FYI

Things are tough all over.

GP
---------------------- Forwarded by Greg Piper/Corp/Enron on 12/10/2000 10:01 
PM ---------------------------
From: Keith Couch on 12/10/2000 11:02 AM
To: Hal Elrod/Corp/Enron@Enron, Brandon Wax/HOU/ECT@ECT, Greg 
Piper/Corp/Enron@Enron, John Cummings/HOU/ECT@ECT, Jeff Harbert/HOU/ECT@ECT
cc:  
Subject: paperexchange CEO resigns

 

PaperExchange CEO steps down
December 08, 2000 01:35 PM PT
by Adam Feuerstein

Kent Dolby, president and CEO of PaperExchange, resigned unexpectedly 
Thursday, adding to the mounting turmoil at the independent Net marketplace 
for the pulp and paper industry.

Dolby's resignation, for personal reasons, comes a little more than a month 
after the company laid off 14 percent of its workforce in a major retooling 
of its business plan. Dolby joined PaperExchange -- 83 percent owned by 
Internet Capital Group (ICGE) -- in December 1999.


Bob Brenner, PaperExchange's current chief technology officer, is being 
promoted to the CEO post. Duane Desisto, currently CFO and chief operating 
officer, will become president.


Company executives, including Dolby, were not available to discuss the 
management shifts, but the moves were confirmed by a company spokeswoman.


Brenner's ascension may be linked to PaperExchange's decision to focus less 
on its online exchange for excess paper products, and concentrate instead on 
developing and selling Internet-based business applications for the pulp and 
paper industry.


Dolby may also be a victim of the fickleness of the b-to-b sector. When he 
joined the company, independent Net markets were the poster children for 
successful b-to-b ventures. But in the ensuing months, industry-sponsored 
marketplaces -- ventures set up by big industry players -- have risen to the 
top, forcing indie Net markets onto the b-to-b endangered list.


PaperExchange faces considerable competiton from ForestExpress, a marketplace 
sponsored by industry giants Weyerhaeuser (WY), International Paper (IP), 
Georgia-Pacific (GP), Mead (MEA), Boise Cascade and Willamette (WLL).


ForestExpress may or may not grow into a successful b-to-b marketplace, but 
its very existence has dominated b-to-b activity in the pulp and paper 
industry, and has essentially frozen any progress PaperExchange was making.


The pickle in which PaperExchange finds itself is also being viewed, by some, 
as an indictment of Internet Capital Group.


In September, ICG boosted its stake in the company from 20 percent to 83 
percent, in exchange for 4.8 million shares of ICG common stock. The deal 
came at a time when ForestExpress was showing signs of life and when indie 
Net markets in general were falling into disfavor and were being all but 
ignored by most venture capitalists.


ICG's fortunes have tumbled lately because many of its b-to-b investments are 
not paying off for shareholders. Last month, the company announced plans to 
cut costs, reduce its investment spending and refocus efforts on 15 
"developed" companies in its portfolio -- companies that have the best 
near-term shot at initial public offerings.


PaperExchange was not named as one of those "developed" companies.


An ICG spokeswoman defends the investment in PaperExchange, acknowledging the 
company needs to help in developing its business model further -- a role ICG 
is uniquely positioned to play.


"We have accumulated a lot of knowledge about b-to-b that has helped us build 
some leading b-to-b businesses," said Michelle Strykowski. "Our investment in 
PaperExchange is an educated bet based on that proven experience."






Adam Feuerstein covers e-commerce for UpsideToday. Reach him at 
adamf@upside.com. If you would like to submit a letter to the editor 
regarding this story, email online@upside.com