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Sister unit of DQE takes stake in e-firm
Thursday, August 19, 1999 By Ken Zapinski, Post-Gazette Staff Writer
Duquesne Enterprises, a sister company of Duquesne Light, is trying to bring a little of the Silicon Valley spirit to Pittsburgh.
The DQE Inc. subsidiary said yesterday it is purchasing a substantial stake in OnlineChoice.com, a start-up company creating a Web-based service to secure the lowest-cost electricity for Pittsburgh area residents.
Just as important, though, Duquesne Enterprises brings a network of relationships that will help that Web-based service, called ElectricityChoice.com, get off the ground. Companies affiliated with Duquesne Enterprises will help with licensing requirements, assist in finding cheap sources of power and even subsidize some advertising costs.
"What Duquesne Enterprises brings to the table is much more than capital," said Sanjay Chopra, the Carnegie Mellon University graduate who is president and chief executive officer of onlinechoice.com.
Those are the sort of interlocking relationships that the most famous name in venture capital, Kleiner Perkins Caufield & Byers, tries to establish within the universe of companies that it funds. And what a universe. Those who have benefited from the Kleiner Perkins treasury over the years include America Online, Netscape, Amazon.com and @Home, the cable modem Internet service provider.
Kleiner Perkins and its high-profile partner John Doerr try to create an atmosphere where the companies find it beneficial to work together. Netscape, for instance, long supported and invested in @Home. That gave the newcomer a credibility that helped convince Tom Jermoluk to give up the presidency of Silicon Graphics to become CEO of @Home. Netscape was later purchased by AOL, another Kleiner Perkins company.
To mention Kleiner Perkins and a utility holding company like DQE in the same breath may seem strange. But as DQE sells off its electric generating plants to focus on other outside investments, e-commerce and technology will take on ever greater importance, according to DQE Chairman and CEO David D. Marshall. At the helm of Duquesne Enterprises carrying out Marshall's directives is Thomas A. Hurkmans, a 33-year-old former investment banker and software company founder.
"The universities are pumping out lots of talented, creative entrepreneurs," Hurkmans said.
The two sides would not discuss the size of the Duquesne Enterprises' investment, except to say it was not a controlling share. But the DQEunit's influence can be seen everywhere.
Rarely does a start-up snag space in as luxurious a setting as 1 North Shore, an office building with sweeping vistas of the Allegheny River across the street from the under-construction PNC Park. But Duquesne Enterprises owns the building and is headquartered there, so OnlineChoice.com is there as well.
Its ElectricityChoice.com venture is intended to use the Web to group together customers interested in switching to a new power supplier.
The idea is that together, the customers can negotiate a volume discount that none of them could achieve on their own.
To do business, ElectricityChoice.com will need a license from the Public Utility Commission. To avoid that lengthy process, the venture will partner with OnDemand Energy Solutions, a Duquesne Enterprises subsidiary that already has its license.
North American Power Brokers, an online electricity and natural gas auction service, in which Duquesne Enterprises has a stake, will help the venture in finding the lowest possible price.
And ElectricityChoice.com will receive a discount to place its ads on FreeWay, a service in which customers receive free long-distance telephone calls in exchange for listening to brief recorded commercial messages.
FreeWay is run by BroadPoint Communications, in which Duquesne Enterprises has a controlling stake.
"We increasingly bring expertise in e-commerce business development," Hurkmans said.
OnlineChoice.com wants to expand its business into areas such as natural gas, telephone and insurance services. It has registered more than three dozen related domain names, including toychoice, vacationchoice and investmentchoice.
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