From the Network World Archive

USWeb buys six of its affiliates
By Chris Nerney

04/21/97
     Santa Clara, Calif.
     Fueled by a fresh infusion of private capital, Web services start-up 
USWeb Corp. has gone on a spending spree, purchasing some of its 
top-performing affiliates.
     Founder and CEO Joe Firmage said the acquisitions kick off the second 
phase of USWeb's business strategy, focusing on revenue growth and 
acquiring an increased share of the Internet and intranet services 
outsourcing market. Forrester Research, Inc. has estimated the Internet 
outsourcing market alone will reach $10.4 billion by the year 2000.
     'My objective is to have a 10% market share over the next five 
years,' Firmage said.
     Launched in March 1996, USWeb has built a nationwide network of 
affiliates, or franchises, by signing up existing Web consulting, 
development and hosting companies.
     These affiliates offer Internet- and intranet-related professional 
services, such as Web site design, content development and database 
integration.
     The affiliates also give 7% of their gross revenue to USWeb, receiving 
in return marketing and technology support as well as reduced operational 
costs.
     USWeb is snapping up affiliates in New York, San Francisco and Orange 
County, Calif., Philadelphia, Milwaukee and Washington, D.C.
     The buyouts were made possible by a recent $18 million to $20 million 
private capital deal, Firmage said. USWeb raised $30 million in its first 
round of financing in March 1996.
     He said the acquisitions will provide USWeb with the working capital 
and liquidity necessary to meet the company's goal of having between 200 
and 250 offices worldwide by the year 2000. Currently, USWeb has 54 offices 
nationwide.
     The first phase of the company's strategy was building brand 
awareness. Firmage said that this brand awareness has been achieved, 
pointing to a USWeb-commissioned study  showing the company trails only 
AT&T and MCI Communications Corp. in name recognition for Web professional 
services.
     Ironically, those companies do not compete with USWeb, he said. 'Our 
real competition in the long term is [Electronic Data Systems Corp.] and 
Andersen Consulting.'
     Firmage said his goal is for USWeb to 'become the Andersen Consulting 
of the Internet space in a few years instead of a few decades.'
     A former vice president of strategic planning for Novell, Inc.'s 
NetWare products division, Firmage started USWeb with two former Novell 
executives, Toby Corey and Sheldon Laube.

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