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Hold on -- maybe those dot-com fantasies weren’t so far-fetched. Five years after the big crash in technology, the Internet is a big -- and once again booming -- business, and nowhere more so than in financial services.
That it is is a tribute to the talents, and perseverance, of the elite of e-finance, who make up the ranks of Institutional Investor‘s sixth annual Online Finance 40 ranking. They survived the bust and disproved doubters who saw the Internet as nothing more than a cheap communications tool with no revenue potential. How many executives these days increase their number of customers 35 percent in a year, like Bank of America Corp.'s Sanjay Gupta (No. 2), or double their trading volumes year after year like Seth Merrin of Liquidnet Holdings (No. 9)?
The journey, however, has not been smooth -- the Nasdaq composite index is down nearly 60 percent from its March 2000 peak -- or straightforward. The Online 40 includes just five individuals who were in the inaugural group in 2000. Eleven other companies on that first list are represented, but by different people. More than half of this year’s leaders either weren’t around or had not achieved e-prominence then.
Gone are the mantras of “killer apps” and “next big things.” But a few late-'90s conceits have proved enduring. Among them:
* Eyeballs. No. 1 Nathan Richardson entertains 11 million pairs of them a month at Yahoo! Finance. To keep them coming, “We’ve adopted a more professional tone,” Richardson says. The portal has become a destination for sophisticates as well as punters and therefore a lucrative advertising medium.
* Disintermediation. Fears that online start-ups would doom established institutions proved overblown as incumbents harnessed the technology themselves, often through consortia overseen by such executives as Deutsche Bank’s Will Meldrum (No. 31). But traditional intermediaries remain vulnerable to alternative marketplaces like Merrin’s Liquidnet.
* IPO exits. Archipelago Holdings (Gerald Putnam, No. 11), one of the rebel electronic communications networks of the 1990s, went public last August, followed by bond-trading platform MarketAxess (Richard McVey, No. 18) in November. Next up: International Securities Exchange (David Krell, No. 7). Can Financial Engines (Jeff Maggioncalda, No. 15) or BondDesk Group (Robert Slaymaker, No. 32) be far behind?
The Online 40 profiles were compiled under the direction of Global Technology and Banking Editor Jeffrey Kutler and written by Kutler, Senior Editors Steven Brull and Justin Schack, Senior Writer Loch Adamson and Contributors Jane Adams, Tom Groenfeldt, Suzanne Lorge, John Wagley and Vicki Zunitch.
