Former Novell executive forms new company

Software industry veteran Chris Stone first saw the benefits of an emerging technology called XML when his employer, Novell, was attempting to use it as a unifying tool for its new flagship software product.

Stone, who served as senior vice president of corporate strategy and development at Novell, has seen many of the software industry's battles over technology standards. He has since embarked on a new venture that uses Extensible Markup Language (XML) as a means to tie various systems together. His company, Tilion, just received $10.5 million in first-round funding from venture capitalists, with a second round expected by October.

XML is a Web standard for exchanging data that proponents say will allow companies to easily and cheaply conduct online transactions with customers, partners and suppliers. XML is related to HTML, a language used to generate Web pages. But unlike HTML, XML allows software developers to define their own vocabulary for data exchange, making it a potentially more powerful tool for linking businesses together.

Stone is hoping to latch on to an emerging trend in the industry: selling software technology as a service to companies.

The 35-employee Tilion, for example, plans to charge $50,000 per customer for a software service. The service's technology unifies and organizes information from an e-commerce or supply transaction, allowing a company to view the state of its inventory through the Web.

Tilion's technology will enter tests with customers this fall, Stone said.

Some companies have built such technology internally, but no one has made it commercially available, Stone said. He is betting that his XML-based software can make such functions mainstream.

"How much of the world is XML? Not much," Stone said in a recent interview. "How much will it be? From the looks of it, it's really taking hold.

"I'm betting on the XML wave," he said.

Stone left Novell in September of 1999 at a time when the company was thought to be amid a renaissance. It has since pre-announced earnings and its stock and overall outlook among analysts has plummeted as well. The executive said he felt the need to return to his entrepreneurial roots, feeling uncomfortable as a corporate spokesman.

Tilion received backing from North Bridge Venture Partners, Venrock Associates and Lucent Venture Partners. Most analysts predict a huge market for software that can manage e-commerce transactions and Internet-based supply relationships between companies. Several competitors, such as Oracle, SAP, Ariba and CommerceOne, are taking various approaches toward the market--companies with which Stone said he hopes to partner.

One venture capitalist said the various systems currently handling the deluge of e-commerce transactions will need unifying technology.

"Until you have a unified approach, you're really only getting 30 percent of the value," said Neil Vasant, general partner at Lucent Venture Partners. "Once the (technology) islands start getting blended, you'll start seeing the classic transaction system."

"What these guys are doing will be wanted by a whole bunch of people," he said.