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Tuesday, Jul 23, 2024

Enterprise—Investors dig the product made by these high-tech whiz kids

When the founders of Mohomine Inc. launched their Web site devoted to providing software code to programmers, they thought they might get some attention but were unprepared for the response it received.

Within days of the site’s launch, the partners, four college students, received calls from venture capitalists and others who wanted to buy the company.

Sounds like a no-brainer: Set a price, cash in, and return to school. Except that isn’t the way it works in the high-tech business world.

Chris Harris, one of Mohomine’s founders, said ideally the prospect of handing over the technology for a lump sum payout sounded great, but early on they realized that wasn’t going to happen.

“When they buy a company, they don’t just want the technology. They want you because they don’t know how (the technology) works,” said Harris, whose business card reads “Money Kid.”

How exactly Mohomine’s technology does work is so complex chairman and CEO Neil Senturia readily admits it’s beyond his understanding. But that didn’t prevent him from joining the youngsters in late 1999 when he first met the founders.

Reading their business plan, Senturia focused on a single sentence which said the technology could be applied to other industries.

“After about 15 minutes, I stopped and asked them, ‘Can you do that?,’ and they said yes, and I knew if they could do that, it was going to be a big business,” said Senturia, a former real estate developer and high-tech entrepreneur.

Mohomine essentially makes software that enhances a search engine’s power, allowing it to find and categorize online data that is relevant to what a user is looking for, said Sameer Samat, Mohomine’s chief technical “moho.”

“What we try to do is help our customers build very specific catalogs of information about the things their users are really interested in,” he said. “It navigates the Web in an intelligent fashion.”

Sorting It Out

Samat got the idea for the business while working toward a degree in computer science at UCSD. In his quest to find usable source code to create new programs, Samat’s searches generated lots of data, but hardly any of it helpful.

“Here you have the largest repository of data in the history of mankind , the Internet , and the most software collected ever in one place, and at the same time you had no way to access it, no way to find it, no way to get in and retrieve the source code you could reuse for new applications,” he said.

Samat saw a chance to collect that kind of information, put it in one place, and maybe make a little money.

To help him put the Web site together, Samat enlisted three friends , his roommate, Josh Dammeier; Harris, a resident of the same UCSD dormitory; and longtime friend Sean Brady, a student at Cal Poly San Luis Obispo. Except for Harris, who hails from Sacramento, the young entrepreneurs all grew up in the same San Jose neighborhood. Brady is 23; the rest are 22 years old. By August 1999, the site, called Sourcebank.com, was up and people were banging on the door wanting to invest in the firm, or buy it out completely.

Value Kept Climbing

As the offers came in, the kids’ collective jaw dropped. Initially they were thinking of valuing the company at what they all might have earned in a summer job, say about $20,000, but they quickly wised up.

The dot-com bubble hadn’t burst yet, and hundreds of little Internet companies were getting millions of dollars from venture capitalists and other flush investors, looking for the next new, hot thing.

Realizing quickly that any standard method of valuing their enterprise didn’t apply to Sourcebank, the partners started looking around and figuring out how much to ask.

“It kind of comes down to what you can say with a straight face, and you keep pushing that envelope,” Samat said.

Several of the offers, in combined cash and stock, were in the millions of dollars. But after one meeting, an executive with a large search engine firm advised Samat, “I don’t think you really want to sell this thing,” and put the friends on the track of retaining and building what they created.

Enter Senturia, who met the lads through a series of mutual business contacts and was immediately impressed with their intelligence and belief in themselves.

“I was dazzled by these kids. This is real technology, not just another dot-com,” said Senturia, an intense, high-energy man who likes to explain things with a pen and pad.

Senturia had just finished selling Atcom/Info, a local company he started in 1995 that provided kiosks with Internet access in airports, hotels and other public places. At the time the company was sold to CAIS Internet of Washington, D.C., the stock value of the deal was in excess of $50 million.

Acknowledging that he doesn’t have to work again, Senturia couldn’t help getting involved in a venture he says is on the cutting edge, one that “is a big idea with a lot of runway.”

He’s also impressed with the dedication and moxy of his new partners.

About three months after he took charge of the daily business operations, Senturia fielded an acquisition offer from a large search engine firm that was estimated at “about $30 million, plus or minus.” “They said, ‘No, we want to go on,’ and I loved that,” he said.

Digging In

Mohomine derives its name from the geological term describing the boundary between the Earth’s crust and its mantle, the Mohorovicic layer. The geologic layer is impervious to drilling, according to company literature.

Similarly, Mohomine goes after deeply buried data. But by using Mohomine’s “vertical crawling technology,” according to the company, search engines can go deeper and narrower, extracting the specific information users need.

The technology may be complex, but isn’t so inscrutable to scare off well-heeled investors. Early on, the company attracted about $1 million in early angel investment and gained another round of $4.2 million in May. It expects to close yet another financing round of an undisclosed amount from a large investment group later this quarter, said spokeswoman Dina Moskowitz.

Although their initial focus was to help computer programmers, Mohomine’s technology reaches across many fields, and can be applied both to business-to-business and business-to-consumer models.

Online Asset Exchange, a San Diego-based firm that operates an online marketplace selling primarily used industrial equipment, is a Mohomine customer.

“More than just saving us money, this technology also improves our response time to our supply chain which make things easier for them and for us,” said George Z. Marootian, chief technology officer.

Before employing the technology, OAE employees had to manually visit the Web sites of its suppliers, find the equipment that was for sale, then manually transfer the data to their site. That process is now all done automatically, he said.

Mohomine has 54 employees, up from about 25 at the middle of last year, but looking at its prospects, it could grow to 85 by this year, Senturia said.


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