Monday, January 16, 2006

Internet

An alluring rebirth: Co-founders of Art Technology Group start new venture, target same market

By Christopher Calnan

For Joe Chung, it must be like déjà vu.

The co-founder of the e-commerce software company Art Technology Group is starting another website software and design company - with the same people who founded his previous company with him, with the same backers and in the same city.

And he's targeting the same customers too.

One might expect a degree of boredom from such repetition. But Chung, the 41-year-old chief executive of Cambridge-based Allurent Inc., has a glint in his eye when describing his new business that's using the latest Internet tools - specifically, rich Internet applications - to design websites for retail companies.

Chung plans for Allurent to reduce the number of online shoppers who stop just short of buying by making the checkout process quicker and easier. And rich Internet applications, or RIA, is part of his plan to accomplish that.

He points to the role that RIA plays in the popularity of Google Maps, allowing visitors to drag and drop, as an example of what it could do for retail sites.

"We're taking that model and applying it to online shopping," Chung said. "RIA lets you do anything you want."

Based on his track record, the same may be said about Chung.

Sucharita Mulpuru, a senior analyst at Forrester Research Inc., said Chung and his group are highly respected in the industry. But it's too early to tell how realistic their plans are.

She expects Allurent to prove itself - one way or the other - when it enlists more customers, within six months.

"It's difficult to get a sense of how much is hype and how much is reality," Mulpuru said. "The proof is going to be in the pudding."

Chung said he left ATG in 2002 because he felt it was time to take a break after 11 years with the company. Also, ATG's new management team had a better chance of success without the founder constantly second-guessing it, he said.

Chung said the timing for RIA technology is better than when he left ATG. Five years ago, Internet-based companies were going under and wary investors were pulling out.

"It was a real bunker mode then. It just wasn't appropriate," said Chung.

About 6 percent of retail sales are now done on the Internet. Chung said he expects that to grow to 50 to 60 percent. "As the Xbox generation grows up," he said. "We'll see a huge shift."

Forrester's Malpuru projects more modest growth of up to about 15 percent over the next 10 years.

Allurent, has been generating revenue through consulting and signed on with one major retailer Chung declined to name. Chung said he expects to add more clients that will be among "the top 100 U.S. retailers."

ATG's retail customers include Best Buy Companies Inc., J. Crew, Neiman Marcus and Target Corp. ATG lists Allurent as one of its complementary software vendors, but company officials could not be reached for comment.

Allurent, which operates out of a bright and minimalistic office in Harvard Square, has 14 employees. Chung said he expects that number to reach 30 by the end of the year.

Chung is running Allurent with his co-founder and vice president of technology at ATG, Fumi Matsumoto, and former ATG chief executive, Paul Shorthose.

Chung started Allurent in 2004, two years after resigning from ATG. But the company's formation wasn't made public until September 2005.

Allurent's consulting business will generate revenue while the startup develops its programs. It's how ATG got started in 1991, Chung said.

"Mainly, it's about getting immersed in the problems of your customers," he said. "It keeps you grounded."

Charles King, principal analyst at California-based Pund-IT Research, said some retailers will want to continually refine and upgrade their sites. But he questioned how advanced consumers will want the sites to be.

"As (the Internet) continues to mature, it's unclear if there will be a space for companies that offer more sophisticated tools like Allurent offers," he said. "I don't see a huge demand for it, but there could be a demand in some sectors."

In addition to ATG, Allurent can expect competition from web page designers Scene7 Inc. of California and New York-based RichFX Inc. which could use RIA technology in the same way, Forrester's Mulpuru said.

Besides its deal with ATG, Allurent has also signed on such partners as Scene7, Fluid, Macromedia, Blast Radius and others.

This places Allurent in an interesting position, in which the company would partner, as well as compete with market competitors, Chung said.

So far, friends and family have invested in the new company. Other investors are considering it, but Chung said he doesn't plan a road show to drum up financial support.

"We have a reasonably good track record from the last time," he said. "So hopefully it won't be too hard."