Fox slyly cashes in on 'Net technology

Ken Fox, the co-founder and managing director of Internet Capital Group, a Silicon Valley-based venture capital firm, spoke Friday as part of the Fox Leadership Program. With his father, University Trustee and program sponsor Robert Fox, and a group of about 30 students present in a second-floor conference room in Houston Hall, Fox spoke about what he had learned through his involvement in ICG. Fox started out at Safeguard Scientific, a large venture capital company based in the Philadelphia suburbs. Branching out from the larger corporation, Fox and fellow Safeguard executive Walter Buckley formed ICG early in the development of the commercial Internet. "It was very early. Mosaic was just coming out of the University of Illinois," Fox said of the original World Wide Web surfing software. "Most of the excitement was coming out of the consumer side." But Fox had learned at Safeguard that predicting consumer interests was fairly difficult. So they focused ICG on companies that serve other companies rather than individuals. ICG makes investments in business-to-business, or "B2B" companies, which Fox defines broadly as "any product or service which helps a company sell more effectively." Fox saw this strategy as an advantage, allowing the new company to make the rules for the type of investments he wanted to make. "One of the great things about being an entrepreneur is that you have no legacy," Fox said. Fox said that his company, unlike many venture capitalists, invests in companies for the long term. ICG's goal was to go public, Fox said, and the company's initial public offering in 1999 was the most successful of the year. ICG currently holds 72 companies worth more than $483 million and has eight offices across the world. "The sun never sets on ICG," Fox said. Fox spent the majority of the presentation explaining his management philosophy. Fox said that while a legacy is a burden in starting a business, it provides great benefit to an established company. "Over time, the only competitive advantage is execution," Fox said. To really succeed, businesses need to have some advantage over other companies in their field. "What's proprietary, what's your competitive advantage?" Fox said entrepreneurs should ask themselves. Businesses need to consider whether what they provide is an extra or an essential service: "Is it a vitamin or is it penicillin?" Fox said. He added that while the work environment must be supportive, employees need to know they're being held accountable for their work. "We hire and fire aggressively," Fox said. Fox said ICG's strategy is to acquire three types of companies -- business infrastructure companies that provide basic business automation services; horizontal services companies that provide logistics, credit and financial services to other firms; and vertical markets in what Fox called "very fragmented areas." "We actually sold more head of cattle than anybody in the world last year," Fox said.

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