Magazine article Black Issues in Higher Education

A New Day for Making Money on the Web

Magazine article Black Issues in Higher Education

A New Day for Making Money on the Web

Article excerpt

PERSONAL | COMPUTING

Until the middle of 2000, the Internet economy was flying high, elevating with it the larger economy, not to mention the stock market and the portfolios of millions of investors. Then the bottom caved in.

During the first quarter of 2001, in the middle of the implosion, 164 Internet companies declared bankruptcy or shut down completely, a drastic increase from the five that did so during the first quarter of 2000, according to Webmergers Inc., a market research company in San Francisco. Things have improved lately, though the shakeout continues, with 54 dot-coms failing during the first quarter of this year.

What's an Internet entrepreneur to do? Can you still make a profitable go at it in today's leaner and meaner dot-com world?

Yes you can, says Jim Romeo, author of the new book Net Know How: Surviving the Bloodbath - Straight Talk from 25 Internet Entrepreneurs. You just have to think differently, and more traditionally, than many of the still wet-behind-- the-ears digerati who created the dot-com bubble.

From talking to and writing about these 25 dot-com entrepreneurs, Romeo in a phone interview offered five pieces of advice:

1. Strive for profit not just market share.

In the dot-com heyday, Internet entrepreneurs priced their goods or services below cost to gain market share, create a buzz, and attract venture funding. Many achieved wildly successful initial public offerings. Scores of millionaires were born virtually overnight.

The whole digitalada came crashing down when investors began demanding that Internet companies justify their sky-- high valuations with hard earnings.

"Dot-com entrepreneurs today should go back to basics," Romeo says. "The new economy is a misnomer. It's just the old economy with a different look. You need to follow the same principles that created the industrial revolution and built the wealth of nations."

2. Minimize your expenses.

The failure to do this was the biggest culprit in the dot-com collapse, Romeo says. In the old days- two or three years ago -- many Internet entrepreneurs started off by hiring lots of people before they even had any market share. Lavish salaries and funky perks such as Friday afternoon pool parties were common.

Today, Romeo says, you need to better watch your cost of operation. Expenses should follow revenue, not vice versa. Don't spend on head count and overhead and hope you can make enough money to cover your costs. …

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