Despite reporting massive growth, accurate valuation of Internet companies continues to be hard to pin down. At least this was the sentiment expressed at the Australian Information Industry Association's recent business briefing -- the Rise and Rise of E-Corporations.
Speaking at the meeting was management consultant George Riedel, principal of McKinsey & Company. Riedel said that due to "big market-cap growth" shown by Internet companies "but no revenue", there is a large disparity between analysts' evaluations of these companies.
"Is this some new form of alchemy or is there something real here?" asked Riedel, explaining people are forced to rationalise the way Internet companies should be valued. "But you don't have to break the laws of physics to get there," he said.
Douglas Carlson, managing director of Internet startup GreenGrocer.com.au, also addressed the capacity AIIA briefing. He claims that as the Internet continues to create new business models, distribution remains the major driving force on which the future success of companies is hinged.
Like groceries, "computers are perishable", said Carlson, who went so far as to say a company's existing distribution models -- that include bricks-and-mortar assets -- are going to become "a liability in the future".
E-corporations are also recognising the emerging power of online consumers, claims David Tonkin, managing director of Travel.com.au. He said there is a growing trend for customer "self-service", catered to by Internet companies.
Tonkin claimed specific industry-based niche and specialist e-companies are more likely to succeed online than Web portal-based non-specific retailing -- such as Yahoo -- because people are reluctant to buy online when they don't know where the money or purchasing information is going.