Part 2 : The Net and the people

A lot of your work is interviewing CEOs and other top executives from leading Internet-oriented companies. With the Net demanding flexibility and fast reactions, is managerial and entrepreneurial skill an even greater determinant of success than it is offline?
Well, I think that we need to separate managerial and entrepreneurial skills apart because the two are very different animals. The sign of a good Web entrepreneur, from my experience, is someone that is not only passionate and has vision but is tenacious as hell! These are the people who don't give up! They drive through or under brick walls and achieve their goals. Especially in the pessimistic Web environment that we have entered recently, I think this trait is more important than ever before.

Then, as the company evolves and grows the more "traditional" managerial skill set becomes important for Net- focused firms. However, this isn't the same toolset of managerial skills that work in a Global 2000 environment. The best Internet managers are those that can delegate and make decisions quickly - without having reams of information and lots of time in front of them. This is a game of speed, flexibility and not "looking back." Otherwise, you end up road kill.

After you've done an interview with a CEO, can you make a good guess as to whether that company will be around in a year's time?
Well, I like to think that I can at least have a decent guess on that topic after having interviewed over 150 Net company CEOs or founders in the past few years. Even with the April Nasdaq wipeout, the amount of utter B.S. and fluff that some Net CEOs are still spouting is astonishing.

When I interview a CEO with a stock price in the single digits who thinks his company is actually going to "roll-up" an industry, that's when I know a certain percentage of companies are still in dot com fantasy land. It's a scary thing to see still, given the aggressive shakeout that we're in the middle of right now. Investors aren't foolish. I think they can tell better than ever before when a CEO has a real execution plan and when a company is drifting lost in the middle of the ocean!

And why do so many dot coms fail? Is it a natural process, as has always been the case with new businesses, or is the Internet a special case?
The Internet is not a special case. It's just an example of the traditional business creation process on serious steroids, for lack of a better phrase. Companies simply succeed or fail faster then ever before because of the speed of which things occur on the Web. We can see this happening all around us right now. In many ways, venture capital and the capital markets are the rocket fuel that speeds up this process. Lots of capital isn't a bad thing - but it encourages homeruns or gigantic flameouts by its very nature.

Many weak companies are now failing because they've been inflated by this capital and propped up. Then when it is pulled out from underneath them- they starve, because they have yet to create a real underlying business model that is self-supporting. It is a vicious but needed process that we are now witnessing.

And what are the qualities that the winners share?
I think this is really simple when you break it down. The enduring companies will offer a true value proposition to their customers - be it a product or service. Once there is a real value proposition established, these companies need to establish multiple revenue streams with a business model that supports attractive margins that lead to near term profitability. I disagree with the extremes now that the market is demanding profitability out of Net companies, but it's a reality now that companies must deal with and conquer.

Finally Matt, is there still gold in them thar hills?
Yes. It's out there. Really! All that's happened is that the gold right on the surface of the hill has already been mined. In other words, the easy money is gone. But I say good riddance to it, because what we see now with all these dot coms failing that it is forcing the weak hands out of the market. Let them go back to their corporate jobs. In the long run, this means that there is a bigger piece of the pie for the entrepreneurs that endure to carve up! To get to this gold today, though, and in the future, entrepreneurs are going to need to drill into the center of the hill and do some serious mining. In other words, the business and wealth creation process has just been extended more- it's not going to happen overnight. It's going to take time and persistence, which is right up my alley.