EarthLink, Disney Execs Forming Net Incubator

Betting on Southern California’s ability to be a leading center of Internet entrepreneurship, the top executives of EarthLink Network Inc. and Walt Disney Co.’s online operations said Monday that they are forming an Internet business incubator in Santa Monica.

Jake Winebaum is leaving his position as chairman of Disney’s Buena Vista Internet Group to run the new venture, called ECompanies. Co-founder Sky Dayton will devote about 40 hours a week to ECompanies while continuing his role as chairman of Pasadena-based EarthLink, one of the country’s largest Internet service providers.

Both Disney and EarthLink will provide financial backing for the venture.

“There’s incredible untapped potential in Southern California,” Dayton said. “There are so many creative companies here, and so many creative people. We’ve just begun to see the potential of the kind of Internet hub the Tech Coast can become.”

The partners plan to use ECompanies to create start-ups based on business ideas of their own. They also expect entrepreneurs with nascent companies to apply for space in their incubator. Few other details about the venture were disclosed.

The formation of ECompanies is in part a nod to Pasadena-based Idealab, the 2 1/2-year-old Internet incubator founded by serial entrepreneur Bill Gross. Among its high-profile offspring are EToys Inc., Ticketmaster Online-CitySearch Inc., Free-PC and GoTo.com Inc.

Southern California “is ready to dominate with respect to the e-commerce revolution,” said Cliff Numark, program director for the Los Angeles Regional Technology Alliance. “Having these incubators will secure the region’s place in this revolution.”

Although both ventures share a focus on incubating Internet start-ups, ECompanies is not modeled on Idealab, Dayton said.

That’s a good thing, because Idealab’s success may be hard to replicate. Gross’ unusually energetic personality is uniquely suited to the fast-paced world of Internet start-ups, observers said.

“I don’t think Bill Gross has a corner on the market by any means,” said Bill Manassero, executive director of the Software Council of Southern California. “But I really don’t think this model will work for other people.”

Since they became friends and snowboarding companions two years ago, Winebaum and Dayton frequently found themselves discussing ideas for Internet start-ups. The momentum for launching ECompanies picked up in recent weeks as Disney considered a restructuring of Buena Vista Internet Group, Winebaum said.

Indeed, Disney disclosed Monday that it is negotiating to buy the 57% of Internet portal Infoseek that it doesn’t already own. Should a deal be reached, Disney may issue a new class of common stock that would track the performance of its Internet operations, the company said.

Although that deal is still being worked out, changes at Buena Vista Internet Group have already been made. With Winebaum gone, the group’s chief financial officer, Steve Wadsworth, will move into the president’s office. In addition, three other key executives--Chuck Davis, Kevin Mayer and Larry Shapiro--will take on broader roles within the company.

Winebaum, who joined Disney in 1992 after the company bought his award-winning magazine FamilyFun, is credited with building one of the most formidable Internet divisions within a major studio. In addition to its stake in Infoseek, Buena Vista Internet Group operates the Disney.com, ESPN.com and ABCNews.com Web sites, along with the Go Network, a portal launched earlier this year.

It was Winebaum who convinced Disney Chairman and Chief Executive Michael Eisner to make substantial investments in the Internet, said Gary Arlen, president of Arlen Communications, a new-media research firm in Bethesda, Md.

“Clearly he had a vision, and most importantly he had the ear of Eisner, who has been of mixed enthusiasm about committing to the Internet,” Arlen said.

Shares of Burbank-based Disney rose 25 cents to close at $30.88 on the New York Stock Exchange, and EarthLink’s stock dropped $5.06 to close at $53.94 on Nasdaq.

* INFOSEEK TALKS: Disney said it is in talks to buy the 57% of Infoseek that it doesn’t already own. C16