on a Monday morning--a week to the day before Christmas--my plane lumbered off the runway in Minneapolis in damn-near whiteout conditions, thoroughly drenched in de-icer and aimed for JFK. When I came out from under the blanket about two hours later, was I delighted to arrive to blue skies, bright sunshine, and *warm* temps in the mid-30s F!

Hey, this New York thing is GREAT, I thought! Is this Long Island place a frigging *resort*, or what??

It was, like, a hugely welcome break from what was already one of the worst winters in Minnesota on record. I was so sick of moving snow and freezing my butt off, I was ready to....

....PARTY!!

I mean, cover an event. So sorry--almost forgot my mission there, valued Conference Buzz Consumers.

After a 40-minute cab ride into Midtown (the last 20 minutes of which we moved about a half-mile), I arrived at the appointed venue, the glimmering high-rise Hilton--just a few blocks from Central Park....rarin' to get a dose of B2B like never before (well, with the exception of that conga-line thing in Boca)... delivered up by the cheeky new kids on the block, Line 56. Who'd hyped this thing up to the point where I was...well, panting! (Or was that just from the air in the taxi?)

Anyway, this was my final Year 2000 event....and I purposely held off sending out the report on it till now, to give you guys a breather from the machine-gun barrage of coverage I've been putting out over the past couple months.

Never fear, though--a regular, though less frequent, flow will continue. The event hype machine is hardly showing signs of slowing down--trust me. And keeping up with the greater conference buzz surely will not get any *less* important in this business environment...know what I mean?

I based the following report on the shorter one I filed on "Line56Live!" a couple weeks ago to Conferenza.com. It was a confab I'm really glad I decided to catch -- a good trip, an excellent first-time conference that provided many insights, and a lot of fun at Holiday Time in the Big Huge City. (Even caught The Letterman Show--third row center! Yeah, baby!!)

So have at it, buzz freaks! All I ask is that you think nice thoughts about your over-traveled conference buzz collector... and be sure to give me your feedback. Send positive comments to graeme@gtamarketing.com....negative ones to GoShagYourself@AustinPowers.com.

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Oh, Behave! Is That Rock 'n' Roll
in My B2B? Yeah, Baby, Yeah!

by Graeme Thickins
grt@gtamarketing.com

Many wondered whether a technology event the week before Christmas could ever work. Throw in the Nasdaq meltdown over the previous several weeks--which certainly didn't discriminate against B2B in its ferocity--and one would have to say that attempting to launch a new event at this particular time was...just a bit iffy?

Well, the folks at Line 56 were surely nervous as the weeks closed in. But count them either very smart, super ballsy, or both--because the event came off surprisingly well, even despite first-time glitches one might expect. And New York City at Christmastime was actually...well, quite pleasant! (The secret sauce for this one may have been the timing encouraged many spouses or guests to be brought along, by both speakers and attendees, for the much-vaunted NYC shopping and holiday spirit--turning this thing into a mini-vacation for many couples. And, okay, full disclosure: they picked up my travel expenses, as a tradeout for running ads on the event in my newsletters.)

The main story with this one, though, was that the producers succeeded in bringing a dose of new energy to a space populated by a conservative, usually all-business lot. Line 56 obviously felt these B2B types needed a major dose of fun and excitement amidst the apparent gloom-and-doom -- so they let 'em have it! For example, a mega-blowout party Tuesday night--with live music, lots of hot (and wacky) entertainment, and food and drink the likes of which few conference-goers ever see. (One of many highlights: we kept hearing "Kiss" was coming out....hah! it turned out to be *Mini*-Kiss: four crazed midgets dressed like the famous '80s rock act, lip-synching their way through a selection of hits. Okay, you had to *be* there! But, suffice it to say, these Line 56 people do know how to party.)

And there was more: loud rock music preceding and during the daytime sessions--used liberally as "bumper music" when speakers were introduced, and during breaks. And it was damn good! (That alone drew more comments from attendees than any other I heard related to logistics, as if it were so unusual--when, in fact, it's done at every good Internet conference I attend. The music is just better at some than others--call me a connoisseur. Even the best-of-the-best at conference A-V, Mike Petrovich, would have been impressed.)

One speaker proclaimed as he approached the podium: "That's the closest a B2B person will ever get to being a rock star!" (He was right. And no one laughed...but me.)

And there was yet more! Video cuts on the big screen from the movie "Austin Powers" were sprinkled throughout. That's right, folks--including the classic Mike Meyers "Yeah, Baby, Yeah!" take, appearing at strategic intervals, presumably to get the crowd to quick taking themselves so damn seriously. Or to wake the hell up and pay attention to the next speaker.

Just the B2Beginning?

"Line56Live! NY" was the first U.S. conference put on by the upstart publisher of Line 56 magazine, now some seven or eight issues old. (Editor Adrian Mello, formerly of Upside, was also in attendance, as were several of his editorial staffers.) A smaller Line 56 event two weeks earlier in London was the organization's first ever. The company's events staff has been located there, but is soon to move to LA.

With the unabashedly bold stated mission of "Bringing B2B to the World," Line 56 was founded by successful British serial- entrepreneur Mike Jefferies and two of his Aussie mates less than a year ago. Paul Higgins, former Bain & Co. consultant (and Aussie surfer!), was recently named CEO. The firm is based in Los Angeles...specifically, the famed enclave of Westwood Village...which positions Paul strategically to now frequent Malibu and Ventura County Line, whenever he gets an hour or two to go catch some waves.

Some event stats: 1496 attendees (as counted on the list handed out) plus 54 sponsors--13 platinum, 31 silver, 10 bronze--all of which doubled as exhibitors, which numbered somewhere between 60 and 80 by my observation. The sum total of which contributed to this first-time event being a money-maker, I was told. Some 75 press people also attended (and much news coverage ensued). Over the two and half days, there were five panel discussions, 25 stand-alone presenters (most CEOs of well-known B2B industry players)--too few of the former, and too many of the latter, in my estimation-- and one *big, wild* party, as mentioned, after the first day's sessions. [More on the party later...]

Keep the Faith, Baby

What did we learn at "Line56Live!NY"? Surprise--that B2B e-commerce is here to stay, though "2 to 3 years out" seemed to be the favorite time period for when it would really grab hold. We heard more about the just how huge the opportunity is, while several leaders made bold predictions, and others told us how the industry (or they) were changing to adapt to market forces. The rate and extent of that change was perhaps the biggest takeaway of all. [This space is not for the faint of heart.]

We heard about how some industry-sponsored marketplaces, or ISMs (the so-called consortia), would succeed, while others will surely fade away, or never get going. And we again heard at least one speaker (in this case, the GE exec) roundly thrash the entire notion that arch-competitors could ever work together. But one thing is becoming more and more appparent: the ISMs *need* the independent exchanges, and vice versa. So, it seems an interesting mating ritual is underway in earnest.

An optimist speaks: "We hear a lot about the 'dot-dombs,' said John Sidgmore, vice chairman of Worldcom and head of its UUnet unit. "But the Morgan Stanley Internet basket of stocks is still up some 4x since 1998," he said. "And there's no way the growth won't continue." He noted that UUnet's growth has averaged "1000% per year for five years," and that the Internet has been "the greatest growth driver there's ever been."

And, Chris Vroom, a managing director of CS First Boston focused on B2B, later told us that we should "expect a strong recovery in the B2B index once the market settles."

Predictions Flowing Freely

"The 'horizontal services' sector will be the next big wave in the development of B2B revenues," said Ken Fox, managing director of Internet Capital Group.

Another take on the theme was that from Harvey Seegers, CEO of GE's Global Exchange unit: "Our vision of the future is the 'horizontal exchange,' where all buyers and sellers come together... without the need to make an equity investment with their competitors. You talk about footprint and capability! We believe we understand B2B. We're in 52 countries, with 30 years experience, doing a billion transactions a year, worth $1 trillion in goods and services!"

Yet another top-name speaker, Keith Krach, CEO of Ariba, declared, "The last 12 months have been like 'scary fun'...but this will be the biggest marketplace we'll see in our lifetime."

What's the gain? "The upside in B2B for Fortune 500 companies will be in more efficient supply chains, not in equity gains (in new business units or shares in consortia)," said Ben Smith, Vice President, EDS/A.T. Kearney Ventures.

So what's the right model? "In three years, you're either a service provider, a technology company to a service provider, or you got the exchange model right," said Ken Thompson, COO, e-Steel.

Next big thing? (Another vote for the perennial favorite of late.) "By 2003, 80% of apps for the Internet will be wireless," said Pat Toole, GM/B2B Solutions, IBM.

And yet another wave? "Open architecture is the next big wave in IT...Most companies don't want an integrated suite, just to optimize their own systems," said analyst Chris Vroom of CS First Boston... who also reminded us that "the B2B opportunity is huge -- 65% of all B2B commerce will eventually be electronic transactions...$12 trillion will flow through third-party marketplaces."

The ISM take? Rico Digirolamo, acting CEO of the automakers' consortium Covisint, had this prediction: "The technologies will take a few years yet. The big winners will be Tier 2 and 3 supplier CEOs who can take advantage of this new technology to make money."

Another ISM naysayer heard from: Tim Stojka, Chairman of Commerx, declared, "Many ISMs will go out of business. There'll be a lot of bloodshed in 2001!"

But, noted the CEO of Exostar, George Shaw: "The ISMs have the capital advantage, and can more easily bring their supply chain. Now, if they can just get the right *people*, they have the best shot to succeed."

A different angle was cited by Tony Schwartz, CEO of Global Exchange (yes, the same name as GE's unit--very strange). He thinks the large consortia, like Covisint, "will become like ISPs -- they'll do a lot of the internetworking."

What's a key skill companies need first? "We anticipate the next two years of B2B activity will require *internal* management of content, to be able to extend relationships with trading partners," said Drew Bartkiewicz, VP of enterprise solutions at Broadvision.

Other Rockin' Quotes

"Visceral competitors *can* work together, because there's enough
economic benefit to *make* them." And later: "The intention is
to IPO this thing."
- Rico Digirolamo, acting CEO of automakers' consortium Covisint
(yes, they're *still* looking for a permanent one)

"How can competitors who've been at each others throats for hundreds
of year work together?...The reason why consortia are having difficulty
hiring CEOs is they realize they could go to *jail*! (for antitrust
violations)...There will be some successes but, on balance, this is
a flawed business model."
- Harvey Seegers, CEO, GE Global Exchange Services

"The difference between just a corporate initiative and getting
traction in an ISM is getting the industry to rally around you,
and deploying rapidly."
- George Shaw, COO, Exostar (an aerospace ISM)

"Companies have to back up and look at how business processes work,
and remap that to the web. It takes time. The challenges are the same
for all -- independents and industry-backed alike."
- Rico Digirolamo, acting CEO of automakers' consortium Covisint

"The focus should be on the *value* you bring, not liquidity. Even
the New York Stock Exchange, with its huge number of transactions,
doesn't have that much value (in revenues and profits to it). But
look at all the others around it--the investment banks and so
forth. They make huge money."
- Ken Thompson, COO, e-Steel

"Why are B2B exchanges working in some markets and not
others? Most don't look like the classic 'butterfly,' or center-
based model. They're peer-to-peer webs, with many intermediaries.
They're markets that *don't want* to wring out inefficiencies...
The center-based model has been applied to the wrong markets
in many cases...Intermediaries are critical for matching, and
providing liquidity."
- Rusty Braziel, Chairman, Altra Energy
(an early-in independent energy marketplace)

"There's been a lot of talk about independents versus industry-
backed, but that blurs over time. I can't imagine independents
being successful without industry backing. And, conversely,
industry exchanges (consortia) need to be seen as *independent*."
- Ken Thompson, COO, e-Steel

"In the first six months of 2000, hundreds of consortia were
announced. That's the fastest the Fortune 500 ever moved!"
- Dave Perry, CEO, Ventro
(exaggerating the real numbers a bit)

"The struggle marketplaces are facing today includes technical
complexity. It's just beginning to hit people, and it's a real
problem. It wasn't perceived as an issue when plenty of capital
was available. But, until the problem is solved, you don't have
any income!"
- Dave Perry, CEO, Ventro

Some Growing Pains

The event was generally well put on by Line 56--which is admittedly new to the conference business. But the program had shortcomings--the major one being that several of the 25 stand-alone presenters were merely pitching their companies instead of focusing on issues. (Surely Line 56 tried to prevent that, but CEOs...well, do what they want, I guess.)

More panel discussions would have helped ensure that attendees got more focused, even-handed content. There were only five panels--but these were generally the best received, most interesting parts of the program. Regarding the many stand-alone presenters (all were either CEOs or other senior execs): another problem was that some of them used slides that either said little, or didn't match the pitch they were giving orally--which was frustrating. They should know better. [Have weaker stock values caused speech coaches to be cut?] Finally, the program would have benefitted from a more-involved host or MC throughout, as most good executive conferences do (instead of just an announcer introducing speakers)...to help keep things in context going along. You know, maybe an easy-chair, sit-down interview from time to time.

Expectations at a Fever Pitch

The announcer was great, though -- a Line 56 editor from London, whose name wasn't even in the program. We'll call him Jolly Good Mystery Man. Very British and proper--great vocabulary, wit, and elocution. He also hosted some funny pre-taped, on-the-street interviews in and around New York City--which were shown on the big screen during some breaks. But his particular shining moment turned out to the buildup he delivered for the party. With true British understated humor--which few probably got or appreciated, till later that evening, anyway--it went something like this (imagine the refined British accent, and a totally serious delivery): "Be sure not to miss tonight's party. We're quite happy to say we'll have Snoop Doggie Dog, Puff Daddy, and Jennifer Lopez performing. And please do bring along whomever you wish, because security will be quite lax." Complete hogwash, of course. But surely visions of mass rioting and mayhem--with a bunch of crazy Brits and Aussies on stage, rapping along to it all--were being conjured up throughout the room. In fact, it's likely that several of the conservative suit-and-tie crowd took this as a message to hunker down in their rooms that night, order in, and bolt the door. Actual entertainment included no big-name stars, but a bevy of great local acts....my personal favorite being Johnny Pots and Pans, straight off the D Train.

But you should have seen the crowd--yes, many people were pouring in that had nothing to do with the conference, with no one seeming to care. Trust me--the Hilton Grand Ballroom won't see the likes of this one again soon....a cross between a three-ring circus and the Hogs n' Heifers club in Soho comes to mind. A funny, clumsy moment occurred when Ken Fox of Internet Capital Group, who sponsored the party, tried to deliver the requisite sponsor's remarks on stage in actually a sober, serious way. Next time, Ken will likely just lose the tie, down a couple cocktails first, shimmy on up there and let it all hang out, getting as crazy as the audience--as host Mike Jefferies (Line 56 chairman) was doing, very nicely...and seemed to be thoroughly enjoying.

And More of My Review...

Event logistics were also mostly good, especially the A-V, the staff, and (of course) the party. But one very weird thing was the *stand-up* lunch format in the exhibit area. [Didn't the Hilton have tables and chairs to put somewhere?] They were real balancing acts! And I thought limited interchange between attendees. Also, the choice to place coffee and refreshments away from the main ballroom was hardly attendee-friendly. Folks had to fight their way through the too-narrow aisles of the exhibit area to get to all that. The exhibitors? Oh, they must have loved it--traffic like mad. Too bad most of them were spewing out the same old tired buzz words and cliches--leaving confused attendees the job of *somehow* trying to figure out what the heck makes any of these B2B technology enablers, exchange and auction software companies, and various and sundry service providers different from each other.

So, net-net it out then, you say? Why, yes I will!

Bonus: My Top-10 Takeaways from "Line56Live!"

(no charge, gang! feedback encouraged...)

1) Continued movement from public to private exchanges,
and a shifting focus from vertical to horizontal exchanges

2) It's the content and services, stupid; nowhere near as
much talk now of "liquidity," or volume of transactions
(that seems so, well...pre-bubble!)

3) Independent exchanges and industry-sponsored
marketplaces (ISMs) are teaming up, naturally
(i.e., because they need each other)

4) More time needed: the tech complexity of B2B ecommerce
has been widely underestimated, and also the difficulty in
"ramping community"

5) Business models of the new players are still evolving
rapidly; some independent exchanges are now morphing
into enterprise software companies or "marketplace service
providers" to address the needs of the proliferating
ISMs (where all the money is)...and more will follow

6) Nonetheless, many ISMs will fail or never get off
the ground, according to several speakers

7) The biggest problems now facing ISMs are goverance
issues and difficulty hiring qualified CEOs

8) Prediction (mine): You *will* hear of ISM flameouts
soon due to one notable agreement by consortium members--
the right CEO doesn't exist or can't be recruited, so let's
fold the tent

9) Implementing a B2B exchange is now being compared
to ERP -- essentially another business process reengineering
project....thus, those companies that have been through ERP
would seem to have the upper hand

10) Expect to hear much more about the *interconnection*
of ISMs and standardized access, so a given supplier can more
easily participate in multiple exchanges (cross industry)

Another Takeaway Perspective

I had the opportunity to get an assessment of the current state of B2B e-commerce after the event from another astute observer, Mick Calder, Senior Analyst at Line 56:

"My final thoughts, as far as an outlook for 2001 after the turmoil of 2000, are these: B2B has just begun to develop and become complex. Most of the turmoil of 2000 was surrounding capital markets and a squeeze in funding. But wait till the funding and industry backing are there, and the industry starts dealing with the *real* complexities. That will be the story for 2001 and 2002."

And One Final Note...

But the smartest guy in the whole B2B business last month might have been Narry Singh. He's VP of Global Trading at Rapt Inc. in SF, and a noted supply-chain consultant. As you may recall, Narry was the producer and host of the very excellent "iB2B Chicago" event The Industry Standard threw in October, which I reported on. (See links to my coverage at bottom.)

Narry, a former McKenna and McKinsey consultant, was actually scheduled to moderate a panel at "Line 56 Live!" -- the "What Have We Learned Today?" recap at the end of the second day. It was nip and tuck, with the show's sponsors not sure if Narry would show. But, alas, a substitute had to step in at the last minute...which actually turned out to okay with me, because I had to run over to 53rd and Broadway to take advantage of the hard-to-get Letterman tickets we'd somehow been able to snag the day before....which put me in a quandary, because I really didn't want to miss Narry.

Anyway, as I said, Narry may have been smarter than all of us. A week or so after I get home, a Christmas card arrives from him, postmarked...guess where? St. Bart's!! The guy was spending the holidays on the beach! While we all thought *we* were stylin' in some damn hotel ballroom in New York City! There he was in a hammock or something, probably laughing heartily thinking of us all back in NYC...while having a great time with his girlfriend, Tina, a very classy lady (and gorgeous fashion model), whom I'd had the pleasure of meeting at the Internet Summit in July in Laguna.

Narry...there's only one thing I have to say to you, man:

"Yeah, Baby, Yeah!!!"

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That's it folks--the keyboard needs a rest. (It's smokin'!)
I hope this report provided some good insights for you, and
I'd enjoy your feedback, via graeme@gtamarketing.com.

Please note: if you were gone over the holidays, you may
have missed some of the many conference reports I did over
the past month or two. For a complete list of report links, check
out this page .... or see the individual links below.

Again, if you'd like to be among the first to receive my reports
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Just email me, and I'm there.

your ever-faithful, rock n' rollin', B2Bin' in the Big City,
now-back-to-freezin'-my-ass-off-in-MN conference reporter,
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Graeme Thickins, Founder & Principal Consultant
GT&A Strategic Marketing Inc.
*Twin Cities *LA *SF *Anywhere
Voice: 952/944-1672
Fax: 952/944-1673
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And Editor-in-Chief:
"Branding & Marketing to Win
in the Knowledge Economy(tm)"
http://www.gtamarketing.com
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Check out our home page for past conference coverage, and also
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Watch for more conference reports coming soon....on
"Optix 2001" in Pasadena and "The O'Reilly Peer-to-Peer
Conference" in San Francisco....both in mid-February.

If you have suggestions about other events you'd like to see
covered, please let me know, would ya? Thanks.