Halsey Minor's Virtual Train Station


Few serial entrepreneurs have had as much success -- and patience -- as Halsey Minor. Two years before Netscape even made Web browsing popular, Minor founded CNET Networks (CNET), a Web site dedicated to tech news and reviews (see "The Dilemma of CNET's Success"). The idea was right on, but Minor says those first two years were a little difficult as his team waited for a market to arrive. After leaving CNET, he created several other companies, including Vignette (VIGN), an Internet software maker, and the Internet portal site Snap.

Still only 40 years old, Minor is at it again. His latest company is Grand Central, a Web-services outfit that acts like a virtual train station, making sure various online offerings by companies like Salesforce.com (CRM) and security specialist Oblix can work together (see BW Online Special Report, 2/8/05, The World of Web Services"). Just like Minor did with CNET, he has had to wait a few years for the market to catch up with his San Francisco-based company.

Minor recently spoke with BusinessWeek Online Technology Editor Jim Kerstetter about his experience in tech and his current venture. Following are edited excerpts of that conversation:

Q: Tell me about the gestation of Grand Central, because you've been working on this for five years now.

A: Yeah, I have a bad habit of being way ahead of markets. I had 12 employees at CNET before Netscape was started. We started in 1993 and waited through two years of doing nothing to wait for the market to catch up with the vision.

If the world is going to look like a bunch of Salesforce.coms, where applications are not being run inside a company but outside of it, there will be a need for a service that ties and integrates all those services together. Now the problem is: The Salesforce.coms of the world had to get traction before there was a need for a service like ours.

Q: Now you've had some management changes. Walk me through that. What happened there?

A: There was somebody who ran the business for really the first two-and-a-half years. I started it, somebody else ran it. I came back about 18 months ago.

Q: Why did you come back?

A: A couple of things. The market was finally starting to wake up for technology products. And I think the person who was running it was not really the right person.

Q: Why?

A: Because he was a first-time and inexperienced CEO. I'm also a firm believer that managing a company is like raising your children. Sometimes it's hard to get someone else to do it. There's a connection between a founder and a company, and it's not the same to bring in "professional management." There's not the same level of passion that a founder brings that you can replace.

So I replaced him about 18 months ago and came back into the company. At the time, it was a very difficult market for any technology company...but I think we did less well than we could have, even though it was a tough environment.

Q: You had left San Francisco for a while in Grand Central's early days.

A: I took some time off and went back to Virginia.

Q: So why did you leave, and what brought you back?

A: I left because I was tired. I started CNET. And out of that we spun out Vignette, which we owned 30% of at CNET. I started Snap, spun that out, and spent a year running that. I started E! Online, as a joint venture with the E! cable channel.

So then I left CNET and started 12 Entrepreneuring (a tech investment firm) with Eric Greenberg and Benchmark Capital, which was about as poorly timed and poorly constructed as anything I've done in my career. When we returned the money at 12, and I sort of didn't have a job anymore, I took that as the perfect opportunity to take a couple years off. I went back to Virginia, but stayed very involved in Grand Central. I ended up buying out a lot of the shareholders who didn't really believe in the business.

And once I got back over 50% ownership in Grand Central I really decided I wanted to go back and run it. The market about 18 months ago started picking up again, so I wanted to make sure the company had the best chance of succeeding in a recovering market. So, I packed up from Virginia and moved back to San Francisco.

Q: How is Grand Central doing now?

A: We're doing incredibly well. We went through a period when I first came in when the company had vacillated from one marketing pitch to another, so I had to rebuild credibility in the market, and we had to do a lot of product development stuff. But it's the second year in a row that we've won Infoworld's Technology of the Year, and we're signing up some very large customers. We'll have a bunch of announcements in the mid-February timeframe on various partners who are essentially reselling our solution.

This is the year that there will be some real traction around Web services. We've actually entered the practical phase of Web services. The first phase was a bunch of people designing a whole bunch of standards -- primarily those were a bunch of computer scientists. Now people are getting practical about what a Web service can and cannot solve.

You're going to see some components of the standards get completely forgotten, and you're going to see some proprietary things creep in. But by and large you're going to see the technologies around Web services solve some real problems this year.

Q: What exactly is Grand Central solving?

A: The number one problem companies have -- and it doesn't matter if they're medium or large, all of them suffer from the same problems: They cannot get the systems integrated that they've purchased. As a simple example, it's very difficult for them when a salesperson sells something to get that sale recorded in the financial system. What we do is provide a very low-cost, low-risk way for companies to interconnect these systems without having to buy any hardware or software.

We turn the Internet into an integration platform, so any application can talk to any application without requiring the complexity of hardware and software. Most importantly, what drives our business right now is our lack of complexity, and one of the great advantages of our model is we take away a significant amount of the risk. If you do a big project and you integrate a bunch of things, instead of buying $2 million worth of software and see if it works, you just simply turn on Grand Central, and you start paying as you start driving traffic. We're like the phone network. The more you use, the more you pay.

Q: How many customers do you have?

A: We haven't provided specific customer numbers. But our goal for 2005 is to have 20,000 paying organizations connected to the network.

Q: That's pretty good.

A: You have to understand the model. Customers create customers for us. We have one customer -- I can share this because I'm an investor in them -- Inside Scoop, who has built a set of processes around [customer resource management], and they have signed up 20 customers around our service. So they're a customer, but they're out selling our service, which sits on our infrastructure. We have larger customers who have aspirations of bringing 5,000 other customers on the network this year.

Q: Any chance of you going public in the near future?

A: I don't know. I think if you look at Salesforce or Google (GOOG), they showed it's better to be a mature company before you go out, so realistically it would be late 2006 or 2007 before we would even consider it. I think it will take us at least that long before we have the level of maturity and predictability to take us public.

Q: Do you think you'll be the guy in the CEO's office when you do go public?

A: I do. I think I'm going do this about another five years. I ran CNET for about eight, so I think I'll end up running this for about the same.


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