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The dot com crash blew away hundreds of ill-thought-out business models. Those left alive have a revitalized chance for success this year. The growth of Internet didn't pause through this recession. More people are online, more people are using high-speed connectivity, and more people are buying online. Even Internet ad sales grew through downturn, which is quite remarkable considering that an offline ad depression has delivered a body blow to print and broadcast media companies.
So we begin 2002 with fewer Internet companies, more Internet buyers and a larger Internet advertising pool. The final piece of picture, venture capital, will probably come later in year. This will create a favorable environment for new Net launches or expansions by existing Internet companies. Certainly a good dose of skepticism will remain from brutal dot com crash, but a new dose of caution will probably help enhance positive environment for growth. The Internet boom of 1999 and 2000 toppled in part because a lack of caution pushed capital into incompetent hands.
The question remains: who will benefit from a favorable online business climate? During holiday season of 2001, big beneficiaries were major brick retailers such as Sears, Columbia House, Barnes and Noble, Toys 'R' Us. In part, it was because these companies had capital. New Internet companies had little to work with in promoting their business, since venture community sat on sidelines during all of 2001.
This could change in 2002. If venture capitalists invest in new online ventures, brick companies could get a run for their money. Chances are, with caution in place, venture money will go highly experienced management teams, perhaps defectors from successful online teams now living within major brick retailers.
Rob Spiegel is the author of Net Strategy (Dearborn) and The Shoestring Entrepreneur's Guide to Internet Start-ups (St. Martin's Press). You can reach Rob at spiegelrob@aol.com