Bricks and mortar firms fight back

By ADAM GIFFORD

The risk of companies losing key staff to internet startups is dropping as bricks and mortar companies create hybrid internet models internally.

Cathy Benko, Deloitte Consulting's leading e-business consultant, says that is one of the outcomes from the major trends which are emerging as e-business gets into mainstream areas.

These trends include the emergence of new kinds of hybrid companies, increased hurdles to launching businesses, a reassessment of the whole "dot com" model, and new opportunities for business incubators and accelerators.

Many "big dumb companies" have also become enlightened and are crashing the dot com party. A year ago the dot com startups were seen as threatening them.

Ms Benko says established companies are in a better position to profit from e-business because they can bring real products, real customers and real revenues to new business opportunities.

Deloitte Consulting itself has established a "mothership" model, where it is spinning off business opportunities into "pods." These pods involve partnerships with other major companies, so they launch with global alliances, financing and products in place.

Rather than the share options, which in recent times lured many staff at United States companies away to startups, the staff transferring to these pods are given equity in the whole portfolio of pod companies which come under the Deloittes umbrella.

While this approach may not promise the stratospheric rewards dot com startups were promising, "there's not the same risk either."

Ms Benko says incubator or accelerator firms which inject venture capital or expertise into other firms, now see ventures spun off from existing companies as a better target customer than dot coms.

"We don't think there is real money to be made in startup incubation. There are over 800 accelerator organisations out there. It's real needle in a haystack stuff, so if you were to really support the marketplace where would you go?"

Those of the 2000 top global companies which are doing spin-offs and carve-ups, are the best market, she says.

"These are the guys that can use that help."

Ms Benko says hybrid companies are able to launch with proven talent and business expertise seconded from their parent organisations.

"When you can bring resources to bear from a bigger company, you have a big advantage. You can source people who are proven in your space."

Hybrid companies are more likely to be able to go to market with a complete solution, rather than the unproven components many dot coms are offering.

She says it's now half-time for dot coms.

"I don't think there is a dot com out there which isn't taking the time to look at its viability."

However, there may still be considerable value in dot coms, which is why many are now being merged with or acquired by older companies.

"There is a lot of consolidation in that space. Startups may be your dance partners," Ms Benko says.