Will the Credit Crunch Inflate the Internet Bubble?

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1. Chris R.
   

   November 16th, 2007 at 1:05 pm

   “do your homework on competitors; find a team of technically skilled, motivated, and smart individuals who love your idea”

   What they’re going to run into is saturation. There are plenty of cottage businesses they can start and leverage the internet as an ordering and catalog platform. This would be a much safer bet for ex-financial sector people. To go head on against experienced programmers is extremely risky business.

2. alexanderpink
   

   November 16th, 2007 at 1:07 pm

   Who cares, the barrier to entry is so low, they can just use LAMP architecture and hire a developer for like $10 an hour and have their “startups”. As for your advice, do they need it? I hate all this talk about bubble, because the fact is no one cares about these companies except VCs. This isn’t the late 90’s where everyone is going public and thus the risk exposure is increased for the general market. The people hurt when these business don’t pan out will only be the entrepreneur and the VC firms. Web 2.0 could implode tomorrow, and most people wouldn’t even notice. The economy certainly would barely be affected.

3. Andrew
   

   November 16th, 2007 at 1:16 pm

   You have to realize that about 80% of Americans dream of starting their own business. But only like 1% actually goes through with it. So I wouldn’t be too worried about those guys.

4. Chris R.
   

   November 16th, 2007 at 1:16 pm

   “Who cares, the barrier to entry is so low, they can just use LAMP architecture and hire a developer for like $10 an hour and have their “startups”.”

   But that would be garbage. Financial sector people are used to allotting the actual required resources to be successful. That would be like trying to start a Yugo style car factory to compete with Detroit, which itself is not doing so well. These people want to complete the goal successfully.

5. Webpodge
   

   November 16th, 2007 at 1:17 pm

   I believe that everyone should be allowed to try the “internet entrepreneur” thing, however I agree that the success rate is often times very very low. In fact even people “from the industry” succeed at a disparagingly low rate, so I say what the heck the more the merrier. I think what we will end up with is the internet’s version of Amway. A whole lot of people signed up with very few stories of pyramid glory. That said, yes I am available to design websites, lol.

6. Mark Hendrickson
   

   November 16th, 2007 at 1:18 pm

   Andrew - good point, although even if the percentage is a lot less than 30%, there’s still reason for concern I think.

7. No Surprise
   

   November 16th, 2007 at 1:26 pm

   Not at all, if anything the opposite will happen as many would be entrepreneurs won’t be able to pull cash out of their homes financed with sub-prime junk. Lack of credit leads to less cash resources, which of course results in less bootstrapping. Don’t expect more entrepreneurs, expect fewer.

   Econ 1.0

8. Pete
   

   November 16th, 2007 at 1:28 pm

   I agree that there’s already an oversaturation of everything these days, but what makes these people any different than techies? If a person starting a business was mostly a Software Engineer who used C++ or Java for years, what did he really know about business, marketing, and for the most part, communiation skills? Probably very little.

   So if a real estate person or finance person starts their own business, i’d imagine they have their own skillsets the techies didn’t.

   And business is rarely just about technology. Plenty of smart techies failed miserably because they had no clue that starting a business required more than being just a code-monkey.

   I just think this is an arrogant article. Like I said, if you’re a software engineer, who is to say you have a clue how to start a business. And if you’re a real estate agent, who is to say you have a clue how to build a web site. A lot of these successful startups recently, haven’t exactly been a ” One person company.”

9. (different) Pete
   

   November 16th, 2007 at 1:33 pm

   Interesting post; check out this article “Subprime Fallout Could Help Venture Capital” from the NYTimes in August -
   http://www.nytimes.com/2007/08.....nture.html

10. (different) Pete
    

    November 16th, 2007 at 1:33 pm

    oh sorry, I guess you have to log in to see it.

11. ml
    

    November 16th, 2007 at 1:41 pm

    If all these people are going to be starting interent related business they are going to want to rank for whatever it is they are offering. I would see this as a boost to adwords in the short run.

    I think its a good thing for people to try new things whether they know anything about what they are doing or not. You can have all the tools and resources in the world and if you are not motivated or inspired it wont matter. These people will hopefully have both, good luck to them.

12. Len
    

    November 16th, 2007 at 1:44 pm

    Good points Pete (#8).

    Here are some things to think about for all those folks who keep crying Internet saturation, bubble 2.0, blah blah blah…..

    - the world has 6+ Billion people in it (I’m not talking about those with a broadband connection at this time)

    - there are millions of ‘communities’ or small social circles in the world

    - each of these communities requires plumbers, barbers, painters, bus drivers, etc.. etc… etc…

    - each of these communities generally produce enough money, products, and overall life to sustain themselves (generally)

    - the majority of businesses in the world are small ones, not large ones, most are small owner operators that make enough to pay the bills, and raise a family

    - not every web startup needs to be the size of myspace, youtube, or facebook to be successful to the people starting them

    - if any of these entrepreneurs start a web related business and build their own network of 1000-3000 people that can sustain their livlihoods - that is all they need.

    - some may even be more successful and build their networks into a bigger company, garnering the wealth that so many are after

    - back to all these web 2.0 start-ups and non-techies that want to start them, oh and lets not forget the people that read this blog that think they are smarter than everyone else…

    …communities are here to stay and there will be millions of them…their success will also be judged by the people who started them and what their objectives were in the first place….and not YOURS!

    If you don’t like a community or a network, go find one you do and save your negativity for someone else.

    Enough said, if you don’t get the picture after that, you shouldn’t bother being in business, go get a job driving a truck and be a grunt the rest of your life.

13. sky
    

    November 16th, 2007 at 1:44 pm

    I have 100k to invest. I’m thinking about properties or
    a startup company. Which is safer?

14. Len
    

    November 16th, 2007 at 1:48 pm

    I forgot to mention that for the people who question this statement;

    “..- if any of these entrepreneurs start a web related business and build their own network of 1000-3000 people that can sustain their livlihoods - that is all they need…”

    I’m not talking about the site surviving and thriving with 1000 - 3000 on ad sense alone. If your revenue model is strictly advertising, go get that truck driver job I mentioned.

15. Alan Wilensky
    

    November 16th, 2007 at 1:48 pm

    Bravo, Len. Actual communities with real, organic models will always prevail. There are so many unserved business constituencies.

16. Chris R.
    

    November 16th, 2007 at 1:49 pm

    “I have 100k to invest. I’m thinking about properties or a startup company. Which is safer?”

    A. properties

17. Andrew
    

    November 16th, 2007 at 1:51 pm

    Well I’m still not worried…few reasons:

    1) Those guys are old school, old farts who aren’t exactly computer savvy.
    2) They are most likely located outside of hot spots for programmers.
    3) They most likely have no clue sites like elance even exist, and even if they did their site design will most likely include a 1 page note that asks for a digg clone with a bright pink background
    4) They are not internet savvy, so they don’t exactly know whats been done on the net, and what complaints people have about current sites
    5) Most of them cannot afford to finance the project, and their lack of knowledge won’t give them any 3rd party funds(VC/Angel Investors)
    6) They have no clue how to market on the internet, so they will struggle in getting users
    7) Many of them have families, which means they won’t be able to do the bootstrapping phase for that long
    I sincerly doubt many of them will go the start up route…most likely it’ll be something along the lines of an e-store/ebay store
    9) Most of them won’t have any connections to get their project off the ground
    10) Most of them will try to repeat success of the big companies and fail miserably.

    Will some of them succeed? Statistically yes, but I sincerly doubt we’ll see that many new unique start ups coming out from this.

18. Fabian Schonholz
    

    November 16th, 2007 at 2:13 pm

    How many CEOs of startups out there have a degree in computer science or any other related disciplines (math, physics, etc)?? At the end it does not matter. While it might help - and not always - what matters is how effective they are in hiring the right guys all around and they need to be leaders. If you have the right people, with a half solid idea and you are a leader, then your chances are just like everybody else. No need to be a nuclear or rocket scientist to run a company that uses technology.

    And that is another thing … there is big difference between a tech company and a company that uses technology and heavily relies on it. That difference escapes most people. People think because they have a web site all of a sudden they have a TECH COMPANY. Come on … get real. You have a company that uses technology at its core to accomplish the business goals … far from being a TECH COMPANY.

19. Dan Purell
    

    November 16th, 2007 at 2:14 pm

    Actually, I would wager a guess that 50% of the respondents are going to become contingent and contract tech recruiters, 45% of which had been recruiters in the past and became mortgage brokers after the tech bust in 2001.

20. Steve Jobs
    

    November 16th, 2007 at 2:15 pm

    12: Sorry…eek:
    “each of these communities requires plumbers, barbers, painters, bus drivers, etc.. etc… etc.”
    Sure, but having a barber as an exec of an inet company is a shame. You ever actually discuss internet ideas with a plumber? Doctor? Business executive? I have. It is laughable. And sad. They have many hard lessons to learn. Now, if they teamed up with a seasoned inet vetran…or even nerd savant (Rainman idiot), the synergy can work magic.

    “each of these communities generally produce enough money, products, and overall life to sustain themselves (generally)”
    I suppose. If you’re a bachelor living in a trailor park in N. Dakota eating roadkill. $300/month is mad money. Pays for your Direct TV.

    “if any of these entrepreneurs start a web related business and build their own network of 1000-3000 people that can sustain their livlihoods - that is all they need.”
    In all honesty, it’s not terribly hard to get 1000-3000 people as members of a website. Making more than a couple bucks/day on that few - very difficult unless you sell a consumable (but then getting 1000-3000 members is very hard because that market is well beyond saturated - why buy your toothpaste?).

    17: is more correct.

21. Jason
    

    November 16th, 2007 at 2:19 pm

    This will be a win for developers. Hurry all the developers jack up your bill rates. Make some cash off them.

    This is how we end up with ideas like that stupid “cat” or “mouse” thing that you could use to scan a bar code on newspapers and magazines to read more information about the article on the web. Man I would pay money if anyone still has one of those stupid things.

    Did every city/stat have that stupid idea? Or was it just Dallas TX?

22. alexanderpink
    

    November 16th, 2007 at 2:27 pm

    @Jason

    “This is how we end up with ideas like that stupid “cat” or “mouse” thing that you could use to scan a bar code on newspapers and magazines to read more information about the article on the web. Man I would pay money if anyone still has one of those stupid things. Did every city/stat have that stupid idea? Or was it just Dallas TX?”

    You are referring to the cuecat: http://en.wikipedia.org/wiki/CueCat. I live in Dallas, and funny enough just saw one at a garage sale last weekend. Brought back memories…

23. Len
    

    November 16th, 2007 at 2:28 pm

    #20 - Steve,

    I suppose your comments are based on irony, seeing that you are devoid of coming up with an original idea of your own.

    Of course I am referring to your copying of the ‘copycats’ pretending to be “fake somebody”.

    Seriously start looking for that truck driver job I referred to…

24. Len
    

    November 16th, 2007 at 2:29 pm

    That goes for the fake Steve Ballmer always posting here as well

    Don’t you realize how tired that is already.

    Oops more irony I guess.

25. DAN
    

    November 16th, 2007 at 2:34 pm

    Don’t you think CROSS FUNCTIONALITY can bring out more ideas with i-net. Everyone need not be a software geek to succeed. Good Luck!!!!

26. ajf
    

    November 16th, 2007 at 2:36 pm

    This post is absurd and totally devoid of logic. Pathetic, even for a recent grad. That last graph…wow.

27. Jon
    

    November 16th, 2007 at 2:53 pm

    17 - Ramblings of an idiot. You sound like a 15 year old dork (no offense to any smart 15 year olds out there). Go back to your regularly scheduled masturbation session.

28. Chris
    

    November 16th, 2007 at 2:54 pm

    This is the dumbest post I have ever read. Are you an intern at TC?

    First, people lie. There is no way in hell a bunch of real estate agents are going to run out in the next year and start the next YouTube.

    Second, the Web 2.0 bubble is going to burst - its now all about the money and that’s how you know it won’t last much longer. It will be the same thing you saw in 2001 - programmers selling mortgages and starting landscaping companies because all the capital has dried up on the back of a bunch of bogus proformas and busted dreams.

    Figure it out…

29. Matt
    

    November 16th, 2007 at 2:59 pm

    Wow, this was a very ignorant, and flat out terrible post. So only techies can start online companies?? I suspect that most of these folks just want to make a living not create the next billion dollar company. And what is the point of pointing out to search for justmyevents.com? Yes it’s a crappy idea but..umm..the site appears to be under construction.

    I think we need an influx of good ideas and companies. It seems to me that techies are the ones creating the same old social bookmarking/social network/mashup/video-photo sharting etc crap.

30. faceloop
    

    November 16th, 2007 at 3:31 pm

    “Here’s my advice for professionals coming from completely different industries…”

    Why would anyone ask for, or accept your advice?

    What is on your resume that makes you think you are in a position to tell people they should not take a shot at their dream?

    What have you done?

    Seriously. Please reply.

31. Stanley Miller
    

    November 16th, 2007 at 3:36 pm

    entrepreneurship is about connecting dots - not creating small businesses. (it seems you’ve mixed the two in this post.) it’s matching an idea to funding and executing a sales/marketing plan. and you need a good network to do that.

    best odds of success are when you pursues an opportunity in your knowledge and experience domain. otherwise you’re essentially going back to the mail room. can’t underestimate how much you really do know about what you do or did.

    if tech is a must, them something like http://www.propertizeme.com makes sense for property people.

    hope is not a strategy.

32. www.CARversation.com
    

    November 16th, 2007 at 3:42 pm

    AGREE with #1

33. whoopie
    

    November 16th, 2007 at 3:44 pm

    ???? this whole post is ill-conceived claptrap

    lets see, credit has evaporated, so those who were unsuccessful at being independent realtors (a market predicated on credit) will somehow be successful doing vc-funded websites (another market predicated on credit) ???????

    maybe they can pick up mad koding skillz from that guy who advertizes the “learn your computer dvd” on cnn

    looks like the brains at TC have taken the afternoon off and turned over the keyboard for amateur hour

34. whoopie
    

    November 16th, 2007 at 3:47 pm

    and please this whole idea of “founders” of companies has become meaningless. you walk into a cafe in palo alto and 60% of the people there are “founders” yet they can’t string together enough capital to get a bus ticket to sacramento. any idiot can buy a domain, put some crap up on it and call themselves founders.

35. Nick Gonzalez
    

    November 16th, 2007 at 3:48 pm

    Does this mean people will be moving out of REITs and creating ISITs (Internet startup investment trusts).

36. Jay Money
    

    November 16th, 2007 at 3:51 pm

    I think the very reason many of these Brokers and Agents (read “strippers”) are trying to become entrepreneurs is due to a lack of funds. Thus, unless they come up with an amazing concept, they will never get their feet off the ground. Unless of course they can digest some of their own rhetoric and somehow get an adjustable-rate, negative amortization, no proof of income small business loan?

37. Stanley Miller
    

    November 16th, 2007 at 3:54 pm

    @34

    you mean like the Megan family? they’re hoping for something big. see: http://www.megamistakes.com

38. Mark Hendrickson
    

    November 16th, 2007 at 3:58 pm

    26 - what graph?

    28 - I already recognized in my other comment that “people lie”, and much of the rest you say seems to resonate with my point, so…?

    29 - I never said that only techies can start online companies; I just suggested that they need to prepare themselves, just as I would have to prepare myself were I ever to become a real estate agent or banker. I do recognize that non-techies can (potentially) bring a lot to the table but they still need to prepare themselves for this very peculiar industry.

    30 - I’ve been pitched a lot of poorly made websites with bad ideas in my time here at TechCrunch; I may even put that fact on my resume one day.

39. Mark Hendrickson
    

    November 16th, 2007 at 4:00 pm

    And whoopie, wtf mate? Did you even read my post?

40. Chris R.
    

    November 16th, 2007 at 4:07 pm

    “Second, the Web 2.0 bubble is going to burst - its now all about the money and that’s how you know it won’t last much longer. It will be the same thing you saw in 2001 - programmers selling mortgages and starting landscaping companies because all the capital has dried up on the back of a bunch of bogus proformas and busted dreams.”

    Businesses start out on the idea of honest work to produce an honest product which will be sold honestly for a profit. When analysts get a hold of an honest business scheme, they try to squeeze money out of different parts of the business by way of cutting it up into cold numbers and trying to exploit those numbers. They say, well if we can remove x, from business x, y, z, then do it with n cheap labour, then we can make r amount of money.

    They put this into a business plan format, and try to make the investors forget that the business is not really divisible like that if you want to hold the integrity of the original idea which the customers bought into.

    Then when they implement it and it fails, which btw, they already knew was going to happen, they have already paid themselves a good 2 years of 150k salaries and ride off in the sunset in their new hot sports car.
    Then they rinse and repeat.

    These are not entrepreneurs or business people. They are scam artists.

    To truly build a good business online is exactly like building a good business offline. It’s no cheaper, and it takes every bit as much work. You can only fool people so much with window dressing. Facebook tried to fool all of us with that valuation, and even with MS behind them for 1%, they got caught out there, like a receiver in the endzone waiving their arms, but with nobody passing to them because they are too far out.

    Lesser artists have tried it with lesser amounts and they were successful to a lesser degree. If you don’t intend to make an honest go of it, put your whole heart and mind into screwing the investment industry like chasers.

41. Jonathan
    

    November 16th, 2007 at 4:17 pm

    As a veteran of the first bubble, I agree that the invasion of non-qualified and unskilled morons who decide to brand themselves as internet geniuses isn’t a great thing for silicon valley. There are still plenty of those people around from Web 1.0.

42. Chris R
    

    November 16th, 2007 at 4:24 pm

    For the sake of all companies competing in the current pre implosion Web 2.0 environment, we have made a video of how a real company should present itself to the public.

    I believe that our presentation can help you correct your flawed models and realize the error of your ways. The time is now to learn from a company that is poised to give google a run for its money and to introduce the first Canadian search engine.

    Enjoy! http://www.youtube.com/watch?v=_xKHz-UsMVQ

43. Alex
    

    November 16th, 2007 at 4:26 pm

    This is a really good post imo.

    I agree with many points. As a matter of fact I can relate to many points here, as I went through a similar transition back in 2000.

    When the crap hits the fan is when the next batch of great start-ups begin. Take today as an example.. Reading the paper this morning there was an article about Kaiser Permanente (Medical HMO) laying of something like 150 of the IT staff in Pleasanton, CA (SF bay area). Don’t you think that a certain % of these people will start a healthcare related tech/web company in the coming years and these same people have incredible insight into was is currently working via electronic healtcare and hipaa compliance…..Now that eHealth in starting to gain much attention if I was a VC I would be salivating and stalking these employees in the Kaiser Permanente employee parking lot.
    As a matter of fact if any of these ex-employees are reading these posts and have a good web healthcare idea please email me sm1224 a gmail.

    If you start a company here are the five keys:

    1) bootstrap the business
    2) build a product
    3) get revenue for the product
    4) focus
    5) repeat steps 1 to 5

    —-If you have customers, product and revenue you have completed 80% of the equation and are well on your way. What’s left is making sure the market opportunity is big enough and EXECUTION—- BY all means stay away from VC money as long as possible as it can/will be very disruptive—

44. K
    

    November 16th, 2007 at 4:31 pm

    Shouldn’t be a problem. There’s been plenty of tech companies started by, led by, and managed by people who don’t know shit about what their company does. Technology is not what matters to a technology company. Sales do. It’s all about memorizing buzzwords and keeping track of who made them up. What they are, how they work, and how they are made are irrelevant. All businesses ultimately have the same product: money, for their upper stakeholders. The means are arbitrary. If it wasn’t, we wouldn’t have business school; it’d be like teaching, where you get a certificate with a concentration on a particular field.

45. Don Jones
    

    November 16th, 2007 at 5:06 pm

    Hey, good for them - let them go pursue their dream. One or two might even earn a living at it.

    As for the comment about “it is so great to know that you control your own destiny…”, clearly they haven’t dealt with venture capital guys…

46. mmt
    

    November 16th, 2007 at 5:22 pm

    Good article. In 2001 everyone was running from tech and going into real estate. That lasted until - last year. Now it will reverse for a bit, until the next big thing comes along. To me, there’s nothing wrong with this.

47. ajf
    

    November 16th, 2007 at 5:59 pm

    Mark,

    Sorry, graph == paragraph. Faceloop, is absolutely right. You do not have the credentials to give advice on the topic of entrepreneurship. Your response to him doesn’t help your case.

    Frankly, I find the the opinions of most of the contributors here to be rather shallow and more than a little suspect in terms of integrity. Sometimes TC seems like a pay-per-post operation. This post in particular has that feel, there seems to be no reason for it other than to promote PartnerUp.

    A legitimate post on the survey would start by linking to…well, the survey. Some examination of the sample and the motives of the sponsor would also be in order. At that point, I’m quite sure, a competent analyst would stop and find something else to write about. However, let us pretend that there is some valuable data here and examine your analysis. Essentially, you think realtors and bankers make for poor tech entrepreneurs. Fine. But, you don’t make a logical case for your thesis. That’s the real problem. Instead of making your case, you go on to give advice to entrepreneurs that you obviously pulled out of ‘Startups for Dummies’ or something.

    Oh, and that parenthetical about marketing skills is wrong. Whoever put that idea in your head is an idiot.

48. Andrew Fife
    

    November 16th, 2007 at 6:09 pm

    Mark:
    For me this article is flawed because I think the survey was misinterpreted by a fairly wide margin. It seems to me that real estate professionals interested in starting new companies are most likely to start their own real estate practice, which in my own subjective observations, is very common and “something tech-related (’Internet/Web/IT/Technology’)” could easily mean a website for their new practice. I bet these numbers are also true of lawyers, insurance agents and any other services industry where startup costs are low. However, the conclusion that real estate agents are thinking about founding high tech startups would be more believable to me if the survey showed growth in the rate of folks who had actually started working on their new businesses.

    But then again, maybe I’m misreading your interpretations of the survey. Could you link to the survey so readers like myself can take a deeper dive on the results?

    thanks,

    Andrew

49. the bootstrap economist
    

    November 16th, 2007 at 6:20 pm

    This was a harsh post but I believe it stems from a misunderstanding of what separates a banker from an investment banker. To me, throwing a buzzword in front of the word “banker” is the same as throwing a buzzword in front of the word “network”. We are not looking to take an equity stake in your company and nickel and dime it to the ground, but provide you with differentiated services that will help you plan for future growth.

50. Startup News
    

    November 16th, 2007 at 6:22 pm

    The volume of new entrepreneurs is not a problem for everyone . It will be good for some businesses like hosting companies, web developement companies, Pr firms etc … People will have to spend money to get their businesses started .

51. the bootstrap economist
    

    November 16th, 2007 at 6:28 pm

    BTW, here are some thoughts about how the “exclusive” niche community model being used on the web, has already been done for years in other market segments.

    ———

    According to an industry report on Computer Systems Design and Related Services in the US; otherwise known as IT Consulting, 65% of revenues are derived from the business sector. This is further broken down to the banking, finance, and insurance industries comprising 40% of revenues. These traditional businesses are employing outside consultants to build software solutions to fill industry specific and cross industry needs.

    Fortunately for opportunistic entrepreneurs, IT Consulting has a low barrier to entry with approximately 84% of the companies operating as “micro entities”; or companies with fewer than 10 employees. This business model allows for an efficient company with low overhead, and infinite scalability for any project. What sets one company apart from another are three things; the ability to identify customers’ needs, pricing your services competitively, and quickly scaling your workforce to complete the project.

    I have already encountered one company which uses a similar business model to fill a niche market in the banking industry. Beth Hamlin; one of the instructors from my credit training, is the Executive Vice President of Caliber Commercial Corporation, which provides credit analysis and training services to commercial lending institutions. This service fills a position banks need, while eliminating the expense of hiring and training internal personnel.

    With a slice of creativity, the possibilities of partnering with coworkers are endless.

52. nemrut
    

    November 16th, 2007 at 6:39 pm

    …more than 50% may ’say’ they plan on hittig it out on their own, but how many of them can actually ‘afford’ to take the risk? Presumeably, these same folks have slaved away at the comfortable 9-5 deskjobs for how long, with mortgages, car payments, etc.

    Given the precarious state of our economy(ie, credit fiasco, housing collapse, dollar plummeting) why would they take the risk…

53. Chris
    

    November 16th, 2007 at 9:07 pm

    @ 43 and 50 - you must be an MBA - good for you, son…

    FYI, most people here are a little beyond business 101 at the local community college.

    @ 51 - nice copy and paste

54. micfo.com
    

    November 16th, 2007 at 9:25 pm

    Not sure but the partnerup site seems not open for international.

55. Webomatica
    

    November 16th, 2007 at 9:28 pm

    What bums me out is people should be starting tech companies because they have a cool idea or love technology. You know there’s a bubble when people start putting the valuation or the money before the product the company is supposed to be selling. That’s what happened during web 1.0, and during the late stages of the housing bubble people were piling in to flip houses and make money.

    Those sorts of folks - I daresay they aren’t going to provide much that’s positive for the technology industry. Do we really want tons of casey serin types starting web companies?

56. Mark Hendrickson
    

    November 16th, 2007 at 9:39 pm

    #47 - Regardless of whether I have the “credentials” to give advice on entrepreneurship, does my advice really strike you as that misguided? It seems like pretty basic stuff to me. I point it out nevertheless because in my (albeit limited - I do realize I’m young) experience with tech entrepreneurs coming in from other industries, I have found that these fundamental concerns are overlooked. I’m sorry you feel that my opinion is shallow but I certainly didn’t run this piece to promote PartnerUp. And I didn’t link to the survey results because they haven’t been published online yet, but I will ask PartnerUp for permission to post the results here in the comments.

    #48 - Andrew: That’s an interesting point, and it highlights something I should have been clearer about: the survey asked the respondents in which industries they were likely to start a business, so by tech-related I don’t mean just something that might incorporate a website. The data unfortunately does not show any growth rates - it was a one time deal. As I said above, I’ll inquire into whether I can publish the raw data so you can check it out, too.

    #49 - bootstrap: I really didn’t mean to make any distinction between a banker and investment banker; as far as my point is concerned, they’re both the same (i.e. not yet part of the tech community). And I’m sorry that this post sounded harsh - it wasn’t meant to, but I realize how can come across that way. I have no problem with people becoming tech entrepreneurs if they properly assess the effort it will take to educate themselves, find the right idea, and build the right team. I just worry for those that make the leap because they think it’s easy to create a successful internet company.

57. Stanley Miller
    

    November 16th, 2007 at 10:18 pm

    @53 With all due respect, 43’s five step process is over-simplified and naive. 50’s should come as common sense. 50 identified the best types of business models - the enablers.

    If you want to start a company be an enabler. Those are the concerns with a highest probability of success and decent returns. Execution should be a given. It means something, but more often a little more than nothing. You can have a great idea/product, work hard, and still nobody cares. Unless your objective is to be a small business and work for minimum wage. Solo operators are artists. Same goes for inventors. Being an entrepreneur is just like having a job. There are still all of the politics and the usual gatekeepers. You can’t hide from that in your startup dream.

    A would be entrepreneur should view a startup or job the same. They are both investments. What is your return? You can improve your return overtime by gaining knowledge, domain experience, and building solid relationships. Our economy is built around jobs and relationships. If you want to control your entrepreneurial destiny get a job and use it as a launching point. Otherwise your basically playing the lotto when you should be playing single-deck blackjack and counting cards.

58. Alex Linhares
    

    November 17th, 2007 at 1:38 am

    Mark, good post. I was in the PhD Thesis Committee of this guy the other day… he had studied “entrepreneurs” who had failed in the city of São Paulo. He had tons of data; and nothing seemed able to predict failure… until one graph shows up at a random page.

    People starting a company by necessity or wanting to be their own boss–>skyrocketing failure rates here;

    People starting a company because they were unsatisfied with some service or thought they had a better idea on how to provide it–>failure rates dramatically dropped.

    It`s a good rule of thumb is to classify people into these groups. The first group has aspirations and dreams and maybe even a lot of energy to work and prepare and study.

    But the second group has an unexplored business space AND a surprise way to approach it.

59. Alex Linhares
    

    November 17th, 2007 at 1:45 am

    Oh, and for those who think that tech skills are unnecessary, I´d love to be able to talk to Chinese people in my cell while I speak English and they speak Chinese on the other side. Could you please point me out where to get that? Thanks!

60. nick of cebu
    

    November 17th, 2007 at 6:02 am

    This just means mo’ money for Adwords. Also a slight bump on the personal bankruptcies graph for 2008.

61. Adam Wilkens
    

    November 17th, 2007 at 10:06 am

    I find it profoundly intrigueing with looming economic hardships on the horizon that these individuals who ultimately should share some responsibility for the credit melt-down are now keenly focused on the internet as some sort of saving grace. Ultimately they will dive into the internet arena with high expsectations and tight budgets which will prove to be there greatest mistake to date. The leveraging power of the internet has been common knowledge from the beginning of the bubble (essentially creating the bubble) and then after that bubble burst it was boiled down to user penetration and technology speed. The same knowledge/forsight that drove the bubble to begin with never disappeared but instead sat dormant while penetration and technology advanced as well as complexity of the architecture in which the internet has currently evolved into. Without expertise in all aspects of the current vast playing field which is the internet these companies throwing out online intiatives will fall flat just as those bad martgages fell flat. Until these corporations/larger companies allocate responsibilities to individuals who have grown up with the internet and understand its unique value proposition we will continue to spin the wheels of bad online intiatives. Though no worries! As the internet quickly becomes an essential way of life as many understand who have grown up with it, and as those individuals start to climb the ranks within these companies, budgets will be allocated accordingly and more intrigueing and value driven online intiatives will be undertaken and utilized. Bad intiaitives are inevitable with ignorance still prominent regarding the internet. The web is the fastest growing market within the U.S., obviously the business community will react accordingly to the shift, but people lets not forget the greatest leaveraging aspect of the internet…its globalisms greatest allie so position yourselves accordingly.

62. dweezel
    

    November 17th, 2007 at 10:30 am

    @57 Being an enabler requires access to capital, not just good ideas. If you have those two things, you can do anything — just ask Brinn and Page.

    @58 How is the new real doing? Have the inflation problems of the past been kept under control?

    @60 Adwords is mass marketing — consumers are already immune to it.

    @Mark I agree with you 100%. The best way to succeed in business is to treat your customers with respect, not dominance.

63. dweezel
    

    November 17th, 2007 at 10:32 am

    @61 Be nice to the investment bankers, they are the ones that helped all the web 2.0 entrepreneurs get rich. Where do you think the VCs are getting access to all of their capital?

64. Adam Wilkens
    

    November 17th, 2007 at 11:18 am

    @63 No doubt they aided in the financial support of the web 2.0 successes but i think it is more of a testiment to the future of the web more than a pat on the back of investment bankers or VC’s… considering funding repayment is in the 10x’s initial investment by these folks but kudos to the investment bankers and VC’s who had the forsight for some of the suceesses we see today.

65. Ed
    

    November 17th, 2007 at 5:56 pm

    GOOD ADVICE, but that does not go JUST for the real estate agents that probably want to start another website about real estate. There are plenty of bad ideas being funded, and even worst investors getting involved in funding good or bad businesses only to drag them down later on!!!

    I thought that was the nature start ups.

    Nonetheless, the advice was very good, and not one that you pick up in most of the VC pannels you see around town!

    Cheers, E

66. Stanley Miller
    

    November 18th, 2007 at 2:40 pm

    @62 “Being an enabler requires access to capital, not just good ideas.”

    Capital, like execution, is another given. Except capital is very important. You will need some skin-in-the-game, but find investment partners to share the load. If you can’t convince a non-related party to lend you cash, you’re back to playing lotto. Bootstrapping is for kids.

    @64 “kudos to the investment bankers and VC’s who had the forsight…”

    Not foresight. They were hedged guesses. Investors think in terms of odds and thus place multiple bets. Their goal is a blended return above the market average. When you say ‘foresight’ you’re only taking into account the winners.

67. kavak yelleri
    

    November 20th, 2007 at 6:39 am

    I guess you have to log in to see it.

68. Tim and Julie Harris
    

    December 16th, 2007 at 11:41 am

    Very interesting article.
    Here are a few random observations;
    1) The ‘Carlton Sheets’ real estate type programs are being replaced with..
    2) The start your own online business schemes. Want proof?

    Google “start online business’

    Matter of fact this ’space’ is growing so fast that there are a flood of books hitting the store shelves and an equal number of ‘gurus’ staking their claims.
    Makes sense that people who previously were riding the real estate cash flow cow are not turning to what is next.