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From...
Computerworld

How to make your fortune on the Web

internet

INTERACTIVE:

Do you dream of starting your own Internet business and making a zillion dollars?

Yes No Already have
(an Internet business)
View Results

  

March 5, 1999
Web posted at: 6:47 p.m. EST (2347 GMT)

by Joseph E. Maglitta

LOS ANGELES (IDG) -- Do you dream about chucking your technology job and starting the next Amazon.com? Fortunes can still be made starting Web businesses, according to a noted venture capitalist--especially in broadband networking, Internet infrastructure and "wild ideas" for next-generation online companies.

But would-be Web billionaires had better have unbeatable business plans to avoid suffocation in a suddenly crowded field, said Ann Winblad, founding partner of Hummer Winblad Venture Partners in San Francisco.

"Two years ago it was revenge of the nerds," Winblad told some 2000 attendees at the Direct Marketing Association's Net.marketing conference here Wednesday. "Now big money is moving into the Internet. There's a deluge of dollars out there."

Venture capital firms will invest some $7 billion in Internet start-ups this year. Winblad said some of that investment is not smart money. "A lot of start-ups don't make any sense and pollute the pond," she said. "Money will not separate you from the pack."

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Because pioneers are so strongly established, some online businesses--such as flower stores and information and search portals--are already closed to newcomers, Winblad said. Companies like online bookseller Amazon.com gained dominance by being first in their category, she said. Now many Web niches are being pursued by a half dozen or more companies.

Better opportunities exist in next-generation applications that leverage tomorrow's high-speed networks and in novel new applications. "It's the wild ideas that are attracting the money," Winblad said. She cited as examples thespot.com, which offers live talk shows on the Net, and the-knot.com, a bridal site and registry.

A few key Qs

Winblad said aspiring Web entrepreneurs need to answer these key questions: How big is the market? What share can you own? How can you be number one? How can you get big fast? How can you will customer loyalty quickly?

A strong chief financial officer and willingness to set aside 15 percent to 20 percent of the financing as stock options for employees also are important for success.

When asked whether the current Net stock frenzy has peaked, Winblad predicted "higher highs and lower lows. But I don't think we are in any danger of the bubble bursting."

But a reality check is also in order: Of the 2000 to 2500 companies auditioned by Hummer Winblad last year, only 10 got funding, Winblad said. The new Internet economy demands such selectivity, she said, quoting a noted Wall Street analyst: "First place is awesome. Number two is OK. Three is tough. Four is the pits. Then there is no number five."


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RELATED SITES:
Hummer Winblad Venture Partners
Direct Marketing Association
Amazon.com

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