Business Week e.biz -- Special Report: Europe
Germany's Hot Star
Intershop eyes the big leagues for its e.biz software
America loves its legends about Silicon Valley startups. The tiny Palo Alto (Calif.) garage where Bill Hewlett and David Packard got their start has been recognized as an official California historic landmark. Now Europe has its own inspirational counterpart: Intershop Communications Inc. The upstart company's story sounds like a plot for a made-for-TV movie: Young East German with capitalist itch starts e-commerce software company and, against all odds, makes it a hit around the world.
To understand how far Intershop has come, reel back to 1994. Stephan Schambach, just 22 and living in formerly communist East Germany, began developing software allowing small companies to set up basic e-commerce sites. His first office was in an abandoned Protestant parsonage. Today, Intershop is the best-performing stock on Frankfurt's Neuer Markt, soaring from its $15 launch in 1998 to $320 recently, doubling in the past two months alone. Revenues skyrocketed 132% last year, to $27.8 million. And, for Schambach, that's just the warmup. "We want to be the motor for the Internet economy," he says.
His company already is an example for other European Netrepreneurs. It currently ranks third behind such American leaders as Open Market Corp. and BroadVision Inc. in the e-commerce software market, which Forrester Research Inc. estimates will grow from $259 million in 1998 to nearly $5 billion in 2002. "Intershop shows that Europe has good technology," says Christian Nolterieke of the German Internet research company Forit.
The bad news for European startups is that Schambach actually had to move to the U.S. to get his company off the ground. In 1996, when Intershop's first product was ready, Schambach packed his bags and moved to San Francisco, some 40 miles north of the heart of Silicon Valley, in search of customers and credibility. The company's earliest customers were telecom outfits that used Intershop's software to set up Web shops for small businesses.
Now, Schambach is going upmarket with a product called Enfinity, released in October. The new software is aimed at large companies, including customer Hewlett-Packard, and will allow them to take orders from a host of new Web devices such as mobile phones and Palm handhelds. "This new product puts Intershop in the big leagues," says David Truog, an analyst at Forrester Research.
But the major leagues are where the competition gets tough. Still, Schambach realizes that Intershop needs to gain credibility in large corporate accounts. That's why he courted Eckhard Pfeiffer, former CEO of Compaq Computer Corp., who signed on in November as the company's chairman. Pfeiffer has the clout to gain entree to top corporations.
If all goes well, Schambach could achieve the stature of a European Hewlett or Packard some day. His company is no HP yet. But at least it can boast the Silicon Valley stalwart as a customer. And that's a good start.Check out a Q&A with Intershop founder Stephen Schambach at ebiz.businessweek.comBy William Echikson