The NetSuds™ Report ©

The September 1, 2002 Issue:

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Definition:  "com and .com" = Telecom, Datacom, IT or Internet

In this Issue:

        1.0   Heard on the Net
        2.0   Jobs in the "com and .com" Market
        3.0   NetSuds and MedicalSuds Calendars
        4.0   Tidbits
               4.1 NetSuds on Tour - implex.net
               4.2 Internet Radio - A Reader Writes
               4.3 Email Advertising
               4.4 New Academic Journal Examines IT and Society
        5.0   Calendar of Events
        6.0   The Pulver Points™ on the 2002 IP Communications Industry
        7.0   Chicago Weighs VC Fund to Fuel Tech Start-ups
        8.0   Prescription for Instant Care - InstyMeds and QuickMedx
        9.0   E-Law:  Web Site Jurisdiction
        10.0 Guest Writers for this Report

1.0 Heard on the Net

1.1 People on the Move:

Please email:  people@netsuds.com to report a change in your job status if you are moving from or to a company in the "com or .com" space. 

NetSudser Dan Cummings, gofast.net co-founder, has acquired the web hotel (shared web hosting) and Internet (POP) e-mail services from Agiliti and formed Manage.net LLC.  You can reach Dan at either 612.821.5000 or dan.cummings@manage.net.

MedicalSudser Kathie Mattox, CEO of BioAmide has sold the company to the Aderans Research Institute.  For more details, see http://www.aderans.co.jp/e/3/020723/index.html.

Please give details on the above including any information you do not want made public.  We are very discrete.

2.0 Jobs in the "com and .com" Market

Please email:  jobs@netsuds.com to report job openings in the   "com and .com" Market.  In the body of the message, give the name of the company and a URL link to the job postings.

*        See the job posting in the right column of this Report.
*        XO Communications - http://www.xo.com/careers/
*        palaia.com - http://www.palaia.com/about/jobs.htm
**       Orbit Systems - http://www.orbits.net/orbit/employment2.htm

The web calendars for NetSuds and MedicalSuds continue to grow in popularity as more and more people use them for the definitive place to find high-tech events in the Twin Cities.  The Calendars are accessed at

http://mailman.netsuds.com/cgi-bin/calweb/calweb.pl

and are free to use.  If you want to post your events, there is a charge of $100 but you can post as many events as you like - if they are your own - for 2002.  We recently announced the availability of the Press Release calendar to anyone free of charge.  For details, see www.prsuds.com.

4.0   Tidbits

5.0  Schedule of Events

You can also try our new online calendar by clicking here.

5.1 - Minnesota               

9/10  MN Telecom. Assn./NetSuds VC Panel Discussion - Bloomington
        http://www.netsuds.com/eb/2002/september/

9/17  NetSuds Evening Gathering - Minneapolis, MN
        http://www.netsuds.com/netsuds/

9/17  MedicalSuds Evening Gathering - Minneapolis, MN
        http://www.medicalsuds.com/eg/

9/19  MinnesotaBusiness Magazine After Hours - Minneapolis
        http://www.minnesotabusiness.com/afterhours.htm

9/24  American Marketing Association  - University of St. Thomas (Minneapolis)
        http://www.mnama.org

10/4  NetSuds Best of Business Breakfast - Minnetonka, MN (TBA)
         http://www.netsuds.com/

10/25 MedicalSuds BOB Breakfast - St. Louis Park (TBA)
         http://www.medicalsuds.com/

5.2 - Outside Minnesota

9/10  NetSuds Evening Gathering - Raleigh, NC
         http://www.netsuds.com/rdu/eg/

9/24  NetSuds Evening Gathering - Pleasanton, CA
         http://www.netsuds.com/sv/eg/

10/16 NetSuds Evening Gathering - Raleigh, NC (TBA)
         http://www.netsuds.com/rdu/eg/

6.0  The Pulver Points™ on the 2002 IP Communications Industry

7.0  Chicago Weighs VC Fund to Fuel Tech Start-ups

- Proposal would revitalize industry using pension money, investments

August 12, 2002  By Julie Johnsson
From Crain's Chicago Business - http://www.chicagobusiness.com/mag/
http://www.chicagobusiness.com/cgi-bin/mag/article.pl?article_id=18682&bt=Venture+Capital&arc=n

A mayoral advisory panel is urging the city of Chicago to help create a venture capital fund of $100 million to $200 million to spur investing in technology companies.

The proposed fund is part of a broader, 10-year plan to kick-start investing in area start-ups, many of which are starving for capital — and kick the city's reputation as a high-tech backwater.

While Chicago's financial community holds more than $500 billion in assets, less than 2% of those funds is channeled into venture capital.

A mere 5% of the $10 billion in private equity held by Chicago funds is invested locally, while less than 2% of that winds up in Chicago start-ups, according to Texas-based consulting firm A. T. Kearney, which has worked for the past year to draft the venture capital plan, commissioned by the Mayor's Council of Technology Advisors.

"A cycle has established itself, largely of perception: that this is not an entrepreneurial community or a hotbed of venture capital," says

Simon Bell, a principal at A. T. Kearney. "Money flows elsewhere, and as a result, entrepreneurs go elsewhere. It's a self-perpetuating cycle."

To break the cycle, Kearney recommends forming a "fund of funds," with the city 's pension funds placing an initial $20 million as anchor investors.

City leaders would also seek matching investments of $5 million to $20 million from state of Illinois pensions funds, university endowments, financial companies and other institutional investors.

The private-equity fund, which would be run by a private investment manager, would not directly finance fledgling technology companies, a risky proposition ill-suited to a municipal investment vehicle.

Dream committee

Rather, the proposed fund would invest in a portfolio of venture capital funds that invest in seed- or early-stage companies within specialized niches, from biotechnology to Downstate companies. Similar approaches have proved successful in Oklahoma and California, Mr. Bell notes.

Kearney envisions a committee of luminaries leading the effort: blue-chip corporate leaders such as Aon Corp. CEO Patrick Ryan, SBC Communications Inc. President William Daley — Mayor Richard Daley's brother — Northern Trust Corp. CEO William Osborn, financier Carl Thomas and city, state and county treasurers Judy Rice, Judy Baar Topinka and Maria Pappas, respectively.

The city's role is to "serve as the catalyst," says Robin Schabes, who advises Mayor Daley on technology issues. "But this is a private-sector initiative and needs to be led by the private sector."

The plan would also seek to boost angel investing and create a center to help entrepreneurs tap funding, possibly run in conjunction with the Chicagoland Chamber of Commerce. It remains a work in progress, with many of the finer points — like whether portfolio funds would be required to invest in the state — still to be hammered out.

Of course, countless plans to revitalize technology in Illinois have been drafted over the past 20 years, with little real effect.

Among the notable flops: the Skyscraper Fund, which was supposed to leverage a $4-million investment by the city's pension funds into a $100-million fund when it was launched in 2000. Two years later, the effort has been reborn as the more modest Draper Fisher Jurvetson Portage Fund I L.P., a $12-million fund targeting seed- and early-stage companies in Illinois and elsewhere in the Midwest (Crain's, June 3).

"It sounds politically wonderful to say we're going to support the local entrepreneur," says Robert Lestina, a former director of Allstate Corp.'s venture capital portfolio and an adjunct professor of finance at Northwestern University's Kellogg School of Management. "But it just never works."

Still, this latest effort, a follow-up to a strategic plan created last year for the city by McKinsey & Co., is garnering serious consideration within investing circles and in City Hall.

"It's a pretty cool idea that's worth reviewing," says city Budget Director William Abolt. "It's something the revitalized (Mayor's Council of Technology Advisors) is going to work on."

Daley support crucial

But Mayor Daley's stand on the initiatives is unknown. The mayor has been briefed on the report, but he hasn't gone over the recommendations in detail or met with Kearney officials.

Observers give the measure little chance of being implemented without the support of a strong, politically connected leader like the mayor. For starters, the city's pension funds have been reluctant supporters of area tech efforts. They have invested only $20 million in local early-stage venture capital funds, a fraction of the $680 million their California counterparts have invested at home.

Then there's the thorny issue of risk. Although the private-equity funds have outperformed the stock market over the past 20 years, they are still perceived as riskier. The public may balk at seeing pension dollars flow to a venture fund with no guaranteed return on investment.

"There are going to be people taking potshots, saying you're taking pension funds for economic development and that's not the best use for the money," says David Tolmie, who co-chairs a task force on access to capital within the Mayor's Council of Technology Advisors. "Where the state of Illinois stands in terms of invested capital is embarrassing. Something needs to happen. Hopefully, this is something people can get behind."

Senior Reporter Greg Hinz contributed to this story.

8.0  Prescription for Instant Care - InstyMeds and QuickMedx

I remember when physicians made house calls.  But nowadays actually seeing a doctor requires waiting for an appointment, waiting at the physician's office, waiting for the physician in the examination room, and then waiting to pick up your prescription. And forget same day service unless you have an emergency. Hoping to come to the rescue of healthcare consumers are two Minnesota companies - InstyMeds and QuickMedx - with plans to ease the pain of seeing doctors and getting prescriptions filled. They are start-ups based on the most stable of business models: fulfilling a basic need in the marketplace.

Ken Rosenblum founded Mendota Healthcare - www.instymeds.com - after trying to get a prescription filled for his child late at night on a weekend. InstyMeds has prototype vending machines in the Twin Cities dispensing 80 of the most commonly used prescriptions (about 90% of what doctors prescribe).  To date, the InstyMeds drug vending machines (DVMs) are located in physicians' offices and a new DVM at Abbott-Northwestern Hospital.  The company also has five year contracts with Buffalo Hospital and North Memorial Hospital.

I visited one in Minnetonka and witnessed two very happy customers filling their prescriptions. One was a young mother with three kids who dreaded the idea of piling the kids back in the car for another trip to a pharmacy. She loved InstyMeds. The basic DVM contains 80 common, already bottled drugs. The customer inserts a credit card for the co-pay and the prescription is filled. But not before a triple-check with a central database is performed through a wide area network, so that incorrect medication is not dispensed. Finally, a self-adhesive label is applied to the medication in the DVM with all the conventional pharmaceutical information.

The triple check is important. Pharmacists sometimes make mistakes and InstyMeds' founders believe the DVM can be more reliable than the typical pharmacist can. The link back to a central database is vitally important so that the prescription is filled only once. It also enables InstyMeds to know when certain medications are running low in the DVM.

Where will InstyMeds find their biggest market? Consumers, hospitals, and traditional retail pharmacies. Consumers will benefit from ease of use, convenience, and less time spent waiting. Although hospitals can get medications instantly for emergencies, the convenience of a DVM could be very appealing to service less time-critical cases. And even existing retailers with pharmacies, like Walgreen, Target, and Wal-Mart where shopping while waiting for a prescription is part of the business model, might be able to increase their customer's satisfaction through shorter wait times, extending (virtually) their pharmacy hours, and reducing their costs of operating the pharmacy.

While InstyMeds looks to automation, QuickMedx is applying the well proven fast-food model to healthcare. QuickMedx - www.quickmedx.com - has walk-in locations in 8 Cub Stores throughout the Twin Cities staffed by certified nurse practitioners who are qualified to evaluate, diagnose, and prescribe for the most common family illnesses. Physician's offices are routinely overly busy with patients with common ailments. Most everyone, young and old, male and female, want to get attention for their ailments immediately. Along those lines, QuickMedx locations are designed for walk-ins so no appointment necessary. Almost all patients are in and out within 15 minutes.

Instrumental in development of the initial idea was certified nurse practitioner and UofM Professor Kevin Smith, who maintains his close ties to the company. More recently, Linda Hall Whitman joined QuickMedx as CEO. The company is raising money to roll out more locations in select metro markets across the country.  They have seen 40,000 patients since opening 2 years ago.  

Each "store" is a 120-square-foot unit suited for places like grocery stores, shopping centers, large corporate office buildings, and any other place where large numbers of people congregate. Illnesses such as the flu, allergies, certain infections, sties, poison ivy and strep throat can be diagnosed and treated quickly. A physician employee is only a phone call away. All stores are currently in Cub Food stores. Cub is happy because they get revenue from renting space to QuickMedx, and generate more store visits and business for their pharmacies. The business model works well so long as the stores stay busy 50 percent of the time.

The cost of a visit is $35 - no matter the problem. Patients less than 18 months old can not be treated there. Obvious emergency room patients are not accepted either.

HMOs, always looking to reduce costs, should find the QuickMedx solution very appealing. A $35 flat fee costs much less than a trip to a physician's office. To be successful, start-ups need to solve a problem people are willing to pay for. QuickMedx and InstyMeds score high in both regards.

9.0  E-Law:  Web Site Jurisdiction

By NetSudser Linda Hopkins, lkhopkins@intelliwareint.com, Intelliware Intl. Law Firm

Does Internet access to a Web site create legal jurisdiction over the owners of the Web site? Even though customers in the state of Washington can access a Minnesota company’s Web site, the Minnesota company cannot be sued in Washington.

The plaintiff - a Washington State business - sued a Minnesota business defendant, saying that the Minnesota firm had violated the Washington State business’ patent by offering infringing products for sale on the Minnesota company’s Web site.  However, the Defendant Minnesota company never sold any infringing products in the state of Washington.  Plaintiff argued that a Web site reaching viewers in Washington constituted enough “contact” to meet the due process test for jurisdiction purposes.

The U. S. District for the State of Washington held that the Minnesota company did not fall under the jurisdiction of the state of Washington based solely on the fact that its Web site could be viewed on the Internet.

Why?  Even though a manufacturer or retail sales company posts information on a Web site that can be accessed by virtually anyone in the world, the company may simply be seeking customers in a much more localized area that is related to the limited reach of its distribution or services facilities.

Lesson Learned: The mere existence of a Web site by an out-of-state company is insufficient for a court to find that the advertiser has purposefully directed its activities towards residents in the forum state and would not be sufficient reason to meet the court’s test for jurisdiction.
 

10.0  Guest Writers for This Report

I have opened up the Monthly NetSuds Report to guest writers. If you have a passion for a topic, and you can write (at least no worse than me), send an email to me matt@netsuds.com.  You can even send copies of your work.  It needs to be on "com and .com" topics and can include entrepreneur/investor activities.  Good information from our    service providers and vendors is also welcome so long as it is not a "commercial" for any one company or individual.

We will consider both sponsored and unsponsored columnists and guest writers.

If you are aware of others who would like to receive the NetSuds Report, ask them to visit http://www.covc.com/mail.htm to subscribe or unsubscribe.

Please send your comments and feedback regarding this issue of the NetSuds Report to matt@netsuds.com.

Matt Noah

980 Lake Susan Hills Drive
Chanhassen, MN  55317

612.279.2154
fax:  425.795.2019
matt@netsuds.com

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