@LARGEOn the flip side
By Scott Kirsner, 10/22/2001Is pessimism the new optimism?
Back in the go-go '90s, idealistic visions of the future drove stock prices skyward. We'd all get customized menu suggestions over the Web, have groceries delivered direct to our cupboards, and surf the wireless Internet over a high-speed home network while lounging in a cushy sofa purchased from Furniture.com.
Now, we've entered a bizarro world where the stock prices of some technology companies are being driven by hopelessness, not hope. Companies that make biometric security systems capable of picking known terrorists out of a crowd have seen their share prices spike since trading resumed Sept. 17, and the makers of devices that can quickly detect the presence of pathogens like anthrax and smallpox have followed.
How intense is the action around these companies? Cepheid, a Silicon Valley company that makes technology for pathogen detection, has just $10 million in sales, but has lately been vying with Cisco($22 billion in sales) as the hottest topic of conversation on Yahoo's stock market message boards.
Michael Willet, the investor relations officer at Bruker Daltonics, a Billerica company that just sold $10 million worth of equipment to the US military to alert troops to biological assaults, said his phone has been ringing steadily with prospective investors requesting more information about the company.
Tom Colatosti, the chief executive of Viisage Technology, a publicly traded Littleton biometrics company, says he has been getting unsolicited calls from investment bankers asking whether they might handle any private placements or secondary offerings the company might consider. ( Avant Immunotherapeutics of Needham, a biotech company that is working to provide anthrax vaccines for the Department of Defense, did just such a $14 million private placement last week.)
Jeffrey Henken, an Idaho dentist who runs the Web site BullSector.com as a hobby, says his most popular pages lately have been the ones that list "Anti-Biowarfare" and "Anti-Terrorism" stocks.
"Everyone said that biotech would be the next big boom," one friend quipped. "And here we are." It's just a slightly different kind of biotech than we expected.
The flip side of dot-com euphoria turns out not to be complete technological dysphoria, but rather what might be labeled, with a nod to A. A. Milne, the Eeyore effect. Investors are having no trouble imagining an increasingly cloudy future for our society, and they're looking for stocks that might act as umbrellas.
"Anything that looks or feels like it's going to do something for this new, ugly world we're living in, it has had a good run," says Clinton Morrison, a Minneapolis stock analyst who follows Visionics, another biometric security firm. After Sept. 11, Morrison raised his rating of Visionics' stock from a "buy" to a "strong buy." But, he cautions, "a lot of these companies aren't going to see any fundamental change [to their business]. Imagination and hype have probably gotten ahead of the fundamentals."
Colatosti says the sudden rise in some companies' stock prices may be unjustified, but not Viisage's, which has quintupled since the market reopened. "I believe we were undervalued before the 11th," he says. But what else could he say?
Once you've entered this particular mirror world, you realize that the optimists are the ones short-selling the anti-biowarfare and anti-terrorism stocks, and getting no end of abuse for it on the online message boards.
"It would probably be a mistake [to buy these stocks at their current prices]," says Henken of BullSector.com. "I do not think that, long term, we're going to be faced with a great deal of bioterrorism or warfare. I think we'll be successful in eradicating the majority of the threat from terror."
The question for this little corner of the stock market is the same one that the wider culture is asking: Are we stuck in this new world for good?
Keshian on call
Greylock venture partner Dan Keshian is developing a reputation as the firm's Mr. Fix-It. Earlier this year, Greylock dispatched him to serve as interim CEO at Digital Media on Demand, an Allston start-up that had developed software to make online music distribution more secure.
After overseeing some staff cutbacks and a strategy adjustment (the software is now geared to record labels and video production companies that want to securely share works-in-progress among different offices), Keshian was off to his next appointment, and Mark Overington, who had worked with Keshian at AVID Technology, was installed as CEO at Digital Media.
Keshian is now CEO at Cambridge's ArsDigita, the software company that earlier this year was in the throes of a control struggle between founder Philip Greenspun and its two main investors, Greylock and General Atlantic. (A lawsuit ended with a settlement in June, from which Greenspun seems to have profited nicely. He's now touring the country in a new Winnebago. Really.)
Keshian says that a series of layoffs at ArsDigita had been planned before his arrival, that former ArsDigita CEO Allen Shaheen will stay on as president of worldwide solutions, and that the company won't need to raise additional funding to get to profitability, following a $38 million round last year.
"My goal here is to help this group get to market with this technology," Keshian says.
Instead of pushing an open-source software suite for Web site management, community, and e-commerce, ArsDigita will focus on what it calls "enterprise collaboration management" -- software that will help large groups use the Web to work together more efficiently. Shaheen says that while the ArsDigita products that have already been released will remain freely available as open source, "the future is currently open for discussion."
Sticking to it
Fresh from winning two awards last week from the Massachusetts Interactive Media Council, Boston start-up Popstick launches a campaign this week with Microsoft to promote the launch of the new Microsoft XP operating system.
Popstick was founded in 1996 by MIT Media Lab alum Dan Kastner. Its technology allows companies to conduct interactive marketing campaigns through "Popgrams," which are short, action-oriented, animated presentations. Microsoft is using Popgrams to invite people to Windows XP launch events, for example. The technology lets the company track how many people have expressed interest in attending events in various cities, and, if necessary, dedicate more resources to promoting events in cities that might have low attendance.
"Driving event attendance has been more difficult [lately]," Kastner says. "You need to heighten the cool factor, and get people jazzed about the event."
The Popgrams I've seen are lively and engaging, and they're a big improvement on standard e-mail or Web-based invitations. Could it be that Popstick solves a problem that customers are willing to pay for? The company is still adding employees, Kastner says, and recently signed deals with Xerox, Accenture , and Virtual Access Networks of Lawrence. Popgram campaigns start at about $15,000.
Scott Kirsner is a Boston freelance writer and a contributing editor at Wired and Fast Company magazines.