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Lotus Founder Kapor Advises $50k On New E-Commerce Opportunities

Debbie Chang
Mitch Kapor speaks to students about business and industry at the $50K Entrepreneurship Competition Thursday in 10-250.
BySanjay Basu
Associate News Editor

Last Thursday, the MIT $50K Entrepreneurship Competition kicked off with a speech by Mitch Kapor, the founder and former CEO of Lotus Corp. Kapor, a judge for this year's contest, discussed his expectations for business in the next century, specifically in the competitive field of electronic commerce.

The annual $50K contest challenges teams of students to create plans for future businesses in pursuit of a $50,000 award.

Kapor said that he preferred to invest in young companies in hot fields. "What's the fastest growing space?" Kapor asked. "E-commerce, of course." But Kapor warned that competition in the e-commerce industry, especially from Microsoft, has driven many companies out of business.

"Be careful. You have to be aware about what other people in the business are doing, especially when it comes to electronic commerce," he warned. "Ask yourself, what is the Microsoft strategy here?"

Although the audience laughed at his question, Kapor remained serious as he explained that software companies ignoring Microsoft's role in their industry are planning for failure.

"How are you going to create a sustainable advantage? You're going to have to deal with Microsoft somehow. It could be that you find an industry that is too small for Microsoft to cater to. It could be that they're not interestedŠ which doesn't happen very often. Or you could plan to make really good software and have Microsoft buy you out sometime."

"Microsoft is not a contestant, they're an environment: dominant, ruthlessŠ you have to account for them. I started Lotus, and I have Excel running on my own computer. God!"

But the founder of Lotus also had less mainstream opinions about Microsoft to present to the $50K audience.

"I wouldn't continue betting on Microsoft all the time. At any moment, all of our Microsoft products could fall like the Soviet Union," Kapor said. "The history of computer technology has been documented by sudden declines and disasters from companies that used to be giants. Computers mean tough businessŠ and sometimes mean bad business."

Kapor warns audience

Among Kapor's chief concerns about business is the problem facing businesses that are not technologically-oriented.

He advised the $50K competitors to focus on selling their products to the average consumer and finding more effective ways to market their goods.

"We've become slaves to our computers," he said. "It's incredible to see some corporations pay $115 per hour to consultants who hook-up printers. I don't know how this happened. I know it has something to do with DOS and WindowsŠ and maybe I had something to do with it myself."

Kapor's fiancé then interrupted him to point out that an MIT professor running a Power Point presentation at the $50K meeting asked her for a paper clip to start his computer.

"That's just the way it is," joked Kapor. "And it teaches a valuable lesson: the vast majority of the world isn't that excited about software. Most of them just find it a pain."

"That's one thing I need to warn you about," he told the audience. "The problem MIT students have is that they get excited when they see some new electronic device. But they don't seem to comprehend that the rest of the world isn't nearly as excited about it as they are."

But Kapor ended on a lighter note, complementing those who are entering the competition.

"Participation is highly worthwhile, even if you lose. I can honestly say that failure was my greatest teacher."

$1K winners reveal their plans

Last term, $50K officials announced the winners of the $1K competition, a miniature version of the $50K that contestants use to test their ideas with judges. Each of the $1K winners presented a 30 to 40-second "elevator speech" for the audience at the $50K kickoff.

One group, microEngine, plans to commercialize "tiny button-size jet engines that could turn carbon fuel into portable power," said spokesman Jonathan M. Protz G. The engines are based on MIT's power-MEMS technology.

Another winner, SportLogic, also incorporated miniature devices into their proposal. Spokesperson Adam J. King G explained that the company would create performance tracking products, including a running device that monitors athletes' progress through a specified training program. Software can then be used to create a variety of different training programs. The group plans to test their devices on marathon runners before commercializing the product.

Natural Electric, Inc. proposed an altogether different performance-enhancement strategy. "We've developed a technology that is an alternative to turbine systems used in hydroelectric plants," explained spokeswoman Gia D. Schneider '99. The group hopes to mainstream environmentally-safe hydroelectric power using their new technology.

Most of the other $1K winners created web-based projects, including portable electronic book devices, biomedical websites, and specialized web-based systems for businesses.

Future $50K events announced

At the kickoff, competition organizers announced several future meetings for $50K contestants. The Teambuilding Dinner will be held today at 8 p.m. at the Media Lab. Registration forms for all future $50K events can be accessed at http://50k.mit.edu.

Organizers will also continue to sponsor events throughout the spring term. Students can still enter the competition by registering and completing a business proposal on the web.

Motorola; Testa, Hurwitz, & Thibeault, LLP; and Fidelity Interactive are primary funders for $50K events at MIT. The entire competition is paid for by nearly 30 sponsors, including MIT.