Part 2: The new environment and succeeding today

Are VC's now demanding people have a lot more experience?
Definitely. They want to make sure that you've headed up people and managed a division. Those days of people coming out of MBA school and getting funding and starting up their future are over. You've got to really prove yourself.

So is the environment, as it is now, difficult to "thrive" in?
Basically, there are a lot of things happening on the Internet, all the inner fights of the organization, all the things that still need to be worked out. All of those things create an environment that is not easy to develop in. You need an environment that everyone can work in. The environment is really counter to the future right now.

There existed as well this whole thing about being glamorous - we call it "digerati" here - placed on these golden boys and girls. I interviewed a lot of people for the book and left out the companies that I thought were going to die, except for one because the guy was so arrogant. I was thinking, this guy is either going to be a complete success or a complete failure so I'm going to leave him in.

And what did a lot of the CEO's and funders you interviewed think about the boom?
Mostly I interviewed people who've been around in the cycles, Bill Lohse, Carol Bartz, Guy Kawasaki, John Warnock who started Adobe, all the people who really funded strong dot coms. They were all watching people come into their offices, pitching snake oil and they were very conscientious who they paid money to.

A lot of the seeds were just giving money out to anyone. People were putting into their venture capital funds faster than they could spend it. When you have that amount of money coming in, you have the responsibility to find the companies and make the return. At the time that average return was 300% and the average IPO was six months.

You started seeing companies filing for IPO's that weren't even profitable. Now, you can see two or three dot coms crash here a day in Silicon Valley and they're crashing silently because they never came out with a product. I talk with angel groups and VC firms and these companies went up quickly with their 20 million in funds. Then they would come back and ask for a bridge fund to make rent or etc.

Now, when that happens, the VC's are saying, "No.!" It was just all these bad ideas that should have never been funded. People were just completely euphoric and insane in the offices.

And is there still funding or mentoring to be had - just that the VCs are more selective?
Now you see a different kind of mentoring like the Angels Forum, run by Carol Sands. There's a group of 25 angels there and she handpicked them because of their disciplines.

It is their own personal wealth they are investing, and she made a rule that they had to have made their own personal fortune. So everyone there is qualified to really give someone advice, you have marketing, engineering, semi-conductor engineers, all these great minds, tops in their fields. Someone has to sponsor the company and make the investment, and they will mentor them in any part of their business.

So if they get a company that's flailing and they need a COO, they bring in someone. Someone who has been a COO from their angels group and can step in until they get a real COO. Carol Sands is wonderful and her group is very formal and very nurturing.

That's the future of the Valley. It's real, and people know what they're doing. You don't have some jerk telling you, "You should pour more money into branding." Branding companies made so much money off the dot com euphoria too.

In the gold rush, the people who made the money were the people who sold the overpriced shovels. And the quicksilver mines made more money than all the goldmines put together, because you need quicksilver to sort the gold. The branding companies were similar in the dot com rush.

What do you think businesses have to do to succeed today?
Businesses really have to facilitate the needs of people on the Internet. It's the ultimate freedom and the battle is being played out. It's the most exciting medium in the whole world. It combines everything into one place and it's going to be amazing too see what happens.

I'm just addicted to the Internet. I really want them to put a chip in my head someday because I want to be on 24/7. I have my Palm Pilot to check email and it's a great example of where you just have to wait for them to make the technology way beyond it. And I think out of all of this, the getting back to the real mentoring and thoughtful funding is the only way to continue on the path.