Of all the overexcited capitalists seeking to sow the fertile New Economy with their seed money, Dayton and his partner, ex-Disney Online chairman Jake Winebaum, have emerged as the poster boys of hyper-entrepreneurism. In part this is because the high-tech industry loves a dynamic duo-Hewlett/Packard, Jobs/Wozniak, Yang/Filo. But mostly it is because hyper-entrepreneurism is all about speed, efficiency, and relationships, and in impressively short order, Dayton and Winebaum have proven themselves speedy, efficient, and very well-connected.
Last May, the pair had dinner after a meeting between EarthLink and Disney. “We sat down at some taco stand in Burbank, and I was telling Sky that I was leaving Disney to start this one specific idea,” says Winebaum, who had become friends with Dayton after meeting him at an Internet industry roundtable and discovering a mutual interest in snowboarding. “But after about three bites of a cheese enchilada, we’d expanded my original idea into eCompanies. By the end of the dinner, we had it all down.”
On June 7, Winebaum and Dayton announced the formation of eCompanies. Eighty-four days later, on August 30, the company boasted two dozen employees and a staggering venture capital fund of more than $130 million, contributed by partners such as The Goldman Sachs Group, CS First Boston, Sprint, Times Mirror, and Disney, among others. On September 1, the eCompanies Venture Group announced its first investment in a startup called eHobbies.com, a vertical portal aimed at train, radio control, models, and rocketry hobbyists.
Dayton and Winebaum have since been trying to decide which of the many projects under review to take to the next level. (With more than 40 employees, eHobbies.com is already past the incubation stage.) As Dayton begins to sketch out the 90- to 180-day process which eCompanies will use to turn a concept into a fully staffed company ready to do business on the Web, it no longer seems odd that there’s a whiteboard and a conference table in the kitchen. In the 25-8-366 world of instant startups, the idea of a completely uninterrupted coffee break — with no chance at all for spontaneous value-adding or impromptu alliance-forging — is hard to imagine.
Business incubators haven’t always been so sexy. Designed to help new companies get off to a strong start, they have traditionally offered services such as free or inexpensive office space, management advice, administrative and technical support, financial assistance, and legal services. There were fewer than 10 business incubators in the United States in 1980, according to Jana Matthews, director of Learning Programs for High Growth Entrepreneurs at the Kauffman Center for Entrepreneurial Leadership, in Kansas City, Mo. Five years later, after universities seeking to commercialize research-generated technologies and state and local governments hoping to revitalize declining industrial areas embraced the incubator concept, that number had grown to approximately 70.
Today, there are almost 600 incubators operating in North America, according to the National Business Incubation Association, but since most continue to be associated with universities or community-driven economic development efforts, just 8 percent of them are for-profit. While helping Wyoming’s Laramie County develop local small businesses may not rank high on the typical Net mogul’s to-do list, however, it turns out that the collectivized, highly efficient hatchery concept fits particularly well into the New Economy, where time and personnel are often the most precious resources.
“I did 11 rounds of funding before taking EarthLink public,” says Dayton. “In this competitive environment today, you can’t be spending your time raising money. You can’t be spending time getting office furniture or setting up bank accounts. You need to spend every minute on the two things that will make you a success — your product and your marketing.”
Thus, the eCompanies proposition: Submit your idea, and if they like it, they’ll invite you to join the nest. They’ll give you the seed-capital you need to get started. Senior vice president of people, Marijo Bos, who was previously the managing director at the high-powered recruiting firm Russell Reynolds Associates, will begin assembling a management team for you. The senior vice president of marketing, Len Vickers, who brought good things to life as the vice president of marketing for General Electric and refashioned Xerox as “The Document Company” when he was senior vice president of marketing there, will begin working on your positioning statement. And in six months or less, if all goes according to schedule, your company will have a working Website and the infrastructure to take advantage of the millions of dollars the eCompanies Venture Group is eager to pump into it. All you have to lose is a substantial piece of your equity. “Because of the large investment commitment we make in our incubated companies, we receive an initial majority stake in them,” says Winebaum.
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