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12.7.98  
A Small-Biz "Grant" Looks Too Good
Winners of Biztalk.com's cash giveaways couldn't be found

For cash-strapped entrepreneurs, the offer sounds too tantalizing to pass up: Earn a shot at a free $1,000 business "grant," awarded randomly five days per week, simply by registering your name and other personal information with Biztalk.com, a Gainesville, (Fla.) Web site that publishes news for aspiring entrepreneurs.

What sounds like sizzle may be mostly fizz, however. Business Week Online could not locate a single person or business who received the $1,000 award, even after repeatedly requesting that information from Biztalk's proprietor. Failure to award prizes and to publicly post winners' names and addresses could run afoul of Florida law regulating game promotions, according to the state attorney general's office. To all appearances, in fact, the Biztalk grant promotion is primarily a reminder that offers of free money should be viewed with plenty of skepticism.

"Biztalk is like any other Web site, we're looking to get noticed," explains Colby Ray Fede, the company's 25-year-old founder, who as of Dec. 2 was the company's business development director. Since the promotion began on Oct. 1, Fede says, more than 3,400 users have registered, and 32 have claimed the prize. "It is a true offer.... A check does get cut. The only stipulation is that you be an entrepreneur looking to start a business or already have a business," Fede adds.

SEEKING CONSENT? Just who are those 32 winners? Fede did not name any despite numerous requests for their names and phone numbers. He said he would deliver the information after securing the winners' consent. Rules posted on the Web site, however, state that as a condition of registering, participants automatically agree to the use of their name and image for "publicity and promotional purposes."

Chris Witting, host of a syndicated radio show on entrepreneurship called Success Journal, and who is identified as Biztalk's spokesperson in company press releases, volunteered the names and businesses of four supposed winners in New York City, Buffalo, San Francisco, and Atlanta. Calls to directory information, checks of electronic phone-number databases, and a search of incorporation papers in each state found no current phone numbers or addresses -- for either the winners or their businesses.

For example, one alleged business winner was New York City-based Trade Route International. A check of New York's state incorporation records located a company called "Trade Routes International," but it was dissolved in November, 1993.

Witting describes Fede as a "very fired up guy" who has "a great idea to pull together resources" for entrepreneurs, which include news updates and features on such subjects as law, technology, and finance. He says, however, that he has never met Fede and that he agreed to be a "compensated spokesperson...they say that about Ed McMahon" -- only after a telephone conference call arranged through Brooke Halpin, a Malibu (Calif.) publicist, and a Minneapolis-based PR firm hired by Fede called Media Relations.

"We went into this in good faith and good conscience, believing what they said is true," says Halpin. "We hope it is. And believe it is."

Says Media Relations account executive Brian Siegel: "All I can tell you about that is that they awarded the $1,000." When asked how to reach any of the winners, Siegel recommended: "Colby knows how to reach those people."

"GAME OF CHANCE." Florida state law requires anyone holding a contest to abide by "game promotion" rules that cover who may enter and how the winnings are allocated, says Assistant Attorney General Mark Fistos. Florida law defines a "game promotion" as a "game of chance or gift enterprise conducted...in connection with the sale of consumer products or services."

Complying with the regulations means that "you can't fail to award prizes offered," Fistos says. Further, if the total prizes are greater than $5,000, the game promoter must register a list of rules with the state seven days before the contest begins. Sixty days after prizes have been "finally determined," a list of winners must also be provided. Without commenting on Biztalk specifically, Fistos says a company that neglects to do all of that "would be a concern" to his office.

A check with the Florida State Dept.'s licensing division found no contest registrations under Biztalk or NetMedia International Biztalk Inc., the name under which the company was incorporated in May, 1997. Fede did not respond to an E-mail request about whether the contest was registered in the state of Florida.

The Biztalk contest began on Oct. 1, so it is possible that the time Florida's game-promotion rules provide to list the winners has not yet expired.

Web users who sign up for the Biztalk contest are not required to pay any entry fees or to give a credit-card number. But they are asked to provide such information as birth date, gender, business address, and telephone number. Fede says winners must sign a form saying they will use the grant to start a new business or fund an existing one. But he conceded that he could not enforce that standard.

"BITS OF PIECES." The Web site itself is tastefully designed, with information in nine "channel" areas that cut across a number of issues pertaining to small business. It delivers a sparse amount of information, however. A check of the "biznews" channel shows nine stories posted from mid-September to late November, some of them press releases, others from the Associated Press, Reuters, and InfoWorld.

Launched in 1996, the Biztalk site was one of the earliest, Fede claims, to address an emerging market for entrepreneurship information. He adds that the site was conceived by a handful of young entrepreneurs who saw a need for small-business guidance on the Web. "Everything was unorganized and in bits of pieces," says Fede, who graduated last year from the University of Florida with a sociology degree, according to the school registrar. "We set out to create something ourselves." Biztalk currently has five employees, he says, and buys articles from a network of freelancers.

Biztalk soon found an audience with advertisers, which now include Microsoft, Compaq, and Fidelity Investments. "They've performed very well," says Alan May, media director at Anderson & Lembke, Microsoft's interactive ad agency. "We've been running on [the site] for two years and wouldn't continue to do that if they weren't performing for us."

The site's $1,000 awards are funded out of advertising revenues, Fede says. But media planner May is perplexed by the offer, given the dearth of profits for Internet "content" sites. "Most Web sites aren't making money," he says. "I don't know why they'd be giving it away."

GAME'S OVER. The giveaways just might end, however. Via E-mail to Business Week Online, Fede said on Dec. 2 that his company had been acquired a day earlier -- just one day after he was queried by Business Week Online. Without specifying any terms of the sale, he wrote: "We are eagerly awaiting word from our new suitors as to what will take place in the coming weeks." In a separate E-mail, Fede added: "I am unsure about my current position (which technically does not exist any more.)"

On Dec. 3, the grant giveaway itself was suspended, according to a notice on the Web site. Users may still register, however, which will make them eligible for future grants.

It's unclear whether the ownership changes will lead to a full accounting of who has won the daily contests. When told about the inability to locate the four winners whose names he supplied, Witting responded: "I am not the official spokesman for this company and don't represent Biztalk." Further, he emphasized, he is merely "a media person for the one project of doing radio interviews for this grant project contest... I am not Biztalk. Colby is Biztalk."

Now that the Web-going public knows who Biztalk is, perhaps Biztalk will let the public know just who was lucky enough to win its pennies from heaven.

By Dennis Berman in New York
dennis_berman@businessweek.com


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