Editors Note: February 5, 2001

 
 
By eweek  |  Posted 2001-02-05 Email Print this article Print
 
 
 
 
 
 
 

Get ready for the next wave of Internet startups. They won't call themselves dot-coms, and they won't behave like them.

Get ready for the next wave of Internet startups. They wont call themselves dot-coms, and they wont behave like them.

In fact, theyll have solid business models with realistic goals for profitability, or they wont get funded. And theyll probably have seasoned management teams that will help them stick around for years, if not decades.

Were about to enter phase two of the Internet era, and its a pattern that has marked the advent of every disruptive technology for the past couple of centuries. Those who are first to market are rarely the ones that stick around for the long haul.

Their successors, far fewer in number than those who gambled on a new technology out of the chute, are the ones that will fight a prolonged battle for the top spots in each market.

As a reference point, consider what happened with the lightbulb. Edison invented it, but he failed to win the ensuing and very bloody power-utility wars to capitalize on it. Marconi invented the wireless, but it was RCA that reaped the profit once the din died down. And the Big Three automakers emerged from a field of hundreds of small companies whose names (except maybe "Tucker") most people had never even heard of.

One of the biggest problems for startups in phase one is that its almost impossible to stand out from the pack—no matter how good the business model. In fact, some of the most successful models in the upcoming phase may borrow heavily from previous failures that were unable to gain notice in a crowded field. Smart businesspeople learn more from failure than from success.

The next startups also will be more conservative with their cash, rather than splurge for Super Bowl ads. Theyll be spending money on infrastructure, whether they run all of their systems in-house or outsource pieces to ASPs. Either way, just as opportunity knocked once in this space, it will come knocking again.

Unlike the first batch, however, these startups wont be looking just for systems. Theyll be looking for partners that can help them grow into major companies, which is what the second wave will attempt to do—more slowly and consistently than their predecessors, who spiked and then crashed. In fact, many of them probably will proceed into public markets with great caution, meaning their financing should be much more secure than that of the dot-coms.

That doesnt mean you can bet your business on all of them. But if history is any judge, there will be another uptick in this market. Make sure youre ready to grab a piece of it.

 
 
 
 
 
 
 
 
 
 
 

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