This month we try to inject some sanity into the crazy world of e. Looking beyond all the hype, hysteria and speculation, we are delighted to introduce what we believe is the most rigorous and objective analysis of internet start-up companies.
Knowing that just about everyone would be coming up with some sort of guide to this booming phenomenon, we decided to engage in real research from a leading consultancy for the best possible analysis. It is not designed as a network or a club. The MT/Bain e25 is an index where fortunes will inevitably rise and fall. We will update and publish the e25 regularly.
The process began in July at a meeting with a top team of strategic consultants at Bain & Company. How, we asked, could we shed real light on Britain's internet explosion? How could we pick the real players from the jumble of contenders and pretenders which have popped up in the press with bewildering variety? How could we provide something useful?
We thought hard about establishing meaningful criteria to measure the two critical areas: the strength of the company's idea, and its success so far. We came up with six criteria: 1) The strength of the concept. Does the business model work? 2) Quality of execution. Is there evidence that the e-company is able to deliver what it promises? In some cases this may be no more than a well-designed web site. In others it may involve the delivery of products to your door. 3) The level of innovation. Is the idea fresh enough to be sustainable? 4) The traffic generated by the company. Is its site attracting a high number of page impressions and, in the case of business-to-business sites, significant revenues? 5) Financing. Has the venture enough backing to fulfil its promise? 6) Public profile.
Establishing a customer base is impossible without visibility. We decided to record the level of coverage each of the companies has attracted.
Then the real work began. The starting point was to track a huge range of UK-based, pure internet start-ups, using every source available. This universe of companies, which reached well over 300, was then put under the microscope to narrow them down. Many fell by the wayside because they were insufficiently funded or had no public profile. That left about 50 companies, which were analysed in detail on all six criteria, using public data sources as well as interviews with founders and management.
Four months later we believe we have completed the most thorough investigation into internet start-ups in Britain. We will use it as a barometer to judge the success of the companies as some rise to starry heights and others flame out and crash. Each of them is entering uncharted territory. We wish them luck.