| UPDATA
| Wit Capital Formation
In "WallStreet.com" (Wired 6.02, page 88), Wit Capital founder Andrew Klein touted his vision of fairer, cheaper, more democratic financial markets. This spring, Wit announced its digital stock market, vowing to give small investors better prices by eliminating greedy intermediaries, and promised to offer "public venture capital" deals, opening early-stage VC opportunities to the masses. But in April, after the company was forced to abandon its first public VC offering (for Sandbox Entertainment), the Wit revolutionaries seemed to be losing the battle. Klein ceded the title of CEO to Bob Lessin, Wall Street legend and former vice chair of Salomon Smith Barney. And a former SEC commissioner and a onetime NASD chair are close to joining the board. "I'll always be the founder of Wit Capital," notes Klein. "And I still have a major say around this place. But I couldn't be happier with Bob taking Wit to the next level."
Where Klein had waffled on strategy and, more critically, on whether Wit was an insurrectionary digital investment bank, bringing radical change in the capital markets, or just a digital tool in the existing securities environment, Lessin has positioned Wit as nothing less than a full-service investment bank. Never mind Wit's short supply of managed capital (which even Goldman Sachs says it needs more of to compete in today's financial markets). Never mind the disappointing Sandbox offering (which was completed as a private deal). Never mind that there might not be enough bull left in the market to support yet another player. Lessin boldly proclaims that Wit is and will be the investment bank of the future.
So far, he seems to be delivering. Based on the strength of Lessin's name, Wit has participated in around 20 public stock offerings, including transactions managed by industry bigwigs such as Hambrecht & Quist, Morgan Stanley, and Merrill Lynch. Although Wit participated in several IPOs in the Klein days, its recent allocations of shares have risen from those initial token levels to respectable 50,000- or 100,000-share chunks. Lessin has also hired an impressive team of seasoned Wall Streeters, including former Schwab vice chair Ron Readmond as president and COO and alums of Cowen and Salomon Smith Barney, to lead Wit's investment banking groups.
Lessin promises that Wit will again focus on the digital market "very soon," this time as the manager of a software platform used by institutions for retail etrading. Lessin also plans to revive the stagnant public venture capital market and even add a mergers and acquisitions capability – a traditional brokerage service that Klein never contemplated.
So Wit Capital is beginning to look more like Wall Street than WallStreet.com, and Lessin is focused less on changing the world than on making money. He may not be primarily motivated by Klein's vision of a digital stock market that will displace the traditional market and give individual investors equal access to the stock exchange, but as Lessin puts it, "I'm bringing in a few of my guys and we're doing deals."
This spring, J. Craig Venter made headlines – and shifted the gene-crunching race covered in "Map the Genome, Hack the Genome" (Wired 5.10, page 152) into high gear. But Venter's bold promise to sequence our human software in three years obscured the real story: hardware.
Established in 1993, PE Biosystems – a division of Perkin-Elmer, Venter's partner and the Microsoft of the DNA-hardware industry – already generates annual revenues of nearly US$1 billion. On the day the partners announced their genome venture, Perkin-Elmer also introduced its ABI Prism 3700 DNA analyzer. At $300,000 a pop, the 3700 is so automated that it requires almost no supervision. "But this is more than an isolated hardware issue, it's an assembly-line issue," says Michael W. Hunkapiller, PE Biosystems president. "We are designing the facility from the get-go."
The start-up may win the genome race, or it may not. More important, it is the world's largest DNA-sequencing production facility. Hacking the genome looks like an early beta test for this burgeoning hardware industry.
Three years after Simson Garfinkel reported the acquisition spree of private database giant Equifax and its attempt to make itself into the consumer information company of the 21st century ("Separating Equifax from Fiction," Wired 3.09, page 96), the firm has extended its tentacles onto the Web. In June, Equifax announced that, in partnership with IBM, it would compete with companies like VeriSign to offer digital certificate services, an important aid to commerce on the Net.
If you're a consumer, Equifax probably has a file on you – the 99-year-old company processes credit reports and tracks auto- and home-insurance claims made by millions of Americans. As Garfinkel discovered, however, those profiles aren't always correct. And at least one privacy advocate doubts whether consumers will be able to count on Equifax for the 100 percent reliability that digital verification services demand. As Robert Ellis Smith, publisher of Privacy Journal, points out, "The accuracy of Equifax's credit databases has never exceeded 75 percent, even by its own statistics."
