Multicity's global network turns portal on its head By Samuel Fromartz WASHINGTON - Brothers Alain and Patrick Hanesh, who are of French-Lebanese background, wanted to set up a Web service two years ago that would break down cultural and language barriers around the world. In rolling out Multicity.com, they may have come up with a new business model that, in effect, turns a Web portal inside out and vastly increases its global scope. At first glance, the company's Web site seems like an unattractive channel for chat, bulletin boards and instant messaging. Part of that is purposeful. "People go onto our Web site and they see another chat company, and we want them to think that - for now," says Alain, who serves as CEO. "We didn't want to show all our cards. But if you look really deep under the skin of that Web site, you will find a huge network covering at least 70 different countries," he adds. That network is composed of various, local Web sites around the world. Plugging in MultiCity's applications, they are linked to the company as well to each other. When the two formed Multicity, they hoped to come up with a way to increase communication between people in various countries. Alain, 29, is the technologist -- he had worked on a streaming sound and video tool at Cornell University in 1995 and coded Multicity's products himself. Patrick, 32, has an MBA, wrote the business plan and designed the company's first Web site himself using Microsoft Front Page. Born in the United States, where their father was a visiting physician, they moved back to France for high school. Then they returned to the U.S. for college and stayed. "When you live in Europe you feel close to the rest of the world -- you really feel connected -- but in the United States we were more secluded," said Patrick, who is president and CFO. The answer, they felt, was a product that could bridge that divide. The first step was rolling out chat software, which consists of a few lines of code that Web sites cut and paste into their pages. The chat appears as a page on the local site but actually resides on Multicity's servers. "Essentially we control about 50-60 percent of the page and the Web site controls the rest," Patrick explains. That allows for co-branding. The program, offered for free in March 1999, immediately took off. Although it was first offered in English, the two rolled out versions in 20 languages. Soon they added a bulletin board service for Web sites, then a matching service so users could find people with similar interests on the global network. Last week they launched an instant messaging service. They now have 50,000 active Web sites (100,000 registered ones) and over 115,000 unique users a day, who spend an average of 30 minutes a session online. All this was achieved without spending a penny --or yen or franc, for that matter -- on marketing. Their next application will be to translate chat in real time, so that French speaking users could, for example, communicate with Americans without knowing English. Although they first aimed at raising a few hundred thousand dollars from angel investors, they revised that goal as the service took off and went for venture capital. At first it was hard to get attention -- they sent out more than 100 business plans without a reply -- but then won a meeting with Draper Atlantic in August 1999 and got an offer for $1 million in 30 minutes. "They had customers -- we like that," says Jim Lynch, managing partner with Draper Atlantic. He also liked that the network grew by word of mouth -- "it was inherently viral" -- reached a global market and was doing so with communication applications. They took the million and raised $15 million more in a second round led by Grotech Capital Group last month. The potential strength of Multicity lies in its network, but the company's success will depend on how quickly it expands and leverages that network to their advantage. Think of a broadcasting model, where a viewer reaches the network by turning on a local station. But rather than the hub-and-spoke pattern of a broadcast network, Multicity functions like a spider web made up of micro-channels. Each of these channels is linked so users can jump from one site to another with a click of the key. And unlike broadcasting, the content is produced by the local users -- not the central hub. Sitting in on a chat with fisherman in Western Australia, one can call up a list of other active chats, and jump to one in Southern India and then to another in Wales or Italy. Like many early Internet services, the current discussions seem to focus on sex and relationships, though that was true of America Online as well. Although Multicity remains in the background, its role too could be enhanced. Patrick, for instance, called up a software demo on his laptop that beamed a video clip across the top portion of a chat room page. The same could be done for music and other content, tailored to the local site or part of a global media campaign. "Imagine the power for Sony to play a song all over the world, with one click of a button," Alain says. "Instead of going to different markets, they come to us, we send it over the network, let people listen to it, buy it and download it." The risk, of course, is that too much control from the center might alienate users at the micro-channel, subverting what the network is all about. Still, the model is enticing, especially compared with portals. What these centralized sites have done is aggregate viewers, offering a wealth of content at a branded site. But in many markets -- especially undeveloped ones -- the Web is a free-for-all where the brands aren't as powerful and local, specialized sites rule. Here, the Hanesh brothers argue, it's easier to aggregate users where they are rather than convince them to go somewhere else. "And once you have the eyeballs and the ears, it's very simple to commercialize," Alain adds. Copyright ©, Samuel Fromartz, 1999, 2000. All Rights Reserved. This article was first published by Reuters on March 10, 2000.