Making Money in Technology
After the Bubble, page 2
Executive Summary
The great Internet bubble has burst. What is the landscape now? The bubble worked many obvious changes,
and some that are less clear. The reaction to bubble-era excesses, and the post-bubble crash, also changed
the playing field beyond recognition.
First, you can repeat after me the mantra, “Technology is not dead. Technology is not dead.”
This means that there are still great opportunities for the astute entrepreneur or investor.
An immediate issue is that the access to funding has dried up. B2C ventures are out of luck.
B2B is very sick. Infrastructure may be viable, but business models and plans need to be pitched in a new way.
The bursting of the Internet bubble is the most dramatic force exercising a downward pull on
technology companies—but not the only one, and, arguably, not the most important one. Problems in the
telecommunications sector (see The Telecommunications Capex Nuclear Winter and Telecom Fallout later
in this barticle) and a slowdown in information technology (IT) spending (see
Crisis Mode and IT Spending later in this article) have also played a major role.
The bubble-era years left a legacy of bulked up “hulks.” Funding was too easy. In many cases,
the business plan—to the extent there was one—was to bulk up fast, without paying much attention to
the internals of the company one was bulking. The assumption was that if you could gain sufficient
size, along with an early-mover advantage, you could become dominant in a given market. All this
occurred in an atmosphere of fat, fat, fat, with Gen X and Gen Y staff flying first class and drinking
expensive wine. Many companies went public that were really venture-stage-in-drag.
Today, running a successful technology venture requires a clear, analytic, well-defined and
well-expressed business model. This business model must demonstrate a path to profitability and
viability that is independent of the vagaries of the financial markets.
What are the opportunities that this provides?
The first is a consolidation play. Typically, this involves streamlining, merging companies together,
creating business plans for viable technology, shoring up a weak management team, and more.
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