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The boat floats

Early last year I wrote a Web Promotion article on raising
investment capital. Despite the fact that I suggested that
it was not going to be very easy, at that time the Internet
economy was still hot and it seemed that almost anything to
do with the Internet was possible. For those of you that
are interested in revisiting ancient history it is available at .

If you were lucky enough to raise investment capital or
better still have an IPO ready, you could raise a lot of
serious money. It seemed, and often was possible despite an
apparent lack of business experience in many startups or
any tangible proof that the business model was viable.

As I am sure you all know those days are gone, probably for
good. The pendulum has now swung so far in the opposite
direction that it now hardly matters how good your business
model is nor how much business savvy you have. Raising
money for an Internet enterprise is going to be a very
difficult task.

That is unfortunate. As much as many of the investments in
Internet startups did not seem to make much sense then, the
herd mentality of running away from Internet investments as
fast as you can makes no more sense now.

Here is an analogy for what it is worth (probably not
much). Imagine a boat slowing down to pass a dock but not
stopping. On the dock are hundreds of people shouting, "We
must get on". As the boat approaches some one jumps, then
some one else and pretty soon there are lots of people
jumping. But then someone notices that most people are
falling into the water ahead of the boat and shouts out,
"stop, it's not safe". So everyone stops jumping. Then
someone notices that the boat is in no danger of sinking.
It is in fact a new, well-built sturdy boat so he shouts
out, "the boat floats". Everyone still on the dock
realizing that the boat is still going buy start to jump
again but fall into the water behind it.

I know the analogy is a little offbeat. I need a sailing

The fact is however, that for all the excess hype about the
Internet initially and all the doom and gloom now, the
Internet has always been well built and is very definitely
going places. What the investment herd is doing is of
virtually no relevance to its viability, but it is
important to who the winners and losers will be in the long

The initial influx of excess capital meant that innovators
had the opportunity to try all kinds of ideas. The fact
that so many apparently failed is not at all surprising
under the circumstances. Now that investment capital is
much harder to find, the driving forces behind the Internet
will shift to the larger, well established and well funded
businesses like Microsoft, AOL and the other big players.

Despite all the dot Com failures there has been a lot of
successful Internet innovation. Just take a look at Napster
for an example. Despite its legal woes, Napster represents
a major innovation that will change the way many people and
businesses distribute and use copyrighted material.

So where does that leave everyone else? The good news is
that the Internet boat is still there, is still very sturdy
and is still going places. All you have to do is figure out
how you are going to get on.

Even though investment money is going to be harder to come
buy, in all probability if you are still here and still
have the wherewithal to work at it, the bursting of the
Internet bubble can in many ways be very beneficial to you.
Next week I will tell you why and how you can take
advantage of it.

"IMS Web Tips" ISSN 1488-7088
© Copyright
2000 Virtual Mechanics

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